Saia - Q1 2015
April 29, 2015
Transcript
Operator (participant)
Good day, and welcome to the Saia Incorporated First Quarter 2015 Results Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Doug Col. Please go ahead, sir.
Doug Col (Head of Investor Relations)
Thank you. Good morning. Welcome to Saia’s First Quarter 2015 Earnings Conference Call. Hosting today’s call are Rick O’Dell, Saia’s President and Chief Executive Officer, and Fritz Holzgrefe, our Vice President, Finance, and Chief Financial Officer. Before we begin, you should know that during the call, we may make certain 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. I would now like to turn the call over to Rick O’Dell.
Rick O'Dell (President and CEO)
Well, good morning, and thank you for joining us to discuss Saia's results. I'm pleased to report record first quarter earnings for Saia. Positive pricing actions and strong execution by the entire Saia team enabled us to achieve solid results, despite what I would categorize as a seasonally sluggish freight trends. Our continued success in network optimization positioned us to handle the seasonal service challenges created by adverse weather, enabling our team to deliver 98% on-time service. Our first quarter financial results reflect our 19th consecutive quarter of year-over-year yield improvement. A few highlights from this year's first quarter results compared to the first quarter of last year are: Our LTL yield rose 4.6%, despite significantly lower contribution from fuel surcharge. Our operating income was $21.2 million, compared to $15.2 million.
Our operating ratio improved by 210 basis points to 92.8. Diluted earnings per share of $0.49, compared to $0.34 last year. I was pleased to see company performance improve and to achieve a record best first quarter operating ratio. We executed particularly well in the pricing, network optimization, safety, and claim prevention areas, which contributed to materially to the results and should set the stage for solid performance for the remainder of this year. Now I'd like to have Fritz Holzgrefe review our first quarter results in more detail.
Fritz Holzgrefe (VP of Finance and CFO)
Thanks, Rick, and good morning, everyone. As Rick mentioned, the first quarter 2015 earnings per share were a record $0.49. Total revenue of $293 million compares to $300 million in the first quarter last year. Operating income of $21.2 million compares favorably with operating income of $15.2 million in last year's first quarter. Both periods included 63 workdays. As Rick mentioned, first quarter LTL yield rose 4.6%, reflecting the positive impact of our continued pricing actions, offset by markedly lower fuel surcharge contribution. I'd like to mention a few key expense items and how they impacted first quarter results.
Salaries, wages, and benefits rose 5% to $158 million in the first quarter, reflecting salary increases and investments we have made to support safety, claims prevention, employee relations, and field sales resources. Costs were also impacted year-over-year by a general wage increase last July, which averaged 3% across our employee base. Purchased Transportation expense in the first quarter dropped by $4.3 million compared to last year, or 6.1% of revenue versus 7.3% last year. This comparison was aided by network improvements, lower volumes, and a slightly less capacity-constrained environment than in the first quarter a year ago. Purchased Transportation miles as a percentage of our total line haul miles declined for the third quarter in a row.
Depreciation and amortization of $15.2 million compares to $13.8 million in the prior year quarter due to continued investments in tractors and trailers, resulting in a newer fleet. Fuel efficiency improved by 0.5% to 6.43 miles per gallon in the quarter. Claims and insurance expense was $4.8 million in the quarter, compared to $9.5 million in the first quarter last year, a quarter which saw unusual accident severity. Our effective tax rate was 37.8% for the first quarter of 2015, and we believe that is a reasonable run rate to use for the remainder of the year. At March 31, 2015, total debt was $107.6 million. Net debt to total capital was 22.1%.
This compares to total debt of $79.7 million and net debt to total capital of 20% at the end of the first quarter of 2014. The year-over-year increase in debt is primarily related to our acquisition of LinkEx in February for a purchase price of approximately $25 million, subject to achieving profit targets. Net capital expenditures in the first quarter were $33.2 million, including equipment acquired with capital leases. This compares to $8.2 million of net capital expenditures in the first quarter of 2014. Full year 2015 net capital expenditures are forecast to be approximately $125 million, as we continue to refresh our revenue equipment and have multiple real estate projects underway. Now I'd like to turn the call back to Rick.
