- Companywide gross margin of 19.0%; Brokerage gross margin of
14.7%
- Brokerage volume increased by 4%; less-than-truckload volume
grew 40% and full truckload volume declined by 2%
year-over-year
- Last Mile stops grew 7% year-over-year, the fastest rate in
nearly two years
- Managed Transportation was awarded more than $200 million in
freight under management
- Acquisition of Coyote Logistics on track to close in the first
half of the fourth quarter
RXO (NYSE: RXO) today announced its financial results for the
second quarter of 2024.
Drew Wilkerson, chief executive officer of RXO, said, “In the
second quarter, RXO continued to execute well, including achieving
4% Brokerage volume growth despite the prolonged soft freight
market. We focused on effectively managing our cost of purchased
transportation and achieved Brokerage gross margin of 14.7%. Our
complementary services were also a significant contributor to our
performance. Last Mile stops grew at the fastest rate in nearly two
years, and our Managed Transportation business was awarded more
than $200 million in freight under management and continued to grow
year-over-year synergy loads it provides to our Brokerage
business.
“Our playbook, which keeps us focused on growing profitably,
strategically investing in our business and controlling costs, will
position us for rapid earnings growth when the market inflects,”
Wilkerson said. “We’re on track to close the acquisition of Coyote
in the first half of the fourth quarter, and we’re excited about
delivering above-market results at greater scale.”
Companywide Results
RXO’s revenue was $930 million for the second quarter, compared
to $963 million in the second quarter of 2023. Gross margin was
19.0%, compared to 18.6% in the second quarter of 2023.
The company reported a second-quarter 2024 GAAP net loss of $7
million, compared to $3 million of net income in the second quarter
of 2023. The second-quarter 2024 GAAP net loss included $11 million
in transaction, integration, restructuring and other costs.
Adjusted net income in the quarter was $4 million, compared to $10
million in the second quarter of 2023.
Adjusted EBITDA was $28 million, compared to $38 million in the
second quarter of 2023. Adjusted EBITDA margin was 3.0%, compared
to 3.9% in the second quarter of 2023.
Transaction, integration, restructuring and other costs, and
amortization of intangibles, impacted GAAP earnings per share by
$0.09, net of tax. For the second quarter, RXO reported a GAAP
diluted loss per share of $0.06. Adjusted diluted earnings per
share was $0.03.
Brokerage
RXO’s Brokerage business grew volume 4% year-over-year in the
second quarter, including a 40% increase in less-than-truckload
volume partially offset by a 2% decline in full truckload volume.
Brokerage gross margin was 14.7% in the second quarter.
Brokerage contract volume increased by 9% year-over-year in the
second quarter. Full truckload contract volume has grown by more
than 40% since the second quarter of 2021.
Complementary Services
RXO’s complementary services gross margin was 23.0% for the
quarter, up 170 basis points year-over-year.
Managed Transportation was awarded more than $200 million in
freight under management in the quarter. The business has more than
$1.6 billion of new freight under management in its sales
pipeline.
Loads provided by RXO’s Managed Transportation business to its
Brokerage business increased year-over-year.
The number of Last Mile stops grew by 7% year-over-year, the
fastest growth rate in nearly two years.
Third-Quarter Outlook
RXO expects third-quarter 2024 companywide adjusted EBITDA to be
between $28 million and $34 million. The company expects
third-quarter 2024 Brokerage gross margin to be between 13% and
15%.
Conference Call
The company will hold a conference call and webcast on
Wednesday, August 7 at 8 a.m. Eastern Daylight Time. Participants
can call in toll-free (from U.S./Canada) at 1-800-549-8228;
international callers dial +1-289-819-1520. The conference ID is
70115.
A live webcast of the conference call will be available on the
investor relations area of the company’s website,
http://investors.rxo.com. A replay of the conference call will be
available through August 28, 2024, by calling toll-free (from
U.S./Canada) 1-888-660-6264; international callers dial
+1-289-819-1325. Use the passcode 70115#. Additionally, the call
will be archived on http://investors.rxo.com.
