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Saia Inc  (NASDAQ:SAIA)
Q1 2019 Earnings Call
May. 01, 2019, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the Saia Inc. First Quarter 2019 Earnings 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.

Douglas L. Col -- Secretary and Treasurer

Thank you, Simon. Good morning, everyone. Welcome to Saia's first quarter 2019 conference call. Hosting today's call are Rick O'Dell, Saia's Chief Executive Officer; and Fritz Holzgrefe, our President and Chief Operating 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 our 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.

Richard D. O'Dell -- Chief Executive Officer

Well, good morning, and thank you for joining us to discuss Saia's results. I'm pleased to report record first quarter revenue, operating income, net income and diluted earnings per share. While, the quarter's results did not meet our expectations, we believe the opportunity for better results is on the horizon and as the difficult winter weather experienced in the first quarter is behind us.

First quarter revenue was a record $410.6 million and with our operating ratio flat at 93%. Operating income grew 3.8% to first quarter record of $28.6 million. Revenue growth was highlighted by 10.6% increase in our LTL revenue per hundredweight. We also had an average increase of 9.8% on contractual rate renewals in the quarter. The first quarter marked the 35th consecutive quarter in which we achieved a year-over-year improvement in our LTL yield. The first quarter this year included one less workday versus last year.

Net income and diluted earnings per share of $22.3 million and $0.85 respectively were also first quarter record. Both of these comparisons benefited from a lower tax rate than in the previous year. Some comparisons from the first quarter of this year to the first quarter of 2018 are as follows; LTL shipments per workday decreased by 0.1%. LTL tonnage per workday decreased by 3.5%. LTL weight per shipment was also down 3.5%. LTL revenue per shipment rose 6.8% to $230.43.

Purchase transportation miles were 9.3% of total linehaul miles, compared to 10.9% in 2018. With the improvement coming from more balance across the network, when compared to last year's first quarter.

Our cargo claims ratio of 0.68% showed a nice improvement from 0.88% a year ago, as our newer dock employees gain experience and benefits from our continuous training initiatives. Dock productivity measured by bills per hour improved by 3%, and despite the more challenging weather we face versus last year, we also saw a 2.4% improvement in P&D productivity measured by stops per hour. So I was pleased with our execution in our operations group across the network.

With that, I'm going to go ahead and turn the call over to Fritz Holzgrefe to review our financial results in more detail.

Frederick J. Holzgrefe -- President and Chief Operating Officer

Thanks, Rick and good morning, everyone. We generated total revenue of $410.6 million in the first quarter, compared to $392.8 million in the first quarter of 2018, a 4.5% increase. Revenue benefited from a 10.6% increase in LTL yield offset by declines in both shipments and tonnage per day as Rick mentioned. Fuel surcharge revenue was (ph) a modest benefit to revenue comparison, up 3.8% from the prior year. As Rick mentioned, the period did include one less workday versus the prior year quarter.

Key -- a few key expense items, which impacted first quarter results on a year-over-year basis are as follows: Salaries, wages and benefits rose 4.4% to $220.4 million in the first quarter, reflecting the impact of an average wage increase of 3% last July. Higher healthcare benefit cost and an approximate 3% increase in our average employee count throughout the quarter.

Salary, wages and benefits were 53.7% of revenue in the quarter, flat with last year. Purchase transportation expense fell 5% to $28.4 million or 6.9% of revenue, this compares the purchase transportation expense of $29.9 million or 7.6% of revenue in the first quarter of 2018. The reduction in purchase transportation as a result of better utilization of Saia capacity and a more stable rate environment in four higher truckload market.

Fuel expense declined by 1.9% in the quarter versus last year and national average diesel prices were essentially flat year-over-year. We also continued to benefit from a newer more efficient fleet. Claims and insurance expense in the quarter decreased by 6.5% to $9.5 million, primarily due to more moderate levels of accident severity versus the prior year. Also on the cargo claims, our cost per claim were down roughly 9% and claims per day were essentially flat with the prior year.

Depreciation and amortization expense of $26.8 million rose by 16.3% from the prior year quarter and reflects our continued investment in real estate, equipment and technology. As a percentage of revenue depreciation and amortization was 6.5% of revenue, compared to 5.9% last year.

Operating income rose 3.8% to a first quarter record of $28.6 million from $27.6 million earned in the first quarter of 2018. The operating ratio of 93% for the quarter was unchanged from last year. At March 31, 2019, total debt was $148.9 million, net debt to total capital was 17.2%. This compares to total debt of $142.6 million and net debt to total capital of 19% at March 31, 2018.

Net capital expenditures in the first quarter were $56.5 million including equipment acquired with capital leases. This compares to $52.1 billion of net capital expenditures in the first quarter of 2018. In 2019, net capital expenditures are forecast to be somewhere between $275 million and $300 million, including investments in real estate, terminal infrastructure improvement projects, our fleet and in continued investments and technology.

Now I'd like to turn the call back to Rick.

Richard D. O'Dell -- Chief Executive Officer

Thanks, Fritz. On Monday of this week, we opened a new terminal in Newburgh, New York. This facility will enable us to provide Saia customers with full coverage across the Hudson Valley and will serve as our second break book terminal in the Northeast. This opening marks our second new Northeast terminal opening of 2019 and our 12th in the region, since our expansion got under way on May 1st, 2017. We have plans to open another four to six locations in the Northeast this year.

