Good day, everyone, and welcome to the Saia Incorporated Third Quarter 2015 Results Conference Call. Today's call is being recorded. At this time, I would like to turn the conference over to Doug Col. Please go ahead.

Thank you, Ann. Welcome to Saia's third quarter 2015 conference call. Hosting today's call are Rick O'Dell, Saia's President and Chief Executive Officer; and Fritz Holzgrefe, 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. Richard D. O'Dell - President, Chief Executive Officer & Director: Good morning and thank you for joining us. This morning, we released our third quarter results, and I'm disappointed that we were not able to build on the fourth quarter's record earnings that preceded this quarter. Although this was our 21 consecutive quarter of year-over-year LTL yield improvement, it was not enough to overcome the weak tonnage trends felt throughout the quarter. Our previously announced market-based wage increase was effective July 1 and provided a significant cost headwind into weakening freight trends and was normally a strong seasonal period. These factors along with higher costs related to self-insurance were largely responsible for our 27% year-over-year decline in operating income to $19.8 million. A few comparisons of the third quarter of this year's results compared to last year include; revenue decreased by 4.6% to $317 million as LTL tonnage fell 6.7%. LTL revenue per hundredweight increased by 2.2% despite the negative impact of lower…

We'll go first to Tom Albrecht from BB&T Bank. Thomas S. Albrecht - BB&T Capital Markets: Hey, guys. Sorry about that. It caught me off guard there. So, Rick, I wanted to kind of – let me ask a factual question first. PT miles, what percentage of your miles did PT represent and how did that compare a year ago? Richard D. O'Dell - President, Chief Executive Officer & Director: PT miles, total line haul miles were 10.7% compared to 14.7% last year. Thomas S. Albrecht - BB&T Capital Markets: Okay. All right. And then, I guess, Rick, when I look at salaries, wages, and benefits, the $177 million, obviously, you alluded to the fact that you're in a process of adjusting your workforce. That was up about $7 million sequentially. How quickly can you adjust? I mean, because you had given public updates on July and August tonnage. I'm guessing that September's tonnage was down close to 8%. How much of that SW&B is going to be fixed because you did raise driver pay and did the sign-on bonuses versus flexibility on the docks in that? Richard D. O'Dell - President, Chief Executive Officer & Director: I don't know if you're on trucking boards and what not, but – or you have someone who covers that type of stuff. But, we did... Thomas S. Albrecht - BB&T Capital Markets: I've looked at it, but not in the last week or so. Richard D. O'Dell - President, Chief Executive Officer & Director: Yeah. We actually did a reduction in force to kind of make some corrections from a volume standpoint of what we're seeing today and the reduced outlook. It's approximately 4% of our workforce. And it was done performance-based. Obviously, we value our employees and the quality drivers, but…

We'll go next to Brad Delco with Stephens.

Good morning, Rick. Good morning, Fritz. How are you doing? Richard D. O'Dell - President, Chief Executive Officer & Director: Good morning. Frederick J. Holzgrefe - Chief Financial Officer & VP-Finance: We're hanging in there.

Yeah. It was probably a bad question. I apologize. Frederick J. Holzgrefe - Chief Financial Officer & VP-Finance: No. No. It's okay.

You made a comment that many people probably will going to be pretty concerned about regarding the pricing environment as more competitive. Can you elaborate on that a little bit? It doesn't seem like margins in the industry are healthy enough for us to try to repeat what happened in 2009 or 2010, I just want to make sure that we have a very clear understanding of kind of what that comment implied. Richard D. O'Dell - President, Chief Executive Officer & Director: Yeah. I mean, first of all, I totally agree with kind of your return comment. I also think we're fighting some headwinds in our industry from a cost perspective and the driver market, I think, continues to be tight, so I think that's going to continue into the future. And I think it's very important that this granular pricing to make sure that customers and shipments are operating properly when your network remains the cornerstone. So, we're going to continue to stick and manage through that. I guess, I would just say, we've seen a couple of what you might call early signs of people cutting some rates with 3PLs for volumes, a couple of competitive bids that have come out with people pricing materially below where we would see things would work for us. A little concerning that everyone doesn't necessarily share that philosophy. I would tell you, for us, during the quarter, our contract renewals were up 6% for the quarter and that compares to up 7% last quarter. So, we've continued to have success kind of moving rates up in lanes and with the business that we need to. So, now, it's not – I don't think you've seen things kind of fall off, not really crazy things going on out there in the marketplace and I think there's a large pool of people that are being very rational, but there may be a little bit of a chink in the armor with a couple players.

