Saia (SAIA) Q3 2025 Earnings Call Transcript Motley Fool Transcribing, The Motley FoolNovember 1, 2025 at 9:10 PM 0 Image source: The Motley Fool. Date Thursday, Oct. 30, 2025, at 10 a.m. ET Call participants President and Chief Executive Officer — Frederick J. Holzgrefe Chief Financial Officer — Matthew J.
- - Saia (SAIA) Q3 2025 Earnings Call Transcript
Motley Fool Transcribing, The Motley FoolNovember 1, 2025 at 9:10 PM
0
Image source: The Motley Fool.
Date
Thursday, Oct. 30, 2025, at 10 a.m. ET
Call participants -
President and Chief Executive Officer — Frederick J. Holzgrefe
Chief Financial Officer — Matthew J. Batteh
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Risks -
The operating ratio is expected to deteriorate sequentially by 300 to 400 basis points in Q4 2025, with management noting, "October to date, is a little bit softer than where we expected to be" according to Matthew J. Batteh, and holiday months are characterized as "challenged from a demand standpoint."
Accident claims and insurance expense increased 22.5% year over year in Q3 2025, primarily due to existing accident-related claims development and inflation in cost per claim.
Shipments and tonnage in October 2025 are trending below expectations, with CFO Batteh stating, "shipments are down around three and a half percent, tonnage down about 4%."
Adjusted operating ratio increased by 250 basis points year over year to 87.6% in Q3 2025, up from 85.1% in Q3 2024, due in part to cost inflation and headwinds in insurance and depreciation.
Takeaways -
Revenue -- $839.6 million, down 0.3% year over year, described as "relatively flat compared to last year" by management.
Adjusted Operating Ratio (OR) -- 87.6%, up 250 basis points from Q3 2024 and 20 basis points from Q2 2025, reflecting adjusted expense items.
Reported Operating Ratio -- 85.9% operating ratio, including a $14.5 million net gain from real estate transactions.
Diluted Earnings Per Share -- $3.22, down from $3.46 a year ago; Adjusted diluted EPS was $2.81.
Adjusted Cost per Shipment -- Increased 4.6% from Q3 2024 but improved 0.7% sequentially despite higher fuel and self-insurance costs.
Shipments per Workday -- Decreased 1.9% year over year; Shipments per workday improved 3.2% compared to Q2 2025.
Tonnage per Workday -- Decreased 1.5% year over year to approximately 24,700 tons; sequential 4.2% increase in shipments per workday for ramping facilities in 2025.
Fuel Surcharge Revenue -- Up 2.1% to 15.2% of total revenue; yield, excluding fuel surcharge, decreased by 0.1%.
Salaries, Wages, and Benefits -- Salaries, wages, and benefits increased 0.7% from Q3 2024, offset by a 3% reduction in headcount from Q3 2024 and continued alignment of hours to volume.
Purchase Transportation Expense -- Decreased 9.5% from Q3 2024, representing 7.1% of revenue (down from 7.8% in Q3 2024).
Depreciation Expense -- $64 million, up 17.2% from Q3 2024 due to capital investment exceeding $600 million over the last twelve months.
Contractual Renewal Rate -- 5.1% contractual renewal rate, providing insight into the pricing environment.
Cargo Claims Ratio -- 0.54%, marking the fourth consecutive quarter below 0.6%.
Network and Operations -- 39 terminals opened since the beginning of 2022, with ramping markets now operating at a sub-95% operating ratio; 17 terminals completed their first full year of operations.
General Rate Increase (GRI) -- 5.9% effective October 1, impacting about 25% of operating revenue.
3% Wage Increase -- Implemented October 1, 2025, for all employees, described as net neutral to GRI impact for Q4 guidance.
Headcount -- Headcount was down 3% from Q3 2024 as management continues to match resources to volume.
Capital Expenditures -- Expected to be $400–$500 million in capital expenditures for 2026, down from 2025
Summary
Saia (NASDAQ:SAIA) management indicated revenue remained essentially flat in Q3 2025, with modest sequential shipment improvements offset by a year-over-year contraction in both shipments and tonnage. Insurers and accident claims costs increased markedly, along with higher depreciation from previous years' capital investments, directly pressuring operating margins and driving a higher adjusted operating ratio of 87.6 in Q3 2025. The company expects ongoing margin headwinds in Q4 2025, with October 2025 volumes tracking below seasonal expectations. Management forecasts an operating ratio deterioration of 300 to 400 basis points sequentially from Q3 to Q4 2025, heavily influenced by volume and holiday workdays. Strategic expansion emphasizes continued ramp-up in newly opened terminals and focus on leveraging operational efficiencies, with management asserting that the recently announced 3% wage hike and 5.9% GRI will net neutral in aggregate for Q4 guidance. A pullback in anticipated capital investment signals a shift toward harvesting returns from prior network spend, with leadership reiterating their intent to optimize cost structures and deepen customer wallet share even absent a broader industrial rebound.
Once freight volume recovers, given the current underutilization of network facilities.
Management emphasized ongoing adoption of artificial intelligence and network optimization initiatives to reduce shipment "handles" and improve efficiency.
CFO Batteh detailed that "adjusted cost per shipment was down 0.7% sequentially", despite the network's fixed cost drag from newly opened, not-yet-mature terminals.
Leadership outlined that "over 70% of our volume growth came in one and two-day lanes," according to Frederick J. Holzgrefe, largely from existing customers, highlighting the impact of expansion on share of wallet.
Management acknowledged an opportunity to narrow the revenue per bill gap versus major LTL competitors, with President Holzgrefe stating this continues to be "an ongoing opportunity."
October shipments and tonnage were "a little bit softer than where we expected to be," according to management commentary, with management cautioning that "holiday months have their own impacts and challenges."
Employee engagement remains high, with survey participation rates over 80% for three consecutive years, according to the company's annual engagement survey.
Industry glossary
LTL (Less-Than-Truckload): Freight shipping for relatively small loads that do not require a full truck trailer, often involving multiple customer shipments on a single vehicle.
Operating Ratio (OR): A measure of operating efficiency calculated as operating expenses divided by operating revenue; lower ratios indicate better profitability.
Handles: The number of times a shipment is touched, moved, or transferred between facilities during routing through a network.
General Rate Increase (GRI): A scheduled price increase applied broadly to service rates, not tied to specific contracts but applicable to a portion of total revenue.
Yield: Revenue per shipment measure, sometimes tracked with and without fuel surcharge to reflect core pricing trends.
Ramping Facilities: Newly opened terminals or service centers undergoing a period of scaling toward full operating maturity and cost efficiency.
Contractual Renewal Rate: The average percentage rate of price change on renewed contracts during the reporting period.
Full Conference Call Transcript
Also, in the third quarter, we recorded $14.5 million in net operating expense reduction from a gain on real estate disposal and impairment of real estate. When we discuss adjusted operating expenses, adjusted cost per shipment, adjusted operating ratio, or adjusted diluted earnings per share in our comments, it refers to our adjusted results that exclude the gain from that real estate sale and impairment on that property. See our press release announcing third quarter results for a reconciliation of non-GAAP financial measures. That press release is available on the financial releases page of Saia's Investor Relations website. I will now turn the call over to Fritz for some opening comments.