Opening new terminals and markets where we already provide direct service is an ongoing strategy and opportunity. And to this end, we plan to add at least one additional terminal in our existing coverage area. This initiative is designed to allow us to get closer to the customer, improved service and ultimately attract customers we may not have efficiently reached in the past. Our ability to serve our customers in more markets is a key tenet of our value proposition and gives us the opportunity to become an even more important part of our customer supply chain as we grow.

And before we open up for questions, I'd like to make a few comments regarding our outlook for the remainder of the year. Difficult tonnage comps for the past several months have made it difficult to read the underlying freight demand, but we are encouraged so far by the spring shipping season. In April, shipments per day increased 1.3% and were, up 3.2% adjusted for the Good Friday shift to April of this year. Tonnage per day was down by 4.7% and down 2.7% adjusted for Good Friday.

While, we are clearly disappointed with a flat first quarter operating ratio of 93 and a first-quarter incremental margin of 5.9%. I'm pleased with our accomplishments over the past several quarters and look forward to being back on track this spring.

Investments in our company, including the expansion into the Northeast, which began in 2017, have allowed us to post solid incremental margin gains over the past couple of years. Since our May of 2017 geographic expansion, we've posted consistently expanding incremental margins. The first full quarter after our expansion began, we posted third quarter of 2017 incremental margin of 5.8% and the incremental margin expanded each quarter through the fourth quarter of 2018 as follows: 10.8% in 4Q of 2017; 14.4% in Q1 of 2018%; 18.5% in Q2 of 2018, 20.6% in Q3 of 2018 and 22.4% in Q4 of 2018.

Adjusted for Good Friday, again, we saw a nice uptick in shipments and are experiencing good productivity execution across our operation. While we are always subject to self-insurance volatility in a given quarter, I look forward to giving the incremental margin story back on track in the second quarter. We currently expect 2Q incremental margins to be in the mid-20% range.

With that said, I'd like to go ahead and open up the call for questions.

Questions and Answers:

Operator

Thank you, sir. (Operator Instructions) We'll now take our first question from Amit Mehrotra from Deutsche Bank. Please go ahead. Your line is open.

Amit Mehrotra -- Deutsche Bank -- Analyst

Thanks, operator. Hi, everybody. Thanks for taking my question. Obviously, I guess, I'll just address prime gorilla in the room with respect to the pricing environment. The commentary and the release was -- Rick was obviously positive, but the comments from OD (ph) last week were I would say, incrementally negative and new. Any color, kind of, on that -- just the underlying demand environment is obviously a little bit weaker than last year, which is to be expected. So -- and is just more sort of natural, slight moderation in pricing power. Are we seeing some actors, some competitors, kind of, chase price to cover some overhead? Thanks.

Richard D. O'Dell -- Chief Executive Officer

Yes, I mean, I think the pricing environment is still conducive to generating certainly solid increases above our cost pressures that we have, particularly from a wage perspective. But I think you see this right, I mean, a lot of businesses are procurement oriented and when they think things have loosened, they're going to come out and test the market. When we are having to do corrective action pricing sometimes, if someone wants to take some certain lanes from here or something, but I mean, I think the environment still fairly conducive.

Amit Mehrotra -- Deutsche Bank -- Analyst

Are you guys using, I guess a little bit of the pricing lever to win some maybe early market share as you expand in the Northeast. I mean, is that kind of a strategy that you guys are pursuing?

Richard D. O'Dell -- Chief Executive Officer

No, we use our proper lane (ph) management to model to do pricing in the Northeast. I think, we do have to kind of address that a little bit, because in some cases, we're not productive up there yet and we do have some excess capacity, particularly in our routes and some of our newest terminal openings. You tend to run for coverage as opposed to building an optimal route. So we kind take that in the consideration, but we've been increasing our pricing in the Northeast market as well.

Amit Mehrotra -- Deutsche Bank -- Analyst

Okay. Just as a follow-up from me. You frame the Northeast market is kind of the $7 billion opportunity. And I think within that $7 billion opportunity, the $2 billion was kind of the regional -- Northeast moves that obviously now that market has opened up a little bit with some supply disruptions in that particular segment of the market. I always thought that was the last piece of the market you're going after last. If you can just talk about maybe how the demand environment for you guys has changed following that disruption. And are you still thinking, you're going to be able to achieve kind of 1% market share in the Northeast of that kind of $7 billion pie?

Richard D. O'Dell -- Chief Executive Officer

Yeah, I think our target is a little bit less than 1% per year when we go into a particular market. We would expect overtime to four to five years to get our 4% to 5% then, right. So if you look at kind of where we were in March on a revenue basis, annualized revenue was running about $210 million a year. So I think we've been successful in that, I think, I would tell you that part of the uptick in April is probably due to the disruptive events you're talking about by a Northeast carrier, but I would tell you the impact on us was modest from that, because we don't like you said with our coverage still developing, we don't play in the intra-Northeast market that much of the -- other people that would have benefit, I think -- I would think materially more.

