RXO Announces Third Quarter Financial Results of 2024

November 14, 2024  by Karen Parrish in Business Strategy, Industry   

Drew Wilkerson, chief executive officer of RXO, said, “In the third quarter, our focus on execution enabled us to achieve a solid 13.7% gross margin in our Brokerage business, despite the prolonged soft freight market. Momentum continued within our complementary services. In Managed Transportation, we secured more than $300 million in new business and continue to have a strong sales pipeline of more than $1.3 billion in freight under management. In Last Mile, we grew stops by 11% year-over-year, an acceleration from our second-quarter growth rate.”

Wilkerson continued, “We remain focused strategically investing in our business while controlling costs. Closing the Coyote acquisition in the third quarter makes RXO the third-largest freight broker in North America. Our larger scale enables us to provide customers with more capacity and carriers with more freight. The integration is progressing nicely, and we now expect to achieve at least $40 million in cost synergies."

"The additional savings will be primarily driven by integrating technology platforms and reducing vendor spend. We will continue to provide our customers with superior service, comprehensive solutions, continuous innovation and deep relationships.”

Companywide Results

RXO’s revenue was $1.04 billion in the third quarter, compared to $976 million in the third quarter of 2023. Gross margin was 17.3%, compared to 17.7% in the third quarter of 2023.

The company reported a third-quarter 2024 GAAP net loss of $243 million, compared to a net loss of $1 million in the third quarter of 2023. The third-quarter 2024 GAAP net loss included $248 million in transaction, integration, restructuring and other costs. Adjusted net income in the quarter was $7 million, compared to $6 million in the third quarter of 2023.

Adjusted EBITDA was $33 million, compared to $26 million in the third quarter of 2023. Adjusted EBITDA margin was 3.2%, compared to 2.7% in the third quarter of 2023.

Transaction, integration, restructuring and other costs, and amortization of intangibles, impacted GAAP earnings per share by $1.86, net of tax. For the third quarter, RXO reported a GAAP diluted loss per share of $1.81. Adjusted diluted earnings per share was $0.05.

These results include the impact of RXO’s acquisition of Coyote Logistics, which was completed on September 16, 2024.

Balance Sheet Update

The combined company’s leverage ratio for the last twelve months (LTM) decreased by more than 40%, from 3.0 times to 1.6 times LTM adjusted EBITDA, as a result of the equity financings associated with the acquisition of Coyote Logistics.

Brokerage

Volume in RXO’s legacy Brokerage business, which excludes the impact of Coyote Logistics, declined by 5% year-over-year in the third quarter. Less-than-truckload volume increased by 13% but was offset by a 9% decline in full truckload volume.

Legacy RXO full truckload contract volume has grown by more than 30% since the third quarter of 2021.

Consolidated brokerage gross margin was 13.7% in the third quarter. Legacy RXO brokerage gross margin was 13.8% in the third quarter.

Complementary Services

RXO’s complementary services gross margin was 21.5% for the quarter, up 150 basis points year-over-year.

Managed Transportation was awarded more than $300 million in new freight under management in the quarter. The business has more than $1.3 billion of new freight under management in its sales pipeline.

The number of Last Mile stops grew by 11% year-over-year.

Fourth-Quarter Outlook

RXO expects fourth-quarter 2024 adjusted EBITDA to be between $40 million and $45 million. The company expects fourth-quarter 2024 Brokerage gross margin to be between 12% and 14%.

Conference Call

The company will hold a conference call and webcast on Thursday, November 7 at 7 a.m. Eastern Standard 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 82059.

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 28, 2024, by calling toll-free (from U.S./Canada) 1-888-660-6264; international callers dial +1-289-819-1325. Use the passcode 82059##. Additionally, the call will be archived on http://investors.rxo.com.

For the full press release, click here.