Frederick J. Holzgrefe: Good morning. And thank you for joining us to discuss Saia's third quarter results. We are very pleased to share that our results for the third quarter reflect our continued focus on customer service, network optimization, and cost control efforts. Our customer-first focus remains paramount as we continue to mature in our newer markets. Although the economic backdrop continued to exhibit the trends seen throughout 2025 with customers awaiting a more certain environment, we are pleased that our expanded footprint continued to provide opportunities to service customers in both our legacy and ramping markets.
Our ramping markets, which are made up of the 39 terminals opened since the beginning of 2022, grew sequentially and improved their operating ratio by over 100 basis points compared to the second quarter and are now operating at a sub-95 OR. 17 of these terminals have just completed their first year of operations, making the overall improvement and performance even more impressive. Our nationwide footprint allows us to build deeper relationships with customers, and we're seeing the benefit of the investments made in our network over the past several years. Compared to the second quarter, we experienced revenue growth in both legacy and ramping markets.
Customers value ease of doing business, and with our now national network, we are better positioned to provide solutions than we ever have been. Our third quarter revenue of $839.6 million was relatively flat compared to last year's third quarter, reflective of the macroeconomic landscape. While our third quarter operating ratio was 85.9, adjusting for the one-time real estate transactions, our adjusted operating ratio was 87.6. Adjusted operating ratio increased by 250 basis points compared to our operating ratio of 85.1% in the 2024 and 20 basis points compared to the 2025, outperforming historical seasonality.
The improvement from the second quarter was achieved primarily due to our focused cost control efforts resulting in a decrease in sequential adjusted cost per shipment despite headwinds from increases in self-insurance and related costs. Excluding the net impact of the real estate transactions, our adjusted cost per shipment improved sequentially from the second quarter by 70 basis points. The sequential improvement reflects our continued focus on operational efficiency while still maintaining our focus performance standards. For the quarter, our cargo claims ratio was 0.54%, which is our fourth straight quarter of sub-0.6 cargo claims ratio, a notable company record.
Additionally, reflective of our expanded offering and continued service performance for customers, our contractual renewal rate for the quarter was 5.1%. Volumes for the quarter were in line with our expectations based on how the overall freight market has trended in 2025 compared to the 2024, shipments per workday decreased 1.9%, while sequentially, shipments per workday improved 3.2%. We continue to experience outsized growth in our newer markets where our expanded footprint and service offering provide more opportunities as customers come to understand and see the value in our expanding service capabilities. Our ramping facilities saw a 4.2% sequential improvement in shipment per workday in the 2025.
In facilities opened prior to 2022, shipments increased 3% sequentially and decreased 4.8% compared to the 2024. We're pleased to see both legacy and ramping facilities grow sequentially, reinforcing the value of a national network through our expanded service offering despite a softer overall LTL freight market. In Q3, we saw continued benefits from our accelerated network optimization efforts that began in the first quarter of the year. Enabled by our ongoing investments in technology, these initiatives improved efficiency across our national footprint. As handles or the number of times a shipment is touched as it's routed through our network continue to be lower than their first quarter peak.
We expect our national footprint to continue to scale moving forward, aligning with our long-term strategy of getting closer to this customer, improving service levels, and providing solutions that meet customers' needs. We're already seeing the benefit of our investments in our results, and conversations with customers reinforce our value proposition. Optimization of mix remains an intense focus for us, and our ongoing efforts around pricing remain one of our biggest opportunities. As noted earlier, our expansion strategy is yielding tangible results as we get closer to customers and can provide more solutions to meet their needs.
Sequentially, over 70% of our volume growth came in one and two-day lanes across our network, with over two-thirds of that growth coming from customers that we already do business with. Growth in these lanes helped drive an increase in operating income and profitability compared to the second quarter. This growth, driven largely by our national accounts segment, demonstrates the impact of our expansion and ability to grow existing customers and build relationships with new customers. We implemented a GRI on October 1 at a rate of 5.9%. As a reminder, this increase will impact approximately 25% of our operating revenue and varies by mix of business and lane.
Ensuring that we drive returns on our substantial network and service investments remains a focus, and this GRI is another step in the right direction in obtaining the compensation we expect from our customers for the service we provide in this inflationary business. I'll now turn the call over to Matt for more details from our third quarter results.
Matthew J. Batteh: Thanks, Fritz. Third quarter revenue was relatively flat compared to the prior year, decreasing 0.3% to $839.6 million, while revenue per shipment, excluding fuel surcharge, increased 0.3% to $294.35 compared to $293.39 in the 2024. Fuel surcharge revenue increased by 2.1% and was 15.2% of total revenue compared to 14.8% a year ago. Yield, excluding fuel surcharge, decreased by 0.1%, while yield increased by 0.5%, including fuel surcharge. For the third quarter, shipments per workday decreased 1.9%, while weight per shipment and length of haul increased slightly compared to the 2024. With this change, tonnage per workday for the quarter decreased 1.5% to approximately 24,700 tons compared to approximately 25,000 tons in the 2024.
Shifting to the expense side for a few key items to note in the quarter. Salaries, wages, and benefits increased 0.7% compared to the 2024. This increase is primarily driven by increased employee-related costs, including group health insurance and workers' compensation costs. Due to cost inflation and experience, these increased costs were partially offset by reduced wages compared to the prior year as we continue to match hours to volume. Compared to the 2024, headcount was down 3%. Purchase transportation expense, including both non-asset volume and LTL purchase transportation miles, decreased by 9.5% compared to the third quarter last year and was 7.1% of total revenue compared to 7.8% in the 2024.
Truck and rail PT miles combined were 12% of our total line haul miles in the quarter. Fuel expense for the quarter increased by 0.9% compared to the prior year, while company line haul miles increased 1%. The increase in fuel expense was primarily the result of an increase in national average diesel prices by over 1.8% on a year-over-year basis. Accident claims and insurance expense increased by 22.5% year over year. The increase compared to the 2024 was primarily due to the development of existing accident-related claims and inflationary increases in cost per claim.
Depreciation expense of $64 million in the quarter was 17.2% higher year over year, primarily due to ongoing investments in revenue equipment, real estate, and technology totaling over $600 million over the last twelve months. Compared to the 2024, adjusted cost per shipment increased 4.6%, largely due to the increases in depreciation and self-insurance related costs. On a sequential basis, though, adjusted cost per shipment improved 0.7% from the 2025 as cost management and core execution remained a heavy focus. This sequential improvement was achieved despite the headwinds from sequentially rising fuel costs and self-insurance related costs.
Total operating expenses increased by 0.6% year over year, but after backing out the net gain on real estate in the third quarter, total adjusted operating expenses increased by 2.6% for the quarter. When combined with the year-over-year revenue decrease of 0.3%, our adjusted operating ratio increased to 87.6% compared to 85.1% a year ago. Our tax rate for the third quarter was 24.8% compared to 24.4% in the third quarter last year. And our diluted earnings per share were $3.22 compared to $3.46 in the third quarter a year ago. Adjusted diluted earnings per share for the 2025 were $2.81. I will now turn the call back over to Fritz for some final comments.