About RXO
RXO (NYSE: RXO) is a leading provider of asset-light
transportation solutions. RXO offers tech-enabled truck brokerage
services together with complementary solutions including managed
transportation and last mile delivery. The company combines massive
capacity and cutting-edge technology to move freight efficiently
through supply chains across North America. The company is
headquartered in Charlotte, N.C. Visit RXO.com for more information
and connect with RXO on Facebook, X, LinkedIn, Instagram and
YouTube.
Non-GAAP Financial Measures
We provide reconciliations of the non-GAAP financial measures
contained in this release to the most directly comparable measure
under GAAP, which are set forth in the financial tables attached to
this release.
The non-GAAP financial measures in this release include:
adjusted earnings before interest, taxes, depreciation and
amortization (“adjusted EBITDA”); adjusted EBITDA margin; and
adjusted net income (loss) and adjusted diluted earnings (loss) per
share (“adjusted EPS”).
We believe that these adjusted financial measures facilitate
analysis of our ongoing business operations because they exclude
items that may not reflect, or are unrelated to, RXO’s core
operating performance, and may assist investors with comparisons to
prior periods and assessing trends in our underlying businesses.
Other companies may calculate these non-GAAP financial measures
differently, and therefore our measures may not be comparable to
similarly titled measures of other companies. These non-GAAP
financial measures should only be used as supplemental measures of
our operating performance.
Adjusted EBITDA, adjusted EBITDA margin, adjusted net income
(loss) and adjusted EPS include adjustments for transaction and
integration costs, as well as restructuring costs and other
adjustments as set forth in the attached tables. Management uses
these non-GAAP financial measures in making financial, operating
and planning decisions and evaluating RXO’s ongoing
performance.
We believe that adjusted EBITDA and adjusted EBITDA margin
improve comparability from period to period by removing the impact
of our capital structure (interest and financing expenses), asset
base (depreciation and amortization), tax impacts and other
adjustments that management has determined do not reflect our core
operating activities and thereby assist investors with assessing
trends in our underlying business. We believe that adjusted net
income (loss) and adjusted EPS improve the comparability of our
operating results from period to period by removing the impact of
certain costs that management has determined do not reflect our
core operating activities, including amortization of
acquisition-related intangible assets, transaction and integration
costs, restructuring costs and other adjustments as set out in the
attached tables, and thereby may assist investors with comparisons
to prior periods and assessing trends in our underlying
business.
With respect to our financial outlook for the third quarter of
2024 adjusted EBITDA, a reconciliation of this non-GAAP measure to
the corresponding GAAP measure is not available without
unreasonable effort due to the variability and complexity of the
reconciling items described above that we exclude from this
non-GAAP measure. The variability of these items may have a
significant impact on our future GAAP financial results and, as a
result, we are unable to prepare the forward-looking statement of
income and statement of cash flows prepared in accordance with GAAP
that would be required to produce such a reconciliation.
Forward-looking Statements
This release includes forward-looking statements, including
statements relating to our third-quarter outlook and acquisition of
Coyote Logistics. All statements other than statements of
historical fact are, or may be deemed to be, forward-looking
statements. In some cases, forward-looking statements can be
identified by the use of forward-looking terms such as
"anticipate," "estimate," "believe," "continue," "could," "intend,"
"may," "plan," "predict," "should," "will," "expect," "project,"
"forecast," "goal," "outlook," "target,” or the negative of these
terms or other comparable terms. However, the absence of these
words does not mean that the statements are not forward-looking.
These forward-looking statements are based on certain assumptions
and analyses made by us in light of our experience and our
perception of historical trends, current conditions and expected
future developments, as well as other factors we believe are
appropriate in the circumstances.