Got you. That's good context. Richard D. O'Dell - President, Chief Executive Officer & Director: I don't understand because some of the players that you see that with – and they're still paying – you see and they're still hanging signs out in front of their terminal to pay signing bonuses. I mean, what kind of sense does that make?

That makes sense to me. And then, Rick, sort of my second question, a lot of people view sort of LTLs having a lot more fixed costs than some other transportation modes. Can you kind of give a view as to what you think in your cost structure is fixed versus variable, and maybe that will help, kind of continue on maybe Tom's line of questioning is to how quickly – if we do need to lower costs, how quickly we can do that and to what extent we could cut? Richard D. O'Dell - President, Chief Executive Officer & Director: Yeah. A lot of our terminal labor costs on an hourly perspective is variable, and we have to manage that from a production standpoint. We didn't do a very good job of that in the quarter. Quite frankly, we were a little reluctant. We were a little slow to react, and some of our margin deterioration is self-inflicted, but that and some of the self-insurance things from a safety perspective are kind of our near-term opportunity. We've targeted next year about $25 million worth of savings. Half of that probably is on the labor side. We also have a further cargo claim reduction, which I'm confident that our execution can continue to improve in that area with a couple of programs that we have. And then a portion of it is – a pretty big bucket is also on the maintenance side. And then we have kind of daily variable cost, and then over time, you have kind of semi-fixed cost, too. I mean, we've made some investments in employee relations, safety, some sales resources that you kind of have to reevaluate over a period of time if you're getting a return on those. We did – with our staff adjustments, we're in the 4% range and we did reduce some sales resources by about that same 4% kind of performance-based. But, our benchmarks show that we're still a little bit underrepresented in the marketplace. And over time, obviously, we're committed to our market share and selling our value proposition, so you don't want to be particularly short-sided with that either.

No. That makes sense. If I were to try to just put big numbers around that, would you say fixed and variable is 50/50 overall for the business model or you think it's 60/40? Any kind of way to put it in that terminology? Richard D. O'Dell - President, Chief Executive Officer & Director: About 50/50.

Okay. Richard D. O'Dell - President, Chief Executive Officer & Director: You do have some challenges, right? I mean, if you run a network and your bill count goes down, you can manage your load average in your big heavy-type lanes. But it's hard to make up when you lose three bills and – three and four bills in Savannah. You're still going to run those schedules, right, so I could adjust my variable labor cost around the terminal, but you're going to still incur some line haul cost. You get in a bigger terminal and it becomes a more variable. But, I mean, that's one of the challenges that you have in managing a network like this, right?

No. No. Exactly. I definitely understand that. Well, that's great color. I appreciate the time, Rick. Thanks very much. Richard D. O'Dell - President, Chief Executive Officer & Director: Okay.

We'll go next to Jason Seidl from Cowen & Company.

Thank you, operator. Hey, Rick. Hey, guys. Just sticking on the pricing theme, you were kind enough to give us your contractual pricing in the quarter given some of the, let's say, unreasonable pricing practices you described here recently by some of your competition, do you think that 6% is going to fall even further in the fourth quarter? Richard D. O'Dell - President, Chief Executive Officer & Director: Probably a little bit. I don't know. It'll be interesting. I mean our comps get tougher because if you remember in last year, we weren't very satisfied with our margins and we began to take a more aggressive pricing stance, and so we're overlapping some quarters that have some higher absolute numbers in them. But, I mean, October sequentially was a good step-up month for us. So from a base period, we're kind of off to a good start, better than any month I had in the last quarter. So, part of that is just a magnitude of contract renewals and then also the fourth quarter is the largest quarter that we have in contract renewals. They are a little bit heavier weighted to 4Q, so that could be some opportunity as well.