Frederick J. Holzgrefe: Thanks, Matt. I'm pleased with our team's ability to focus on what we can control at this point in the cycle. Each day brings new variables, and the ability to improve operating ratios sequentially from the second quarter despite headwinds from increased fixed costs in addition to elevated insurance-related expenses speaks to our team's ability to remain steadfast in our focus on core execution and cost management. This quarter is yet another example of our team's operating performance being the best in the industry. In addition to the GRI, we also implemented a wage increase at 3% effective October 1 for all employees.
We recently completed our annual engagement survey, and for the third year in a row, had a participation rate over 80%. This participation rate remains among the strongest in the industry, and most significantly, overall employee engagement remains high and actually improved compared to last year. The results of the engagement survey continue to reflect an engaged workforce. Despite the economic trends seen throughout the year, while we always have areas in which we can improve, I'm very pleased with the results of the survey and the ongoing commitment of our teams throughout the network. Saia's expanded footprint is supported by our best-in-class team, and the commitment of the team shows in the results seen in Q3.
In a down freight cycle, we continue to focus on providing a high level of service while at the same time maintaining cost management and improving core execution. We have remained resilient amid customer shifts that seem to transpire on a day-to-day basis and are well-positioned to leverage our investments in the network over the last few years into an opportunity to turn Saia into one of the largest players in the LTL industry. Given the ongoing market conditions, the results we're seeing from the investments in our network, and our ability to adapt to an uncertain environment, we believe that we're still in the very early stages of realizing our full potential.
With that said, we're now ready to open the line for questions, operator.
Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. Please limit yourself to one question and one follow-up. At this time, we will pause momentarily to assemble our roster. The first question comes from Christian F. Wetherbee with Wells Fargo. Please go ahead.
Christian F. Wetherbee: Hey, thanks. Good morning, guys. Appreciate the time. Maybe two quick questions here. Just kind of curious how things have been trending in October from a tonnage perspective or a shipments perspective? And then Fritz, I noted you put the wage increase in October one. Maybe you could give us a little bit of color or framework around how you think about the fourth quarter operating ratio in the context of the improvement you're making on the cost per shipment, but also obviously some changing dynamics with seasonality and volume. So a couple of questions there would be great. Thank you.
Matthew J. Batteh: Thanks, Chris. I'll go ahead and give the monthly for Q3 as well just so everyone has it. So in July, shipments were down 1.2% tonnage down 0.9%. Excuse me. Up 0.9%. August shipments down 2.2%, tonnage down 2.2%, September down 2.5% on shipments, and 3.3% on tonnage. In October so far, shipments are down around three and a half percent, tonnage down about 4%. If we look at October so far, we've seen trends be a little bit depending on the day, up and down a little bit. I think there's maybe a few things that could be attributable to, but the first couple weeks were a little bit lighter than we anticipated.
We still have a couple of days to go, but that's where we're tracking as we stand right now. We think about the OR portion, and I'll hand it over to Fritz too for some commentary as well. But if we think about the OR, if you look back in history, the average sequential Q3 to Q4 is about a 250 to 300 basis point degradation. Usually. Assuming yours, it's a little bit better. There's obviously tails on either side of that. With October trending a little bit lower this year than what we've expected so far, I think a fair range probably in the three to 400 basis point degradation range. A lot of that's gonna be volume dependent.
Just seeing where we are so far in October, October is a big month, 23 workday month. Followed by an eighteen day November, which has its own challenges and just around the holidays in general. So with what we see now, that's where we stand. It's gonna be volume dependent as we look forward.
Frederick J. Holzgrefe: Yeah. I think just to add, Chris, I mean, I think that the overall environment that's kinda leading the trends that we see, it's been pretty muted throughout the year. I think if you look at the month of October, I mean, certainly, you know, we don't have a direct exposure to, you know, sort of government per se in terms of, you know, business with various different departments. You know, we're downstream from that.
And you know, I think to assume that doesn't hasn't had some impact on kind of the overall environment is probably a bit naive but yeah, I think there's something to that, but at the same time, I, you know, I'm pleased with what we're doing at Saia around kinda driving the results. So you know, could we get to more of the history? We could, for sure. And, you know, I think it depends on how November develops and into December.
Christian F. Wetherbee: Got it. Thank you very much. Appreciate it.
Operator: The next question comes from Jonathan B. Chappell with Evercore ISI. Please go ahead.
Jonathan B. Chappell: Thank you. Morning, everyone. Fritz, updates on the we'll call them, the new terminals, the 39 open since the start of '22. Know, went from breakeven to high nineties OR, and now you said less than ninety five. And I get I assume you're doing that without the volume that you had anticipated when you opened that up. Is this all strictly a productivity cost efficiency, and given what you just laid out for October, is it possible for those new terminals to continue to edge better on a margin front? Without any volume through or an accelerated volume throughput in the near term?
Frederick J. Holzgrefe: Good question, Jonathan. Our focus, you know, as you get developed maturity in those facilities, what's exciting about them is that the incrementals can be pretty positive, and you're starting to see a bit of that. So I think that, you know, as we continue to grow in those markets, both inbound and outbound, that's a benefit to us. Now we're gonna run into a bit of a challenge around seasonality for sure now. Right? It is just Q4 is typically a slower time of the year. But the opportunities there are it's about the maturity in those facilities. I mean, we're just now lapping, you know, getting full year behind us on 17 last year.
So we're really pleased with what we're seeing around operating efficiencies, as we build density across not only in those facilities, but across the line haul network. Right? So as you build those opportunities out, that's what's exciting about where we are at Saia.
Jonathan B. Chappell: Great. Thanks, Chris.
Operator: The next question comes from Scott Group with Wolfe Research. Please go ahead.
Scott Group: Hey. Thanks. I wanna talk about the pricing environment. If you look at yield and rep per shipment ex fuel both kinda flat, what are you seeing with the pricing environment? Do we I know you don't tend to give updates, but maybe it would be helpful if you did. Right? I'm you think that we should be expecting those yield metrics to turn positive in Q4 just sort of any color there.
Frederick J. Holzgrefe: Yeah. You know, listen, I think broadly, Scott, the environment is around pricing is disciplined and focused. I mean, I think that this the underlying nature of the business is inflationary. We've talked about that, and I know others have talked about that as well. And so it's important to get the pricing right. I think it's also important to when you study the metrics at Saia that you understand a few elements of that. Right? So this is a emerging the mix of business in our in for us is changing as we go.
You know, right now, we highlighted for you that you know, the growth in the business from Q2 to Q3, a good chunk of that came in one and two-day lanes we're really excited about because that's those are opportunities to grow, share a wallet with customers. But those are also by definition, one or two-day lane pricing. That tends to be relative pricing versus three or four-day lanes are it's gonna be less. Right? That's just the market. But that's not a bad thing. So you're gonna have mix of businesses in there.