Our benefit, I think, from that opportunity comes probably over time, we've got some good people from their organization to provide some opportunity for some sales and operations, resources. And I think a lot of the, kind of, improvement from March to April, the Northeast was part of that, but it wasn't really a -- we just kind of saw that across our network is the weather disruptions were behind us and then obviously, we expect to take share as our terminals mature up there anyway. And that's probably a bigger factor than the fact we opened a couple of terminals and a couple of terminals in late December. And so those facilities mature, we tend to gain some volume through that, absent the event that occurred up there.

Amit Mehrotra -- Deutsche Bank -- Analyst

Okay. That make sense. Yes. Well, go ahead, Rich. What did you say?

Richard D. O'Dell -- Chief Executive Officer

No there is nothing.

Amit Mehrotra -- Deutsche Bank -- Analyst

Okay, thanks a lot, guys. Appreciate it.

Operator

Our next question comes from Scott Group from Wolfe Research. Please go ahead, your line is open.

Scott Group -- Wolfe Research -- Analyst

Hey, thanks. Good morning, guys.

Richard D. O'Dell -- Chief Executive Officer

Good morning.

Frederick J. Holzgrefe -- President and Chief Operating Officer

Good morning, Scott.

Scott Group -- Wolfe Research -- Analyst

So the April comment suggest that the declines in weight per shipment are getting worse and maybe just some thoughts there, if you think that's macro or something? And then the length of haul was down in the first quarter, and I guess I would have thought with the Northeast expansion that length of haul would be going up. So maybe just addressing those two things?

Richard D. O'Dell -- Chief Executive Officer

Yes, I think the length of haul, we kind of go into April is more flattish, I mean part of that probably does reflect that there's some incremental business that we picked up in the Northeast more into our region. But it's not very much, it's not very much. So that would be a partial offset. Overall our Northeast revenue -- our Northeast length of haul is higher than our company average, so that would be correct.

And then on the -- I guess just the weight per shipment factor, I think as the truckload market softens, there's less truckload spillover and as truckload capacity loosens some of our heavier weighted shipments move to a truckload stop-up type environment. Some of your more sophisticated customers are able to optimize across modes, and that's what we see from an analytical perspective, probably the biggest impact.

Scott Group -- Wolfe Research -- Analyst

Okay, that makes sense. Can you give us your thoughts on the -- just the margin seasonality from 1Q to 2Q? And then I think last quarter, you thought about or you gave guidance on 150 basis points to 200 basis points of margin improvement. I'm guessing after 1Q, that's not the number anymore, so maybe just some updated thoughts there.

Richard D. O'Dell -- Chief Executive Officer

Yeah, sure. Okay, so 1Q to 2Q, the historical three-year average is 210 basis points better. Given the first quarter weather impact and some things that the uptick in shipments in our execution, we would currently expect 350 basis points to 400 basis points sequentially. And as always, that's subject to self-insurance volatility and other risk factors. And I think you're probably right with the increase in or little bit softer environment that we're operating in. I mean that puts 2Q more in the 100 basis point range, right. Instead of 150 to 200 year-over-year.

Scott Group -- Wolfe Research -- Analyst

Right. Is that how you would now think about the full year or the back half of the year closer to (inaudible)

Richard D. O'Dell -- Chief Executive Officer

I think it just depends, right, I mean if this weight per shipment challenge persist and you had a little bit different revenue per bill run rate than what we've seen. We have some internal initiatives to work on that, and what opportunities we see there, so we're really delving into that particularly with what we saw in April. So I mean that's as part of the question, I guess, is that a lever we can pull or is that's happening across the environment, then we'll have to deal with that, right.

Scott Group -- Wolfe Research -- Analyst

Right. And then just to that point, maybe just last quick thing. So we got the pricing renewals for 1Q. Is 2Q tracking much differently?

Richard D. O'Dell -- Chief Executive Officer

I really don't know the answer, we haven't closeout out April, we haven't looked at where we're trending. So that's really is the function of what comes up for renewal in the quarter and what kinds of increases we need across lanes in key markets to get an account corrected and operating within the range that we're looking for. I would just tell you, I think the market still conducive to getting corrective action pricing where needed.

Scott Group -- Wolfe Research -- Analyst

And do you still think you should be doing better pricing than the market?

Richard D. O'Dell -- Chief Executive Officer

I think generally, so I mean all our data shows that compared to, you know, national type players. Now we're not quite national here, right. But all of our data which show that the key players, we trail them from a yield perspective, so I think that opportunity is out there. I mean the challenge you run into and we've discussed this before is customers do business with you for a reason being that the value that they perceive you as being the coverage that you have and the pricing that you're offering them today. So when we try to correct pricing, I mean, maybe they move to somebody else's more of a price play, right. And as we expand our coverage and increase our value proposition, and we have to be compensated for that. So maybe that requires you to change customers, right, or lanes among the customer. So it's, I mean I think the environment still conducive for us to make some headway. And I would guess, probably not, educated guess would say we should be able to continue to do better than the market.

Scott Group -- Wolfe Research -- Analyst

Okay, thanks for the thoughts, guys. Appreciate it.

Operator

Our next question comes from Todd Fowler from KeyBanc Capital Markets. Please go ahead, your line is open.