Rick O'Dell (President and CEO)
Thank you, Fritz. Given the many dynamics currently shaping the volume and pricing model in our business, I'd like to take a couple of minutes to put some context around our first quarter results. Our LTL tonnage was down 6.6% versus last year, and this was comprised of a 2.8% decline in shipments and a 3.9% drop in weight per LTL shipment. We believe the decline in shipment count is primarily due to our ongoing pricing actions because it took place essentially all within our national account and 3PL business. While lower volumes may result from these actions, a more profitable freight mix is our goal, and we believe our first quarter results validate that this strategy is working.
The lower year-over-year weight per shipment is largely due to the spike in weight per shipment in the first half of last year, that was fueled by the tight capacity in the truckload market, causing higher tonnage shipments to spill over to our LTL carriers. The sequential drop from the fourth quarter weight per shipment to first quarter weight per shipment was approximately 1% and appears normal to us. Coming out of the first quarter, the demand trends in April have improved sequentially. We believe the LTL landscape remains conducive to continuing our strategy of pricing for improved profitability on an account by account, lane by lane basis. This pricing opportunity, combined with investment in sales and marketing resources, quality, and a network optimization, provides continued optimism for Saia's prospects for the remainder of this year and beyond.
With these comments, we're now ready to answer your questions. Operator?
Operator (participant)
Thank you. If you'd like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question, and we'll pause for just a moment to allow everyone an opportunity to signal for questions. And we'll take our first question from David Ross with Stifel.
David Ross (Managing Director of Transportation Research)
Yes, good morning, gentlemen.
Rick O'Dell (President and CEO)
Morning, David.
David Ross (Managing Director of Transportation Research)
Rick, could you talk a little bit about, I guess, how the year-over-year tonnage or shipment trends, you know, progressed through the quarter into April? You mentioned the demand trends in April improved sequentially, yeah, but if you can provide any color around that, that'd be great.
Rick O'Dell (President and CEO)
Sure. Fritz?
Fritz Holzgrefe (VP of Finance and CFO)
Yeah, so if you take the first quarter tonnage and disaggregate it by month, you would look at January, year-over-year, -3.6%. February, a difficult month, -9.3%. March, -7.4% versus the last year. These are the tonnage numbers. Now, what's, I think, important to highlight, in light of the mix and the truckload spillover issues that Rick described, we also need to look at the shipments number that kind of go along with that. So January shipments were down -0.6% versus last year. February was -4.4% versus last year. March was down -3.8% versus last year. Those last three numbers, shipments, year counts, year-over-year.
Rick O'Dell (President and CEO)
Yeah, and then into April.
Fritz Holzgrefe (VP of Finance and CFO)
Yeah, into April, you would see tonnage into April down 5.2 versus last year, and then shipments down 2.3.
David Ross (Managing Director of Transportation Research)
That's very helpful. And then, you know, balancing that with the yield side, yeah, Rick, can you comment a little bit on the overall pricing environment and, you know, when contracts are coming up for renewal, what you're generally seeing? You know, is it kind of in that 3%-4% range still, a little bit better than that?
Rick O'Dell (President and CEO)
No. Our pricing, our contract renewals during the quarter were again, in excess of 5%. They actually are- were about 5.6% for the quarter. Our GRI retention has been good, and our theoretical yield model, which shows true yield adjusted for length of haul, weight per shipment, and fuel surcharge, improved about 7%.
David Ross (Managing Director of Transportation Research)
Excellent. Thank you very much.
Operator (participant)
We'll take our next question from Art Hatfield with Raymond James.
Art Hatfield (Senior Equity Analyst)
Hey, morning, everybody. Rick, when do you start to lap the effect of the heavier weight truckload shipments in your business from last year?
Rick O'Dell (President and CEO)
3Q. I mean, basically kind of that truckload spillover thing. I mean, it was more normalized from a capacity and availability standpoint in 3Q. I mean, 1Q in the beginning of 2Q, you know, with the rail disruptions, at some point, you couldn't even get trucks, even if you're willing to pay a ridiculous price for them, right? So people would break shipments up and give them to us. And, you know, if I look at year-over-year, our shipment count, the shipments under 1,000 pounds, and remember, our LTL shipment average weight is about 1,100 pounds.