These forward-looking statements are subject to known and
unknown risks, uncertainties and assumptions that may cause actual
results, levels of activity, performance, or achievements to be
materially different from any future results, levels of activity,
performance or achievements expressed or implied by such
forward-looking statements. Factors that might cause or contribute
to a material difference include the risks discussed in our filings
with the SEC and the following: potential delays in consummating
the potential transaction to acquire Coyote Logistics; the
occurrence of any event, change or other circumstance that could
give rise to the termination of the purchase agreement for the
potential transaction; the effect of the pendency or completion of
the potential transaction on the parties' business relationships
and business generally; competition and pricing pressures; economic
conditions generally; fluctuations in fuel prices; increased
carrier prices; severe weather, natural disasters, terrorist
attacks or similar incidents that cause material disruptions to our
operations or the operations of the third-party carriers and
independent contractors with which we contract; our dependence on
third-party carriers and independent contractors; labor disputes or
organizing efforts affecting our workforce and those of our
third-party carriers; legal and regulatory challenges to the status
of the third-party carriers with which we contract, and their
delivery workers, as independent contractors, rather than
employees; our ability to develop and implement suitable
information technology systems and prevent failures in or breaches
of such systems; the impact of potential cyber-attacks and
information technology or data security breaches; issues related to
our intellectual property rights; our ability to access the capital
markets and generate sufficient cash flow to satisfy our debt
obligations; litigation that may adversely affect our business or
reputation; increasingly stringent laws protecting the environment,
including transitional risks relating to climate change, that
impact our third-party carriers; governmental regulation and
political conditions; our ability to attract and retain qualified
personnel; our ability to successfully implement our cost and
revenue initiatives and other strategies; our ability to
successfully manage our growth; our reliance on certain large
customers for a significant portion of our revenue; damage to our
reputation through unfavorable publicity; our failure to meet
performance levels required by our contracts with our customers;
the inability to achieve the level of revenue growth, cash
generation, cost savings, improvement in profitability and margins,
fiscal discipline, or strengthening of competitiveness and
operations anticipated or targeted; a determination by the IRS that
the distribution or certain related separation transactions should
be treated as taxable transactions; and the impact of the
separation on our businesses, operations and results. All
forward-looking statements set forth in this release are qualified
by these cautionary statements and there can be no assurance that
the actual results or developments anticipated by us will be
realized or, even if substantially realized, that they will have
the expected consequences to or effects on us or our business or
operations. Forward-looking statements set forth in this release
speak only as of the date hereof, and we do not undertake any
obligation to update forward-looking statements to reflect
subsequent events or circumstances, changes in expectations or the
occurrence of unanticipated events, except to the extent required
by law.
RXO, Inc.
Condensed Consolidated
Statements of Operations
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
(Dollars in millions, shares in thousands,
except per share amounts)
2024
2023
2024
2023
Revenue
$
930
$
963
$
1,843
$
1,973
Cost of transportation and services
(exclusive of depreciation and amortization)
700
723
1,399
1,482
Direct operating expense (exclusive of
depreciation and amortization)
50
59
103
120
Sales, general and administrative
expense
154
144
299
297
Depreciation and amortization expense
17
18
33
36
Transaction and integration costs
7
4
8
10
Restructuring costs
2
1
13
9
Operating income (loss)
$
—
$
14
$
(12
)
$
19
Other expense
—
—
1
—
Interest expense, net
8
8
16
16
Income (loss) before income
taxes
$
(8
)
$
6
$
(29
)
$
3
Income tax provision (benefit)
(1
)
3
(7
)
—
Net income (loss)
$
(7
)
$
3
$
(22
)
$
3
Earnings (loss) per share data
Basic earnings (loss) per share
$
(0.06
)
$
0.03
$
(0.19
)
$
0.03
Diluted earnings (loss) per share
$
(0.06
)
$
0.03
$
(0.19
)
$
0.03
Weighted-average common shares
outstanding
Basic weighted-average common shares
outstanding
117,579
116,894
117,398
116,748
Diluted weighted-average common shares
outstanding
117,579
119,457
117,398
119,414
RXO, Inc.