Todd Fowler -- KeyBanc Capital Markets -- Analyst

Great, thanks. Good morning. Rick, on the expectation to get mid-20% incremental margins in the second quarter. Is that mostly a function of the operating environment in 1Q and the weather impact there? Or is there something else to think about on the incremental margin improvement, which should really be the highest level in the last several quarters?

Richard D. O'Dell -- Chief Executive Officer

Correct. I mean part of it right is some execution things that we're doing in the core execution of our operations group, for instance, in first quarter, was there was very favorable. We just couldn't overcome the headwinds of the loss of volume and some cost items that you have. And as we commented, I think when we even said -- try to set expectations around first quarter results is a bit of an investment quarter for us. So I guess, that's just a reflection, I guess of the core execution that we have and as the Northeast matures and we grow share up there, we gain efficiencies and the incremental margins should be positive. And again, we're kind of base lining that off of April results today. So unless something changes right then, we are -- it's just -- I think the story is still on track. It just got derailed a bit in the first quarter.

Todd Fowler -- KeyBanc Capital Markets -- Analyst

So I guess maybe to just kind of square up the first quarter, then I don't know if you have an estimate of maybe what whether or caution the quarter, I know that kind be some fuzzy math. But then, Rick, to what you were just commenting on it, it's also sounds like maybe the timing of opening some facilities in 1Q that, that had a greater impact on the incrementals on the results then what we've seen in the quarters when you've opened things later in the year, or maybe freights little bit seasonally stronger?

Richard D. O'Dell -- Chief Executive Officer

It was quite frank with you. I think it was the weather disruption. The revenue loss that we saw from that, some incremental costs. Actually those would be the biggest factors. And as we have commented, not just on the opening thing we invested in some training, as well some marketing expenses year-over-year would have been up pretty significantly. Those are things we'd expect to obviously benefit from over time and part of that's what's -- we're seeing is continuing to drive our key operations execution.

Frederick J. Holzgrefe -- President and Chief Operating Officer

Todd, I would add the investments that we made in the first quarter are ones that we knew going into the quarter. And we've talked about what Q1 was going to look like, we knew those investments are there. The weather was certainly an impact, but just give you one -- we spent $600,000 more in snow removal costs in the first quarter versus last year. I mean, it's just that kind of expense, and then when you're running a linehaul network, you're routing freight around whether to the extent you can and then it gets bottled up and then you -- your maintenance cost run up, because you got equipment that you can't run in multiple sub-zero kind of risk situation. So it kind of crept up everywhere in the expense line. But the core operation productivity that Rick pointed out. We were quite pleased with and that probably and that could continue into the more seasonally strong parts of the year, so that would be positive. But in the quarter that weather certainly was a disruption.

Todd Fowler -- KeyBanc Capital Markets -- Analyst

Okay. Great (Multiple Speakers)

Richard D. O'Dell -- Chief Executive Officer

It would be more of a intuitive thing, because like you said, it's difficult to quantify when you have both top line revenue loss and cost increases. And you don't really know what your cost would have been if you had not add any weather, you never get none right. So I mean -- but it was clearly an impact and I guess if I had to ballpark of that say 0.5 to 0.75 of a point.

Todd Fowler -- KeyBanc Capital Markets -- Analyst

Okay. Yeah, that makes sense. I mean, I think when you originally talked about 1Q. The 1Q you said a little bit higher than where you were in the fourth quarter and you came in higher than that and the different sounds like basically the weather impact there, so that kind of squares that. So just a follow-up, the growth into the Northeast was time very well with a pretty strong freight market kind of across the board. If we get into a slower freight market, do you feel that you've got a big enough toehold in the Northeast, where you continued build out. You wouldn't see incremental start-up costs. And then how do you think about possibly adjusting the cadence of the growth, if the freight markets are slower than what we've seen for the past couple of years?

Richard D. O'Dell -- Chief Executive Officer

That's the great thing about the organic expansion, is because you can always slow it down, if you want to. What I would say is there is some benefit to having broader coverage across the state, otherwise and/or region, right or maybe you go through RFQ or proposal and people say why bring in another carrier that doesn't go here and there. So, but we could always slow it down. Well, I guess what I would tell you, when you look at kind of where we are an incremental margins, you have two factors working. One, is the new terminals, which at this point, tend to be smaller and then you also have the terminals that have been opened for a while, are improving in their execution, as well as gaining some density, just because of their maturity, right.

So I guess the question is, it -- we really want to balance the strategic opportunity to go ahead and continue to stays the expansion and versus what the opportunity is from a margin perspective. So the way we're executing today and kind of what we currently see from an environment, I really wouldn't -- I wouldn't necessarily look to slow it down. And if anything with the event up there, with the another carrier, we actually have some -- we may be seeing some opportunities to actually step that up faster and maybe that makes sense too. So we're kind of working through that facility, availability and that opportunity as well. And Fritz, do you want to comment on that a little bit more?

Frederick J. Holzgrefe -- President and Chief Operating Officer

Sure. I mean, I think the, certainly the several -- our terminal network or regional terminal network is obviously in play. And as they go through their bankruptcy proceedings and such those, we've seen some of those assets and certainly that gives us more available locations to consider. The challenge is real estate challenge investments typically are -- can be complex and then ones that are maybe in a restructuring or a bankruptcy situation can be a little bit more complicated. So, but I think the net of it all is, it does give us more real estate to potentially target and as Rick described, potentially accelerate our own sort of growth initiatives.

