Less-than-truckload carrier Saia said Monday it will open six terminals in August, part of a broader plan to open 18 to 21 new facilities across the country this year. The Western portion of its expansion includes an entrance into Wyoming as well as new facilities in Montana and South Dakota.
Saia (NASDAQ: SAIA) opened a new terminal in Cheyenne, Wyoming, on Monday and plans to add sites in Casper, Wyoming, and Billings, Montana, on Aug. 19. Two additions in South Dakota (Rapid City and Watertown) along with another site in Butte, Montana, will open on Aug. 26.
Saia opened its first location in Montana in April. The South Dakota terminals will be its second and third in the state.
The additions announced Monday are part of a portfolio of 11 leased properties it acquired at auction from defunct LTL carrier Yellow Corp. (OTC: YELLQ) in December to go along with the 17 service centers it acquired at a separate auction earlier that month. Saia spent a total of $235.7 million to acquire the properties, according to its second-quarter update.
The company has also been relocating terminals in some markets into larger, better-suited spaces.
“August marks a considerable highpoint in our efforts to expand our presence in the Western U.S. this year,” said Ray Ramu, chief customer officer, in a news release. “Our ongoing expansion is key to our customer-first approach, making sure the investments we are making in our network are for the benefit of our shippers.”
Saia plans to make roughly $1 billion in investments during 2024. The capital expenditures plan allocates $550 million to real estate and $400 million to $450 million for tractors, trailers and other equipment. Approximately $50 million will be spent on IT projects.
Prior to Monday’s announcement, the company had opened eight new terminals and relocated two others so far this year. In total, the additions are expected to bring Saia’s terminal count to 215 by year-end, a low- to midteen-percentage increase in door count.
The incremental costs associated with the new terminals were a drag on second-quarter results, sending Saia’s shares more than 20% lower since the July 26 report. As expected, the new locations operated at a loss in the quarter compared to the 82.2% operating ratio (inverse of operating margin) its legacy service centers produced. The cost headwind was a 130-basis-point hit to its 83.3% OR, which was 60 bps worse year over year.
Even with the cost hurdle Saia expects to see only 100 to 200 bps of OR deterioration from the second to the third quarter, in line with its historical average. The company remains committed to a long-term goal of 100 to 200 bps of annual OR improvement, though that is not expected to occur this year.
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