- Brokerage volume increased 10 percent year-over-year; set
multiple records in the quarter including total volume, quarterly
loads per day and monthly loads per day
- Companywide gross margin of 18.6 percent; brokerage gross
margin of 15.4 percent
RXO (NYSE: RXO) today announced its financial results for the
second quarter of 2023.
Drew Wilkerson, chief executive officer of RXO, said, “RXO
executed well in a soft freight market. In our brokerage business,
we continued to gain significant market share and recorded 10
percent volume growth year-over-year. We set several brokerage
volume records in the quarter, including total volume, quarterly
loads per day and monthly loads per day. Companywide and brokerage
gross margin remained strong at 18.6 percent and 15.4 percent,
respectively.
“Our margin performance was the result of continued customer and
carrier adoption of RXO’s cutting-edge, AI-enabled technology,
including our industry-leading pricing algorithms,” Wilkerson said.
“Ninety-six percent of RXO’s orders in the quarter were created or
covered digitally and 78 percent of carriers using our technology
returned to our platform within seven days.”
Wilkerson concluded, “Our market share gains are accelerating,
and we are well-positioned at this stage of the freight cycle. We
will continue to provide outstanding customer service, grow market
share profitably and control costs while investing for the future.
Following this playbook will enable significant earnings growth
when the cycle inflects, and we remain confident in our ability to
deliver our long-term adjusted EBITDA target.”
Companywide Results
The company’s revenue was $1.0 billion for the second quarter,
compared to $1.2 billion in the second quarter of 2022. Gross
margin was 18.6 percent.
The company reported second-quarter 2023 GAAP net income of $3
million, compared to net income of $44 million in the second
quarter of 2022. GAAP net income included $6 million in
transaction, integration, restructuring and other costs. Adjusted
net income1 in the quarter was $10 million, compared to $64 million
in the second quarter of 2022.
Adjusted EBITDA1 was $38 million, compared to $101 million in
the second quarter of 2022. Adjusted EBITDA margin1 was 3.9
percent, compared to 8.2 percent in the second quarter of 2022.
Transaction, integration, restructuring and other costs, and
amortization of intangibles, impacted GAAP earnings per share by
$0.05, net of tax. For the second quarter, RXO reported GAAP
diluted earnings per share of $0.03. Adjusted diluted earnings per
share1 were $0.08.
Brokerage
RXO’s brokerage business grew volume 10 percent year-over-year
in the second quarter. Brokerage gross margin was 15.4 percent in
the second quarter.
Brokerage contract volume increased by 19 percent year-over-year
in the second quarter, the result of the company’s increased bid
activity in the fourth quarter of 2022 and the first quarter of
2023. RXO’s brokerage sales pipeline remains strong, and annual bid
count increased by 23 percent year-over-year in the second
quarter.
To position the company for further growth when the freight
cycle inflects, RXO announced that it has invested in the expansion
of its brokerage offices in Ann Arbor, Michigan; Columbia, South
Carolina; and Kansas City, Missouri.
The company expects brokerage volumes to continue to grow on a
year-over-year basis in the third quarter of 2023.
Complementary Services
RXO’s complementary services gross margin was flat
year-over-year in the quarter and increased by 50 basis points
sequentially. Loads provided by RXO’s managed transportation
business to its brokerage business increased both year-over-year
and quarter-over-quarter.
RXO’s last mile business grew EBITDA year-over-year in the
second quarter, and the company continues to expect to grow
full-year last mile EBITDA year-over-year.
Technology Update
In the second quarter of 2023, 96 percent of RXO’s brokerage
loads were created or covered digitally using RXO’s best-in-class
technology platform, up from 80 percent in the second quarter of
2022.
The seven-day carrier retention rate was 78 percent, compared to
73 percent in the second quarter of 2022. Weekly average users on
the platform increased 3 percent year-over-year in the second
quarter.
Conference Call
The company will hold a conference call and webcast on
Wednesday, August 2 at 8 a.m. Eastern Daylight Time. Participants
can call in toll-free (from U.S./Canada) at 1-888-259-6580;
international callers dial +1-206-962-3782. The conference ID is
16669759.
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 23, 2023, by calling toll-free (from
U.S./Canada) 1-877-674-7070; international callers dial
+1-416-764-8692. Use the passcode 669759#. 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, freight forwarding and last mile delivery. The
company combines massive capacity and cutting-edge technology to
move freight efficiently through supply chains. RXO’s proprietary
technology connects approximately 10,000 customers with over
100,000 independent carriers across North America. The company is
headquartered in Charlotte, N.C. Visit RXO.com for more information
and connect with RXO on Facebook, Twitter, LinkedIn, Instagram and
YouTube.