Condensed Consolidated Balance
Sheets
(Unaudited)
June 30,
December 31,
(Dollars in millions, shares in thousands,
except per share amounts)
2024
2023
ASSETS
Current assets
Cash and cash equivalents
$
7
$
5
Accounts receivable, net of $9 and $12 in
allowances, respectively
725
743
Other current assets
44
48
Total current assets
776
796
Long-term assets
Property and equipment, net of $319 and
$293 in accumulated depreciation, respectively
118
124
Operating lease assets
210
195
Goodwill
630
630
Identifiable intangible assets, net of
$124 and $118 in accumulated amortization, respectively
62
68
Other long-term assets
17
12
Total long-term assets
1,037
1,029
Total assets
$
1,813
$
1,825
LIABILITIES AND EQUITY
Current liabilities
Accounts payable
$
382
$
414
Accrued expenses
197
199
Short-term debt and current maturities of
long-term debt
16
3
Short-term operating lease liabilities
54
53
Other current liabilities
13
13
Total current liabilities
662
682
Long-term liabilities
Long-term debt and obligations under
finance leases
370
356
Deferred tax liabilities
—
7
Long-term operating lease liabilities
160
146
Other long-term liabilities
42
40
Total long-term liabilities
572
549
Commitments and Contingencies
Equity
Preferred stock, $0.01 par value; 10,000
shares authorized; 0 shares issued and outstanding as of June 30,
2024 and December 31, 2023
—
—
Common stock, $0.01 par value; 300,000
shares authorized; 117,607 and 117,026 shares issued and
outstanding as of June 30, 2024 and December 31, 2023,
respectively
1
1
Additional paid-in capital
599
590
Retained earnings (Accumulated
deficit)
(16
)
6
Accumulated other comprehensive loss
(5
)
(3
)
Total equity
579
594
Total liabilities and equity
$
1,813
$
1,825
RXO, Inc.
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
Six Months Ended June
30,
(In millions)
2024
2023
Operating activities
Net income (loss)
$
(22
)
$
3
Adjustments to reconcile net income
(loss) to net cash from operating activities
Depreciation and amortization expense
33
36
Stock compensation expense
11
11
Deferred tax expense (benefit)
(9
)
2
Other
2
1
Changes in assets and
liabilities
Accounts receivable
13
162
Other assets
1
(17
)
Accounts payable
(27
)
(73
)
Accrued expenses and other liabilities
—
(59
)
Net cash provided by operating
activities
2
66
Investing activities
Payment for purchases of property and
equipment
(22
)
(28
)
Net cash used in investing
activities
(22
)
(28
)
Financing activities
Proceeds from borrowings on revolving
credit facilities
119
—
Repayment of borrowings on revolving
credit facilities
(92
)
—
Payment for tax withholdings related to
vesting of stock compensation awards
(3
)
(9
)
Repurchase of common stock
—
(2
)
Repayment of debt and finance leases
(1
)
(1
)
Other
(1
)
(1
)
Net cash provided by (used in)
financing activities
22
(13
)
Effect of exchange rates on cash, cash
equivalents and restricted cash
—
1
Net increase in cash, cash equivalents
and restricted cash
2
26
Cash, cash equivalents, and restricted
cash, beginning of period
5
98
Cash, cash equivalents, and restricted
cash, end of period
$
7
$
124
Supplemental disclosure of cash flow
information:
Leased assets obtained in exchange for new
operating lease liabilities
$
49
$
36
Cash paid for income taxes, net
2
21
Cash paid for interest, net
15
17
RXO, Inc.
Revenue Disaggregated by
Service Offering
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
(In millions)
2024
2023
2024
2023
Revenue
Truck brokerage
$
543
$
557
$
1,107
$
1,157
Last mile
265
261
497
501
Managed transportation
156
176
308
373
Eliminations
(34
)
(31
)
(69
)
(58
)
Total
$
930
$
963
$
1,843
$
1,973
RXO, Inc.