And I think the other element to consider too, we look at year over year third quarter, that's down high double digits, 18% or so shipment wise. So that's a negative mix headwind for us from a on the revenue line. But you know, we look at that in the holistically, what we've been able to do in the ramping terminals and in the others, I think that's been pretty good performance. So there's a lot moving in it. I've point all this out because there's a lot moving in and out our revenue line.
Scott Group: Okay. And then, again, if you have any thoughts on the Q4 yield, I know you don't do it, but I think it would be helpful. And then just when I look at the margin progression, right, Q1 was top down 700 basis points and Q2 was got a little bit better down four fifty, Q3 down two fifty, so more progress. But sounds like Q4 takes a step back and it's down you know, three to 400 basis points again. Just curious your thoughts on why it's getting worse again, and it's maybe it's just too early. But any sort of early thoughts you have about how to think about margins next year?
Frederick J. Holzgrefe: Yeah. So we just did a GRI of 5.9%. So that kinda gives you a feeling of what we think about pricing in the environment. We're continuing to push contractual renewals. So that's part of what the opportunity is for us. So we'll continue to focus on pricing and yield management. So that's critical to us. That hasn't changed. You know, I think we need to recognize that we saw that in October so far, it was a bit soft. It's one month in the fourth quarter, twenty three workday months, we have November coming up, which is eighteen workdays. The fixed costs remain the same.
You don't have the opportunity to reduce those in a, you know, in a month short month like that. So you know, can we over outperform the thoughts around sequential? We could. And you know, but we're trying to be realistic around what we're seeing trend wise right now and that's reflective in the guide. Wanna add to the pricing environment. Scott, Fritz talked a lot about mix, and obviously, we're getting a lot of great opportunities with customers that we're really excited about. It's why we put those dots on the map and we get a chance to talk to them about an expanded offering.
And we've had several customers tell us that we're getting awarded this because we can just now solve more problems. For them, and we get excited about that. It's great opportunities that we're gonna continue to take advantage of. So there is some mix shifts in there, but if we look at just the contracts that we renewed Q3 of last year, and how they performed Q3 of this year, on like for like business, we're netting little over 4% revenue per bill on those specific contracts. So we're seeing good flow through on those. We would like it to be more, but that's part of the environment we're in now.
But importantly, there's mix shifts in some of these new businesses. But we underlying pricing environment we feel remains very rational. This is an inflationary business. We have to get price.
Scott Group: Okay. Thank you, guys.
Operator: The next question comes from Jordan Robert Alliger with Goldman Sachs. Please go ahead.
Jordan Robert Alliger: Yeah. Hi. Good morning. Question, you mentioned in your opening remarks your network optimization efforts continue. Can you provide a little more or remind you know, some of the things you're specifically doing whether it be on the legacy side, the total network side, and where are you in that process? I mean, since still relatively early in the improvement front on that side of things. Thank you.
Frederick J. Holzgrefe: Yeah. The I think the way we've studied this or described it before. So one of the key things, key initiatives that we have as you build out a network, and you it changes, you know, there was a time you know, a year ago at this time, we had several 17 fewer terminals. Right? And as you add those to the terminal, how you schedule and manage freight through a connecting all of the dots. How you design that network is critical to how you optimize cost. So when we deploy our reroute freight, synchronize the system such that you have fewer handles through the system.
So if you went back to Q1 of this year as we were challenged in that environment, one of the things that we were really focused on was that in that period, we had what we call peak candles, which meant as freight was routed through our networks, particularly our largest operate our largest brake facilities. The amount of work that was being the number of touches of freight going through those facilities was at an all-time high for us. So we've been continuing to work that down over time.
And the way you do that is you're building efficiencies around how do you build out loads and build density in a market, say, a Trenton or you know, a new market like that and handle that freight and not have it touch any other dockwork or facility through the network. And it's part of its maturity, part of its scheduling, part of it is you know, really taking the data that we have and figuring out ways that we can better optimize that. So it's an ongoing effort. I tell you, I think we're in the early innings, because it's what's critical of that is I think we're in the early innings of monetizing this network expense.
You know, I think from the beginning, have said pretty clearly that the idea wasn't to fill the terminals up as quickly as possible, to do it in a way that people under customers understood the value paid for that service, and at the same time, we have to continue to optimize the cost structure behind it. It's been a bit of a challenging environment. Had we had more sort of growth in those markets, I think we'd have been in a position to take advantage of that quicker. But the great thing about it is it's set up for really significant incrementals going forward. If as the market improves.
Jordan Robert Alliger: Thank you.
Operator: The next question comes from Kenneth Scott Hoexter with Bank of America. Please go ahead.
Kenneth Scott Hoexter: Hey, Greg. Good morning. Fritz and Matt, maybe excuse me, parse a little bit of the 300, 400 basis point sequential margin change. Maybe how much of that is what you're talking about, volume? How much is it of the timing of the 3% wage increase? That was a big issue. I think when you were debating the timing of the wage increase last time. So I just wanna see how much of that is affecting that sequential change. And then thoughts on October, if seasonality holds, the 3% down, that a good read on the full quarter? Or is it normally just given the holidays that normally get worse as we go through?
Just wanna understand where we are on.
Matthew J. Batteh: In terms of the OR guide, Ken, if so the GRI and the wage increase went into place on the same day, October 1, for both of those. That you can consider that to just wash out amongst each other in terms of the guide, in terms of the impact. So net neutral from the combination of two of those. I mean, Fritz commented on the fixed cost impact. If you look at the holiday months, they're just overall challenged from a demand standpoint. But when you've got fewer workdays, there's some workdays that are workdays and they're revenue days, but they're not really full revenue days, but you get all the fixed cost aspect of it.
So if you look back in our history, I mean, we've had some quarters where there's an OR that's higher than our average, and a lot of that, you've got weather in there. You've got demand trends. So with what we're seeing in October, it's trending a little bit worse than what we would typically see. I wish we had a crystal ball and read into what November and December would look like. It's just generally those holiday months have their own impacts and challenges. So we're focused on core execution. We're focused on the four walls in our business.
There's an externality component on demand that we can't always control, but when we look at the bridge between that, it's just where we're seeing things in October so far. Versus what's ahead of us in those couple holiday months. But it's I would view that as you know, October is an important month. In the quarter. Right? So it's 23 workdays. Without holidays, and then you get into November and December, and those have them. So that's kind of the bridge for it.
Kenneth Scott Hoexter: But Matt, are you saying that we're sub seasonal and it's this holiday season or something is getting worse than normal? Or just because you always have the same fewer days in November December. Right? So October is more meaningful. But I'm just trying to understand if your commentary is that something got noticeably worse and it's accelerating on the downside on the volume here as we enter the fourth quarter?
Matthew J. Batteh: Well, October to date, is a little bit softer than where we expected to be. I don't know how that reads out fully from November to December, but we're just taking what we see so far in October and our daily trends that we look at our at the reports every day and see what's coming through. So not a great readout. I mean, we have thoughts that it sort of bounces back a little bit towards more normal seasonality, but what we're seeing so far in October is below that.
