Good day, and welcome to the Saia, Inc. Fourth Quarter 2011 Results Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Renée McKenzie. Please go ahead. Renée McKenzie: Thank you, Kevin. Welcome to Saia’s fourth quarter and 2011 conference call. Hosting today’s call are Rick O’Dell, Saia’s President and Chief Executive Officer; and Jim Darby, our Vice President of Finance and Chief Financial Officer. Before we begin, you should know that during this call, we may make some forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements and all other statements that might be made on this call that are not historical facts are subject to a number of risks and uncertainties, and actual results may differ materially. We refer you to our press release and our most recent SEC filings for more information on the exact risk factors that could cause actual results to differ. Now I would like to turn the call over to Rick O’Dell.

Well, good morning, and thank you for joining us to discuss Saia’s fourth quarter earnings. Saia’s results for the quarter show that we continue to build on the positive momentum we have seen throughout 2011. Our revenue was $253 million, up 13% and our operating income was $6.2 million. This growth in revenue and operating income reflects the successful efforts of our entire team, particularly in the areas of targeted marketing, improved pricing and progress with cost initiatives. Some highlights from the quarter compared to the fourth quarter of last year include earnings per share were $0.15 versus $0.04, operating ratio was 97.6% versus 99.2%, our LTL tonnage per work day increased 1.5%, LTL weight per shipment increased 2.8%, our LTL yield increased 11% due to favorable pricing actions and increased fuel surcharges. Meeting our service goal of 98% on time consistently, and improving our other key metrics published in our customer Service Indicator Index has allowed us to continue to advance pricing initiatives across our customer base. We again attain solid increases in our contract renewals during the quarter from customers who value size, service quality. And increased with the results attained by our inside sales department which was launched earlier this year. This group target small customers and despite being existence for only a year has shown significant growth with this small shipper segment, assisting in lane density in key lane and targeted markets. We’ll be expanding this group into 2012, due to the success we’ve had. Their focus as with the balance of our sales group remains on yield improvement customer retention and growth. As I mentioned previously, our emphasis on engineered initiatives is designed to enhance service and lower cost. We continue to upgrade our driver handheld units to improve our customer service and to provide…

Thanks, Rick, and good morning, everyone. As Rick mentioned, the fourth quarter 2011 earnings per share were $0.15, compared to $0.04 in the fourth quarter of 2010. For the quarter, revenues were $253 million with an operating income of $6.2 million, this compares to 2010 fourth quarter revenue of $224 million and reported operating income of $1.8 million. The LTL yield for the fourth quarter 2011 increased by 11%, and was favorably impacted by continued pricing actions and increased fuel surcharge. Yield showed steady improvement again in this quarter, as we continue to achieve price increases and target quarterly operating accounts. Fourth quarter results were again adversely impacted by higher cost from healthcare and maintenance. The requirements to cover more dependent, and the inflation and health service costs have continued to rise in healthcare costs. In addition to more miles driven in an older age of fleet, maintenance costs were impacted by more costly routine maintenance and higher parts cost. These factors increased maintenance expense by $1 million compared to the fourth quarter of 2010. Quarterly results were further unfavorably affected,, by claims expense which was $4.8 million higher than the fourth quarter of 2010, primarily due to higher accidents severity. While accident frequency was improved in the fourth quarter, a small number of accidents were severe. Workers compensation expense was $2.8 million higher than fourth quarter of 2010, which reflected increase in development of prior year cases and higher frequency of current year injuries. Depreciation and amortization were at $10.2 million during the quarter versus $8.7 million in the prior year quarter, as our new tractors continued to come into service. Our effective tax rate was 37% in the fourth quarter. For modeling purposes, we expect our 2012 effective tax rate to be approximately 38.5%. For the full year…

Thank you, Jim. I’m encouraged that we’ve made solid progress in 2011 by improving tonnage, enhancing yields and resulting profit and I believe the improvements in the execution over the last several quarters combined with recent technology investments have set the stage for additional progress going forward. We remain committed to our core strategy of improving yield, building density, enhancing customer satisfaction, and reducing cost for engineered processed improvements. Saia’s strategy provide the solid foundation for long-term profitable growth and increase shareholder and customer value. With these comments, we’re now ready to answer your questions. Operator?