Has this price aggressiveness been sort of across the board or has it been focused more on 3PL freight? Richard D. O'Dell - President, Chief Executive Officer & Director: Yes, I just said there's been a couple of examples of when people go into 3PLs for volume, which to me that's kind of the first sign of kind of a crack in the armor so to speak, but it could also just be somebody's strategy too, right? I mean I don't – it could be an isolated incident.

How should we look at CapEx for next year? I know you guys don't have a number out there yet, but what should we be thinking about in the model? I'm assuming probably down somewhat from this year. Richard D. O'Dell - President, Chief Executive Officer & Director: Yeah. For next year pricing you're talking about? Frederick J. Holzgrefe - Chief Financial Officer & VP-Finance: The capital.

No. CapEx. Richard D. O'Dell - President, Chief Executive Officer & Director: Oh, capital? We see value in continuing to lower our fleet age and having some cost benefits for that. So, we'll probably make some investments in the same ballpark as this year. Frederick J. Holzgrefe - Chief Financial Officer & VP-Finance: Yeah. I mean, you get – the two primary returns out of the fleet investment are obviously maintenance cost and fuel – well, three actually, maintenance, fuel efficiency, and then safety, the latest, bring even more current safety equipment. So, I think there's a continued focus on those sorts of investments that give us a pretty quick return. Richard D. O'Dell - President, Chief Executive Officer & Director: And then, we just have to look at it over a period of time. I mean, it depends kind of what the outlook is. We have good cash flow, strong balance sheet, and we think we continue to make prudent investments. And then, if we need to make adjustments to our fleet size, we just take out the old stuff, which is the most costly and less efficient as well, right?

Well, that makes sense. I guess the last question I'll have, I was having a back and forth with a client this morning over sort of the state of the economy. And his contention was that we're probably in a recession just based on what the transports are seeing right now. I'd love your feel for what you believe the economy is doing right now. Richard D. O'Dell - President, Chief Executive Officer & Director: I mean, it feels like it's softened up, obviously, quite a bit over the last 60 to 90 days. I mean, to me it's a pretty big change in our outlook. And I think, once you kind of get the rest of the LTLs out there, we'll see kind of what their tonnage trends look like. And then, we'll have to figure out if it's a soft patch versus something a little more serious. And these guys talked about inventory build, you have some – maybe some of the West Coast port activity was the backlog and we got a little, probably a little benefit there. I mean, I don't know. It might be a little early to get a big read on it, but it does feel soft; I don't disagree with you.

Okay. Fantastic. Gentlemen, thank you for the time as always.

We'll go next to David Ross with Stifel. David G. Ross - Stifel, Nicolaus & Co., Inc.: Yes. Good morning, gentlemen. Richard D. O'Dell - President, Chief Executive Officer & Director: Good morning. Frederick J. Holzgrefe - Chief Financial Officer & VP-Finance: Good morning. David G. Ross - Stifel, Nicolaus & Co., Inc.: Rick, can you talk a little bit about dimensioners and how you're currently looking to roll those out in the network and what benefit they may bring? Richard D. O'Dell - President, Chief Executive Officer & Director: Yeah. I mean, we have pretty good coverage across our network. We run about – we have 27 of them. We run about 30% of our freight in a week through the network of dimensioners. We use those that are misclassified. There is a certain percentage of those. You can kind of adjust pricing on. And then to the extent you have FAKs or a range of pricing, you can adjust immediately on those. But you know what the dims are and you reflect it in your costing activities and your pricing over a period of time. We have a pretty sophisticated network setup where we periodically run customers through there. And if it's generating adjustments and whatnot, then we'll keep running that freight through there. And if the freight is properly classified and we're not having issue, we quit taking it over to the machine. So, it's a – obviously not only you have the tool, right, you kind of have the system and network build around it, and those are two key things that we do. David G. Ross - Stifel, Nicolaus & Co., Inc.: Is there any estimations to what the yield benefit may have been over the past year with increasing the use of the dimensioners,…

