Doug Col - Treasurer Rick O'Dell - President and CEO Fritz Holzgrefe - VP-Finance and CFO.

Jason Seidl - Cowen Todd Fowler - KeyBanc Capital Markets David Ross - Stifel Brad Delco - Stephens, Inc. Tyler Brown - Raymond James Scott Group - Wolfe Research.

Good day and welcome to the Saia, Inc. Third Quarter 2016 Results Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. Doug Col. Please go ahead, sir..

Thank you, Michelle. Good morning. Welcome to Saia's third quarter 2016 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 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 the actual results to differ. With that, I would like to turn the call over to Rick O'Dell..

Well, good morning, and thank you for joining us. This morning we announced our third quarter 2016 earnings, with diluted earnings per share of $0.54 compared to $0.46 in the third quarter of last year.

The third quarter results reflect our continued positive pricing actions coupled with productivity improvements and cost initiatives realized across our operation.

It's also nice to be able to say that with positive manufacturing data having been reported for six of the past seven months our shipment trend turned positive in September and have improved further into October. So, with that as the backdrop, I'd like to share a few comparisons of the 2016 third quarter results versus last year's third quarter.

LTL yield increased 3.7% and contractual price renewal increased an average of 5.7%. The third quarter marked the 25th consecutive quarter in which we were able to show year-over-year improvement in our LTL yield. LTL shipments per workday were down 1.2%, but turn positive in September for the first time since February.

LTL weight per shipment fell 1.7% to £1,114. Dock productivity, as measured by bills per hour, improved by 6%.

P&D productivity, as measured by stops per hour, improved by more than 2%, purchased transportation miles per day were down 19% in third quarter and represented 8.9% of our total line haul miles compared to 10.7% in the third quarter of last year.

Cargo claims ratio of 0.85% was flat compared with last year, but we did see a 3% reduction in the average cost of a cargo claim during the quarter. Now I would like have Fritz review our third quarter financial results in more detail, then I will make some final comments..

Thanks, Rick, and good morning, everyone. We generated total revenue of $316 million in the third quarter compared to $317 million in the third quarter last year, a decrease of 0.2%. Revenue has held essentially flat year-over-year as declines in tonnage and fuel surcharges were largely offset by yield management.

Operating income rose by 14.1% to $22.6 million compared to $19.8 million earned in the third quarter of 2015. Both periods included 64 workdays. As Rick mentioned, third quarter LTL yield rose 3.7%, reflecting the positive impact of our continuing pricing actions, offset by lower fuel surcharge contribution.

Fuel surcharge revenue was down 11% from last year's third quarter. I’d like to mention a few key expense items and how they impacted third quarter results on a year-over-year basis.

Salary, wages and benefits rose 0.6% to $178.7 million in the third quarter, reflecting the impact of an average wage increase of 3% in July offset by lower headcount in improved productivity. Purchased transportation expense in the third quarter fell by $3.7 million to $15.7 million and was 5% of revenue versus 6.1% last year.

This expense of line item continues to benefit from increased utilization of internal assets, favorable truckload carrier rates and lower fuel costs charged by carriers. As Rick mentioned, purchased transportation miles as a percentage of our total line haul miles were 8.9% compared to 10.7% in the third quarter of 2015.

Outside maintenance and parts expenses were down 14% in the third quarter compared to last year. These expense items are benefiting from our investments in new equipment and also from enhanced maintenance processes and programs. We continue to see fuel cost savings related to improve fuel efficiency being achieved with our younger tractor fleet.

In the third quarter we averaged 7.04 miles per gallon, an increase of nearly 2% compared to the same quarter last year. Claims and insurance expense in the third quarter increased by 9.2% versus the prior year to $10 million with the increased being largely the result of higher insurance premiums.

Depreciation and amortization expense of $19.9 million compares the $16.8 million in the prior quarter and reflects our continued investments in tractors, trailers and forklifts. So far in 2016 we have put in the service approximately 2300 pieces of new rolling stock equipment. Our effective tax rate was 35.9% for the third quarter 2016.

And we expect our full year tax rate will be approximately 36%. At September 30th, 2016, total debt was $94.2 million, and net debt-to-total capital was 16.6%. This compares the total debt of $81.2 million and net debt-to-total capital 15.6 at September 30, 2015.