[Operator Instructions] We can start first with Jason Seidl of Dahlman Rose.

A couple of quick things, Jim, I think you’ve made the comment that you saw your yields increased throughout the quarter. Can you guys break that out a little bit and then maybe talked about with pure pricing was and what your signing contracts out right now?

Yes. I mean we don’t give specifics like quarter-to-quarter, I mean there are some seasonality impacts, I’m sorry month-to-month. So I guess what we could tell you is the quarter pricing sequentially, excluding fuel surcharge was up in the 2% range from third quarter to fourth quarter, and then our contract renewals averaged again in about the 5% range. That’s been good retention on the general rate increase.

That’s very helpful. Rick, you mentioned the inside sales team, you said it’s a year old and you’re going to grow it, what percent of your sales force is inside sales right now?

That’s pretty small, I’d rather prefer not to kind of give specific numbers, but they managed about 4% of our revenue. And actually it’s probably only 2%, 2.5% of our sales force.

Okay. Is there a sort of an optimum number you think you want to get that to, in terms of percent of revenue?

I mean, I think it’s a very profitable segment. We’re making some good headway with it and we have to add some management resources and things but it’s a fairly low cost investment. So as long as it continues to show these type of results again it’s pretty, it’s new for us to try it. We’re growing it. We’re adding resources, and having them have access to our customer relationship management system which I think will make some enhancements going forward. So I think it could -- they could easily manage 8% to 10% of our revenue over time.

Okay. That’s helpful as well. Can I just look on in terms of modeling this out, I mean, you had a pretty severe accident rate in the quarter that drove up your claims to a pretty high level. Clearly, last year you guys actually probably had a slightly lower than normal claims rate. What should we really thinking about going forward, especially in model it out because your comps are going to be bit skewed in the fourth quarter all things being equal correct?

Right. Absolutely and you are absolutely right, fourth quarter 2010 the severity was very mild. So what I would tell you, Jason is that we’re probably about $3 million worse than an average quarter.

Yes. From an accident expense standpoint.

Right.

Plus there was the work comp factor as well.

So you’re looking then probably an unusual hit looks like about just under $0.12 a share in the quarter from that?

That would be about right compared to an average quarter.

Compared to an average year, okay.

That’s right.

So that sort of baseline all things being equal, what we should think of as a more valid year-over-year comp 4Q 2012?

Yes. That’s correct. And what Rick mentioned because I mentioned in the script about the work comp increase that you saw that’s up in salaries, wages and benefits line.

Okay. And last question I’ll turn it over to somebody else. Jim you mentioned the tax rate jumping to 38.5%, could you give us some reasons why and should we expect that going forward into '13 as well?

Well, the uncertainty and about the alternative fuel tax credit that we had the benefit of the last couple of years and it’s not in for next year. And that’s all the big part of it

We’ll go next to the side of Art Hatfield with Morgan Keegan.

Hey Jim, can you give us what the tonnage or shipments did throughout the quarter on a monthly basis?

Sure. I’ll be glad to do that. Our LTL tonnage for the quarter as we go month-by-month, October was up 2.0%, November was up 2.6% and December was down 0.2%. And then, so far month to-date in January, we’ve been blessed with very good weather so far. We are showing month to-date January LTL tonnage up 4.2% over a year ago.

Got it. And as I recall last year, you had -- everybody had weather problems in January and February is that correct?

That’s absolutely right. We had some really bad storms particularly, well in both months last year, but in January I know for certain.

Just a couple of other things, when we think about, well, let me first go to -- you did a really good job on the purchase transportation line and I don’t recall you really talking about that specifically. If you did, I apologize. But can you talk a little bit about what you’re able to do there in Q4?

Yes. I mean we are always looking for those opportunities to kind of re-optimize our network and internal on external mile. So I think, if you look at part of our initiatives through the year were to address certain accounts from a pricing perspective. And at times, that accentuates imbalance issues, as you go through those changes during the year, and so during that time period we covered those imbalances with purchase transportation, and at some point we had some of that was sub-optimal. And so if you look at that you go through and see well where can we more effectively, run round trip with our own people to stabilize or improve service and re-optimize cost. And so, we kind of went through that process, and it really began to show some good benefits in fourth quarter.