We'll go next to Art Hatfield with Raymond James. Art W. Hatfield - Raymond James & Associates, Inc.: Morning. Hey, thanks for taking my questions this morning. Hey, Rick, when you look at your tonnage, where it's gone, where it's kind of October, you talked about the softness in the economy and you also talked about a couple of examples of maybe some more aggressive pricing. Where would you characterize your tonnage downdraft from this standpoint? How much do you think of it is just the economy, one? And how much do you think it is your focus on maintaining price at current levels? Richard D. O'Dell - President, Chief Executive Officer & Director: I mean, you just have to – I'm going to have to get everybody else's numbers for the quarter and then I'll compare our tonnage trends to how they're doing, right? I mean, I think we have, on the UPS Freight, I believe, their numbers were up. Where were they, Fritz? Frederick J. Holzgrefe - Chief Financial Officer & VP-Finance: Tonnage were down 10%, I think. Richard D. O'Dell - President, Chief Executive Officer & Director: I mean, I think when everyone else comes out, then we'll have to see kind of, like I said, how much of it is – I mean, I think, we probably have a little more exposure to the oil patch than some of our competitors just because we don't have 48-state coverage. So, by definition, we got a strong share there in Texas, Oklahoma, Louisiana where the company kind of grew up. Comps are difficult because of last year's deal spillover. But, I mean, I would tell you the biggest frustration I have is last quarter I wasn't particularly pleased with the tonnage, but with the yield and the cost…

I don't think we're far along enough in the renewal process to say we're not seeing carriers willing or insurance carriers willing to come in and compete. But just given the size and the visibility of some major transportation related claims and awards last year, I'd just say insurance carriers are – if they're still playing in this market, they're very careful about who they underwrite. So it's competitive, but it's something we'll manage through as we get closer to our renewal. Art W. Hatfield - Raymond James & Associates, Inc.: Sure. So it sounds like it's not necessarily an issue for you, but it could be an issue for some smaller carriers if they have got poor experience? Richard D. O'Dell - President, Chief Executive Officer & Director: Yeah, potentially. I think that combination of poor experience and some very high profile accidents that probably have some huge numbers associated with it, right? Art W. Hatfield - Raymond James & Associates, Inc.: Yeah. Richard D. O'Dell - President, Chief Executive Officer & Director: Got to make you think. And, like you said, for us and I think carriers that have a robust safety program are investing in technology, have all the onboard devices and electronic logging and things that are going to come to market and become even more prevalent out there amongst the smaller carriers and you've got to think it's going to have some impact, right? Art W. Hatfield - Raymond James & Associates, Inc.: Right. No, I would think so. Hey, thanks for the time this morning, guys.

We'll go next to Alex Vecchio with Morgan Stanley. Alexander Vecchio - Morgan Stanley & Co. LLC: Hey there. Thanks for taking my questions. Rick, obviously, we have seen M&A pick up in the space over the last few months. And I kind of want to touch back on the pricing environment. And maybe can you kind of talk to the extent to which there might be some relationship between the behavior of some competitors, just given what's happened in the market and from an M&A perspective? Richard D. O'Dell - President, Chief Executive Officer & Director: Are you talking about XPO specifically? Or what – I don't know, what's your question there earlier (38:14)? Alexander Vecchio - Morgan Stanley & Co. LLC: My question is, are you seeing behavior change at carriers that are now owned by different companies? So, yes. Richard D. O'Dell - President, Chief Executive Officer & Director: No. I don't want to get into one sign of something I saw with a couple of people, and we don't normally name other carriers out there, but that wasn't the carrier that I was referring to. Alexander Vecchio - Morgan Stanley & Co. LLC: Okay. But there are numerous other folks out there that are engaging in a bit more aggressive pricing behavior? Richard D. O'Dell - President, Chief Executive Officer & Director: It's actually – I've only seen couple of other instances and we see it in RFQs and sometimes I don't know who won the business or if somebody tells me that if they're telling me the truth or not. So somebody, they may tell me – oh, they are trying to get me to match somebody's pricing and they may tell me it's FedEx that won the business. I don't necessarily really know if…

We'll go next to Scott Group with Wolfe Research.

