RXO Announces 2nd Quarter Financial Results for 2024

August 7, 2024  by Karen Parrish in Business Strategy, Industry   

·      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

·      Acquisition of Coyote Logistics on track to close in the first half of the fourth quarter

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

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