Reconciliation of Net Income
(Loss) to Adjusted EBITDA and Adjusted EBITDA Margin
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
(In millions)
2024
2023
2024
2023
Reconciliation of Net Income (Loss) to
Adjusted EBITDA
Net income (loss)
$
(7
)
$
3
$
(22
)
$
3
Interest expense, net
8
8
16
16
Income tax provision (benefit)
(1
)
3
(7
)
—
Depreciation and amortization expense
17
18
33
36
Transaction and integration costs
7
4
8
10
Restructuring and other costs
4
2
15
10
Adjusted EBITDA (1)
$
28
$
38
$
43
$
75
Revenue
$
930
$
963
$
1,843
$
1,973
Adjusted EBITDA margin (1) (2)
3.0
%
3.9
%
2.3
%
3.8
%
(1)
See the “Non-GAAP Financial Measures”
section of the press release.
(2)
Adjusted EBITDA margin is calculated as
Adjusted EBITDA divided by Revenue.
RXO, Inc.
Reconciliation of Net Income
(Loss) to Adjusted Net Income (Loss) and Adjusted Diluted Earnings
(Loss) Per Share
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
(Dollars in millions, shares in thousands,
except per share amounts)
2024
2023
2024
2023
Reconciliation of Net Income (Loss) to
Adjusted Net Income (Loss) and Adjusted Diluted Earnings (Loss) Per
Share
Net income (loss)
$
(7
)
$
3
$
(22
)
$
3
Amortization of intangible assets
3
3
6
6
Transaction and integration costs
7
4
8
10
Restructuring and other costs
4
2
15
10
Income tax associated with adjustments
above (1)
(3
)
(2
)
(7
)
(6
)
Adjusted net income (loss) (2)
$
4
$
10
$
—
$
23
Adjusted diluted earnings (loss) per
share (2)
$
0.03
$
0.08
$
—
$
0.19
Weighted-average shares
outstanding
Diluted weighted-average shares
outstanding
119,837
119,457
117,398
119,414
(1)
The tax impact of non-GAAP adjustments
represents the tax expense calculated using the applicable
statutory tax rate that would have been incurred had these
adjustments been excluded from net income (loss). Our estimated tax
rate on non-GAAP adjustments may differ from our GAAP tax rate due
to differences in the methodologies applied.
(2)
See the “Non-GAAP Financial Measures”
section of the press release.
RXO, Inc.
Calculation of Gross Margin
and Gross Margin as a Percentage of Revenue
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
(Dollars in millions)
2024
2023
2024
2023
Revenue
Truck brokerage
$
543
$
557
$
1,107
$
1,157
Complementary services (1)
421
437
805
874
Eliminations
(34
)
(31
)
(69
)
(58
)
Revenue
$
930
$
963
$
1,843
$
1,973
Cost of transportation and services
(exclusive of depreciation and amortization)
Truck brokerage
$
462
$
471
$
946
$
973
Complementary services (1)
272
283
522
567
Eliminations
(34
)
(31
)
(69
)
(58
)
Cost of transportation and services
(exclusive of depreciation and amortization)
$
700
$
723
$
1,399
$
1,482
Direct operating expense (exclusive of
depreciation and amortization)
Truck brokerage
$
—
$
—
$
—
$
—
Complementary services (1)
50
59
103
120
Direct operating expense (exclusive of
depreciation and amortization)
$
50
$
59
$
103
$
120
Direct depreciation and amortization
expense
Truck brokerage
$
1
$
—
$
1
$
—
Complementary services (1)
2
2
4
3
Direct depreciation and amortization
expense
$
3
$
2
$
5
$
3
Gross margin
Truck brokerage
$
80
$
86
$
160
$
184
Complementary services (1)
97
93
176
184
Gross margin
$
177
$
179
$
336
$
368
Gross margin as a percentage of
revenue
Truck brokerage
14.7
%
15.4
%
14.5
%
15.9
%
Complementary services (1)
23.0
%
21.3
%
21.9
%
21.1
%
Gross margin as a percentage of
revenue
19.0
%
18.6
%
18.2
%
18.7
%
(1)
Complementary services include last mile
and managed transportation services.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240807991749/en/
Media Contact Erin Kelly erin.kelly@rxo.com
Investor Contact Kevin Sterling
kevin.sterling@rxo.com
RXO (NYSE:RXO)
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