Richard D. O'Dell -- Chief Executive Officer

Yes. And again, I would just say, if it's working then we will continue to proceed and/or accelerate, which we've already done. If it's not working, because the environment is not conducive, then we could stop, right?

Frederick J. Holzgrefe -- President and Chief Operating Officer

Yeah.

Todd Fowler -- KeyBanc Capital Markets -- Analyst

Yes. Good. No, and I know that was the thought process going into it. So, OK, thanks so much for the time this morning. We'll talk to you soon.

Richard D. O'Dell -- Chief Executive Officer

Alright, thanks.

Operator

Our next question comes from Brad Delco from Stephens. Please go ahead, your line is open.

Brad Delco -- Stephens -- Analyst

Hey. Good morning, guys.

Richard D. O'Dell -- Chief Executive Officer

Good morning, Brad.

Brad Delco -- Stephens -- Analyst

Apologize, if this has been addressed. But can you talk a little bit about your expectations on PT for the year, clearly, truckload rates are coming under pressure. Just sort of curious, maybe even absent any sort of change in volume. What you think going to apples-to-apples basis your PT costs will look like this year?

Richard D. O'Dell -- Chief Executive Officer

Well, I think is a, you know, we'll see general -- in general, Brad. What we're seeing in the truckload market around rates, I mean, you'll see that translates into what we pay. I think as we look over time, as we've made investments in our own hiring in -- characterizes insourcing our own linehaul assets. We'll continue to optimize our own asset utilization, so I would expect over time that we would reduce our -- some reliance on that, but the expense will benefit simply, because we won't see in the same rate of inflation that we have last year. Am I ready to give you a percentage now? But I think you'll see -- saw a little bit of it in the first quarter, but I think is the balance of the year, kind of, unwinds we'll look to further utilize our own assets and optimize what is we can use with our assets.

Brad Delco -- Stephens -- Analyst

Yes, maybe that, that kind of what spurred the question, if I could ask it maybe differently PT being down 5% in the first quarter. How much of that you think just because the absolute price of TL versus your time your tonnage being --

Richard D. O'Dell -- Chief Executive Officer

That's a smaller contributor, most of that is a utilization situation where we'll use more of our own internal resources there.

Brad Delco -- Stephens -- Analyst

Okay. And then maybe just a -- sort of a broader question. I would sort of categorize Saia as being one of the sort of unique growth names in transport with this geographic expansion story, but tonnage is down, absent what's happening in the Northeast. Is it,-- would it be prudent to think about maybe focusing less on price. Do you feel like you're giving up too much share in some of your established geographies, because I would expect your tonnage to sort of be outpacing the industry given, sort of, your unique growth opportunity. Just high-level thoughts on that would be helpful?

Richard D. O'Dell -- Chief Executive Officer

Yeah, I mean I think we're pretty committed to the pricing discipline. I mean, if you look at the volumes across the network for the first quarter, I mean, there were so much weather impacted in those things that, it's kind of hard to look at. We do have some larger customers that are optimizing across modes, so we saw some of that through late last year, as well as in the first quarter. I guess, if I look at the outlook for 2Q, I mean our revisions is not in our 150 basis points to 200 basis points. But if you can get that kind of top line growth and given the 100 basis point range, still provides a good earnings growth. So we always try to balance the pricing and the volume, but I don't know, I think in this environment with the cost and the recruiting cost for growth and everything else, I mean, they got to make sure you're being properly compensated. It comes to the top of the list.

Brad Delco -- Stephens -- Analyst

No that makes sense. Just wanted to get your thoughts on that. So guys I'll come back in queue. And I appreciate the time.

Frederick J. Holzgrefe -- President and Chief Operating Officer

Thanks, Brad.

Richard D. O'Dell -- Chief Executive Officer

Thanks, Brad.

Operator

Our next question comes from David Ross from Stifel. Please go ahead, your line is open.

Richard D. O'Dell -- Chief Executive Officer

Good morning, David. Can you listen?

David Ross -- Stifel -- Analyst

Yes, sorry, on mute. Good morning.

Richard D. O'Dell -- Chief Executive Officer

Good morning.

Frederick J. Holzgrefe -- President and Chief Operating Officer

Good morning.

David Ross -- Stifel -- Analyst

Would -- I guess with the comments around increased recruiting costs, maybe some commentary on the current driver market or labor market in general, whether it'd be dock workers or drivers?

Richard D. O'Dell -- Chief Executive Officer

Yes, I mean, I don't think it was times, it was last year, but it's still challenging to get highly qualified people, and we're in certain markets, we're continuing to evaluate recruiting alternatives. I would tell you, we tend to be getting more people from a truckload or a dedicated company or something like that. Then we had in the past in terms of just getting other people that worked in LTL industry.

So it kind of depends on the market, but it's not as tight as it was. But it's still challenging. I would tell you like, some of the Northeast market, we;; that sometimes it's a challenge for us to kind of get up and get started. We're actually having good luck there and I think that makes sense, right. You've got people that decide they're going to look for new opportunities, come to a company that's new to the market. You can be at the top of the board, so to speak for run selection and start time selection and you get in the beginning of a company that's going to grow. I think it's going to benefit for a period of time. But we're getting generally nice facilities up there and a lot of brand new equipment, employees like that as well. So that hasn't been a huge challenge for us to get drivers in the gate, and we're opening new terminals, but some other markets have been difficult.