The shipments under 1,000 pounds were flat year-over-year, and all the shipment count declines were in shipments, you know, in the 2,000-10,000 pounds, which, obviously, that's what impacted the tonnage so much.
Art Hatfield (Senior Equity Analyst)
That's very helpful. And then on the, your pricing actions, you know, I, I know that you want to remain disciplined on price, but how much of your... I guess, is it fair to think about how much of your book you've been through so that most of those, at least in the near-term pricing actions, are behind you? And also, how do you balance that with getting yourself to the point where maybe you start to price yourself out of the market, relative to you know, relative to where a reasonable price should be?
Rick O'Dell (President and CEO)
All right. Well, first of all, all of my analysis and competitive data shows we're too cheap, so we're already charging below the market, so we have room to move up, you know, just in the segment and our value proposition with where we're operating. So, you know, we see that opportunity as being very meaningful. You know, it may be a multi-year effort to kind of change your revenue mix and get customers that appropriately value the service and quality that we're providing, and we're kind of willing to work through that time balancing, you know, tonnage and shipment count and how we're operating, you know, during that time period. But, you know, the opportunity based on our analysis is so significant.
that I think we're gonna continue to work through that, and it's probably a multi-year opportunity that should really drive a material improvement in our operating ratio, okay? Now, that being said, I wanna just comment on this. At Saia, our field shipments were really down about 1%, okay? And our field shipments, if you took out the softness in the oil patch, our field business would actually be up. And so National Account and 3PL shipments, which collectively represent about 50% of our business, were down 7%, and these are the accounts that we're addressing with pricing actions. So just as an example, we took increases on all our blanket 3PL business on January 1st, and that was the third increase in 12 months on this segment.
So, you know, it's not surprising to me that this business is down. And I would also comment that that blanket 3PL business never has operated better than it did during the first quarter of this year. So it's just something that needed to be done, and once we work through this and get our business, you know, at a price that's reasonable, then, you know, you're gonna see, you know, you'll see the shipment count and tonnage grow, 'cause we believe in our value proposition in the marketplace. It's just something we needed to do.
Art Hatfield (Senior Equity Analyst)
Are you doing this incrementally, or do you go to customers, as an example, if you believe you're underpriced? I'm just throwing numbers out, 15%. Are you trying to get a portion of that in one moment in time, or do you try and get all of that, or is it really incident dependent on those conversations with individual customers?
Rick O'Dell (President and CEO)
Well, you try to get it, you try to get it all fixed, corrected at once, and then you decide what your tolerance is.
Art Hatfield (Senior Equity Analyst)
Okay.
Rick O'Dell (President and CEO)
That's kind of the way it works. I mean, and sometimes, you know, depending on how we're operating and what lanes the business are in, you know, we're willing to stand the customer up and let them make their, make their decision if they, if we decide to retain the business or not. And other times, you know, we'll take a phased approach and say, well, we got, you know, 60% of what we needed, so we'll continue to haul it at that rate, and we'll move on and, and see you in a year, and we'll go work on a bigger opportunity. So there, there's a balance as you work through that. But generally, what happens, Art, is, you know, we're, we're not generally putting the whole account at risk. We're putting segments that don't operate well. And, you know, it, it... You just see that it works.
I mean, if you don't want to handle business. If the overall account operates well, it still doesn't mean I wanna handle business from, you know, Chicago to Florida in a deadhead haul lane at an operating loss. It just doesn't make sense. So we've made the decision to work through this, to have another aggressive pass through this business mix opportunity, and, you know, it works.
Art Hatfield (Senior Equity Analyst)
Got it. I'll stop there. I'll let other people have at it. Thanks for the time, Rick.
Rick O'Dell (President and CEO)
Great. Thanks.
Operator (participant)
We'll take our next question from Jason Seidel with Cowen and Company.
Jason Seidl (Managing Director)
Hey, thank you. Hey, Rick. Hey, guys, how's everything?
