Q2 2024 Earnings Summary
Reported on Jul 26, 2024 (Before Market Open)
Pre-Earnings Price$489.11Last close (Jul 25, 2024)
Post-Earnings Price$396.30Open (Jul 26, 2024)
Price Change
$-92.81(-18.98%)
- Expansion into strategic markets:
- Strong performance in legacy operations:
- Long-term value creation from new investments:
- Mix shift towards lower-margin freight is pressuring margins. The company experienced a margin headwind of roughly 150 to 200 basis points due to changes in the mix of business, particularly an increase in shipments from national accounts and retail customers with shorter length of haul and lower weight per shipment. This shift negatively impacted profitability and may continue to affect future quarters.
- Higher-than-expected start-up costs from new terminal openings are impacting profitability. Recent terminal openings operated at a loss, creating an approximate 130 basis point headwind for the quarter compared to last year. The company underestimated the costs associated with some openings, such as the Laredo, Texas facility, which resulted in higher expenses than anticipated. With plans to open additional terminals in Q3 and Q4, these start-up costs may continue to pressure margins.
- Softness in the industrial economy is leading to weaker demand in higher-margin segments. The company noted that the industrial economy remains uncertain and has not picked up, affecting traditional industrial freight volumes. Weight per shipment was down 7.1% in the quarter, indicating a shift away from heavier industrial freight. This ongoing softness may continue to impact revenues and margins.
Research analysts covering SAIA.