Net capital expenditures through the first nine months of 2016 were $142.5 million including equipment acquired with capital leases. This compares to $114 million of net capital expenditures in the first nine months of 2015. Now, I’d like to turn the call back to Rick..

Thanks, Fritz. I’m very proud of the value proposition we presented and delivered to our customers in the third quarter, and with generally a soft LTL market, we had flat revenue but we executed very well across our organization and improved our operating ratio by 90 basis points.

Our focus continues to be on delivering quality to our customer and that starts with listening to their needs and doing whatever it takes to meet those needs. In 2015, Saia improved in 25 of 26 service attributes of customer service and the [indiscernible] company annual survey. That was more than any other LTL carrier.

In 2016, we are working hard to further improve in all of these areas, and the response from our customers has been great. We’re gratified that our customers see value in what we're doing and to see shipments and pricing, both positive in the quarter is very encouraging to all of our employees.

Now, before we open it up your questions, I’d like to share an update on our plan to expand our service geography into the Northeast. For those of you who have listened to these calls in the recent past. You know that we have increasingly discussed the topic of expanding our geographic reach into the remaining U.S.

LTL markets, not currently served directly by Saia. We estimate that the Northeastern U.S. LTL market is approximately $7 billion in terms of annual revenue generated by freight that moves in both directions between our existing service area and the 12 Northeastern states we do not currently served directly.

This is an approximate 25% increase in the size of our addressable market. Of course a lot of our best customers do business in this market and currently used providers other than Saia. We view this market as one that hold significant market potential for Saia over time.

Beginning in the second quarter of next year, we plan to open three to five terminals in 2017 targeting major markets in Pennsylvania and New Jersey. Beyond this first phase, we’re targeting a similar pace of new markets to be added in 2018 and 2019.

As always, we remain opportunistic toward any acquisition opportunities that may allow us to speed up the process or otherwise allow us to fill in an uncertain geographic market.

Not only do we plan to invest in new terminal and equipment, but we intend to invest heavily in certain areas of our existing network so that we will be able to handle the increased freight flows to and from the new market.

Our total plan capital expenditures in 2017 will approach $200 million including the investments and property equipment and technology to facilitate our growth. We are excited to move forward with our plans and we look forward to growing to new markets with both existing and new customers. With these comments were now ready to answer your questions.

Operator?.

[Operator Instructions] The first question comes from Jason Seidl of Cowen. Please go ahead..

Thank you, Operator. And good morning guys. Rick I guess my question is going to be now about that Northeast expansion. You know historically it's been a very competitive LTL marketing in terms of the margins that are out there.

Talk a little bit about some of the pace here expansion is that why it seems like you're just going to go in and -- and try to do it in organically in some key areas.

Also, you know, is this an area where you're going to go in and -- and by buildings initially, as opposed to lease them?.

Well we have a strategy to own strategic real estate. So you know we would seek in some of the major markets to own those that make sense.

And there were available to but the majority of them that we've located thus far in our -- our best bargain to be leases and obviously that can help facilitate your growth to over period of time without getting in the high-cost situation right out the gate.

You know I guess if you can't look at the Northeast at this point time you were kind a caught in the middle you were too big to be kind of a regional niche player yet.

We really don't have a national footprint of some of our largest competitors in expansion of the Northeast represents a 25% increase in addressable market of the $7 billion market potential 5 billion in of -- of that moves between five current 34 states of you today that kind of missed opportunity for density benefits.

It leverages our fixed cost network supports our yield initiatives and positions us to compete more effectively guess our peer group of the top 10 carriers you currently the fire network are closer stronger from east to the West.

So with this being primarily in inbound market, the West to East flow into the Northeast would have line haul synergies for us. So, again, we feel like they’re stronger customer positioning with the broader market. We expect to be pricing discipline and market our quality service offering into this market and not going there by business.

So obviously it’s a stage organic expansion into some of the major markets, which I think are probably easier to enter organically, let’s say, because the market potential is bigger, therefore no comparative getting into some of the end of line type terminals right out the gate. Right.

Right. No. It seems like you’re taking a very measured approach to this. And how should we think about it just from a financial standpoint. If you open up those five terminals at Saia in 2017, I'm assuming it's going to take some sort of a ramp to get those terminals to breakeven.

So is this is a minor drag on margins, all things being equal?.

Yes. It’s a minor drag year one..

Okay. That’s good color. I also want to talk about on the pricing side your rate increases in the contractual renewals is actually increasing. Can you talk a little bit about what's driving that? Because I think it was a slightly below that in 2Q when you look at it sequentially..