1 For definitions of non-GAAP measures see the "Non-GAAP
Financial Measures" section in this press release.
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 and adjusted diluted earnings 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 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 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.
Forward-looking Statements
This release includes forward-looking statements, including
statements relating to our continued year-over-year brokerage
volume growth in the third quarter of 2023. 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: competition and pricing pressures;
economic conditions generally; the severity, magnitude, duration
and aftereffects of the COVID-19 pandemic and government responses
to the COVID-19 pandemic; 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; 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 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; 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)
2023
2022
2023
2022
Revenue
$
963
$
1,226
$
1,973
$
2,538
Cost of transportation and services
(exclusive of depreciation and amortization)
723
904
1,482
1,925
Direct operating expense (exclusive of
depreciation and amortization)
59
56
120
111
Sales, general and administrative
expense
144
166
297
327
Depreciation and amortization expense
18
21
36
42
Transaction and integration costs
4
18
10
21
Restructuring costs
1
3
9
3
Operating income
$
14
$
58
$
19
$
109
Other income
—
(1
)
—
(1
)
Interest expense, net
8
—
16
—
Income before income taxes
$
6
$
59
$
3
$
110
Income tax provision
3
15
—
27
Net income
$
3
$
44
$
3
$
83
Earnings per share data
Basic earnings per share
$
0.03
$
0.38
$
0.03
$
0.72
Diluted earnings per share
$
0.03
$
0.38
$
0.03
$
0.72
Weighted-average common shares
outstanding
Basic weighted-average common shares
outstanding
116,894
115,163
116,748
115,163
Diluted weighted-average common shares
outstanding
119,457
115,163
119,414
115,163
RXO, Inc.
Condensed Consolidated Balance
Sheets
(Unaudited)
June 30,
December 31,
(Dollars in millions, shares in thousands,
except per share amounts)
2023
2022
ASSETS
Current assets
Cash and cash equivalents
$
124
$
98
Accounts receivable, net of allowances of
$10 and $13, respectively
743
900
Other current assets
49
31
Total current assets
916
1,029
Long-term assets
Property and equipment, net of $270 and
$241 in accumulated depreciation, respectively
116
119
Operating lease assets
164
159
Goodwill
630
630
Identifiable intangible assets, net of
$113 and $106 in accumulated amortization, respectively
73
79
Other long-term assets
13
15
Total long-term assets
996
1,002
Total assets
$
1,912
$
2,031
LIABILITIES AND EQUITY
Current liabilities
Accounts payable
$
432
$
501
Accrued expenses
210
256
Current maturities of long-term debt
4
4
Short-term operating lease liabilities
48
48
Other current liabilities
5
14
Total current liabilities
699
823
Long-term liabilities
Long-term debt and obligations under
finance leases
451
451
Deferred tax liability
17
16
Long-term operating lease liabilities
118
114
Other long-term liabilities
38
40
Total long-term liabilities
624
621
Commitments and Contingencies
Equity
Preferred stock, $0.01 par value; 10,000
shares authorized; 0 shares issued and outstanding as of June 30,
2023 and December 31, 2022
—
—
Common stock, $0.01 par value; 300,000
shares authorized; 116,954 and 116,400 shares issued and
outstanding as of June 30, 2023 and December 31, 2022,
respectively
1
1
Additional paid-in capital
587
588
Retained earnings
5
2
Accumulated other comprehensive loss
(4
)
(4
)
Total equity
589
587
Total liabilities and equity
$
1,912
$
2,031
RXO, Inc.
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
Six Months Ended June
30,
(In millions)
2023
2022
Operating activities
Net income
$
3
$
83
Adjustments to reconcile net income to
net cash from operating activities
Depreciation and amortization expense
36
42
Stock compensation expense
11
6
Deferred tax expense (benefit)
2
(1
)
Other
1
5
Changes in assets and
liabilities
Accounts receivable
162
(102
)
Other assets
(17
)
11
Accounts payable
(73
)
95
Accrued expenses and other liabilities
(59
)
38
Net cash provided by operating
activities
66
177
Investing activities
Payment for purchases of property and
equipment
(28
)
(24
)
Net cash used in investing
activities
(28
)
(24
)
Financing activities
Payment for tax withholdings related to
vesting of stock compensation awards
(9
)
—
Repurchase of common stock
(2
)
—
Net transfers from XPO
—
30
Repayment of debt and finance leases
(1
)
—
Other
(1
)
—
Net cash (used in) provided by
financing activities
(13
)
30
Effect of exchange rates on cash, cash
equivalents and restricted cash
1
—
Net increase in cash, cash equivalents
and restricted cash
26
183
Cash, cash equivalents, and restricted
cash, beginning of period
98
29
Cash, cash equivalents, and restricted
cash, end of period
$
124
$
212
Supplemental disclosure of cash flow
information:
Leased assets obtained in exchange for new
operating lease liabilities
$
36
$
40
Cash paid for income taxes, net
21
3
Cash paid for interest, net
17
—
RXO, Inc.
