Slide 1: First Quarter 2023 Results
First Quarter 2023 Results May 3, 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: Q1 2023 highlights
Q1 2023 highlights 1 Solid financial and operating results 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 Share repurchase authorization 3
Slide 4: First-quarter financial and operating results
First-quarter financial and operating results Adjusted gross margin $ and % 1 Adjusted EBITDA and margin %1 Brokerage y/y volume growth $260 $100 590.00% $240 $236M $90 585.00% $220 $80 $75M 580.00% + 6% $70 575.00% $200 $190M $60 570.00% $50 565.00% $180 $160 $40 $37M 560.00% 18.8% $30 5.7% 555.00%
Slide 5: Diversified business; profitable share gains continued in Q1
Diversified business; profitable share gains continued in Q1 Brokerage Revenue by service offering • Volume growth of 6% y/y • Profitable market share gains 8% • Volume growth +61% on a 3-year stack Truck Brokerage • Gross margin of 16.3%, flat y/y 11% Last Mile 23% 58% Managed Transportation Comple
Slide 6: RXO technology adoption continues to increase
RXO technology adoption continues to increase Loads created or covered digitally RXO Drive™ app total downloads 7-day carrier retention 79% 1M 96% Average weekly users 920K 87% +25% y/y Active network carriers Q4 22 Q1 23 Q4 22 Q1 23 -3% q/q Engagement on the RXO platform continues to increase 7-day
Slide 7: Brokerage sales and pipeline update
Brokerage sales and pipeline update Strong customer Bid momentum Pipeline continues to relationships continues from Q4 2022 build* Contract volume growth Annual bid opportunities +50% and +84% on a of 19% y/y increased by ~11% q/q* 2- and 3-year stack RXO is attracting new customers to the platform
Slide 8: Q1 2023 adjusted EPS bridge
Q1 2023 adjusted EPS bridge Earnings Per Share Q1-22 Q1-23 GAAP Diluted EPS $0.34 $0.00 Amortization of intangible assets, net of tax 0.03 0.02 Transaction, integration and restructuring costs, net of tax 0.02 0.09 Adjusted Diluted EPS (1) $ 0.39 $ 0.11 RXO delivered Q1 2023 adjusted EPS of $0.11 (1
Slide 9: Q1 2023 adjusted free cash flow walk
Q1 2023 adjusted free cash flow walk 1,2 1 Converted 100% of 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 compensation.
Slide 10: Balance sheet update
Balance sheet update Capital Structure (millions) Q1 2023 Leverage (1) Current Maturities of Long-term Debt $ 4 3.0x Long-term Debt 451 Target 2.5x 1.0x – 2.0x Total Debt $ 455 Less: Cash 121 2.0x Net Debt (1) $ 334 1.5x 1.7x 1.0x 1.2x Available Liquidity (millions) Q1 2023 Cash $ 121 0.5x Revolver
Slide 11: Balanced capital allocation
Balanced capital allocation Organic growth Share repurchases Opportunistic M&A 42% return on invested $125 million share Complementary to RXO’s capital(1) repurchase program strategy Balanced capital allocation philosophy with a ROIC-based approach (1) ROIC for 12 months ended December 31, 2022. Inv
Slide 12: Historical volumes and gross profit per load trends
Historical volumes and gross profit per load trends Brokerage volume and gross profit per load 6,000 $500.00 5,500 $450.00 5,000 $400.00 4,500 $350.00 4,000 $300.00 3,500 3,000 $250.00 2,500 $200.00 2,000 $150.00 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2018 2018 2018 2018 2019
Slide 13: Outlook commentary and FY 2023 assumptions
Outlook commentary and FY 2023 assumptions Outlook commentary • Q2 2023 year-over-year brokerage volume growth • Q2 2023 sequential companywide adjusted EBITDA growth • FY 2023 brokerage gross profit per load moderation vs. FY 2022 • Last Mile FY 2023 EBITDA growth vs. FY 2022 FY 2023 assumptions •
Slide 14: Key investment highlights
Key investment highlights 1 Large addressable market with secular tailwinds 5 Diverse exposure across attractive end markets 2 Market-leading platform with complementary transportation solutions 6 Tiered approach to sales drives multi-faceted growth opportunities 3 Proprietary technology drives effi
Slide 15: Appendix
Appendix RXO
Slide 16: Financial reconciliations
Financial reconciliations Reconciliation of net income to adjusted EBITDA and adjusted EBITDA margin Twelve Months Year Ended Three Months Ended March 31, Ended March 31, December 31, (Dollars in millions) 2023 2022 2023 (3) 2022 Net income $ - $ 39 $ 53 $ 92 Interest expense, net 8 - 12 4 Income ta
Slide 17: Financial reconciliations (cont.)
Financial reconciliations (cont.) Reconciliation of net income to adjusted net income and adjusted diluted earnings per share Three Months Ended March 31, (Dollars in millions, shares in thousands, except per share amounts) 2023 2022 Net income $ - $ 39 Amortization of intangible assets 3 5 Transact
Slide 18: Financial reconciliations (cont.)
Financial reconciliations (cont.) Reconciliation of cash flows from operating activities to free cash flow and adjusted free cash flow Three Months Ended March 31, (Dollars in millions) 2023 2022 Net cash provided by operating activities $ 42 $ 103 Payment for purchases of property and equipment (12
Slide 19: Financial reconciliations (cont.)
Financial reconciliations (cont.) Reconciliation of Adjusted Gross Margin and Adjusted Gross Margin as a Percentage of Revenue Three Months Ended March 31, (Dollars in millions) 2023 2022 Revenue Truck brokerage $ 600 $ 824 (1) Complementary services 437 524 Eliminations (27) (36) Total Revenue $ 1,
Slide 20: Financial reconciliations (cont.)
Financial reconciliations (cont.) Reconciliation of net debt, gross leverage and net leverage March 31, (Dollars in millions) 2023 Reconciliation of Net Debt Total debt $ 455 Cash and cash equivalents 121 Net debt (1) $ 334 Reconciliation of Gross Leverage Total debt $ 455 Adjusted EBITDA for the tr
Slide 21: Financial reconciliations (cont.)
Financial reconciliations (cont.) Reconciliation of Return on invested capital Year Ended December 31, December 31, September 30, June 30, March 31, (Dollars in millions) 2022 2022 2022 2022 2022 Adjusted EBITDA $ 306 Total assets $ 2,031 $ 2,237 $ 2,372 $ 2,296 (-) Depreciation (65) (-) Cash (98) (