So that’s something that is really going to be an ongoing process?

Yes. I mean, so obviously it’s always an ongoing process. I just think, one of the things, that I think people don’t really recognize is as much pricing risk or business risk that you take when you’re trying to get material price increases, a lot of times you see, you may lose a big piece of business in one lane and gain some business somewhere else. And we run a network, so that creates issues for us temporarily from a staffing and equipment perspective. So sometimes all it’s clearly important to manage the yield and make sure you’re being compensated properly, sometimes the cost is actually more difficult to manage, during the time when you’re going through a business mix change like we saw over the last 18 months, and as we kind of have gone through some of those things that with the opportunity to kind of re-optimize with more change than what we’ve seen in the past.

And so some of those benefits are clearly as you continue to grow network density is helping in that regard?

Right. And I would comment both, it’s both network density and balance right. Making sure your properly pricing your imbalanced lane so somebody is paying for the entities.

Right, right, right. What was the employee count at the end of the year, and in conjunction with that kind of as you think about your employee base right now and think about your cost structure going forward? What’s your capability of incremental volume that you should be able to handle without having to make, obviously you make small changes here and there, but without having to really do kind of major increases to your employee count?

Art, I’ll tell you, we mentioned on our call in second quarter we had done some hiring in second quarter to make sure we could maintain good services, we went through summer vacation period. When we look third to fourth, our headcount is about the same, so it’s right around 7900, it’s up a little bit about 4.5% to 5% year-over-year, I believe, and I’ll let Rick comment on with the capacity question.

Yes. I guess first of all I would say our number one priority is quality from a service standpoint and making sure we have the resources in place to provide a consistent product to our customers. And I think if you look at coming out of the downturn, there were some places where we probably had too few employees, and as business came back a little bit, we worked too much over time, so there is an opportunity to re-optimize that. But I would say from a capacity standpoint, we should be able to handle, let’s just say, if you have 5% more business, we would expect some half of that to come back to us from our productivity standpoint, from a density benefit perspective, I mean that’s kind of an internal target that we would have.

Last question and then, I’ll turn it over to somebody else, but and I’m going to pre-qualify this by saying, I realize, I think everybody realizes, you don’t give guidance. But given some of the anomalies in Q4 particularly with the casualty and how that hit you and given the environment we are in with, one you had so far to-date strong volume quarter and pricing go on in the right direction, is that feasibly possible for you to have a flattish or quarter-to-quarter from Q4 to Q1?

I mean, I would say the seasonally weaker first quarter historically about 1 point worse than the fourth quarter. And so, I would think you’re right I mean with self-insurance expected to return to kind of more normal in line with our historical experience and pricing improving, we should do a little better than that.

And we’ll go next to the side of Scott Group with Wolfe Trahan.

So just to go back to the claims expense, is there anything from fourth quarter that carries over into first quarter or is there something that reverses in the first quarter, and then maybe if we keep up with having good weather, do you think it’s fair to think about claims being lower than the $7 million per quarter that you think is a good normal run rate?

I mean, I guess with the major self-insurance that we have of $2 million per accident, is unfortunately, subject to volatility. There is a kind of a normal variance around that average number, call it may be $1 million one way or the other, we would call that to be kind of normal but a significant variance like we had would we be unusual. And I guess, I think your risk goes up somewhat with weather having a serious accident, but lot of the statistics would actually show that a lot of times people are more safe driving perspective and sometimes when there is incremental weather because everybody on the roadway is a little more careful. But our specific incidents haven’t necessarily had to do with the seasonal weather from a safety and self-insurance perspective.

And as I think about 2012, as I just look at fourth quarter and back out the $3 million give or take of higher than normal claims, we get to an outline in fourth quarter ‘11 of about 96, an annual run rate somewhere between ‘06 and ‘07 profitability levels, is that a fair way to think about the margin or earnings power for the company this year?

