- Full-truckload brokerage volume increased 11 percent
year-over-year and less-than-truckload volume increased 45 percent
year-over-year
- Continued momentum in RXO's brokerage business with multiple
brokerage records in the quarter including total volume and
quarterly loads per day
- Companywide gross margin of 18.0 percent; brokerage gross
margin of 14.8 percent
RXO (NYSE: RXO) today announced its financial results for the
fourth quarter and full year of 2023.
Drew Wilkerson, chief executive officer of RXO, said, “RXO
continued to execute well in the fourth quarter despite the
prolonged soft freight environment. For the third consecutive
quarter, our brokerage business delivered double-digit volume
growth with strong gross margin. Our managed transportation
business secured several new managed expedite customers,
solidifying our position as a leading provider of this service. Our
focus on profitable growth and cost discipline enabled us to expand
companywide gross margin sequentially.
“I’m proud of all that we achieved in 2023, our first full year
as a standalone company. We responded quickly to our customers’
needs and changing market conditions; as a result, our customers
awarded us more freight,” Wilkerson said. “In 2024, we will remain
focused on our playbook – taking profitable market share while
making strategic investments in our business. Given the current
market conditions, we continue to reduce costs, which, combined
with our strong brokerage sales pipeline, will position RXO to
deliver rapid earnings growth when the market inflects.”
Companywide Results
The company’s revenue was $1.0 billion for the fourth quarter,
compared to $1.1 billion in the fourth quarter of 2022. Gross
margin was 18.0 percent, compared to 19.5 percent in the fourth
quarter of 2022.
The company reported fourth-quarter 2023 GAAP net income of $2
million, compared to a net loss of $4 million in the fourth quarter
of 2022. Fourth-quarter 2023 GAAP net income included $4 million in
transaction, integration, restructuring and other costs. Adjusted
net income in the quarter was $7 million, compared to $33 million
in the fourth quarter of 2022.
Adjusted EBITDA was $31 million, compared to $64 million in the
fourth quarter of 2022. Adjusted EBITDA margin was 3.2 percent,
compared to 5.7 percent in the fourth quarter of 2022.
Transaction, integration, restructuring and other costs, and
amortization of intangibles, impacted GAAP earnings per share by
$0.04, net of tax. For the fourth quarter, RXO reported a GAAP
diluted earnings per share of $0.02. Adjusted diluted earnings per
share were $0.06.
Brokerage
RXO’s brokerage business grew volume 15 percent year-over-year
in the fourth quarter, including full truckload volume growth of 11
percent and less-than-truckload volume growth of 45 percent.
Brokerage gross margin was 14.8% in the fourth quarter.
Brokerage contract volume increased by 23 percent year-over-year
in the fourth quarter, the result of a strong brokerage sales
pipeline, which has increased in size by 24 percent since the
fourth quarter of 2022.
The company expects brokerage volumes to continue to grow on a
year-over-year basis in the first quarter of 2024.
Complementary Services
RXO’s complementary services gross margin was 20.9% for the
quarter, up 40 basis points year-over-year. 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
fourth quarter and for the full year.
Technology Update
In the fourth quarter of 2023, 97 percent of RXO’s brokerage
loads were created or covered digitally using RXO’s cutting-edge
technology platform, up from 87 percent in the fourth quarter of
2022.
The seven-day carrier retention rate was 76 percent, up 200
basis points year-over-year.
Conference Call
The company will hold a conference call and webcast on Thursday,
February 8 at 8 a.m. Eastern Standard 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 34416829.
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 February 29, 2024, by calling toll-free (from
U.S./Canada) 1-877-674-7070; international callers dial
+1-416-764-8692. Use the passcode 416829#. 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 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 and adjusted diluted earnings per share
(“adjusted diluted 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 diluted 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 diluted 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 outlook and continued year-over-year
brokerage volume growth in the first quarter of 2024. 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.