Kenneth Scott Hoexter: Okay. And then any thoughts on excess capacity? I know that's a number that the industry gives a lot in terms of your capacity and don't know if you wanna throw in a thought on AI and technology. Everybody seems to be talking about what they're adding on. I know if that's something you wanna if that's something you're adapting in any way to accelerate the productivity gains.
Frederick J. Holzgrefe: Yeah. I'll jump in there. I mean, I think the capacity you know, there are many, as you know, Ken, there are many ways to measure capacity. You know, be it drivers, be it doors, be it acreage, all those sort of things. You know, I think we've got ample capacity across our network. You know, maybe because of where we are and the maturity of the network, you know, we're gonna have facilities that are at 20% capacity, and we're gonna have some that are eighty five. So you know, I think it's a relative number depending on where you are.
As far as technology initiatives and AI, I mean, we've you know, for a number of years, we've been investing in network optimization tools, which are AI tools. That's how we've been able to drive our efficiencies around network redesign, all the things we've done around our line haul network, the initiatives that we have around route planning around our city operations, to what we're doing to manage our staffing model. All those things are optimization tools, which are AI based. You know, our view on that, quite frankly, I you know, it's not new.
These are things that we've been investing in for a number of years, and I think I point back to kind of our successes over time. That's been based on those tools. And you know, the way we think about those tools is that there is always a new version. There is always a new feature. There is always a new analytic that comes into. So we're continuously investing in that.
Kenneth Scott Hoexter: Appreciate the time, guys. Thanks.
Operator: The next question comes from Thomas Richard Wadewitz with UBS. Please go ahead.
Thomas Richard Wadewitz: Yeah. Good morning. Fritz and Matt. What is it see if you could give us some thoughts about and I know there are a lot of moving parts in the business, right, and mix and new terminals and legacy terminals and we create market and you know, kind of less freight out of LA. So a lot of moving parts but parts, you know, if we get to a more kind of normalized backdrop where there isn't so much mix, I just wanted you know, try to contemplate when that could be. Right? Like, is that possible? As you go into '26?
And if so, then do you think it's reasonable for us to see what you're talking about with calls 4% contract pricing, something like that, actually come through in the revenue per hundredweight or revenue per shipment? Because it just seems like that's been something where market discipline, what you're doing, your services you know, you've got more capacity, all the good things. But it just doesn't seem to show up in the numbers we see that's yeah, I guess that's the kind of the first element I have a follow-up to. Thanks.
Frederick J. Holzgrefe: Yeah. That's a good question, Tom. I mean, I think the underpinning of what we're doing, the organic expansion is quite candidly, is unlike anybody else in the LTL business. So when you do that, you know, not everything not everything moves in a straight line or you know, kind of on a continuous slope. So we have to manage through challenges around differences and mix of business as that changes in the environment, you know, you see new competitors and some spots or some parts of the network. Those are all part that's part of the challenge.
I think what's really, really compelling about Saia is that the network is poised for real opportunity both for our customer and for the shareholder and for the company. Right? The national footprint gives us reach to markets that we haven't been able to do. I mean, we get anecdotes on a daily basis about how we've won a new piece of business simply because we've been able to solve somebody's problem into the Great Plains. Where they say, you know what? You can solve that problem. I don't have to deal with anybody else. Now I can do more business with you because of that. And that's an important value that we contribute to the customer.
You know, I think in a more normalized freight environment where maybe there's a bit more in the industrial sector. Industrial production improves a bit. I think we're poised to really take advantage and see the incrementals that we saw in the last freight cycles. Right? And I think they actually could probably exceed what we've seen before simply because we have a footprint that allows us to not only for the customer, but then it's also one that where you have a national footprint, you can drive line haul efficiencies as well. And you're seeing we're getting efficiencies right now through network redesign efforts we don't have the volume that we expect to get.
And if we leverage it and get the volume, I think the incrementals could really compelling. You know, that we're getting cost efficiencies with in a challenged environment. And that's a big deal in this business. And with facilities quite candidly are, in many cases, immature. So I think that longer term, there is a compelling opportunity for Saia and you know, I think we're gonna, you know, continue to grind on generate value in the short term. And when the market does and the freight market does change, I think we're poised to win.
Matthew J. Batteh: One of the things we're really pleased with, I mean, cost per shipment was down 0.7% and that's it's sequential. And if you think about what Fritz said too, it's we've got terminals that are not mature yet. I mean, we've opened 39 terminals since 2022. 17 of those, like Fritz said, just crossed over a year. So there's naturally inefficiencies with those. There's fixed costs that are associated with them. So we're very pleased with the cost performance, and the execution of the team on a day to day. But we don't open these for one year time horizon. These are long-term investments for us.
Very proud of the execution that we have in the near term, but when that comes back, the incrementals are gonna be strong because we have that opportunity to leverage it in the new markets but also the existing markets where we're getting more and best because we can solve more problems. So it's not about just about growth in these ramping markets. When we can solve more problems, we also get business in our existing markets. We're seeing that now. And that just gets better when the freight environment better too, but we're seeing the fruits of that labor now.
Thomas Richard Wadewitz: Yeah, that's great. And the quick follow-up is you know, I think it's better in this type of market to be a low price point. To be a high price point. Know, another LTL that reported this morning talked about, you know, kind of gap versus the high price point in the market. And how they're closing that gap. So I just to kind of level set, I think there is opportunity for you over time. To deliver service and maybe you know, kind of improve price more than market. Right? So how do you think of your gap versus whether it's OD or X or just kind of broader LTL market, your gap on you know, price point?
Thank you.
Frederick J. Holzgrefe: Listen, Tom. That's an ongoing opportunity. We make no mistake. We pay really close attention to that. We think that is an continues to be an opportunity for us, and I would encourage anybody to study what sort of whatever their view of revenue per bill across the public sector and compare that to what where Saia is, and we feel like we gotta continue to close that gap. I think what's really compelling is the with that analysis, you take that and look at our cost per shipment and see how that stacks up, and you see a really compelling OR that gets spit out at the bottom. Right? And that's really what the value is in the business.
And for those that understand that, I think they'd understand that's what we're focused on.
Thomas Richard Wadewitz: But do you have it I mean, you think it's 15 points or how wide do you think the gap is between say you and OD or whatever benchmark you wanna look at?
Frederick J. Holzgrefe: Yeah. It's gonna be a number like that. I have to be honest. I haven't studied the results that were published by others today. So I'm sure it's probably at a discount to that. I think that our service stacks up as well, if not better than others. And I think that warrants pricing and, you know, now that we have a national network that matches up with some of those guys, I think that it's a different game. Right? And that lets us compete on an equal footing, and an equal footing means you're an equal market. That means you get the opportunity to continue to push pricing.