David Ross -- Stifel -- Analyst

And then on the service side. It's good to see cargo claims continuing to fall. What about the other metrics that you will track, your CSIs, whether it'd be on-time performance or something else. How is that looking from the service side?

Richard D. O'Dell -- Chief Executive Officer

It's been very good, I think our operations execution kind of talk primarily on this call, our productivity, but all of our quality metrics, whether you look at returns or exceptions before delivery or some of those things we're seeing really good metrics improvements across the board.

David Ross -- Stifel -- Analyst

And did you get rid of the Saia extreme guarantee or is it just been renamed the Saia guarantee?

Richard D. O'Dell -- Chief Executive Officer

We had a product offering for the extreme guarantee and that was kind of included in the pricing, if you had a certain pricing program. We've kind of gone away for that and then we -- but we still do offer guaranteed product offerings without charge.

And then, Fritz just real quick on the housekeeping, because I can't write fast enough. Looks like shipments per day were, up 2.3% adjusted for Good Friday in April and tonnage per day was down 2.7% adjusted for Good Friday. What are the raw numbers, I guess non-adjusted?

Frederick J. Holzgrefe -- President and Chief Operating Officer

So the non-adjusted numbers for shipments are plus 1.3% and the tonnage number is minus 4.7%, and that's April only.

Richard D. O'Dell -- Chief Executive Officer

What's the shipments?

Frederick J. Holzgrefe -- President and Chief Operating Officer

Plus 1.3%.

Richard D. O'Dell -- Chief Executive Officer

Well, the shipments excluding Good Friday, when that 3 something?

Frederick J. Holzgrefe -- President and Chief Operating Officer

3.2.

Richard D. O'Dell -- Chief Executive Officer

3.2.

Frederick J. Holzgrefe -- President and Chief Operating Officer

It is not 2.3, it's 3.2. I believe, David.

Richard D. O'Dell -- Chief Executive Officer

Got it now?

David Ross -- Stifel -- Analyst

Okay, thank you.

Richard D. O'Dell -- Chief Executive Officer

Thanks a lot.

Operator

We'll now take our next question from Matt Brooklier from Buckingham Research. Please go ahead, your line is open.

Matt Brooklier -- Buckingham Research -- Analyst

Hey, thanks and good morning. So just thinking about your commentary on getting back to plus 20% incremental margins in the second quarter. How much of that is contingent on, I guess directional tonnage improvement. You had some positive commentary that you're feeling a little bit better about spring shipping season. But I'm just trying to give a sense for -- if that -- this margin improvement is also baking in some directional improvement on the tonnage side?

Richard D. O'Dell -- Chief Executive Officer

Now we're kind of taking normal seasonality from what we see in April, adjusted for the Good Friday. And then obviously, we have our market share expectations from our geographic expansion. So those are the two key things and we're not saying, Hey, we're going to have another big step-up in marketing efforts. So we're kind of particularly quarter-to-quarter, we're kind of modified trend line forecasters. So that doesn't always make everything come true, but when you kind of have April in the bags and we're not baking in a lot of tonnage increases and productivity improvements from here to get to those expectations.

Matt Brooklier -- Buckingham Research -- Analyst

Okay. That's I thought was OK. So just wanted to kind of make sure. Have you guys announced the GRI? Is that GRI in the cards for 2Q for Saia?

Richard D. O'Dell -- Chief Executive Officer

We actually put one through in February. February 18th, I think it was a date at 5.9%.

Matt Brooklier -- Buckingham Research -- Analyst

(inaudible), OK.

Richard D. O'Dell -- Chief Executive Officer

If we actually -- just to clarify for it, we actually don't issue a press release or anything for that. We kind of process that, we tend to not amplify that and it is part of our historic practice.

Frederick J. Holzgrefe -- President and Chief Operating Officer

These process that with the customer that applies to.

Richard D. O'Dell -- Chief Executive Officer

Yes.

Matt Brooklier -- Buckingham Research -- Analyst

And roughly how much your freight is that typically cover?

Richard D. O'Dell -- Chief Executive Officer

Roughly 20% to 25% in that range. And we usually get acceptance or utilization or realization, I should say, should get somewhere in the 80% plus range.

Matt Brooklier -- Buckingham Research -- Analyst

Okay --

Richard D. O'Dell -- Chief Executive Officer

And again just on expectations wise and when we talk about 2Q, I mean that we're kind of taking our current yield run rate carrying that out and then looking at our contract renewals. So again, there's not a big, there's not a change or speculation or somewhere a big speculation we are taken on yield to get to those incremental margins and it's really quite frankly, kind of, core execution from here.

Matt Brooklier -- Buckingham Research -- Analyst

Yes, it sounds like it's more on the execution side/moving further away from the disruption from the weather.

Richard D. O'Dell -- Chief Executive Officer

Right.

Matt Brooklier -- Buckingham Research -- Analyst

And then my final question, how should we think about the tax rate for the remaining three quarters of the year?