We don’t give guidance, I guess, but what I would tell you is, I’m very encouraged about some of the things we are seeing in the marketplace, I think volumes are okay and pricing is still pretty good. And then we commented just on one item about the line haul efficiencies that we’re seeing, our labor costs and our execution is trending favorable, our on-time service is very good. There is an opportunity for us to improve cargo claims, which I think we have some internal quality initiatives going on and I think we’ll payoff there. So with respect to improved margins going forward, I’m pretty encouraged by the core execution, and the opportunities that we see they are both within the company, as well as the marketplace seems to be, well, it’s not outstanding and I think it’s pretty solid.

Okay. You just talked about a bunch of different expense things going on and you talked earlier about D&A and higher wages. But overall, how do you think about cost inflation in 2012, when you add all -- when you add it altogether?

You are right, I mean, we’ve talked about the wage increase we gave, which we expect to have about a $10 million annual increase. I would tell you that the healthcare costs, and I just mentioned it briefly, when I was going through fourth quarter effects. But I would tell you for the year 2011, healthcare cost was up about $7 million -- little over 14%, and I would think that we would continue to see a double-digit increase in healthcare cost as we go into 2012, so that’s another cost headwind we have to deal with. And then, depreciation, as we bring on more equipment, of course our depreciation will flowed up, you can see that the fourth quarter with that run rate of $10.2 million. I would expect as we brought on units during the quarter, and as we continued to bring them on in 2012, that’s going to go up to $11.5 or so million per quarter. So those are things that we’ll see for continued cost increases. So as Rick mentioned, it’s very important that we continue to raise prices to get back to the margins that we target.

And then just last thing, there is some talk about YRC National cutting out some of its next day services, and I just want to get your sense on and how you think you are positioned to capitalizing some of that volume?

Yes. This is -- I mean, obviously we’ve a strong position in overnight and second day market, that is about 80% of our revenue, so we have a strong position to compete against everyone who plays in that marketplace out there. It feels, we certainly feel good about our position and the opportunities there, as well as in other areas.

We’ll go next to the side of Thom Albrecht with BB&T.

I wanted to follow-up on the PT question a little bit more, because historically the fourth quarter has been lower as a percentage of revenues at least in recent years. I understand some of the network initiatives you have underway? I guess what I’m trying to understand is, would you expect it to be higher more in the first 2 or 3 quarters of the year, even if it’s lower on a year-over-year basis. In other words it was 7.2% of revenue, that just seems awful low, given some of the seasonal trends to think about earlier in the year?

Yes, I think probably the better way to model is it was an improvement over where we’ve -- over where we’ve been, and because obviously the seasonal peak happens in the second and third quarters, and that’s the same time when summer time comes in, you lose some drivers to vacation, et cetera. So you’re trying to manage through that combination of seasonal time period plus vacation periods.

So go ahead and model for the seasonal increases, but also keep in mind that through some of the density and balance initiatives, it may be as a run rate a little bit lower than it used to be as a percentage, is that what you’re saying Rick?

Yes.

Okay. And then, all right, so your CapEx is $80 million, do you anticipate borrowing to meet that or do you think your cash flows from operations would be able to fund that? And then do you have any scheduled debt due this year, I don’t think you do but I’m double checking?

Well, we’ve got current portion, I think a $22 million and the 2 scheduled payments on the notes, which should be at the end of June, at the end of December. And we would expect to fund most of the capital expenditures through or off from operations. I mean we’ll be in and out of the line based on timing when we bring on the CapEx, but we expect to fund the majority of it through cash draw from operations.

And then, is your maintenance CapEx about $40 million, that’s what you used to say during the downturn, I just want to make sure?

I would say that $40 to $45 million and obviously, we deferred CapEx through the downturn, and between last year and what we’ve scheduled for 2012, we’re catching up on some of that.

And then lastly, on the healthcare you mentioned it was up about $7 million year-over-year last year, would you end up at $59 million or?

No. About little over $57 million. For the full year of ‘11 and like I said, I would expect that to continue to go up at double-digit.

The fourth quarter mitigates a little bit from some of the severity we saw in the third quarter.