Matthew J. Batteh: What a national network allows us to do, Tom, is to have those conversations at a different level. When you're able to solve more problems and then you're having a conversation about the value you're providing you're harder to replace. You're stickier. The reality over the years is we've been doing a great job without a like for like footprint. We have a national network now for the first time that we've opened all these facilities. So we get to have that conversation more and more. That helps pricing become stickier. When you're doing more for a customer, you're harder to replace. That's a great value of the national network.
Thomas Richard Wadewitz: Alright. Thank you.
Operator: The next question comes from Ravi Shanker with Morgan Stanley. Please go ahead.
Ravi Shanker: Good night. Good morning, everyone. Would love if you could just expand on your initial comments on the Matthew survey and kind of how the results they've received. Are you guys happy with your spot? Do you think it's worth investing more to get further up, or is it a sweet work for you right now?
Frederick J. Holzgrefe: We need to continue to invest in service regardless of what the Mascio result says. Right? Because we know that the value that we generate in the business for our customers is all about service. So we're hyper-focused on driving that. Are we satisfied with the Mascio results? You know, we would have preferred that be a different position there, but I think there's some pretty interesting data if people look underneath the covers. You look into that, you see that, you know, we over-index based on where we are in terms of our relative share relative to the market. I think that says that people are giving us a shot.
We gotta continue to focus on completely satisfying those customers as they get to get to know us. And that turns into value both for them and for us. So listen. Regardless of where we are today in Mascio, we're focused on investing in behind our customers and that's critically important to driving value in the business.
Ravi Shanker: Understood. That's pretty helpful. And maybe as a quick follow-up, apologies if I missed this. Just on the four Q OR walk, I'm assuming the starting point in 3Q is adjusted for the gain this quarter?
Matthew J. Batteh: That's right. Yeah. That's right.
Ravi Shanker: Great. Thank you.
Operator: The next question comes from Bascome Majors with Susquehanna. Please go ahead.
Bascome Majors: Yep. Thanks for taking my questions. If we exit this year in the kind of down year over year tonnage three, 4% range that you're trending in October. Do you think that there's an opportunity to grow tonnage next year without a meaningful improvement in the industrial economy?
Frederick J. Holzgrefe: You know, I think we'll continue to have the opportunity to develop share of wallet opportunities with our customers. So as we continue to solve problems, they'll be accounts that we grow with. And I think those accounts will understand and appreciate and value the service they get from us. And I think it's gonna be that kind of a that's where the growth is gonna come from. If I think about the overall shipments and tonnage growth, I have to be honest with you. We like the idea of continuing to grow share, but what we really like the idea is generating a return for the network investments that we've had.
So it's for us, it's really not about how quickly we can grow shipment count for the sake of shipment count. It's gonna be about growing our share of wallet with customers that value the service they get from us. So I think there's an opportunity to grow that in the next year. Now what the market all you know, makes available, I don't know yet. But I think our idiosyncratic story continues, and I think that opportunity certainly is right in front of us, and we'll continue to work through that into next year.
Bascome Majors: And, you know, maybe expanding on that, it sounds like from your commentary on the fourth quarter, the margin pressure is really about volume, operating leverage, and absorption on that than necessarily anything idiosyncratic to the wage increase timing or anything like that. You know, if we're in a more flattish tonnage environment, next year, and kinda noticing that you have had countdown, and you've done a very good job controlling costs, in the last couple of quarters here. Is there an opportunity to expand margin without growth in tonnage?
Frederick J. Holzgrefe: I think so. Not meaningful, like, big growth in tonnage. I think we can continue to drive efficiency and continue to focus on pricing, continue to make sure that we get paid for all the services we provide. That's certainly an opportunity. Keep in mind, to the extent that we do get a little bit of growth, in a network that is underutilized because we invested for the long term. The incrementals are gonna be pretty good. Right? So it's not gonna take a whole lot. And so we'll continue to be focused on that. I think there are incremental returns that we'll get in the business, and I think we'll continue to drive that value into next year.
Bascome Majors: Thank you, Fritz.
Operator: The next question comes from Bruce Chan with Stifel. Please go ahead.
Bruce Chan: Good morning. Question, guys. Maybe just a follow-up on the customer comment. As you round up the network, you talked about wallet share expansion with existing customers, which is certainly very encouraging to see. Maybe you can just talk about where else you're targeting growth and how that process is going. I don't know if you can parse what fuel the account penetration looks like versus enterprise, for example, and you know, maybe whether there are any new end markets you think are big opportunities, some others have talked about you know, events business, you know, grocery consolidation. So any color there would be great.
Frederick J. Holzgrefe: You know, I think the growth opportunities are all the above for us. Right? So but I think that let's break those apart specifically. So if you look at the facilities that have been open, you know, since 2022, what we call the ramping facilities, those the opportunities in those markets is to date one of the things we've been able to do is we've grown national account business into those markets in part because we already had established relationships with those customers. So it's an opportunity for us to kinda leverage in those markets. And that was really part of the growth thesis.
But the second part of that I think that is underappreciated is in some of these places, haven't done business before. And so getting that Saia brand name out there, the next legs of growth in those markets are gonna probably come from, you know, the field accounts or the accounts that yeah. Who is this you know, who's this company with the red and white trucks? That remains to be a growth opportunity for us. Right? So I think as you mature in markets, you start with the relationships you have, you grow that business, and in the secondary opportunities come from, you know, finding that customer that doesn't know us.
And you know, for people that have followed us, Bruce, like you have, you know that we know how to do this. So if you go back to our Northeast expansion, that's exactly how we've grown that business to be a meaningful part of our total portfolio. We started at those national accounts, because they knew who we were. And we've done a great job of developing that the local business or field business as we call it, you know, as those facilities mature, we like verticals and, you know, that particularly in spaces that value service, that value our on time and value our investment in technology.
Those are customers that are in business to deliver whatever product or service that they offer, they need a good LTL partner that can achieve at a very high level. That's where we come in. And those markets that you described are all ones where we can win, be it trade show or grocery or, you know, whatever it might be. Those are markets that value our level of service. They're getting to know us in some cases. And in some markets, because we're new, they're finding out about us in there.
So I think the growth is for us, and this is the really exciting part about the company, is across all markets all verticals because we're just now getting to maturity.
Bruce Chan: That's super helpful. Maybe just a quick follow-up. I imagine, you know, there's a margin uplift opportunity as that mix changes. Any thoughts on what that differential with those new field accounts looks like versus the legacy national?
Frederick J. Holzgrefe: Listen. The margin uplift like, if you just get the average, you know, sort pick a market pricing opportunity. Right? So if we get the pricing, we come in and get the business at market. The first uplift is gonna happen as you have a very underutilized facility be it a city driver or equipment, line haul network, that are already in place. And if you get market pricing on that new business, put it on that underutilized piece of equipment, that is a really interesting compelling incremental margin opportunity. We know despite our inefficiencies we got a pretty good cost structure that we can leverage. And scale from here. So I think the opportunity comes in a couple places.
Right? It comes with growth, around good pricing, but then it's also scaling a very, very competitive cost structure.
Bruce Chan: Great. Super helpful. Thank you.
Operator: The next question comes from Brian Patrick Ossenbeck with JPMorgan. Please go ahead.