Richard D. O'Dell -- Chief Executive Officer

So the way I would characterize it is full year numbers of 23 to 23.5 and if you, that would be kind of my expectation for full year. What I would -- as you analyze the 2018 year, you'll see the variation in the tax rate and, you know, by quarter and that may be helpful for you as you analyze the full year numbers of 2019.

Frederick J. Holzgrefe -- President and Chief Operating Officer

Yes, just use something similar core about the core for the last year is probably the best estimate we would have.

Matt Brooklier -- Buckingham Research -- Analyst

Okay, that's what I think I'll do. Appreciate the time.

Richard D. O'Dell -- Chief Executive Officer

Alright.

Operator

Our next question comes from Stephanie Benjamin from SunTrust. Please go ahead, your line is open.

Stephanie Benjamin -- SunTrust -- Analyst

Hi, good morning. And I apologize that if I missed this, but can you provide the monthly tonnage and shipments from the first quarter?

Frederick J. Holzgrefe -- President and Chief Operating Officer

Yes. So the tonnage by month, minus 2.8%, minus 3.2%. March was minus 4.4%, and then if you adjust for the holiday in March, it's minus 5.9%. So that would have been last year's Good Friday. And if you do shipments, January, February, March, minus 0.1%, minus 1.5%, plus 1.5% in March. And if you adjust for the prior year, Good Friday, it's minus 0.1%.

Richard D. O'Dell -- Chief Executive Officer

In March.

Frederick J. Holzgrefe -- President and Chief Operating Officer

In March.

Stephanie Benjamin -- SunTrust -- Analyst

Great. And then just a follow-up -- just could you provide a little bit color on just what you're seeing from an op margin or density perspective just in the Northeast. I think you've talked a little bit before about it being not quite sub-100 or maybe what you're seeing from a production standpoint. Just color there would be helpful?

Richard D. O'Dell -- Chief Executive Officer

Generally, we're seeing some improvements up there. Obviously in 1Q, we did see that, that was one of the areas that of Midwest and the Northeast were pretty significantly impacted by the weather. But I would just tell you that generally, if you just isolate it on the Northeast, absent the weather thing. I mean, that's not generally a drag on our earnings and our incremental margins, it's actually a contributor over time. So first quarter out, if you take fourth quarter and our 2Q outlook, the Northeast would be improving over where it was historically. Growing and improving margins.

Stephanie Benjamin -- SunTrust -- Analyst

Great, that's really helpful. Thank you so much.

Richard D. O'Dell -- Chief Executive Officer

Thanks.

Operator

Our next question comes from Jason Seidl from Cowen & Company. Please go ahead, your line is open.

Jason Seidl -- Cowen & Company -- Analyst

Thanks, operator. Good morning, guys. Just some clarification in terms of the numbers that you're using for comparison. So you're using 93 as an OR for 1Q and then 2Q 2018, you're using 90.3?

Richard D. O'Dell -- Chief Executive Officer

For Q2 of 2018?

Jason Seidl -- Cowen & Company -- Analyst

Yes.

Richard D. O'Dell -- Chief Executive Officer

Yes.

Jason Seidl -- Cowen & Company -- Analyst

So the range you guys, while the range you guys gave from a sequential one from an improvement of 350 to 400 and versus 150 to 200. So there is a differential, I think in those numbers. So the year-over-year comes up lower than your sequential improvement?

Frederick J. Holzgrefe -- President and Chief Operating Officer

Hey Jason, you're kind of mixing the comparisons a little bit. We said the historical Q1 to Q2 trend over the past three years showed about a 210 basis point improvement sequentially from Q1 to Q2.

Jason Seidl -- Cowen & Company -- Analyst

Right.

Frederick J. Holzgrefe -- President and Chief Operating Officer

So that's the metric that Rick was comparing against when he said this year. Because of the difficulties and in Q1 of this year, the actual came it would be more like the 350 to 400.

Jason Seidl -- Cowen & Company -- Analyst

Right, and that would imply an 89 to 89.5 of OR. But then you said on a year-over-year basis typically 150 to 200 and that would imply sub-89 to lower (Multiple Speakers)

Frederick J. Holzgrefe -- President and Chief Operating Officer

No the 150 to 200 is the number we've used to say. We feel like that's an opportunity when we walk into the year. Given what's going on the operation and leverage, we're able to pick up as we grow in Northeast. We felt like walking into the year if you dealt us, you know, a reasonable tonnage environment with our strong yield activity and that said of revenue expectation, we said, we'd like to think we can go get a 150 basis points or 200 basis points in a given year.

Jason Seidl -- Cowen & Company -- Analyst

Okay. So, really focused on more of the sequential than those commentaries, because that's more indicative of the current market that we're sitting in?

Frederick J. Holzgrefe -- President and Chief Operating Officer

I think that's what we have said. And if you look at the number, it's more in the 100 -- it's more on the 100, instead of our 150 to 200 is kind of what our current outlook for 2Q would be.

Jason Seidl -- Cowen & Company -- Analyst

Got you.

Frederick J. Holzgrefe -- President and Chief Operating Officer

And when we kind of, backed it off, quite frankly you have some -- the weight shipment is having a little bit of an impact on our total revenue, our revenue for bill and our total revenue outlook. So while we are encouraged by April and it's kind of putting back and it's a nice step up from where we were in March. I mean, if I were looking back at my plan in December, where I thought we were going to be January, the revenue line is probably little bit lower than what we would have expected. So -- and the weight per shipment things a bit of a burden on margin. Alright?