Yes. I mean, it was just a good – it was a good quarter for us, I guess, just in terms of some of the contract renewals that came up needed some corrective action pricing in certain lanes. And so we’re very disciplined in doing that. Now, we didn’t always retain a 100% of that business.

So if I look at adjusted for length of haul and weight per shipment, our yield increases were up a little over 4% year-over-year..

Okay. Listen, I don't want to tie up all the question. I’ll turn it over here..

All right. Thanks..

Thanks, Rick. Much appreciated..

[Operator Instructions] The next question comes from Todd Fowler of KeyBanc Capital Markets. Please go ahead..

Great. Thanks. Good morning and congratulations on a nice quarter and the expansion plans.

I guess, Rick, maybe, if you could talk a little bit about the experience that you’re seeing with the general rate increase that you guys put? How is the market responding to that and what are you expectations for that as you move to the fourth quarter and the first part of 2017?.

Yes. Our philosophy is to keep our tariff in alignment with the major competitors and we tend to go with the market with a general rate increase and the majority of the -- particularly the big players took the increase in a timing similar or ahead of us and so we kind of -- we follow the market with that and it's been holding very well..

Okay. And then what’s the impact for the items we think about the operating ratio. I think that you typically there's a little bit of degradation is moving to the fourth quarter, given the seasonality you got the timing of the year coming early in the fourth quarter this year.

What’s your expectation be off for the OR sequentially into the fourth quarter?.

Sure, okay. So if you look back three to four years, if you normalize for safety, the fourth quarter operating ratio normally deteriorates between 1.2 and 2.2 operating points, worse than 3Q and I would just caution right 4Q can be particularly difficult to predict just due to holiday volume impact where they fall in potential weather disruptions.

But given our current shipment trends and the timing of the general rate increase, we would expect it to be at the favorable end of this historical range..

Okay. That makes sense. And I guess just a couple of quick ones, maybe on the cost side and the couple of housekeeping things, but Fritz I think you had some comments about higher insurance premiums and the insurance expense has been a little bit, albeit the past couple of quarters with where you were in the third quarter.

Is that the run rate that we should see going forward and is that mostly premiums or was there anything else on the insurance line item this quarter?.

I think what you got, right now if you look at the year-to-date sort of numbers that’s probably a reasonable trend-line over time. I think that we’re impacted in the quarters we highlighted about premium increases, that was a big driver when you compared year-over-year.

But I think that just in general, we’re seeing more litigious environment, claims, settling claims and so forth tends to be a bit more expensive, so I don't know that it's going down anytime soon. So it's -- recent trend is probably the best indication..

Okay. That definitely helps. And I guess just the housekeeping ones.

Did you give us September tons per day trend and would you mention what tons per day you are doing here in October?.

We have not, but I can highlight that. So if you look at the LTL tonnage, you want I ahead and give it for the quarter each month that’s usually the question. The July, August, September. July was minus 3.8%, August down 3%, September was down 1.6% and in month-to-date, October were positive 0.3%. That's on tonnage.

Now speaking of shipments alone, July, August, September ordered down 2.2, down 1.3, positive 0.1% in September, and in October, positive 2.5%..

Okay. That helps. And then just the last one on the expansion, Rick, what would your expectation be for number of years.

I know you have given some initial thoughts on 2017 in the CapEx but is this something that becomes – is it a two or three year process or is the five or seven year process just to fully build out into Northeast?.

We could cover the market with 20 terminals. So you only kind of do the math on that right if we open whatever four to five terminals a year and then if you – if we were to find a tuck-in or something that could accelerate that..

Okay, that makes sense. Nice quarter. Thanks for the time..

Thank you. The next question comes from David Ross of Stifel. Please go ahead..

Good morning, gentlemen. Rick, you talked a little bit to link the whole trends. It's been positive this year but it accelerated a little bit in 3Q, certainly customer type or market that you’re targeting just better luck with the sales force have cross-sells across regions.

How would you think about that number?.

Yes.

Obviously we had some focus on revenue per shipment being an opportunity for us in leveraging our network, also kind of looking at this expression, the Northeast, and kind of looking at the generally having east to west flow we began to the market little more heavily in some of the longer haul from the west to the east and you know the West Coast market is actually been one of our strongest markets.

So, that’s kind of helpful and has a good contribution margin to us..

