Slide 1: Fourth Quarter 2023 Results
Fourth Quarter 2023 Results February 8, 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: Q4 2023 highlights
Q4 2023 highlights 1 Solid execution in a prolonged soft freight market 2 Brokerage gaining profitable share with support from complementary services 3 Continued sales and pipeline momentum 4 Strategic technology and growth investments 5 Market conditions impacting brokerage gross profit per load 3
Slide 4: Fourth-quarter financial and operating results
Fourth-quarter financial and operating results 1 Gross margin $ and % Adjusted EBITDA and margin % Brokerage y/y volume growth $300 590.00% $140 $250 585.00% $218M $120 580.00% $176M 575.00% $200 $100 570.00% $80 $64M 565.00% $150 $100 19.5% $60 560.00% 555.00% 18.0% $40 5.7% $31M 550.00% $50 $20 3.
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 15% y/y – Full-truckload volume growth of 11% y/y 5% – LTL volume growth of 45% y/y Truck Brokerage 10% • Sales pipeline +24% y/y, +90% on 2-year stack Last Mile • Strong p
Slide 6: RXO brokerage continues to invest in the future
RXO brokerage continues to invest in the future Growth and productivity investments • Expanded offices in strategic locations 97% ‒ Plano, Texas and Dublin, Ohio Q4 loads created or • Continue to invest in other modes of transportation covered digitally ‒ Significant momentum in LTL ‒ Added increase
Slide 7: Q4 2023 adjusted EPS bridge
Q4 2023 adjusted EPS bridge Earnings per share Q4-23 Q4-22 GAAP Diluted EPS $0.02 $(0.03) Amortization of intangible assets 0.03 0.04 Transaction, integration, restructuring and other costs 0.03 0.37 Income tax associated with adjustments above (0.02) (0.10) 1 Adjusted Diluted EPS $ 0.06 $ 0.28 2 RX
Slide 8: 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
Slide 9: Q4 capital structure snapshot
Q4 capital structure snapshot Capital structure (millions) Q4 2023 Notes due 2027 $ 355 • RXO continues to have a strong liquidity position Revolver 5 – Total committed liquidity of $600M at the end of Q4 Finance leases, asset financing & other 7 • LTM leverage increased as RXO lapped 2022 adjusted
Slide 10: Historical y/y brokerage revenue per load and gross margin trends
Historical y/y brokerage revenue per load and gross margin trends 49% • Q4 y/y revenue per load decline moderated 41% 45% ~600 basis points when compared to Q3 21% 18% • Revenue per load declined 11% 12% 7% 7% low-teens % y/y in Q4 when adjusted for length of haul, mix and changes in fuel prices -7%
Slide 11: Q4 monthly brokerage gross margin trends
Q4 monthly brokerage gross margin trends • Freight market weakness continued throughout Q4 ‒ National load-to-truck ratio averaged ~2:1 during the quarter ‒ Tender rejection rates were relatively unchanged ‒ Special projects wound down into November and December ‒ Muted holiday peak season • Market
Slide 12: Historical volume and gross profit per load trends
Historical volume and gross profit per load trends RXO’s brokerage gross profit per load increased sequentially in Q4 with significant volume growth 12
Slide 13: Outlook commentary and FY 2024 assumptions
Outlook commentary and FY 2024 assumptions Outlook commentary • Q1 2024 year-over-year brokerage volume growth • Q1 2024 brokerage gross margin: 12%-14% 1 • Q1 2024 companywide adjusted EBITDA : $12M-$18M FY 2024 modeling • Capital expenditures: $40-$50M assumptions • Depreciation: $56-$58M • Amorti
Slide 14: 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 15: Appendix
Appendix RXO
Slide 16: Financial reconciliations
Financial reconciliations Reconciliation of net income (loss) to adjusted EBITDA and adjusted EBITDA margin Six Months Six Months Three Months Ended December 31, Years Ended December 31, Ended December 31, Ended June 30, (Dollars in millions) 2023 2022 2023 2022 2023 3 2023 Net income (loss) $ 2 $ (
Slide 17: Financial reconciliations (cont.)
Financial reconciliations (cont.) Reconciliation of net income (loss) to adjusted net income and adjusted diluted earnings per share Three Months Ended December 31, Years Ended December 31, (Dollars in millions, shares in thousands, except per share amounts) 2023 2022 2023 2022 Net income (loss) $ 2
Slide 18: 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 Six Months Ended Year Ended December 31, December 31, June 30, (Dollars in millions) 2023 2022 2023 2023 Net cash provided by operating activities $
Slide 19: Financial reconciliations (cont.)
Financial reconciliations (cont.) Calculation of gross margin and gross margin as a percentage of revenue Three Months Ended December 31, Years Ended December 31, (Dollars in millions) 2023 2022 2023 2022 Revenue Truck brokerage $ 610 $ 664 $ 2,358 $ 2,929 1 Complementary services 411 488 1,704 2,00
Slide 20: Financial reconciliations (cont.)
Financial reconciliations (cont.) Reconciliation of Bank Adjusted EBITDA; Calculation of Gross Leverage and Net Leverage December 31, (Dollars in millions) 2023 Reconciliation of Bank Adjusted EBITDA Adjusted EBITDA 1, 2 for the year ended December 31, 2023 $ 132 Stock compensation expense 3 for the
Slide 21: RXO
RXO