Consolidated Statements of
Operations
(Unaudited)
(Dollars in millions, shares in thousands,
except per share amounts)
Three Months Ended December
31,
Years Ended December
31,
2023
2022
2023
2022
Revenue
$
978
$
1,120
$
3,927
$
4,796
Cost of transportation and services
(exclusive of depreciation and amortization)
743
842
2,967
3,624
Direct operating expense (exclusive of
depreciation and amortization)
56
59
235
226
Sales, general and administrative
expense
146
155
591
640
Depreciation and amortization expense
15
21
67
86
Transaction and integration costs
—
40
12
84
Restructuring costs
4
4
16
13
Operating income (loss)
14
(1
)
39
123
Other expense
2
—
3
—
Interest expense, net
8
5
32
4
Income (loss) before income
taxes
4
(6
)
4
119
Income tax provision (benefit)
2
(2
)
—
27
Net income (loss)
$
2
$
(4
)
$
4
$
92
Earnings (loss) per share data
Basic earnings (loss) per share
$
0.02
$
(0.03
)
$
0.03
$
0.80
Diluted earnings (loss) per share
$
0.02
$
(0.03
)
$
0.03
$
0.79
Weighted-average shares
outstanding
Basic weighted-average shares
outstanding
117,012
115,848
116,871
115,335
Diluted weighted-average shares
outstanding
119,575
115,848
119,456
115,791
RXO, Inc.
Consolidated Balance
Sheets
(Unaudited)
December 31,
(Dollars in millions, shares in thousands,
except per share amounts)
2023
2022
ASSETS
Current assets
Cash and cash equivalents
$
5
$
98
Accounts receivable, net of $12 and $13 in
allowances, respectively
743
900
Other current assets
48
31
Total current assets
796
1,029
Long-term assets
Property and equipment, net of $293 and
$241 in accumulated depreciation, respectively
124
119
Operating lease assets
195
159
Goodwill
630
630
Identifiable intangible assets, net of
$118 and $106 in accumulated amortization, respectively
68
79
Other long-term assets
12
15
Total long-term assets
1,029
1,002
Total assets
$
1,825
$
2,031
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities
Accounts payable
$
414
$
501
Accrued expenses
199
256
Current maturities of long-term debt
3
4
Short-term operating lease liabilities
53
48
Other current liabilities
13
14
Total current liabilities
682
823
Long-term liabilities
Long-term debt and obligations under
finance leases
356
451
Deferred tax liability
7
16
Long-term operating lease liabilities
146
114
Other long-term liabilities
40
40
Total long-term liabilities
549
621
Commitments and Contingencies
Equity
Preferred stock, $0.01 par value; 10,000
shares authorized; 0 shares issued and outstanding as of December
31, 2023 and 2022
—
—
Common stock, $0.01 par value; 300,000
shares authorized; 117,026 and 116,400 shares issued and
outstanding as of December 31, 2023 and 2022, respectively
1
1
Additional paid-in capital
590
588
Retained earnings
6
2
Accumulated other comprehensive loss
(3
)
(4
)
Total equity
594
587
Total liabilities and equity
$
1,825
$
2,031
RXO, Inc.
Consolidated Statements of
Cash Flows
(Unaudited)
Years Ended December
31,
(In millions)
2023
2022
Operating activities
Net income
$
4
$
92
Adjustments to reconcile net income to
net cash from operating activities
Depreciation and amortization expense
67
86
Stock compensation expense
19
32
Deferred tax benefit
(8
)
(20
)
Other
9
6
Changes in assets and
liabilities
Accounts receivable
158
92
Other assets
(14
)
14
Accounts payable
(86
)
(14
)
Accrued expenses and other liabilities
(60
)
22
Net cash provided by operating
activities
89
310
Investing activities
Payment for purchases of property and
equipment
(64
)
(57
)
Proceeds from sale of property and
equipment
—
1
Other
(2
)
—
Net cash used in investing
activities
(66
)
(56
)
Financing activities
Proceeds from borrowings on revolving
credit facility
76
—
Repayment of borrowings on revolving
credit facility
(71
)
—
Proceeds from issuance of debt
—
451
Repayment of debt and finance leases
(104
)
—
Payment for debt issuance costs
—
(9
)
Payment for tax withholdings related to
vesting of stock compensation awards
(14
)
(3
)
Repurchase of common stock
(2
)
—
Net transfers to XPO
—
(621
)
Other
(2
)
(1
)
Net cash used in financing
activities
(117
)
(183
)
Effect of exchange rates on cash, cash
equivalents and restricted cash
1
(2
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
(93
)
69
Cash, cash equivalents and restricted
cash, beginning of period
98
29
Cash, cash equivalents and restricted
cash, end of period
$
5
$
98
Supplemental disclosure of cash flow
information:
Cash paid for income taxes, net
27
3
Cash paid for interest, net
32
—
RXO, Inc.