Right. Rick, I think there was a sense in the marketplace maybe October, November that pricing would definitely decelerate in 2012, but as we are almost into February now, it doesn’t seem like there has to be the line of thinking that whatever occurred with pricing last year, there is a very good chance that it could be very similar this year, would you agree or disagree with that?

I think there is still a good opportunity there, I think customers have a good understanding that our cost are going up and we have to be profitably compensated for the service that we provide, the industry margins are overall still clearly inadequate to justify reinvesting in the business and certainly investing in growth, so we all recognize, I think at our company that we need to be very disciplined with respect to our pricing and yield management perspective. I think working through yield management initiatives is clearly a process, you do it, it’s account-by-account, negotiation-by-negotiation and in some cases, that leverages the relationship and others that gets down to a lane perspective. And when you go through a correction with a customer, who is mispriced by may perhaps the significant degree, sometimes you have a large increase, sometimes you lose a business and maybe it moves to somebody else at a higher rate but not -- but the yields kind of migrate up and so, I guess from one perspective, those big increases, I would imagine like Saia other companies have worked through some of their worst operating accounts, but there is still a base of business that still obviously, it doesn’t operate well. I mean for companies operate a 97 we have some, we clear have some accounts that aren’t paying their fair share and still need an adjustment, and that new tractor cost $90,000, and new van cost $29,000. I mean there is no reason to reinvesting continuously investing a business that’s not generating the types of returns we need. So I guess I can tell you, I am committed in our customer base, while they don’t like it, I think they have a understanding of where they are and how their account is contributing or not and kind of what needs to happen over time period.

We’ll go next to side of David Ross with Stifel, Nicolaus.

First, I guess, just to kind of round out the PT discussion we’ve had. Looks very good that you’re optimizing your network again, because that’s certainly as a problem with all the churn you’re going on in the pricing actions that have been taken in the industry, but looks like that more of a control. Now if you kind of exclude network management that you’ve done, were PT costs on kind of a per mile basis, were they higher or were they even lower in the quarter year-over-year?

The actual PT costs were marvelous up, David, and it was up because the rates were up, plus the fuel surcharge was up.

Okay. So you still...

So we’ve met that.

Seeing pricing pressure from truckload side of things, but you did a better job managing the network, so it’s still ultimately lower?

Yes. We’re able to drive down more miles more than that, so we netted out favorably.

And then the increase in average weight per shipment, do you think that’s generally due to customers shipping more each time they ship with you, or is that a mix change taking on maybe long-haul customers and regional customers or for your shippers rather than smaller shippers?

Yes. I think part of our re-pricing initiative, sometimes the minimum shipments don’t operate well, and we focused on making sure that we are properly compensated for that. So that may have driven it, I don’t have much of it as the economy little bit as well, getting a little bit better. But we’ve kind of seen it, there is been a pretty steady increase for us over a period of time, and we’re actually seeing that carry into the first quarter.

And then, do you have length of haul in the fourth quarter this year in 2011 versus fourth quarter 2010?

Length of haul was fairly flattish fourth-over-fourth, I think it was down or less than 1%, it was 7.27% versus 7.34% a year ago. So it’s pretty flat with the year ago down slightly from parity with 7.32% parity.

And then, if you look at kind of the Saia map in the U.S. was pretty stronger than any 1 or 2 regions or cover the others or pretty weak in any specific regions?

The Southwest and the Midwest kind of continue to be the strongest for us, and then part of what we’re seeing, you wouldn't be surprised by I would assume is our field business is growing and our national account business is down. And that’s actually, obviously a reflection of our pricing initiatives and some of those national accounts not paying their way.

And have you seen any of those national accounts come back to you after leaving overpricing, saying, we do need your service or we’re not really getting a better price anywhere else?

Sure. Yes we have. And you see that to a period of time it goes somewhere else and then another people find out that it’s not working for them and then they address the pricing, and the business comes back at a margin that’s more acceptable.

It makes a lot of sense because even a 97 OR is not acceptable?

Correct.

All right. Now I guess last question, well, it’s not the last question. Are you seeing any undisciplined pricers still out there anywhere or is the pricing environment fairly rational now?