Rick O'Dell (President and CEO)
Good.
Jason Seidl (Managing Director)
Rick, just to clarify, you said the 3PL increase January 1st was your third increase in the last, did you say six months or last year?
Rick O'Dell (President and CEO)
Twelve months.
Jason Seidl (Managing Director)
Last 12 months, okay. And what was the size of that rate increase overall compared to the other increases that you took? Were they all similar, or was this one outsized?
Rick O'Dell (President and CEO)
No, we took a little bit smaller increase, but I, I think what one of the things, you, you got people that are going to these blanket 3PLs, and they're pricing for seasonal business. So, so, you know, January, February and December are weak, so you got people that actually lower their price for three months. You know, here, the other people are lowering their price, and we went to them with a price increase, so it probably had a bigger near-term impact during the first quarter than, you know, than what would have normally happened. And then what happens is, in March, some of these people that do seasonal pricing, they'll raise their prices again, and, you know, then the shipments just get redistributed again. So, you know, we've seen in March and April, this 3PL segment has had a pretty material bounce back.
Jason Seidl (Managing Director)
Okay. Well, that's good to know. And at least for now, do you feel that the rates that you're giving the 3PLs are compensatory enough for Saia?
Rick O'Dell (President and CEO)
Yes. Yeah, I mean-
Jason Seidl (Managing Director)
Okay.
Rick O'Dell (President and CEO)
There's always some opportunities to look at some lanes and make some adjustments based on the business that you're getting, if it's not operating right.
Jason Seidl (Managing Director)
Right. Right. Of course.
Rick O'Dell (President and CEO)
And that's but we're more looking at tweaks at this point because the overall account for most of my 3PLs, the overall accounts are now kind of operating in the low to mid-nineties. You know, it's not great, but considering the company operated at 92.8 in the first quarter, it's not nothing wrong with that, right?
Jason Seidl (Managing Director)
No, no, nothing wrong with it. And your national account business, what, what type of price increases did, did you hit them with? I mean, you talked about the average one that you guys got, but presumably, they probably got a little bit more than they're used to, which is why you probably lost a little bit of that business.
Rick O'Dell (President and CEO)
No, most of those renewals during the quarter, that five, six, that's, that's pretty much national account pricing.
Jason Seidl (Managing Director)
That's pretty much... Okay.
Rick O'Dell (President and CEO)
Some smaller increases on the 3PL business that would have brought the average down. So it's mid, it's mid-single digit. Again, generally, what you're doing is you're taking a, whatever, a 4% across the board or whatever the number would be, and then you're, that you kind of need to do to get the base business, and then you're adjusting particular lanes and locations that operate poorly for sometimes materially larger increases.
Jason Seidl (Managing Director)
Okay. Just shifting to the economy really quickly, because I think that's most investors' concerns with, you know, a lot of the trucking names, especially on the LTL, being a little bit more outsized, exposed to the industrial economy. Could you talk a little bit about your weight per shipment in just your sort of LTL business, if you're looking at that? Do you have any concerns that it did dip down a little bit, you know, even excluding some of that heavy haul business, or do you think that the underlying economy out there feels pretty decent?
Rick O'Dell (President and CEO)
... Yeah, no, I think it feels decent. You got to remember, the oil patch is down a little bit, and those tend to be heavier weighted shipments. You know, we've done some pretty material repricing amongst some of our hazmat customers, which tend to be, you know, chemicals, heavy totes, and things like that, to try to get those priced properly, and I think that's had some impact. I mean, overall, you know, I don't think the economy is great, but it doesn't seem like it's- doesn't seem like it's bad. And, you know, we-- if you look at it and say, hey, we're growing field business and all of our negative shipment counts are happened in national account and 3PL, and that tells you something, right?
Jason Seidl (Managing Director)
Right, right, right.
Rick O'Dell (President and CEO)
More than anything.
Jason Seidl (Managing Director)
Okay, well, listen, I'll, I'll let somebody else have at it, and I appreciate the time, as always, guys.
Operator (participant)
And we'll take our next question from Scott Group with Wolfe Research.