Revenue Disaggregated by
Service Offering
(Unaudited)
Three Months Ended December
31,
Years Ended December
31,
(In millions)
2023
2022
2023
2022
Revenue
Truck brokerage
$
610
$
664
$
2,358
$
2,929
Last mile
257
277
1,014
1,061
Managed transportation
103
129
439
523
Freight forwarding
51
82
251
422
Eliminations
(43
)
(32
)
(135
)
(139
)
Total
$
978
$
1,120
$
3,927
$
4,796
RXO, Inc.
Reconciliation of Net Income
(Loss) to Adjusted EBITDA and Adjusted EBITDA Margin
(Unaudited)
Three Months Ended December
31,
Years Ended December
31,
(Dollars in millions)
2023
2022
2023
2022
Reconciliation of Net Income (Loss) to
Adjusted EBITDA
Net income (loss)
$
2
$
(4
)
$
4
$
92
Interest expense, net
8
5
32
4
Income tax provision (benefit)
2
(2
)
—
27
Depreciation and amortization expense
15
21
67
86
Transaction and integration costs
—
40
12
84
Restructuring and other costs
4
4
17
13
Adjusted EBITDA (1)
$
31
$
64
$
132
$
306
Revenue
$
978
$
1,120
$
3,927
$
4,796
Adjusted EBITDA margin (1) (2)
3.2
%
5.7
%
3.4
%
6.4
%
(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 and Adjusted Diluted Earnings Per
Share
(Unaudited)
(Dollars in millions, shares in thousands,
except per share amounts)
Three Months Ended December
31,
Years Ended December
31,
2023
2022
2023
2022
Reconciliation of Net Income (Loss) to
Adjusted Net Income and Adjusted Net Income Per Share
Net income (loss)
$
2
$
(4
)
$
4
$
92
Amortization of intangible assets
3
5
13
21
Transaction and integration costs
—
40
12
84
Restructuring and other costs
4
4
17
13
Income tax associated with adjustments
above (1)
(2
)
(12
)
(10
)
(29
)
Adjusted net income (2)
$
7
$
33
$
36
$
181
Adjusted diluted earnings per share
(2)
$
0.06
$
0.28
$
0.30
$
1.56
Weighted-average shares
outstanding
Diluted weighted-average shares
outstanding
119,575
117,671
119,456
115,791
(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 (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 December
31,
Years Ended December
31,
(Dollars in millions)
2023
2022
2023
2022
Revenue
Truck brokerage
$
610
$
664
$
2,358
$
2,929
Complementary services (1)
411
488
1,704
2,006
Eliminations
(43
)
(32
)
(135
)
(139
)
Revenue
$
978
$
1,120
$
3,927
$
4,796
Cost of transportation and services
(exclusive of depreciation and amortization)
Truck brokerage
$
519
$
545
$
1,993
$
2,389
Complementary services (1)
267
329
1,109
1,374
Eliminations
(43
)
(32
)
(135
)
(139
)
Cost of transportation and services
(exclusive of depreciation and amortization)
$
743
$
842
$
2,967
$
3,624
Direct operating expense (exclusive of
depreciation and amortization)
Truck brokerage
$
—
$
1
$
1
$
1
Complementary services (1)
56
58
234
225
Direct operating expense (exclusive of
depreciation and amortization)
$
56
$
59
$
235
$
226
Direct depreciation and amortization
expense
Truck brokerage
$
1
$
—
$
1
$
—
Complementary services (1)
2
1
7
5
Direct depreciation and amortization
expense
$
3
$
1
$
8
$
5
Gross margin
Truck brokerage
$
90
$
118
$
363
$
539
Complementary services (1)
86
100
354
402
Gross margin
$
176
$
218
$
717
$
941
Gross margin as a percentage of
revenue
Truck brokerage
14.8
%
17.8
%
15.4
%
18.4
%
Complementary services (1)
20.9
%
20.5
%
20.8
%
20.0
%
Gross margin as a percentage of
revenue
18.0
%
19.5
%
18.3
%
19.6
%
(1)
Complementary services include freight forwarding, last mile and
managed transportation services.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240208177771/en/
Media Contact Erin Kelly erin.kelly@rxo.com
Investor Contact Kevin Sterling
kevin.sterling@rxo.com
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