I guess we’ve had pretty good success both in, in going through bids, as well as some of our individual negotiation. So I think the market is still being, is still acting pretty rational overall. Obviously, you get pushback from customers, particularly if their business isn’t doing well or they took an increase last year, and we may have had to staged the increase in over 2 increases, because we didn’t feel like we could get it all at once. And so, when you come back for the second time for material increase, you get more pushback and people look more to evaluate their alternatives out there in the marketplace and take some transition risk maybe to other carriers or to a second or third tier carrier as well. So it’s just, it’s kind of going, okay, I guess and I guess, I’m fairy encouraged that the volumes are still okay, so we just can continue to work on yields and relationships that we have and the service that our customers expect.

And then on driver availability, have you had any issues on a reasonable basis or overall basis finding drivers?

Just a handful of markets are kind of tough and it’s kind of tightened up a little bit obviously, with CSA and the economy coming back. Again in LTL, we have a higher quality of lives in truckload. So that’s kind of a target for us as people kind of migrate from one lifestyle driving -- driver lifestyle to another. And then we’re also beefing up our dock to driver training programs to get it more stable, more robust and kind of focused on some of the areas that are higher costs more difficult markets from recreating perspective, and we would expect that to certainly assist over a period of time. And that’s something for us we’ve kind of -- we’ve done it before for a period of time, and then when thing get tough and you don’t need drivers, obviously we went through a period of time, we’re laying people often. So you don’t really need a dock to driver training program during those periods and something that we’ve really need to kind of commit to and keep it’s good for employees, and the safety records of the people we’ve trained are better than our external hires, and something that we think will help us clearly over a period of time on a couple of fronts.

We’ll go next to side of Tyler Brown with Raymond James.

Could you just breakdown the $80 million of CapEx between your row and stock IT, and if there is any real estate in there?

Small amount for real estate, it’s primarily replacement for tractors and we’re starting to replace the trailer fleet. I would say, we’re looking at tractors buying new in the range of about little less than 500.

Okay. 500 new, how many do you plan to retire 500 or will there be some growth?

I think most of this is replacement, Tyler, is what we’re looking at. It gives us the opportunity to flex and growth we need to but we are looking at business that’s mostly replacement. And then, about I would say right now its 700 trucks and this is the first trailers that we bought in a while.

Okay. Okay. That’s fair. Do you know where you guys ended the year average age of tractor and trailer? And then if you assuming you do all the replacement where those might shakeout by the end of ‘12?

We drove down the average age of the tractors to about 6.5 years, and because we bought so much last year. The trailers continue to age, because we didn’t buy any and they are running about 10.7 years, and so that’s why we’re getting back in to reinvesting in trailers next -- starting next year.

Okay. So a more normal age would be 6 say on tractors and more like 9 on trailers or so?

That’s about right.

And you will get to 6 on the tractors this year and we will be at 10 on the trailers, so it should be improved but. And the other issue you have got is, I think particularly on the trailer perspective, as we purchase some logistics post trailers and kind of refresh our tough fleet, there should be some low to average opportunities there as well. So we would expect to gain some efficiencies in our line haul network with that.

Yes. Of your pubs network or of your pubs how many of them do you have the logistic bars of decking?

About 70%.

Okay. That’s fair. And then kudos for your team because the service is really improved of late. I think the 98 on time is about the best you posted in the past decade. But I was just curious if you feel that the marketplace is really recognizing the service improvements, and does that really make your pricing conversations much easier when you can go in and show that kind of improvement?

It absolutely does and I think you are right, service at our company is never been better on a number of fronts not only on time, but our first time appointments, miss pickups are reduced dramatically. So we’ve really have focused on the quality perspective, and it’s something that we are committed to maintaining going forward, through bearing seasonal periods and cycles, and the customer certainly see that. And what happens more than anything else is, they use it against you to delay the increase that you’ve worked hard for, even if you go through a brief period of service volatility.

We’ll go next to the site of Jack Waldo with Stephens Inc.

I wanted to ask Jim, could you repeat what you saw D&A would look like for 2012?