Scott Group (Managing Director)
Hey, thanks. Good morning.
Rick O'Dell (President and CEO)
Morning, Scott.
Scott Group (Managing Director)
Rick, I know you don't always give this to us, but can you maybe share what the revenue per hundred weight and what the renewals are doing in April, or maybe if you have that by month, it'd be helpful.
Rick O'Dell (President and CEO)
I would just tell you this, absent of volatility and fuel surcharge, our yield sequentially has gone up every month, including into April.
Scott Group (Managing Director)
Are you saying on a year-over-year basis, the increase has accelerated, or you're saying that just sequentially from January to February, the absolute number just has gone up?
Rick O'Dell (President and CEO)
The absolute number has gone up in a similar range as the progress that we've been making.
Scott Group (Managing Director)
Okay.
Rick O'Dell (President and CEO)
Right. I mean, part of it is, you know, one month you might have a big contract that renews, that didn't need much of an increase. So, you know, I think getting into one, one particular, you know, one particular month, but I think, you know, on average, we continue to see progress on the yield side. And, you know, what we're seeing with customers and contract renewals, you know, is, is to me, seems conducive for the that to continue. The only kind of maybe challenging area, right, is some of the oil field business, some of that segment. Those guys are particularly, concerned about price increases, but most of that business operates pretty well for us, so it's not like we had to go to them for a big corrective action.
Scott Group (Managing Director)
Right. So I mean-
Rick O'Dell (President and CEO)
Right.
Scott Group (Managing Director)
I guess you think that the pricing is sustainable, because, right, history says that when tonnage turns negative for LTLs, that it's tough to keep pricing. Are you seeing any change in pricing strategies from any of the other LTLs? And are you in any way contemplating changing the way you think about pricing at all, or is the answer a firm no?
Rick O'Dell (President and CEO)
I mean, I think the environment is still conducive. I mean, you still have driver challenges. You've got, you know, a pretty material wage inflation, you know, in the current driver market. I think you got all of us aren't operating, or most of us, except one, aren't operating where we'd like to be operating. And so, you know, I think that everyone kind of has to continue to push on the rates. And it'll be interesting to see, you know, when the other LTLs announce whether, you know, our, you know, our tonnage trends or shipment count trends are probably more influenced by pricing than not. You know, we'll see that. I know, you know, FedEx announced, and FedEx Freight, I mean, their tonnage was up, and their shipment count was up in LTL.
You know, they're the biggest player out there in the marketplace. So, I mean, we'll just have to see when everybody else announces what the trends are, but I'm not dissatisfied with the current volumes. You know, our we had a very difficult February from a weather and an OR standpoint. In spite of that, we had a good quarter. March was particularly strong, and, you know, I feel good about kind of where we're headed into the next quarter.
Scott Group (Managing Director)
Okay, that's helpful. And just last thing, just to that last point, about the next quarter. You typically share with us, with us some thoughts about sequential operating ratio. It's typically 2% - 3% points better, second quarter versus first quarter, if you had some thoughts on that.
Rick O'Dell (President and CEO)
Yeah, I think that's reasonable. You know, you got one thing is, the general rate increase last year, for instance, was in 2Q, and this year it accelerated, so you don't have that. But given our positive pricing on contract renewals and kind of our current outlook, I think the midpoint of that 2%-3% range is probably reasonable.
Scott Group (Managing Director)
Okay, great. Thank you.
Operator (participant)
We'll take our next question from Bill Greene with Morgan Stanley.
Bill Greene (Managing Director)
Yeah. Hi there, good morning. Hey, Rick, I want to ask your thoughts on costs. So obviously, Q2 was good, as was the claims. How sustainable are the improvements that you're seeing on the cost side, particularly in those two categories?
Rick O'Dell (President and CEO)
Yeah, no, we believe it's very sustainable, and we've reoptimized our network. And, you know, the pricing actions that we're doing sometimes, you know, causes lanes to get rebalanced where you're handling unprofitable business in a deadhead haul lane, and that tends to work, too. So, you know, the combination of operational execution and improvement on some of the self-insurance thing, I think is sustainable. You know, we had a very good quarter from a safety standpoint after a bad first half of last year. In January, we trained every driver in the company in our Smith System training.
