Slide 1: Third Quarter 2023 Results
Third Quarter 2023 Results November 7, 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 presentation to the most directly comparable measure under GAAP, which are set forth in the financial tables attached to this present
Slide 3: Q3 2023 highlights
Q3 2023 highlights 1 Solid execution in a 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 Strong liquidity position and optimized capital structure 3
Slide 4: Third-quarter financial and operating results
Third-quarter financial and operating results 1 Gross margin $ and % Adjusted EBITDA and margin % Brokerage y/y volume growth $300 590.00% $140 585.00% $223M $250 $120 580.00% $200 $173M $100 575.00% + 18% 570.00% $80 $66M 565.00% $150 $100 19.6% $60 560.00% 555.00% 17.7% $40 $50 5.8% $26M 550.00% $
Slide 5: Diversified business; profitable brokerage share gains continued in Q3
Diversified business; profitable brokerage share gains continued in Q3 Brokerage Revenue by service offering • Volume growth of 18% y/y • Full-truckload volume growth of 13% y/y, and +58% y/y on 3-year stack 6% Truck Brokerage • LTL volume growth of 55% y/y 11% • Sales pipeline +115% on 2-year stack
Slide 6: RXO continues to invest in the future – Q3 highlights
RXO continues to invest in the future – Q3 highlights Growth Technology Productivity • Onboarded new Brokerage employees • Launched enhancements to RXO • New Natural Language Processing in the quarter Connect™ platform, including: solutions implemented for ‒ Brokerage headcount increased both ‒ Enha
Slide 7: Q3 2023 adjusted EPS bridge
Q3 2023 adjusted EPS bridge Earnings Per Share Q3-23 Q3-22 GAAP Diluted EPS $(0.01) $0.11 Amortization of intangible assets 0.03 0.04 Transaction, integration, restructuring and other costs 0.04 0.25 Income tax associated with adjustments above (0.01) (0.06) 1 Adjusted Diluted EPS $ 0.05 $ 0.34 2 RX
Slide 8: Trailing 6-month cash walks
Trailing 6-month cash walks Adjusted free cash flow Cash balance 1 $15M of tax timing Includes $8M use for outflows increased Quick Pay adoption Adj. free cash flow impacted by increased Quick Pay adoption and $15M of tax timing outflows Note: In millions. (1) Adjusted EBITDA and Adjusted FCF are No
Slide 9: Q3 balance sheet snapshot (prior to optimization)
Q3 balance sheet snapshot (prior to optimization) Capital structure (millions) Q3 2023 Current maturities of long-term debt $ 3 • RXO continues to have a strong liquidity position, with total liquidity of $604M at the end of Q3 Long-term debt 451 • LTM leverage increased as RXO lapped 2022 Total deb
Slide 10: Optimized capital structure
Optimized capital structure 9/30/2023 Capital structure (millions) 9/30/2023 Pro Forma • Exercised revolver Revolver capacity $500 $600 accordion feature, adding $100M capacity Term loan $100 - 7.5% notes due 2027 $347 $347 • