Slide 1: First Quarter 2024 Results
First Quarter 2024 Results May 2, 2024
Slide 2: Non-GAAP financial measures and forward-looking statements
Non-GAAP financial measures and forward-looking statements Non-GAAP financial measures We provide reconciliations of the non-GAAP financial measures contained in this presentation to the most directly comparable measure under GAAP, which are set forth in the financial tables attached to this present
Slide 3: Q1 2024 highlights
Q1 2024 highlights 1 Solid execution in a prolonged soft freight market 2 Improving brokerage profitability 3 Continued companywide sales pipeline momentum 4 Strategic technology and growth investments 5 Strong liquidity position 3
Slide 4: First-quarter financial and operating results
First-quarter financial and operating results 1 Gross margin $ and % Adjusted EBITDA and margin % Brokerage y/y volume growth $300 $100 590.00% $250 $90 585.00% $80 580.00% $200 $189M $70 575.00% + 11% $159M $60 570.00% 565.00% $150 $50 $100 18.7% $40 $37M 560.00% $30 555.00% 17.4% 3.7% $50 $20 $15M
Slide 5: Diversified business; brokerage market share gains with strong margins
Diversified business; brokerage market share gains with strong margins Brokerage Revenue by service offering • Volume growth of 11% y/y – Full-truckload volume growth of 8% y/y 6% Truck Brokerage – LTL volume growth of 29% y/y • Strong profitability, gross margin of 14.2% 10% Last Mile Managed Compl
Slide 6: Continuing to invest in the future
Continuing to invest in the future Growth and productivity investments Multiple technology enhancements to the RXO platform 97% ‒ Increased dedicated lane capabilities to improve carrier engagement Q1 loads created or covered ‒ Contract pricing automation for cross-border freight digitally ‒ Generat
Slide 7: A continuous improvement mindset
A continuous improvement mindset Cost Management Actions Results • Increasing employee productivity • 2024 actions will now result in at least $35M of annualized P&L savings • Streamlining corporate costs (vs. at least $25M prior) • Rationalizing vendor spend • 2H 2024 will fully benefit from annual
Slide 8: Q1 2024 adjusted EPS bridge
Q1 2024 adjusted EPS bridge Earnings per share Q1-24 Q1-23 GAAP Diluted EPS $(0.13) $ 0.00 Amortization of intangible assets 0.03 0.03 Transaction, integration and restructuring costs 0.10 0.12 Income tax associated with adjustments above (0.03) (0.04) 1 Adjusted Diluted EPS $(0.03) $ 0.11 2 RXO rep
Slide 9: Trailing six-month cash walks
Trailing six-month cash walks Adjusted free cash flow Cash balance 1 Adj. free cash flow impacted by lower levels of profitability at this stage of the freight cycle Note: In millions. 1 Adjusted EBITDA and Adjusted FCF are non-GAAP financial measures. 2 Adjusted EBITDA excludes certain NEO spin-rel
Slide 10: Q1 capital structure snapshot
Q1 capital structure snapshot Capital structure (millions) Q1 2024 • Enhanced flexibility with Amendment to Revolving Notes due 2027 $ 355 Credit Agreement Revolver - • RXO continues to have a strong liquidity position Finance leases, asset financing & ST debt 20 • LTM leverage increased as RXO cycl
Slide 11: Historical y/y brokerage revenue per load and gross margin trends
Historical y/y brokerage revenue per load and gross margin trends 49% • Q1 y/y revenue per load decline moderated 41% 45% ~500 basis points when compared to Q4 – Third consecutive quarter of y/y improvement 21% 18% 11% 12% – Expect another y/y improvement in Q2 2024 7% • Revenue per load declined -7
Slide 12: Q1 monthly brokerage gross margin trends
Q1 monthly brokerage gross margin trends • Market loosened as the quarter progressed Monthly gross profit and margin trends ‒ January weather tightened the market, without resulting in spot opportunities ‒ Load-to-truck ratio, tender rejections and linehaul spot rates moved lower ‒ Continued excess
Slide 13: Historical volume and gross profit per load trends
Historical volume and gross profit per load trends RXO’s brokerage gross profit per load decreased sequentially in Q1, primarily due to January weather 13
Slide 14: Q2 2024 outlook and FY 2024 modeling assumptions
Q2 2024 outlook and FY 2024 modeling assumptions Q2 2024 outlook • Positive year-over-year brokerage volume growth – Full truckload: down low-to-mid single digits – LTL: up more than 30% • Brokerage gross margin: 13%-15% 1 • Companywide adjusted EBITDA : $24-$30M FY 2024 • Capital expenditures: $40-
Slide 15: Key investment highlights
Key investment highlights 1 Large addressable market with secular tailwinds 5 Market-leading platform with complementary transportation solutions 2 Track record of above-market growth and high profitability 6 Tiered approach to sales drives multi-faceted growth opportunities 3 Proprietary technology
Slide 16: Appendix
Appendix RXO
Slide 17: Financial reconciliations
Financial reconciliations Reconciliation of net income (loss) to adjusted EBITDA and adjusted EBITDA margin Six Months Ended Three Months Ended Twelve Months Year Ended Three Months Ended March 31, March 31, December 31, Ended March 31, December 31, (Dollars in millions) 2024 2023 2024 3 2023 2024 4
Slide 18: Financial reconciliations (cont.)
Financial reconciliations (cont.) Reconciliation of net income (loss) to adjusted net income (loss) and adjusted diluted earnings (loss) per share Three Months Ended March 31, (Dollars in millions, shares in thousands, except per share amounts) 2024 2023 Net income (loss) $ (15) $ - Amortization of
Slide 19: Financial reconciliations (cont.)
Financial reconciliations (cont.) Reconciliation of cash flows from operating activities to free cash flow and adjusted free cash flow Six Months Ended Three Months Ended Three Months Ended March 31, March 31, December 31, (Dollars in millions) 2024 2023 2024 2023 Net cash provided by operating acti
Slide 20: Financial reconciliations (cont.)
Financial reconciliations (cont.) Calculation of gross margin and gross margin as a percentage of revenue Three Months Ended March 31, (Dollars in millions) 2024 2023 Revenue Truck brokerage $ 564 $ 600 1 Complementary services 384 437 Eliminations (35) (27) Revenue $ 913 $ 1,010 Cost of transportat
Slide 21: Financial reconciliations (cont.)
Financial reconciliations (cont.) Reconciliation of Bank Adjusted EBITDA; Calculation of Gross Leverage and Net Leverage March 31, (Dollars in millions) 2024 Reconciliation of Bank Adjusted EBITDA Adjusted EBITDA 1, 2 for the trailing twelve months ended March 31, 2024 $ 110 Adjustments per credit a
Slide 22: RXO
RXO