You know, normally we did that on an anniversary date, so that would have been the cost of that, and the training time would have been spread out across the quarters. So, you know, we spent about $1 million in safety training in January, and that would have normally been $250,000. So, you know, there's about $700,000 of incremental cost there. I think it contributed to us kind of getting off to a good start for the year from a safety standpoint. And then we've also added regional safety resources, additional terminal management over the last year or so, regional HR resources, regional claim prevention resources to kind of further our goals in safety claims as well as employee relations.
You know, these resource additions, they're supported by engineered programs and execution practices, and, you know, it's working. We're seeing, you know, we had a decent cargo claims ratio in the first quarter of, like, 0.89, and, we're seeing improved trends there as well, which, you know, helps our value proposition in the marketplace. You know, we've targeted to try to get that cargo claims ratio by the end of this year to the 0.5 range. You know, that's a, that's a big, big improvement for our customer, and we are spending some additional resources and, and money, you know, on, in wages and salaries, but it's, it's paying. We know it'll pay big dividends.
Bill Greene (Managing Director)
Yeah. Well, and so when we think about the overall cost structure, right, as you can tell from all the questions here, there's a lot of nervousness about the broader transport environment. Obviously, trucking has been showing some slowing, and then, of course, all this focus on your tonnage. So when you think about your cost structure, if we end up that the back half of the year is much weaker than we think, for whatever reason, due to the macro, then how much of your cost structure can you get at? How variable is it, do you think? How do you think about that?
Rick O'Dell (President and CEO)
Well, I think we demonstrated pretty well this quarter what our abilities are on negative tonnage and shipments, and, you know, that, that PT is pretty fluid for us to be able to take out purchase transportation and reoptimize our costs. You know, we have, you know, very effective productivity targets at terminals and can manage based on where we're growing and take costs out in areas where, you know, volumes are down. I mean, today, you know, we're seeing growth in Southern California out of the ports, and South Texas is really weak, and, you know, we're making adjustments in our... the hours we're working in those markets, and we- the operating ratio in both. If I look at my West Coast region and my Texas region, the operating ratio in both regions are improving.
So, you know, we're demonstrating that we can adjust our costs in conjunction with, you know, some changes in the market, and that we can effectively take price risk where, you know, where something's not working, and then we can adjust our costs there.
Bill Greene (Managing Director)
Yeah. Okay. All right. I appreciate the time. Thank you.
Operator (participant)
As a reminder, again, if you'd like to ask a question, please signal by pressing star one. Again, that is star one if you'd like to ask a question. We'll go next to Willard Milby with BB&T Capital Markets.
Tom Albrecht (Managing Director)
Hey, guys, it's actually Tom Albrecht. I was having phone problems, so Will transferred me in. So I want to explore a couple of these expenses again. So on the insurance, I know you had the big quarters in Q1 and Q2 of last year, but I kind of look at $7 million a quarter as a more normal level. I know you've talked about all these improvements in that. It seems hard to believe that $4.8 million-$5 million would be kind of the new run rate. So could you just talk about that a little bit more?
Rick O'Dell (President and CEO)
Yeah, I think I looked at a five-year average, right? And it's down, it's 200,000 less than your number. So, I mean, I think the pure delta, you know, against our historical average is 19. You know, I think with the investments that we're making and the technology that we have, over time, you know, we'll have less poor quarters, right? And maybe our best quarters will be a little better. This was a record good, strong first quarter for us from a self-insurance perspective. So, you know, it was pleased to be able to accomplish that. But, you know, we know we could potentially see some volatility around that over time.
You know, I do think that cargo claims ratio is going to come down, but that's not the biggest part of that expense in that line either.
Tom Albrecht (Managing Director)
Sure. And was part of the lower I&C because you've had favorable closure to a lot of open claims, and you might have been over-reserved?
Rick O'Dell (President and CEO)
No.
Tom Albrecht (Managing Director)
Okay.