Brian Patrick Ossenbeck: Thanks. Good morning. So maybe, Fritz, just to follow-up on that line of question. When you get those new field accounts, does that is that incremental to the volume you have already there with the nationals and it just drops straight in? And help balances out the mix, or does that do you shift those ramping facilities to have more of a percentage mix as some of that national might churn and go away. Maybe you can help provide some thoughts around that and what that where that would show up if it's more on the rev per piece side or if it's more on the cost per shipment side rather.
Frederick J. Holzgrefe: It's gonna end up in both places, Brian. So if I just go back at our Northeast experience. Right? So look at as we expanded in that network, you know, you find customers that are willing to pay for the value that you're providing. Right? So that's a top line. And that may require that you find a piece of business that, you know, you picked up and you realize that, jeez, this the pricing's not right or know, this isn't working. You exit that business and then bring in something that's more maybe a little bit more appropriately priced. You get all the accessorials and that's an incremental, right, in terms of on the pricing line?
And regardless, the volume is gonna be incremental to leveraging cost structure. So if I have a facility that is underutilized, you know, that's an opportunity for us to win on both accounts. We're not necessarily targeting, hey, is it field? Is it national account? Is it different segments of the business? We're more focused on customers that say, let's look at the value that Saia provides, and we're willing to pay for it. Right, and understand what that investment is. And those are customers that fit best for us. Sometimes that's a national account, sometimes that's a field account. Sometimes it's a combination of both. And it could be across industries.
So it's more of that profile that we're pursuing. That makes the most sense for us.
Brian Patrick Ossenbeck: Alright. Thanks, Kristen. Quick follow-up for Matt. Can you just give some more details around the CapEx continuing to come down, I think, for the third straight quarter here. Is that trim coming from? And do you think that's at a good place as you exit the year? And maybe some early thoughts on next year as well? Thank you.
Matthew J. Batteh: Sure. Sure, Brian. As we have a pretty robust real estate pipeline that we look at, and from an equipment standpoint, pretty much all the equipment for this year has been delivered and in service. So that's more on the real estate front. We go through and look at projects. We're going through diligence on these, having conversations about what the market opportunity is, gonna be serviced by different locations. So that's just looking at projects that we've got in flight and being a little more discerning on those. And it's not that we're never gonna do them. It may just be that we're delaying a little bit.
They've seen us push a little bit of that out as we stand. I think that's probably in a good range for this year. Depending on which what a couple of things that may flow through but I think that's probably a pretty good range. And then still early. We're looking at next year. But I'd say early read is probably more in a 4 to $500 million range for a CapEx standpoint. So obviously, way down from last year, but down again from this year.
And it again, the network build out, we still have opportunities and dots that we need to put on the map, but we've made big strides in that shows in the CapEx line over the past couple of years. So still some finalization to be done for 2026, but I'd say probably 4 to $500 million number is probably a fair range.
Brian Patrick Ossenbeck: Okay. Very good. Thank you.
Operator: The next question comes from Tyler Brown with Raymond James. Please go ahead.
Tyler Brown: Hey, good morning guys.
Matthew J. Batteh: Morning. Hey, Tyler.
Tyler Brown: Hey. I missed the first part of the call, so I apologize if you addressed it. But I think last quarter, we talked about peak touches in line haul, maybe in Q1 or Q2. And I think Patrick's got a number of initiatives to kinda, let's call it fundamentally redesign line haul. To basically take touches out regardless of volume. I think your cost per shipment fell sequentially for the second straight quarter. So can you just kind of talk about where we're at on that touches or breaks per shipment journey? And do you feel at this point that you're you're basically past peak pain?
Frederick J. Holzgrefe: Yeah, Tyler. I think we're past peak pain. I think we're continuing every you know, as we pass into, you know, the next few months in the next year, we continue to have steps around our network redesign, line haul optimization efforts. As we continue to refine and deploy our you know, our AI based routing tools around that. I think there continues to be opportunity around that. And I think it's I think what's really, really interesting is the value of that. We haven't necessarily monetized yet because I think there's still a lot of growth to come in facilities that are you know, still immature.
So where I say that we have the opportunity to monetize that, I think that cost structure is very effective. And as we continue to grow in markets that have been open less than three years, you're gonna be doing that and further leveraging those sort of cost savings initiatives. So I think the incrementals that's gonna help drive the increment incrementals into the future. So I it's early innings on what the opportunity is. Now challenged into the fourth quarter. Right? Because you've got first quarter. But I would tell you that I think that the scaling opportunity is really interesting. We haven't run through a full year of leveraging that.
Tyler Brown: Yeah. Agreed. And so what about balance as well? Because is the is the outbound inbound mix starting to balance out? And I would assume that as you build that outbound side, particularly on the new one the new terminals, that's gonna help with this touch issue as well because you're gonna be able to build more directs. Is that right?
Frederick J. Holzgrefe: Oh. No. Tyler, great. Great point. I mean, we're early innings on that stuff. Right? So you think about just in the simplest form, and I yeah. These are not huge markets, if you just took you know, the Great Plains states, so the immediate value we can provide to a customer we can go to those points now. So you have a customer, say, that's in Dallas, that says, hey. I need to go to Montana. Well, Saia can now go to Montana. We solved the problem. So that's an opportunity. Now the challenge for us is that immediately makes us sort of out of. Right? So you have those Montana markets.
We don't have the freight coming out of there yet. The opportunity for us is to grow out of those markets to the extent there's available freight. That's a balancing opportunity. Right? So those are the smaller markets. Then you take a big market like a Trenton or a Laredo, man, we're early innings there too. So those facilities had just crossed over a year. They are the opportunity to grow both the inbound and outbound is very, meaningful. And that is all a scaling leverage the network build directs, take touches out, and we've already got a good cost structure to start with. So I think there's an opportunity to keep getting better from where we are.
Matthew J. Batteh: That part doesn't even factor in the value that you get when a little bit of uplift from the environment. You're also getting the volume back from those dense legacy networks. Right? The new works Dallas. Houston's, all those. When you get that volume back too, it's an opportunity to continue to leverage that density that's been built over the years. So it's gonna be a combination of both and the opportunity to service customers. You're right, Tyler. It's a direction really matters in this business too, where the freight is coming from. So length of haul and weight per shipment are important metrics, but direction really matters too.
Tyler Brown: Right. I would assume. Take if you take a handle out, you have the opportunity to improve service to a customer. You might be able.
Operator: The next question comes from Eric Morgan with Barclays. Please go ahead.
Eric Morgan: Hi. We have our next question from Eric Morgan with Barclays.
Eric Morgan: Hey. Good morning. Thanks for taking my question. I guess just one for me. Could you give us an update on, know, conversations with customers heading into '26? I know that real-time volume picture sounds pretty sluggish, but I guess just curious if you're getting any early reads on, you know, potential green shoots or just broadly how your customers are positioning. Into next year? Thanks.
