- Full-truckload brokerage volume increased 13 percent
year-over-year and less-than-truckload volume increased 55 percent
year-over-year
- Momentum in RXO's brokerage business accelerated as the quarter
progressed; set multiple brokerage records in the quarter including
total volume, quarterly loads per day and monthly loads per
day
- Companywide gross margin of 17.7 percent; brokerage gross
margin of 15.1 percent
RXO (NYSE: RXO) today announced its financial results for the
third quarter of 2023.
Drew Wilkerson, chief executive officer of RXO, said, “RXO
continued to execute well in the third quarter. We achieved a
record number of loads per day in our brokerage business and grew
brokerage volume by double-digits for the second consecutive
quarter. Brokerage gross margin remained strong. Our experienced
team, our deep customer relationships, and continued adoption of
our cutting-edge, AI-enabled technology all contributed to our
results.
“While RXO’s results improved as the third quarter progressed,
the market remains soft and we’re monitoring the freight markets
closely. We’ll continue to follow our playbook of taking profitable
market share while controlling costs and making strategic
investments in our business,” Wilkerson said. “In the third
quarter, we onboarded new brokerage employees and made significant
tech investments. We believe this will enable RXO to continue to
achieve outsized growth when the market inflects. RXO is uniquely
positioned to outperform.”
Companywide Results
The company’s revenue was $1.0 billion for the third quarter,
compared to $1.1 billion in the third quarter of 2022. Gross margin
was 17.7 percent, compared to 19.6 percent in the third quarter of
2022.
The company reported a third-quarter 2023 GAAP net loss of $1
million, compared to net income of $13 million in the third quarter
of 2022. The GAAP net loss included $5 million in transaction,
integration, restructuring and other costs. Adjusted net income1 in
the quarter was $6 million, compared to $39 million in the third
quarter of 2022.
Adjusted EBITDA1 was $26 million, compared to $66 million in the
third quarter of 2022. Adjusted EBITDA margin1 was 2.7 percent,
compared to 5.8 percent in the third quarter of 2022.
Transaction, integration, restructuring and other costs, and
amortization of intangibles, impacted GAAP earnings per share by
$0.06, net of tax. For the third quarter, RXO reported a GAAP
diluted loss per share of $0.01. Adjusted diluted earnings per
share1 were $0.05.
Brokerage
RXO’s brokerage business grew volume 18 percent year-over-year
in the third quarter. Brokerage gross margin was 15.1 percent in
the third quarter.
Brokerage contract volume increased by 30 percent year-over-year
in the third quarter, the result of a strong brokerage sales
pipeline, which has increased in size by 115 percent since the
third quarter of 2021.
The company expects brokerage volumes to continue to grow on a
year-over-year basis in the fourth quarter of 2023.
Complementary Services
RXO’s complementary services gross margin was 20.0% for the
quarter, up 90 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 third
quarter, and the company continues to expect to grow full-year last
mile EBITDA year-over-year.
Technology Update
In the third quarter of 2023, 97 percent of RXO’s brokerage
loads were created or covered digitally using RXO’s cutting-edge
technology platform, up from 81 percent in the third quarter of
2022.
The seven-day carrier retention rate was 77 percent, compared to
75 percent in the third quarter of 2022.
Optimized Capital Structure
In early November, RXO exercised a feature under its Revolving
Credit Agreement that increased total commitments from $500 million
to $600 million. RXO simultaneously repaid all outstanding
obligations under its Term Loan Credit Agreement. These
transactions have no impact to the company’s net debt and liquidity
and are expected to save the company more than $1 million per year
in pre-tax interest expense.
Conference Call
The company will hold a conference call and webcast on Tuesday,
November 7 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 11616211.
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 November 7, 2024, by calling toll-free (from
U.S./Canada) 1-877-674-7070; international callers dial
+1-416-764-8692. Use the passcode 616211#. Additionally, the call
will be archived on http://investors.rxo.com.
1 For definitions of non-GAAP measures see the “Non-GAAP
Financial Measures” section in this press release.