Rick O'Dell (President and CEO)
No, it's just severity was—I mean, both frequency and severity were improved during the quarter, and it was one of the best quarters we ever had. I would just comment, too, you know, year-over-year, there are some other expenses that are up in other lines where you saw some favorable results from a safety standpoint. For instance, you know, last year, we didn't have a good first quarter. We didn't meet our plan, so, you know, there was bonus accruals were zero last year, where this year, we're incurring those because we're in our run rate, and we're hitting some targeted OR numbers. See what I'm saying?
Tom Albrecht (Managing Director)
Okay.
Rick O'Dell (President and CEO)
So you can't, you can't necessarily just take the delta and calculate an EPS on that.
Tom Albrecht (Managing Director)
Oh, sure. No, I get it.
Rick O'Dell (President and CEO)
Right. All right.
Tom Albrecht (Managing Director)
Fritz, when you were given the monthly tonnage figures, was that the LTL tons per day or total tons? I'm assuming it was LTL.
Fritz Holzgrefe (VP of Finance and CFO)
That was LTL.
Tom Albrecht (Managing Director)
Okay, and same thing-
Rick O'Dell (President and CEO)
Both tons and shipments.
Tom Albrecht (Managing Director)
Just kind of reviewing depreciation, we were thinking about $64 million-$65 million on the year. The Q1 run rate would be a little below that. Do you have any updated thoughts? And then I've got one more kind of big picture question.
Rick O'Dell (President and CEO)
I think it'll end up we'll return to sort of those higher run rate numbers as we bring on the equipment. A lot of that's driven by, you know, timing of delivery and so forth. So that, you know, I think it's a little bit light due to timing, but I think you'll see it kind of expand during the balance of the year.
Tom Albrecht (Managing Director)
Okay. And then, you know, the whole yield world is always confusing, but, you know, one of your competitors had talked about the impact to their reported yield was almost 500 basis points with fuel having come down so dramatic. I'm wondering if that's about the magnitude for you guys. In other words, if we saw, I mean, that your yields were really up more like 9.5%, if fuel hadn't been such a factor, is that in the ballpark?
Rick O'Dell (President and CEO)
I calculated 10.1.
Tom Albrecht (Managing Director)
Okay. All right. Well-
Rick O'Dell (President and CEO)
So, yeah.
Tom Albrecht (Managing Director)
We're in the ballpark.
Rick O'Dell (President and CEO)
The ballpark's right. Yeah, no, that's right.
Tom Albrecht (Managing Director)
Okay.
Rick O'Dell (President and CEO)
Yeah.
Tom Albrecht (Managing Director)
And I don't mean to-
Rick O'Dell (President and CEO)
Again, our weight per shipment came down, and length of haul went up, so that had... That's where I kind of got, that's that 3% impact, which shows, which shows kind of our true yield, you know, adjusted for mix, was about 7%.
Tom Albrecht (Managing Director)
Correct. Right. We were kind of making that adjustment as well.
Rick O'Dell (President and CEO)
Right.
Tom Albrecht (Managing Director)
And I don't mean to be snarky with this last question, but, you know, you grew sales at the end of 2013, and I think a little bit at the end of 2014. Why grow the sales effort if you're going to be in an environment of flat to slightly down tonnage?
Rick O'Dell (President and CEO)
Because my analysis shows that the competition has 60 more sales resources in the market than I do. And if I want to participate in field growth share and, you know, get good customers that value our value proposition in the marketplace, you know, I need to match the other people's capabilities in the market.
Tom Albrecht (Managing Director)
Okay. I guess one thing I was just looking at that didn't quite jive. I think you said your 3PL and national accounts was about 50% of the business, down about 7%, but your LTL tonnage was down 6.6%, so it seems like the other half had to be down as well.
Rick O'Dell (President and CEO)
I'm counting. I said shipments.
Tom Albrecht (Managing Director)
Okay. Okay.
Rick O'Dell (President and CEO)
So they're down 7% in shipments, and the other ones are flattish to down 1%.
Tom Albrecht (Managing Director)
Okay.
Rick O'Dell (President and CEO)
Net, we were down, shipment count for the quarter was about three.