Frederick J. Holzgrefe: So I think right now, the way I would this, people are you know, they're incrementally maybe a little bit more confident, positive than they were at the beginning of the year. Right? So if you think through, we've kinda got a view of what the tariff landscape is. We've got a view of what tax policy is. We've got a view around interest rates. All that is incrementally positive. Right? I'm waiting to see it in the numbers. And I think that's we haven't seen that yet, but I think customers were kinda ticking off the uncertainties, which is good.
Now we just need the next step, I think, is for customers to have the confidence to say, now is the time to, you know, build my you know, launch the new product or build a new facility or whatever it might be. Ramp up production, that sort of thing.
Eric Morgan: Appreciate it.
Operator: The next question comes from Richa Harnain with Deutsche Bank. Please go ahead.
Richa Harnain: Thank you. So just a few quick clarification ones for me. First, the three to 400 bps of OR deterioration I know, Matt, you talked about how October being lower than you expect is contemplated in that outlook. But what are you assuming for November, December? Do we assume an in line seasonality? Type results for those months? Or do we assume that things continue to be sub you know, normal? And then Fritz, did you say when you were talking about margin expansion opportunity next year, I just want to clarify that was a year over year comment I. E, you can still maybe expand margins next year even if the environment remains lackluster.
And then lastly, contract renewals Can you remind us what those were in Q3? Thank you.
Matthew J. Batteh: Yeah. I'll start and then hand it back over to Fritz. So I'll hit the contractual renewals number one quickly. So 5.1%. For that piece. In terms of the margin progression, like you referenced October what we're seeing so far is contemplated. What we've got our thoughts around for November and December is that it gets back a little bit more towards seasonality. So if that's a different plus or minus. It could impact where we land from what we're projecting and thinking through right now. If there's a bounce back in November, could we do on the lower end of that? We certainly could.
But I think a lot remains to be seen in those holiday periods, but our assumption is that we're getting sort of back towards what normal seasonality would be, which are usually declines from October. Usually, what you'd see in October to November would be a decline in shipments, and then November to December would be another decline in shipments. So that's what we're forecasting now. But we'll see what we get from the October exit rate.
Frederick J. Holzgrefe: Yeah. And with respect to 2026, we haven't given you a number around but I think, you know, in a sort of steady state environment, I think we could be in a position where we could see some incremental improvement around OR and operating income.
Operator: The next question comes from Ari Rosa. I think that.
Frederick J. Holzgrefe: I'm sorry?
Operator: Pardon me. Go ahead.
Eric Morgan: Okay. Sorry. May get garbled there for a second. So I'm not sure what you missed, but I think could we have operating income and OR improvement next year versus 2026 versus 2025? Environment. So we haven't quoted a number around that yet, but I think there's an opportunity for us to drive you know, some performance in the next year. And which we're excited about. I think the maturity in the facilities that you know, have been open since '22 is gonna be a key catalyst for that. And then you know, I think that as we continue to develop that share of wallet with our customers, I think that'll be a continue to be a positive for us.
And that those will all be contributors for us next year. We are. Thank you.
Operator: The next question comes from Ari with.
Ariel Luis Rosa: Hey, good morning. So, Fritz, you mentioned the cargo claims ratio and, you know, with all due respect, it I'm aware it's a little bit higher than kind of the best in class player. How do you think about your service? Kind of in context and to what extent is that holding back some of the pricing opportunity or kind of the ability to realize better pricing.
Frederick J. Holzgrefe: So just to kinda level set a bit, so our cargo claims ratio is at gap number, so I'm not exactly sure how everybody else calculates it. Think the best thing that we can do to improve our cargo claims ratio is to get our pricing in line because with market, so that's a way to drive improved cargo claim ratio right away. I don't think that there is a situation where we lose business because of the cargo claims. I think that a customer looks holistically at doing business with us around everything from picking up on time, delivering on time, meeting the promises, being able to meet their expectations.
So there's not a singular limiter that says, I'm not gonna do business with you because you got a 0.54 cargo claims ratio. We haven't lost business with that. We've had opportunities around that. I think it's not a discernible difference from other numbers. I think where we win though, is that alongside of all the other things our team does for customers. And that's where we win. And then we continue to focus on driving pricing, and that obviously is in the denominator. So that would improve. Cargo claims ratio too.
Ariel Luis Rosa: Got it. That's helpful. And then I wanted to shift gears a little bit just on my. It sounds like potentially CapEx coming down a little bit I, you know, I gotta say, Fritz, I've heard you sound more confident, I think, this call in terms of the incremental opportunity from expanding the network and into 2026. And yet, the stock is obviously down quite a lot. And it sounds like maybe the free cash flow is going to be pretty robust over the next couple of years. How are you thinking about the opportunity maybe to initiate a buyback here or get a little bit aggressive in terms of driving shareholder returns for kind of long-term holders? Thanks.
Frederick J. Holzgrefe: So I'm excited about and have been incredibly excited the Saia opportunity, and this is entirely why we invested in our network is to generate value not only for our customers, but for the shareholders of Saia. We did it on an organic basis. We did it with the idea of creating long-term value for our customers and for the shareholders. I think that we are on the right on the cusp of really taking advantage of in a when we have an improving market, better macro backdrop, I wanna put the work 213 facilities and drive the incrementals out of that. Customers will see what service they get in a business that we know how to scale.
We've got a record history of being able to do that. And I think that gives us confidence. I'm confident because I watch every day to see what our team's doing for our customers. Seeing the performance there, seeing what response we're getting in a lackluster market. So I think about if there's a big market or a positive market, man, what the potential is, I've always known it's there. I'm just excited about it right now because I think that longer term, people need to understand that. Now we are also and always have been, stewards of the shareholders' capital. So the opportunity to drive value is gonna generate returns for Saia.
It'll give us investment opportunities to further expand this network because I think there are opportunities to do that. But at the same time, I think there's gonna be an opportunity, and I just don't know when to return capital to our shareholders. In any number of forms. But I think that those are things that are front and center for us. But the biggest thing, all that happens if we drive value out of the network we've just we've invested. In. And so as we look into next year, and frankly, the capital numbers even this year, you know, we see slow we see slow growth.
And as a steward of the shareholders' capital, we're slowing capital investment as it relates to that and making sure we're in a position the company to take advantage of the opportunities that'll inevitably be there for us.
Ariel Luis Rosa: Helpful. Thank you for the time, Fritz.
Operator: This concludes our question and answer session. I would like to turn the conference back over to Frederick J. Holzgrefe, Saia's President and Chief Executive Officer. Please go ahead.
Frederick J. Holzgrefe: Thank you everyone for taking the time to listen and learn about Saia's results. We're very pleased with the outcome of Q3. Q4 in the current environment continues to present challenges. But I think what's critically important is the underlying value that Saia is creating for customers ultimately is underlying value for our shareholders, and it's really about the story from here, how we drive incremental improvements in margins in the business that we've invested in over the last number of years. Companies built for the long term and long term is long term value creating for the shareholder. So thank you for your time.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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Source: "AOL Money"
Source: Money
Published: November 02, 2025 at 12:18AM on Source: VOXI MAG
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