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, 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 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 fourth 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 September
30,
Nine Months Ended September
30,
(Dollars in millions, shares in thousands,
except per share amounts)
2023
2022
2023
2022
Revenue
$
976
$
1,138
$
2,949
$
3,676
Cost of transportation and services
(exclusive of depreciation and amortization)
742
857
2,224
2,782
Direct operating expense (exclusive of
depreciation and amortization)
59
56
179
167
Sales, general and administrative
expense
148
158
445
485
Depreciation and amortization expense
16
23
52
65
Transaction and integration costs
2
23
12
44
Restructuring costs
3
6
12
9
Operating income
$
6
$
15
$
25
$
124
Other expense
1
1
1
—
Interest expense (income), net
8
(1
)
24
(1
)
Income (loss) before income
taxes
$
(3
)
$
15
$
—
$
125
Income tax provision (benefit)
(2
)
2
(2
)
29
Net income (loss)
$
(1
)
$
13
$
2
$
96
Earnings (loss) per share data
Basic earnings (loss) per share
$
(0.01
)
$
0.11
$
0.02
$
0.83
Diluted earnings (loss) per share
$
(0.01
)
$
0.11
$
0.02
$
0.83
Weighted-average common shares
outstanding
Basic weighted-average common shares
outstanding
116,970
115,163
116,823
115,163
Diluted weighted-average common shares
outstanding
116,970
115,163
119,415
115,163
RXO, Inc.
Condensed Consolidated Balance
Sheets
(Unaudited)
September 30,
December 31,
(Dollars in millions, shares in thousands,
except per share amounts)
2023
2022
ASSETS
Current assets
Cash and cash equivalents
$
104
$
98
Accounts receivable, net of allowances of
$10 and $13, respectively
787
900
Other current assets
45
31
Total current assets
936
1,029
Long-term assets
Property and equipment, net of $281 and
$241 in accumulated depreciation, respectively
122
119
Operating lease assets
173
159
Goodwill
630
630
Identifiable intangible assets, net of
$116 and $106 in accumulated amortization, respectively
72
79
Other long-term assets
13
15
Total long-term assets
1,010
1,002
Total assets
$
1,946
$
2,031
LIABILITIES AND EQUITY
Current liabilities
Accounts payable
$
448
$
501
Accrued expenses
221
256
Current maturities of long-term debt
3
4
Short-term operating lease liabilities
50
48
Other current liabilities
6
14
Total current liabilities
728
823
Long-term liabilities
Long-term debt and obligations under
finance leases
451
451
Deferred tax liability
15
16
Long-term operating lease liabilities
125
114
Other long-term liabilities
37
40
Total long-term liabilities
628
621
Commitments and Contingencies
Equity
Preferred stock, $0.01 par value; 10,000
shares authorized; 0 shares issued and outstanding as of September
30, 2023 and December 31, 2022
—
—
Common stock, $0.01 par value; 300,000
shares authorized; 117,002 and 116,400 shares issued and
outstanding as of September 30, 2023 and December 31, 2022,
respectively
1
1
Additional paid-in capital
589
588
Retained earnings
4
2
Accumulated other comprehensive loss
(4
)
(4
)
Total equity
590
587
Total liabilities and equity
$
1,946
$
2,031
RXO, Inc.
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
Nine Months Ended September
30,
(In millions)
2023
2022
Operating activities
Net income
$
2
$
96
Adjustments to reconcile net income to
net cash from operating activities
Depreciation and amortization expense
52
65
Stock compensation expense
16
9
Deferred tax benefit
(1
)
(8
)
Other
4
6
Changes in assets and
liabilities
Accounts receivable
114
(10
)
Other assets
(13
)
12
Accounts payable
(56
)
25
Accrued expenses and other liabilities
(48
)
39
Net cash provided by operating
activities
70
234
Investing activities
Payment for purchases of property and
equipment
(46
)
(39
)
Proceeds from sale of property and
equipment
—
1
Other
(1
)
—
Net cash used in investing
activities
(47
)
(38
)
Financing activities
Payment for tax withholdings related to
vesting of stock compensation awards
(12
)
—
Repurchase of common stock
(2
)
—
Net transfers to XPO
—
(39
)
Repayment of debt and finance leases
(3
)
—
Other
—
1
Net cash used in financing
activities
(17
)
(38
)
Effect of exchange rates on cash, cash
equivalents and restricted cash
—
—
Net increase in cash, cash equivalents
and restricted cash
6
158
Cash, cash equivalents, and restricted
cash, beginning of period
98
29
Cash, cash equivalents, and restricted
cash, end of period
$
104
$
187
Supplemental disclosure of cash flow
information:
Leased assets obtained in exchange for new
operating lease liabilities
$
60
$
46
Leased assets obtained in exchange for new
finance lease liabilities
1
8
Cash paid for income taxes, net
25
3
Cash paid for interest, net
18
—
RXO, Inc.