Revenue Disaggregated by
Service Offering
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
(In millions)
2023
2022
2023
2022
Revenue
Truck brokerage
$
557
$
755
$
1,157
$
1,579
Last mile
261
274
501
520
Managed transportation
112
133
229
272
Freight forwarding
64
100
144
239
Eliminations
(31
)
(36
)
(58
)
(72
)
Total
$
963
$
1,226
$
1,973
$
2,538
RXO, Inc.
Reconciliation of Net Income
to Adjusted EBITDA and Adjusted EBITDA Margin
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
(In millions)
2023
2022
2023
2022
Reconciliation of Net Income to
Adjusted EBITDA
Net income
$
3
$
44
$
3
$
83
Interest expense, net
8
—
16
—
Income tax provision
3
15
—
27
Depreciation and amortization expense
18
21
36
42
Transaction and integration costs
4
18
10
21
Restructuring and other costs
2
3
10
3
Adjusted EBITDA (1)
$
38
$
101
$
75
$
176
Revenue
$
963
$
1,226
$
1,973
$
2,538
Adjusted EBITDA margin (1) (2)
3.9
%
8.2
%
3.8
%
6.9
%
(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
to Adjusted Net Income and Adjusted Diluted Earnings Per
Share
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
(Dollars in millions, shares in thousands,
except per share amounts)
2023
2022
2023
2022
Reconciliation of Net Income to
Adjusted Net Income and Adjusted Diluted Earnings Per Share
Net income
$
3
$
44
$
3
$
83
Amortization of intangible assets
3
5
6
11
Transaction and integration costs
4
18
10
21
Restructuring and other costs
2
3
10
3
Income tax associated with adjustments
above (1)
(2
)
(6
)
(6
)
(9
)
Adjusted net income (2)
$
10
$
64
$
23
$
109
Adjusted diluted earnings per share
(2)
$
0.08
$
0.56
$
0.19
$
0.95
Weighted-average shares
outstanding
Diluted weighted-average shares
outstanding
119,457
115,163
119,414
115,163
(1)
The tax impact of non-GAAP
adjustments represents the tax benefit (expense) calculated using
the applicable statutory tax rate that would have been incurred had
these adjustments been excluded from net income. 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)
2023
2022
2023
2022
Revenue
Truck brokerage
$
557
$
755
$
1,157
$
1,579
Complementary services (1)
437
507
874
1,031
Eliminations
(31
)
(36
)
(58
)
(72
)
Revenue
$
963
$
1,226
$
1,973
$
2,538
Cost of transportation and services
(exclusive of depreciation and amortization)
Truck brokerage
$
471
$
598
$
973
$
1,288
Complementary services (1)
283
342
567
709
Eliminations
(31
)
(36
)
(58
)
(72
)
Cost of transportation and services
(exclusive of depreciation and amortization)
$
723
$
904
$
1,482
$
1,925
Direct operating expense (exclusive of
depreciation and amortization)
Truck brokerage
$
—
$
—
$
—
$
—
Complementary services (1)
59
56
120
111
Direct operating expense (exclusive of
depreciation and amortization)
$
59
$
56
$
120
$
111
Direct depreciation and amortization
expense
Truck brokerage
$
—
$
—
$
—
$
—
Complementary services (1)
2
1
3
2
Direct depreciation and amortization
expense
$
2
$
1
$
3
$
2
Gross margin
Truck brokerage
$
86
$
157
$
184
$
291
Complementary services (1)
93
108
184
209
Gross margin
$
179
$
265
$
368
$
500
Gross margin as a percentage of
revenue
Truck brokerage
15.4
%
20.8
%
15.9
%
18.4
%
Complementary services (1)
21.3
%
21.3
%
21.1
%
20.3
%
Gross margin as a percentage of
revenue
18.6
%
21.6
%
18.7
%
19.7
%
(1)
Complementary services include
freight forwarding, last mile and managed transportation
services.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230802443159/en/
Media Erin Kelly erin.kelly@rxo.com
Investor Kevin Sterling kevin.sterling@rxo.com
RXO (NYSE:RXO)
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