And you mentioned West Coast been one of the stronger market, have there been any stronger industries or other strong markets or anything you've seen that has driven this September, October shift to positive shipment growth?.

I don’t think I would point to anything specific. We have such a diverse customer base..

And how is the energy business doing, is that you think you found a bottom there in the oilfield services?.

Yes. It’s still big negative obviously, right..

Yes. And the last questions is just on the sales force.

Are we at the process were, you know, you are good at where we are in the sales side? Do you need to cut anymore? You need to start adding people, now the shipments are coming back?.

No, I think, we are good shape there. We -- basically have had kind of flattish type of sales resources in the field and where we kind of made our investments there is in the inside sales to work on prospecting and help our field sales group kind of be more productive with their you know out -- out about in their territory.

So that's really kind of where our focus is on a -- in a team-based selling relationship?.

Have you seen the benefit to the inside sales? How are you measuring that?.

Yes, field revenue is actually growing in eight of eleven regions, and overall of the company, our field revenue is up. Our three PL business, blanket three PL in our resale business is kind of flattish and our national competence is down a little bit..

Excellent. Thank you..

Thank you. The next question comes from Brad Delco of Stephens, Inc. Please go ahead..

Good morning, Rick. Good morning, guys.

Rick, the inflection in September, do you have any kind of good reason why you think you saw that in your network and would you expect that -- that's more of a market event or do you think it's more company specific?.

Brad, I have been -- I really don't know until we get the competitors result and we kind of get a better feel for what's going on the marketplace, but -- and I think it's encouraging..

Yes, I guess the only thing I could wonder is pushing the GRI later, do you feel like you saw some customers come over from others that push GRI sooner.

Is that -- that there was enough of a lag the matter?.

I don't think so. We did it the first day of October, and you know now still a little bit ahead of time. I mean we don't generally see that small customers for a week or whatever change their relationships..

Thanks. And then….

I don't think that's what the driver is..

And then in terms of the -- the expansion plans. I know real estate is hard to come by. It seems like you have a pretty good idea at this point what facilities are available, it sounds like you are going to be leasing them.

Are there any other things to be thinking about it could be an impediment to that timing that you laid out?.

I don't think so. We wouldn't be talking about it in this kind of detail right. .

Yes..

And we are pretty far along in securing the facilities, leadership candidates have been identified. We've got an executable plan to be prepared..

And then maybe my final question. It seems like when you enter into some expansion plans you would sort of have some customers that will help you initially with density.

Have you already had conversations with customers and you feel like you have -- whether it's firm or tentative commitments that you'd be picking up a good bit of that Northeastern business from your existing customer base?.

Yes. You can assume you've done our research, our homework and work through the opportunities and it's kind of interesting, when we do an RFQ today -- right, we get -- we generally -- people send us RFQ, we get all their data.

So today when we mine that data for opportunities we sort of -- but non direct states we sort of take those off, but we keep the data, right.

So we have that data to go back and say, hey, we did RFQ with you a year ago, we see this is the business you have in the Northeast and now we’re going to have these terminals open, we can actively -- proactively work on that. So we're not -- it's not like you're starting from scratch, right.

And then don't forget that of the primarily inbound market and of the $7 billion market potential -- 5 billion of that goes to and from our existing geography. And I know people talk about that being a tough market and I think particularly the regional market up there is particularly tough.

We would obviously be looking to participate more in the interregional market with our -- and leverage our coverage area as well as the freight flows that we have today running parcels up in that direction..

That makes sense. Let me just ask this follow-up then.

The comment about it being competitive market, would you think it would be any more competitive than the Southeast market considering the number of well-run private carriers in that region?.

No. I would not..

All right..

And, you know, that's one benefit to us. Right? I mean, if you look at it. If we look at our network, overall, the middle operates better than the end generally and so if you end you'd really have more middle, right.

So for us the Charlotte region which goes up in Virginia is kind of end of our network and today Ohio would be the end of our network too. And as you kind of expand further, you begin to be able to get freight flows in both directions across those regions which really helps their profitability..

That makes sense. Guys congrats on the good quarter and best of luck..

Thank you. The next question comes from Tyler Brown of Raymond James. Please go ahead..

Good morning guys. Rick, I was just hoping to come back to productivity, you guys have been doing a nice job there despite the tonnage, I am just curious if you can talk about how are you’re achieving that.