Revenue Disaggregated by
Service Offering
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
(In millions)
2023
2022
2023
2022
Revenue
Truck brokerage
$
591
$
686
$
1,748
$
2,265
Last mile
256
264
757
784
Managed transportation
107
122
336
394
Freight forwarding
56
101
200
340
Eliminations
(34
)
(35
)
(92
)
(107
)
Total
$
976
$
1,138
$
2,949
$
3,676
RXO, Inc.
Reconciliation of Net Income
(Loss) to Adjusted EBITDA and Adjusted EBITDA Margin
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
(In millions)
2023
2022
2023
2022
Reconciliation of Net Income (Loss) to
Adjusted EBITDA
Net income (loss)
$
(1
)
$
13
$
2
$
96
Interest expense (income), net
8
(1
)
24
(1
)
Income tax provision (benefit)
(2
)
2
(2
)
29
Depreciation and amortization expense
16
23
52
65
Transaction and integration costs
2
23
12
44
Restructuring and other costs
3
6
13
9
Adjusted EBITDA (1)
$
26
$
66
$
101
$
242
Revenue
$
976
$
1,138
$
2,949
$
3,676
Adjusted EBITDA margin (1) (2)
2.7
%
5.8
%
3.4
%
6.6
%
(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)
Three Months Ended September
30,
Nine Months Ended September
30,
(Dollars in millions, shares in thousands,
except per share amounts)
2023
2022
2023
2022
Reconciliation of Net Income (Loss) to
Adjusted Net Income and Adjusted Diluted Earnings Per Share
Net income (loss)
$
(1
)
$
13
$
2
$
96
Amortization of intangible assets
4
5
10
16
Transaction and integration costs
2
23
12
44
Restructuring and other costs
3
6
13
9
Income tax associated with adjustments
above (1)
(2
)
(8
)
(8
)
(17
)
Adjusted net income (2)
$
6
$
39
$
29
$
148
Adjusted diluted earnings per share
(2)
$
0.05
$
0.34
$
0.24
$
1.29
Weighted-average shares
outstanding
Diluted weighted-average shares
outstanding
119,416
115,163
119,415
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 (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 September
30,
Nine Months Ended September
30,
(Dollars in millions)
2023
2022
2023
2022
Revenue
Truck brokerage
$
591
$
686
$
1,748
$
2,265
Complementary services (1)
419
487
1,293
1,518
Eliminations
(34
)
(35
)
(92
)
(107
)
Revenue
$
976
$
1,138
$
2,949
$
3,676
Cost of transportation and services
(exclusive of depreciation and amortization)
Truck brokerage
$
501
$
556
$
1,474
$
1,844
Complementary services (1)
275
336
842
1,045
Eliminations
(34
)
(35
)
(92
)
(107
)
Cost of transportation and services
(exclusive of depreciation and amortization)
$
742
$
857
$
2,224
$
2,782
Direct operating expense (exclusive of
depreciation and amortization)
Truck brokerage
$
1
$
—
$
1
$
—
Complementary services (1)
58
56
178
167
Direct operating expense (exclusive of
depreciation and amortization)
$
59
$
56
$
179
$
167
Direct depreciation and amortization
expense
Truck brokerage
$
—
$
—
$
—
$
—
Complementary services (1)
2
2
5
4
Direct depreciation and amortization
expense
$
2
$
2
$
5
$
4
Gross margin
Truck brokerage
$
89
$
130
$
273
$
421
Complementary services (1)
84
93
268
302
Gross margin
$
173
$
223
$
541
$
723
Gross margin as a percentage of
revenue
Truck brokerage
15.1
%
19.0
%
15.6
%
18.6
%
Complementary services (1)
20.0
%
19.1
%
20.7
%
19.9
%
Gross margin as a percentage of
revenue
17.7
%
19.6
%
18.3
%
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/20231107638353/en/
Media Contact Erin Kelly erin.kelly@rxo.com Investor
Contact Kevin Sterling kevin.sterling@rxo.com
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