Tom Albrecht (Managing Director)
Yep.
Rick O'Dell (President and CEO)
So basically, my whole decline is in national and 3PL.
Tom Albrecht (Managing Director)
Right. Okay, that's helpful. Thank you for the comments.
Rick O'Dell (President and CEO)
All right, great. Thanks.
Operator (participant)
We'll take our next question from David Ross with Stifel.
David Ross (Managing Director of Transportation Research)
Yes, hello again. I just wanted to follow up on the LinkEx acquisition. You guys completed this, you know, midway through the quarter. You talked about it being accretive by about $0.02 a quarter, when you bought it. Just wanted to see if that had, you know, the accretive impact you expected in the first quarter, and, you know, if it's still on plan.
Rick O'Dell (President and CEO)
Yes, it was kind of a weak seasonal period for them, and, you know, they didn't quite make that number, so it really didn't have any impact in the quarter.
David Ross (Managing Director of Transportation Research)
You would still expect it to be $0.02 accretive to 2Q?
Rick O'Dell (President and CEO)
I do, in that range. Yeah, I mean, it's a good, good little company, you know, good management team. You know, we think they're gonna bring something to the table for us and allow us to continue to seek opportunities in that marketplace. But just like I said, it's kind of a weak seasonal period for them, but I think the 2-cent number is a good one to use going forward.
David Ross (Managing Director of Transportation Research)
Excellent. Well, thank you very much.
Rick O'Dell (President and CEO)
All right, great.
Operator (participant)
We'll take our next question from Brad Delco with Stephens.
Brad Delco (Managing Director and Research Analyst)
Hey, good morning, Rick.
Rick O'Dell (President and CEO)
Morning, Brad.
Brad Delco (Managing Director and Research Analyst)
Sorry for hopping on late. Had two calls going on. But following up to Tom's question before, with the investment in the sales force, can you talk about where your national 3PL and field business is today, and maybe where that was a year ago, and where—what your goal is for that mix to be, you know, down the road?
Rick O'Dell (President and CEO)
Yeah, I don't, I don't have a targeted goal for it. I mean, I, I love—we like our national accounts, right? We just need them to be compensatory. So, you know, I, I wouldn't care if I had 70% national accounts if they all operated at a 88% right, or a 90%. I mean, the, the thing we look at is I just can't. You know, I'm not gonna get my operating ratio in the 80s, handling national account business with lanes at a 105 and a 110. So, yeah, or, or field accounts. They just don't generally operate like that. But we, you know, we're, we're going through a, a repricing initiative to make sure that the accounts are compensatory. And, you know, I don't—I think there's opportunities to grow national accounts.
I mean, there's accounts that we don't participate with, that, you know, value service and a low claims ratio that, you know, I think we always continue to seek opportunities with that. And, you know, today we're going through a rebalancing of some pricing that isn't paying its way in today's market. We had some inflation in costs and, you know, I think it's, I mean, it's just, it's just business, it's what we have to do. But I'd like to see all-- I'd like to see all the segments growing once they get operating well.
Brad Delco (Managing Director and Research Analyst)
Got you. So I... Maybe then following on to that, would it, would it be fair to say that this margin improvement that we're seeing in your business, would you rank it that the greatest improvement you're seeing is in the national account, 3PL, and field, sort of in that order, then?
Rick O'Dell (President and CEO)
Yes. Yeah, you're saying the improvement?
Brad Delco (Managing Director and Research Analyst)
Yeah, in terms of the greatest improvement of your margins is primarily in national.
Rick O'Dell (President and CEO)
Yes.
Brad Delco (Managing Director and Research Analyst)
Okay, gotcha. Rick, I think that's all for me. Thanks for the time.
Operator (participant)
This concludes the question and answer session, and I would now like to turn the conference back over to our host, Rick O'Dell, for any additional or closing remarks.
Rick O'Dell (President and CEO)
Great. Thank you for your interest in Saia, and we look forward to, you know, to updating you at upcoming conferences, investor meetings, and if not, then on our next conference call. Thank you.
Operator (participant)
This concludes today's conference. Thank you for your participation. You may now disconnect.