Slide 1: Second Quarter 2023 Results
Second Quarter 2023 Results August 2, 2023
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 release to the most directly comparable measure under GAAP, which are set forth in the financial tables attached to this release. The
Slide 3: Q2 2023 highlights
Q2 2023 highlights 1 Strong execution in a soft freight market 2 Brokerage gaining profitable share with support from complementary services 3 Continued technology adoption and sales momentum 4 Strong cash flow and balance sheet 5 Approaching cycle bottom 3
Slide 4: Second-quarter financial and operating results
Second-quarter financial and operating results Gross margin $ and % Adjusted EBITDA and margin % Brokerage y/y volume growth 1 $265M $300 590.00% $140 585.00% $250 $120 580.00% + 10% $101M 575.00% $179M $200 $100 570.00% $80 565.00% $150 560.00% 21.6% $60 8.2% $38M $100 555.00% $40 18.6% 550.00% 3.9
Slide 5: Diversified business; profitable share gains continued in Q2
Diversified business; profitable share gains continued in Q2 Revenue by service offering Brokerage • Volume growth of 10% y/y • Volume growth +77% on a 3-year stack 6% Truck Brokerage • Strong underlying profitability, gross margin of 15.4% 11% Last Mile Complementary services 26% 56% Managed Transp
Slide 6: RXO technology adoption update
RXO technology adoption update Loads created or covered digitally 7-day carrier retention Weekly average users 96% +3% y/y 78% 80% 73% Active network carriers +2% q/q Q2 22 Q2 23 Q2 22 Q2 23 Our best-in-class technology helps drive increased engagement on the RXO platform 6
Slide 7: Brokerage sales and pipeline update
Brokerage sales and pipeline update Strong customer Bid momentum Strongest pipeline relationships continues from Q1 2023 since pre-COVID* +118% and +132% on a Contract volume +19% y/y Bid count +23% y/y 2- and 3-year stack RXO is attracting new customers to the platform and expanding share of wallet
Slide 8: Q2 2023 adjusted EPS bridge
Q2 2023 adjusted EPS bridge Earnings Per Share Q2-23 Q2-22 GAAP Diluted EPS $0.03 $0.38 Amortization of intangible assets 0.03 0.04 Transaction, integration, restructuring and other costs 0.05 0.18 Income tax associated with adjustments above 1 (0.03) (0.04) Adjusted Diluted EPS 2 $ 0.08 $ 0.56 RXO
Slide 9: Trailing 6-month adjusted free cash flow walk
Trailing 6-month adjusted free cash flow walk 1,2 1 Converted 68% of YTD adjusted EBITDA to adjusted free cash flow 1 Note: In millions. (1) Adjusted EBITDA, Adjusted FCF and Adjusted FCF conversion are Non-GAAP financial measures. (2) Adjusted EBITDA excludes certain NEO spin-related stock-based co
Slide 10: Balance sheet update
Balance sheet update Capital Structure (millions) Q2 2023 Leverage 1 Current Maturities of Long-term Debt $ 4 3.0x Long-term Debt 451 Net Debt Target 2.5x 1.0x – 2.0x Total Debt $ 455 Less: Cash 124 2.0x 2.2x Net Debt 1 $ 331 1.5x 1.6x 1.0x Available Liquidity (millions) Q2 2023 Cash $ 124 0.5x Revo
Slide 11: Tightening market impacted brokerage gross margins
Tightening market impacted brokerage gross margins M/M changes in buy rate impacted Q2 brokerage GM% • Capacity tightened as the quarter progressed, 16% but no meaningful spot market developed 15% 14% ‒ National load-to-truck ratio increased April May June ‒ Load-to-truck ratio in states impacted by
Slide 12: Structurally higher profitability across freight cycles
Structurally higher profitability across freight cycles RXO is improving cross-cycle profitability (1) See the “Non-GAAP financial measures” section. 12
Slide 13: Historical volumes and gross profit per load trends
Historical volumes and gross profit per load trends Since Q1 2020, RXO’s volume has grown by ~70%, positioning us for the inflection 13
Slide 14: Outlook commentary and FY 2023 assumptions
Outlook commentary and FY 2023 assumptions Outlook commentary • Q3 2023 year-over-year brokerage volume growth • Last Mile FY 2023 EBITDA growth vs. FY 2022 FY 2023 assumptions • Capital expenditures: $60-$65M, incl. $15mm of strategic real estate investments • Depreciation and amortization: $70-$75
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 to adjusted EBITDA and adjusted EBITDA margin Twelve Months Year Ended Three Months Ended June 30, Six Months Ended June 30, Ended June 30, December 31, (Dollars in millions) 2023 2022 2023 2022 2023 3 2022 Net income $ 3 $ 44 $ 3 $ 83 $ 12 $ 92
Slide 18: Financial reconciliations (cont.)
Financial reconciliations (cont.) Reconciliation of net income to adjusted net income and adjusted diluted earnings per share Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions, shares in thousands, except per share amounts) 2023 2022 2023 2022 Net income $ 3 $ 44 $ 3 $ 83 Am
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 June 30, (Dollars in millions) 2023 2022 Net cash provided by operating activities $ 66 $ 177 Payment for purchases of property and equipment (28) (
Slide 20: Financial reconciliations (cont.)
Financial reconciliations (cont.) Calculation of gross margin and gross margin as a percentage of revenue Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2023 2022 2023 2022 Revenue Truck brokerage $ 557 $ 755 $ 1,157 $ 1,579 Complementary services 1 437 507 874 1,031 Eli
Slide 21: Financial reconciliations (cont.)
Financial reconciliations (cont.) Reconciliation of net debt, gross leverage and net leverage June 30, (Dollars in millions) 2023 Reconciliation of net debt Total debt $ 455 Cash and cash equivalents 124 Net debt 1 $ 331 Reconciliation of gross leverage Total debt $ 455 Adjusted EBITDA for the trail