Is it really about manpower planning is there any new technology, there that's helping or what is catalyzing that?.

Yes not primarily manpower planning.

And we have very robust toolbox right in terms of dispatch tools we measure miles per stop and have some targeted individual opportunities and our engineering group does a good job of supporting the organization, but you quite frankly lot of days in this business it's about discipline right, you got pretty hard data about what you're pickup volumes look like and your stops and you know how many freight bills you have to deliver and you just have to staff the terminal to kind of -- to effectively manage your productivity.

I think its particular rewarding because our most dense area in the company is kind of in the Texas Louisiana area and you know that that business is down.

So you’ve actually – you know in an area where we’re very efficient, we have less bill count, and in other areas where we’re growing you know we've been able to manage for some improvement in our production overall.

So that's been the cost execution given some of the challenges we have with some of our most -- one of our most profitable reasons being down materially has been still in some pretty solid execution..

Yes. Absolutely, great blocking and tackling, but it is nice to hear about this call.

I guess de novo growth strategy, but Fritz, can you talk about the cash component to the 200 million in CapEx is it safe to assume that that's kind of a holistic number that incorporates the value of the leases, I'm basically looking for some sort of color on how much investment will show up on the cash flow statement..

Yes.

So what we should be – if you think about our internal cash flow right so if you just looked at where our operating cash flow, I think what you’re going to see is – as we make the investments are normal investments in fleet and in any real estate investments we make, you’ll see us leverage up in the other course of the year and then as we continue to generate cash from operations, you will see us pay down, we’ll probably put on a modest amount of lease capital leases in there, but most of that we think will generate from our paid down over relatively short period of time..

Okay.

So most of the CapEx is cash in nature, though?.

Yes, right..

Okay. And then just a couple of quick….

There is a fairly significant amount of added real estate projects for some expansion that we really need across some of our upper Midwest geography to handle freight close to and from the Northeast.

Today we’re in a facility that’s going to add capacity, and if we look at where we’re headed, you need a bigger break-bulk operation in few of those cities..

Right.

Okay and then just a couple quick housekeeping items, but what percent of the book is on your general tariff these days?.

Less than 25..

Less that 25, okay, great. And then just real quickly on the day count just I don't get it wrong. What is the Q4 day count and will you have one less day next year.

I'm assuming in Q1 from the leap your?.

Yes, so we’ve got 64 days in the current quarter -- 61 days to achieve their. 61 days in the fourth quarter. Next year it will be 252 work days..

Okay with the delta in Q1?.

Delta will be Q4. For Q3 – Q4 would be 61..

Okay, perfect. All right, thanks guys..

[Operator Instructions] We’ll take our next question from Scott Group, Wolfe Research. Please go ahead..

Thanks, good morning guys. A few more on the Northeast rollout, so I think you said that the terminals start in the second quarter, but what's the kind of the expected timing of the 3 to 5.

Is it all on the second quarter? Is it a couple each quarter? And then when do the costs started that first or second quarter? And then maybe just with that do you also – beyond just the guys in the terminals, do you need to ramp up the sales force?.

Yes. We’re projecting about 13 sales resources for the markets that we’re going to open next year. We’re targeting kind of first of April type opening, but we need do get the – this things kind of lockdown, so that could push a little bit.

I would say, we'll have either three or four terminals early 2Q, so there could be some minor 1Q startup type cost because you are going to obviously hire employees and train them in ahead of the opening, right..

It makes sense.

And 13 sales resources on the base of how many just for some perspective?.

Total sales resource including leadership national half about 260..

Okay. It makes sense.

So your comment about some margin pressure just in year one of these terminals was that a comment on just these terminals specific or that broadly, we could see margin pressure in kind of consolidated results in 2016 as a result of this?.

No. I'd say, first year it's a modest negative, right, just because you have the startup cost. .

But you're not saying that you think all your margins are lower in 2017 and 2016 because of this..

I did not say that..

Okay. I didn't think you are saying just want to make sure. So on the….

The four terminals, I would say the four terminals the day it open they don't contribute positively right. You got some lead time.

Our experiences has been we know what kind of share we historically take whether it be after an organic opening or a acquisition post-acquisition and so we've modeled getting that share over a period of time and out the gate it projects modestly negative..

Okay. And then just last questions. So we've talked in the past about the goals getting to the sub-90 operating ratio.