Hey. Thanks. Good morning, guys. Richard D. O'Dell - President, Chief Executive Officer & Director: Good morning, Scott. Frederick J. Holzgrefe - Chief Financial Officer & VP-Finance: Good morning, Scott.

The 4% workforce reduction, when did that take effect and what percent of the salaries line does that impact? Richard D. O'Dell - President, Chief Executive Officer & Director: It took effect on Friday. So we'll get about two months of benefit for the quarter. And then when you say – it's our salaries, wages and benefits line that will be impacted. And over time, you'd see some impact in the fringe rate as well.

I'm guessing though it's not – doesn't impact the entire salaries line. I'm guessing there's some part of that that's more fixed or bonus-related or something. Richard D. O'Dell - President, Chief Executive Officer & Director: That's correct.

Or should we – so what's a good – like on that salaries line, what's a good percent to take that would come down 4%? Or I guess, if it's simpler for you, what's the ultimate cost savings from this 4% workforce reduction? Richard D. O'Dell - President, Chief Executive Officer & Director: Our first half, again, I don't even have a full week of productivity targets that we're achieving post that, right? So I'm giving you based on my historical experience with doing this and are working to manage better after we've gone through a process like this, it's probably around $1 million a month reduced expense run rate.

Okay. That's helpful. So on the pricing... Frederick J. Holzgrefe - Chief Financial Officer & VP-Finance: Scott, that wouldn't be in addition to what you described earlier.

Got you. Okay. Richard D. O'Dell - President, Chief Executive Officer & Director: And obviously, there's an overlap with that for our targeted savings for next year, right.

Got you. Okay. Okay. On the pricing, I don't know if there's enough history with the 3PLs, but is this how the pricing has started to fall in the past? Does it start with the 3PLs and then lead or is this an unusual kind of first chink in the armor? Richard D. O'Dell - President, Chief Executive Officer & Director: What I would say is I've seen that be a first chink in the armor thing and then sometimes it falls after that, but I've also seen sometimes you just have one player who says, I want to do this and maybe he didn't participate with this 3PL previously or he is not participating to the extent they choose to, and it's just a one-time action, right? So, the question is, is that a reaction or a thing where somebody else follows, somebody else follows, and next thing you know this segment of your business begins to deteriorate from a yield standpoint. I mean, I don't know I think it's – to me, when people ask me, what's the first sign? I mean, to me, it's sometimes that is a sign that you look at. But, I also see people are using various tactics with 3PLs. I mean, some people cut their rates with 3PLs from December to March 1 because it's a slow seasonal period and they want more business. I mean, I personally think it's a slow seasonal period for them. It's a slow seasonal period for me. I'd rather manage through it than reduce my yield. So, I've chosen not to do that. I also feel that people that resell blanket 3PL, if they want to resell my pricing, I'll give them that, but I'm not turning my pricing into transactional business every time there's a seasonal downturn. But other carriers have different philosophies or something they're trying to do during that time period. So, I don't control what other people do. We can only control our philosophy and our discipline.

Yeah. So, knowing what you know... Richard D. O'Dell - President, Chief Executive Officer & Director: Why exacerbate a low seasonal period. I mean, to me, it just doesn't make any sense to me, just except that's a low seasonal period and manage through it.

Yes, yes, yes. I hear you. Knowing what you know, how would you budget for LTL pricing next year, your LTL pricing? Richard D. O'Dell - President, Chief Executive Officer & Director: I mean, I think there'll be a step down from what we've been able to achieve in the prior year. So, we're trying to be conservative. We've taken our tonnage expectation. I think I talked to you guys about that where we kind of think our run rate would be if we got normal seasonality. And I still think with where we are and what we're seeing in the marketplace, I mean, we're targeting a 4% to 5% increase in contract renewals. And I think you're looking at, based on the general rate increases and the timing that's already been announced, I mean, we would target something in that range as well. Similar to what other people have done. Our practice is kind of to follow the market, so a lot of other people get out there in front and then we go along. We want to keep our tariffs in line with the market. So, as you're out there pricing, you know you're not out of whack from a discount percentage, right?

Do you still think 4% to 5% pricing is reasonable for next year? Richard D. O'Dell - President, Chief Executive Officer & Director: That's what I'm targeting.

Okay. And then just last question. So, maybe with the tonnage commentary, the pricing commentary, do you think we can see that margin improvement and earnings growth in the first half next year or do we realistically need to wait until third quarter and kind of lapping this kind of latest let down in tonnage? Richard D. O'Dell - President, Chief Executive Officer & Director: It's probably a little early to say.

All right. Thank you for the time, guys. Richard D. O'Dell - President, Chief Executive Officer & Director: I mean, I have some preliminary modeling that we've gone through and things, but I don't think I'm – I'm not sure I'm prepared to answer that right now.

Okay. That's fair. Richard D. O'Dell - President, Chief Executive Officer & Director: All right.

I know. Richard D. O'Dell - President, Chief Executive Officer & Director: Okay.

Yes. Richard D. O'Dell - President, Chief Executive Officer & Director: All right.

All right. Thank you, guys.

We'll go next to Willard Milby with BB&T Capital Markets. Thomas S. Albrecht - BB&T Capital Markets: Hey. It's Tom Albrecht. I accidentally knocked my own phone off, so I'm using Will's. A couple of things. I didn't see on your website, but did you end up doing in October GRI like a few of the players did? And then I had kind of a follow-up. Richard D. O'Dell - President, Chief Executive Officer & Director: No. We tend to follow the market from a general rate increase perspective, Tom. And while some people have gone early, you got some other players that went last year in January and they're doing that, we tend to kind of not come early to that party but just show up when everybody else gets there so to speak. So, you could probably assume in January timeline and something in line with what others have done to keep our tariff well-aligned. Thomas S. Albrecht - BB&T Capital Markets: Okay. And I think Scott kind of partly clarified this, but when you get at these points where the market is turning for better or worse, you kind of parse every word. You were talking earlier that relative to 2016 you thought that tonnage and pricing would be lower. I think what I heard is, on the pricing front, you meant rate increases would be smaller, not necessarily negative pricing, but that, on the tonnage front, maybe for awhile, it could still linger and be negative, at least to start 2016. Am I hearing you right on those two fronts? Richard D. O'Dell - President, Chief Executive Officer & Director: Correct. Yeah. I think I said if we have – if we kind of got normal seasonality as we've – from here, and I'm talking about October's run rate as you kind of overlap some weaker periods we've experienced last year, around a negative 2% tonnage would kind of be a normal thing from here. And obviously, we're seeking market share. We're opening another terminal in Chicago in the first quarter. I mean, I'm not just accepting a reduced tonnage outlook in the perpetuity or anything, but I think from a planning perspective and what you're going to achieve from a margin standpoint, I think it's prudent to plan for maybe a softer environment, some continued yield discipline on our part and get more aggressive on cost – from a cost management perspective. So, philosophically, that's what we're working on. Thomas S. Albrecht - BB&T Capital Markets: Okay. That was helpful. Thank you. Richard D. O'Dell - President, Chief Executive Officer & Director: All right. Well, thank you for your interest in Saia this morning. We look forward to providing you some additional update as we visit with you, guys. Thanks.

This does conclude today's conference. We thank you for participation.