RXO Announces Results for Fourth-Quarter 2023, Including Double-Digit Brokerage Volume Growth for Third-Consecutive Quarter
- 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
“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
The company reported fourth-quarter 2023 GAAP net income of
Adjusted EBITDA was
Transaction, integration, restructuring and other costs, and amortization of intangibles, impacted GAAP earnings per share by
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
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
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
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
Consolidated Statements of Operations (Unaudited) |
|||||||||||||
(Dollars in millions, shares in thousands, except per share amounts) |
|
Three Months Ended |
|
Years Ended |
|||||||||
|
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 |
Consolidated Balance Sheets (Unaudited) |
||||||||
|
|
|
||||||
(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 |
|
|
743 |
|
|
|
900 |
|
Other current assets |
|
|
48 |
|
|
|
31 |
|
Total current assets |
|
|
796 |
|
|
|
1,029 |
|
Long-term assets |
|
|
|
|
||||
Property and equipment, net of |
|
|
124 |
|
|
|
119 |
|
Operating lease assets |
|
|
195 |
|
|
|
159 |
|
|
|
|
630 |
|
|
|
630 |
|
Identifiable intangible assets, net of |
|
|
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, |
|
|
— |
|
|
|
— |
|
Common stock, |
|
|
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 |
|
Consolidated Statements of Cash Flows (Unaudited) |
||||||||
|
|
Years Ended |
||||||
(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 |
|
|
|
— |
|
Revenue Disaggregated by Service Offering (Unaudited) |
||||||||||||||||
|
|
Three Months Ended |
|
Years Ended |
||||||||||||
(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 |
|
Reconciliation of Net Income (Loss) to Adjusted EBITDA and Adjusted EBITDA Margin (Unaudited) |
||||||||||||||||
|
|
Three Months Ended |
|
Years Ended |
||||||||||||
(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. |
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 |
|
Years Ended |
||||||||||||
|
|
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. |
Calculation of Gross Margin and Gross Margin as a Percentage of Revenue (Unaudited) |
||||||||||||||||
|
|
Three Months Ended |
|
Years Ended |
||||||||||||
(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@rxo.com
Investor Contact
kevin.sterling@rxo.com
Source: RXO