Does this terminal rollout, accelerate that because of the density slow it because of the lack of density initially or big picture its three or four terminals and it really doesn't impact at the time?.

I think big picture that in near-term, it doesn't necessarily impact the timing. I mean it's modestly negative, as you go into it and then it's incrementally positive. The one positive about the whole thing and the reason -- part of the reason that it make so much sense, right, is about 9% to 10% of our costs are kind of I would call fixed.

So if you have business on an incremental basis were to operate at 90 to the extent that's kind of bolt-on geography at 80, so it’s a -- you get almost a 20% margin improvement over period of time.

And the way we're entering the markets obviously, the markets that are most adjacent to us that are haven't be the largest market so those while you open those originally their larger they should contribute more quickly than the last terminal that you open are more in the line terminal, right.

And then in the inland space they aren’t generating a lot outbound anyway..

Right. So maybe just the last things.

What's the risk of it because obviously if there was no risk you would've done it already?.

Yes. I mean, the risk if I guess you stumble upon your face, you can't get much business or you get stupid and go out and buy business that are at that rate, but we’re not going to do that. I mean it's a small incremental steps, if it's not going particularly well you can slow it down until you execute better.

I mean, I don't see is being particularly risky. Now if you look at the rationale, right.

I mean we've identified yielded has being our biggest opportunity and half our core for reasons of making sure we capitalize on the biggest opportunity we have we stayed focused on improving the quality within our organization and capitalized on the yield opportunity. Now we're generating meaningful cash flow.

We’ve got our age of fleet where it needs to be, we have the capital to invest in the real estate that supports this geographic expansion. It's a very good investment. I mean, if you said hey, you got a 4% share, let's say over time in a $7 billion market.

I mean, look at the incremental revenue that we would have that could operate at with the fixed cost leverage 20% margins to meaningful improvement in our operating income/.

Make sense. Okay. Thank you, guys..

Thank you. The next question comes from Brad Delco, Stephens, Inc. Please go ahead..

Thanks for taking the follow-up.

Rick, I just want to ask and I don't know to what extent you could comment on this, but we want to try to read in to, does this sort of suggest that the M&A opportunities or I guess exploration of M&A opportunities has been exhausted and this is sort of just sending the message that at a tuck-in here to expand in the Northeast, or just going to do it organically ourselves and maybe you're going after the share that some of those Northeast regional carriers haven’t, I mean do you think this may change their mind in terms of willingness themselves..

I don’t know. This is really based on our business case, I mean, I think I would always said I thought the most likely the most likely avenue for the expansion in Northeast was probably a combination of organic and acquisition. And I'm not saying that you would we say we continue to explore opportunities in the marketplace.

A lot of times if you go in and buy regional care you know you are not going to get the break bulk operation that you really need to handle this $5 billion of freight it goes to and from our geography right.

So you know we think this organic with some meaningful real estate investments in the marketplace is a good way to get started and probably would be that type of investment would be needed anyway.

So it doesn't preclude us looking at smaller regional organizations that maybe interested in selling it just – this is a – these are attractive markets and we're ready now, we are confident of the business case looks good on this organic expansion. We are ready to progress..

That makes sense. And then maybe finally and this maybe similar in nature to Scott's question, but we've always kind of view Saia as working towards that sub 90 OR and I'm guess I'm wondering this sort of a chicken in the egg question.

Maybe do you think this is really one of the final pieces that would help you get below the 90 or do you think you have maybe were not able to achieve that the 90 OR without having this national footprint..

I do think that, I think it really helps us I think we could have done it anyway but if you really look at the contribution margin of incremental business in those kind of 20% margins that's a pretty big lever.

And then just be honest, I mean, we still get levered out on price at time because we don't have coverage in the Northeast and they say hey, I have to use pick one of the top other top 10 carriers to go Northeast anyway.

So I'll use you, but you need to show me a discount to what they'll do and so sometimes to get leveraged out there, so it's not just the incremental margins than the other geographies, but that it also helps us you know, you have a network to leverage with the – with your existing customers in your existing geography as well..

That makes sense. Appreciate your color there. Thanks again guys..

Thanks you. It appears there are no further questions at this time. Mr. O'Dell. I'll turn the conference back to you for additional or closing remarks..

Okay. Well, thanks for your interest in Saia and we look forward to catching up with you guys at some of the upcoming conference..

Ladies and gentlemen, this does conclude the conference call for today. You may now disconnect your line and have a great day..