We expected to ramp up. You can see that the fourth quarter was higher than what you -- than the other quarters for this year because we are bringing it on during on the quarter the new tractors and we’ve got pretty heavy CapEx for 2012 as well. So I would see that continue to ramp up to over $11 million, probably about $11.5 million and more for quarter.

Got you. And so you are saying on average it's about $11.5?

Right. And the ramp up as we go through the year because we are bringing on some new equipment now and then as we go through we should get some relief on our maintenance cost, which is been running high overtime.

Got you. And then on your, the employee wage issue, do you know how much it impacted your SWB line coming in December?

In December, I think it was about $800,000 or so. It was just in for one month of the quarter.

Okay. And then Rick, is the $10 million, it’s a little bit less than a point on the OR, right?

Right.

Okay. And then did you say on your comments on the expectations for the sequential change in OR, you’re saying, normally it’s down about 100 basis or the OR is about up about 100 basis points?

Right.

And you were saying that you thought it would be, or you can see reasons why it would be better than historical norms?

Correct.

Even if you include, roughly $2.5 million and a $2 million swing factor and employee expenses?

Yes.

We’ll go next to the follow-up from Jason Seidl with Dahlman Rose.

Hey, I am not one to follow-up, but I actually have a few things here. One, could you remind us in 1Q ‘11, where the weather was hitting you guys in most of what line items?

Well, it would have been really in reduced revenue. So we’re in the top line, because...

Top line?

We had several significant storms both in January and February. So I really think it’s the top line with the tonnage being a lot less.

So it wasn’t in like an op expenses or something like that?

Well, you kind of have both right, the top line is down and then you have some, when you crank backup, you have incremental expenses just to get going are not very effective during that time period, you get delayed pay for people that are out in the road and get shutting down.

Okay. And you mentioned you’re just over 4% here in January, you attributed lot of that to weather. How does the economy feel if we just exclude the weather impact?

I think it’s okay, may be volumes are okay, and we continue to work on the yield opportunities, I don’t think its robust or anything to get it really excited about, but I don’t think there is -- there are not alarms going off or anything either, I think it’s okay.

And last question obviously it’s going to take some time that probably get yourselves back to a yield number that is more, that sort of gives you a more acceptable return to reinvest in the business. But is the 5% renewals sort of where you want to be at going forward?

Well, I mean obviously we’d like to get more, but I mean one of the issues that we had I think certainly as a company and probably as an industry analysis, we all run networks right and so, we need a certain amount of business and tonnage to cover kind of the fixed cost of running our network and some the lanes in the high service expectations that our customers have. So we have to balance the. hey let’s fix everything now against what’s the riskier volumes that you would have because at some point in time there is only a certain amount of cost management and cost cutting that we could take out. So I think that, if we can see the types of favorable cost trends that we have, as well as getting that type of an increase, I mean there is a material enhancement to our margins that we can get corrected. So we’d always like to see more, and I think the one thing that would be more encouraging I guess than anything is if you see some more tonnage, I mean obviously that impacts our profitability, et cetera, but it also encourages you to take more price risk for the people that aren't compensating you probably for your value proposition. So it’s an increase in tonnage regardless as something that could cause that yield objective to change as well.

And we’re going forward as we see more tightness in the truckload sector and ship is get a little bit nervous about capacity. We’ve seen a little bit of a modal shift to rails especially in the domestic front. Could there be any spill over benefit on the LTL side of the larger shipments?

That’s we’ve always seen that historically right, once capacity gets ideal people will breakup shipment or ship truckload carrier who has taken series of truckload drop-off type shipments. He won’t take those because he’s got better utilization by getting a full load, and so those tend to migrate back over to LTL. So I mean obviously LTL tightens, that means favorable for us as well.

We have another follow-up this one from Scott Group with Wolfe Trahan.

Hey guys just real quick, do you have a sense on the yield for so far in January?

It really hasn’t been any different in the then what we saw out in the fourth quarter in the 5% range.

That’s net of fuel and gross if you’re kind of up that double-digit level?

Yes.

I’m showing no further questions at this time. I’ll turn the call back to our presenters.

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