Jason Seidl -- Cowen & Company -- Analyst

Alright. Now, that makes sense. And just in general, I always get a lot of questions about what's the e-commerce market? How does that impact LTL? Where do you see that coming through in your business? And do you foresee grabbing a bigger portion of that going forward?

Richard D. O'Dell -- Chief Executive Officer

Yes, I mean, we see more, like we're seeing an increase in residential deliveries in both shipments tend a way about GBP500. We're being very diligent in our pricing for (inaudible). So you get paid for the residential and the lift gate that's required in those types of deliveries. We're also exploring some opportunities to further optimize that, whether that'd be with specialized equipment or outsourcing that to final mile person that have the lower cost basis perhaps with some technology. So the customer gets the same experience. So we're piloting some of those things. I mean, I think it's something that's going to grow, it's a bit of a -- there's pros and cons on it, right? Because what you need to do is figure out a way to get good at it be efficient, and then we're going to have only do business for the people that are willing to pay for as opposed to this free shipping think. So I have mixed feelings about it because the carrier that has the best margins out there has the highest weight per shipment and all of our experience with this final mile residential stuff is -- it's lower while we showed operating, OK. It's lower revenue per build lower weight for shipments.

Jason Seidl -- Cowen & Company -- Analyst

Well, if you guys start offering free LTL shipments, someone have to change my model a bit?

Richard D. O'Dell -- Chief Executive Officer

I know, right. Yes, me too, right.

Frederick J. Holzgrefe -- President and Chief Operating Officer

I mean -- but even the -- if the vendor is offering it's free then he's not charging the customer for, so he is more price sensitive, right. You got to make sure, you're getting it, right. So I mean that's kind of my point about it. So I don't know, I mean, I think it's going to grow and over time, it's going to be -- over time, I think, it's an opportunity, so we're seeing that segment grow, was neighborhood-ish 5.5% of our shipments, it's almost 7% now. But part of that quite frankly is we have better data today on residential's, we've done some technology work and so we're identifying those shipments more regularly to so there's kind of some moving parts in those comparisons, but it's not a huge portion of our business, but it's not small either, right 7% of your shipments isn't very small.

Jason Seidl -- Cowen & Company -- Analyst

Right, right, that makes sense. That's good color. Well, listen guys, I appreciate the time as always.

Richard D. O'Dell -- Chief Executive Officer

Great, thanks.

Frederick J. Holzgrefe -- President and Chief Operating Officer

Thanks, Jason.

Operator

Our next question comes from Ravi Shanker from Morgan Stanley. Please go ahead, your line is open.

Ravi Shanker -- Morgan Stanley -- Analyst

Thanks, gents, good morning. Just one from me. You said in your release that nearly 70% of your business out of the Northeast is coming from customers, who are already using Saia in other parts of the country. I think that's very similar to a statistic you gave us very early on in your Northeast rollout. Is that what you'd expected, I would have expected that number to come down by now as you got more new customers in that mix. Can you just tell us kind of how you expect that to trend? And when you expect to, kind of, grow that customer base if you will?

Frederick J. Holzgrefe -- President and Chief Operating Officer

Yes, I think the way I would consider that over time is that, I think it will look more representative of the sort of the National LTL market, kind of, as it goes to and from. The positive is with that, I mean, I think you're going to interpret that statistic in a couple ways. One, is that our customers that have -- won't had experience with Saia understand what they get and they will continue to expand their book-of-business with us. I think that's a positive story, and it's growing it perhaps a similar rate to what our new acquisition -- customer acquisition in the Northeast.

So I think it's just part of it is an affirmation that we've done a good job for folks, but then it also says, we continued to have continued growth opportunity of that market, we've identified and continue to invest in our regional sales resources that, kind of, give us access to some of the accounts that we didn't have.

Ravi Shanker -- Morgan Stanley -- Analyst

Very good. Thank you.

Richard D. O'Dell -- Chief Executive Officer

Yes.

Operator

It appears there are no further questions at this time. Mr. O'Dell, I would like to hand the conference back to you for any additional or closing remarks.

Richard D. O'Dell -- Chief Executive Officer

Alright, thank you for your interest in Saia. We look forward to catching up with you guys later.

Operator

Ladies and gentlemen, this concludes today's call. Thank you for your participation. You may now disconnect.

Duration: 53 minutes

Call participants:

Douglas L. Col -- Secretary and Treasurer

Richard D. O'Dell -- Chief Executive Officer

Frederick J. Holzgrefe -- President and Chief Operating Officer

Amit Mehrotra -- Deutsche Bank -- Analyst

Scott Group -- Wolfe Research -- Analyst

Todd Fowler -- KeyBanc Capital Markets -- Analyst

Brad Delco -- Stephens -- Analyst

David Ross -- Stifel -- Analyst

Matt Brooklier -- Buckingham Research -- Analyst

Stephanie Benjamin -- SunTrust -- Analyst

Jason Seidl -- Cowen & Company -- Analyst

Ravi Shanker -- Morgan Stanley -- Analyst

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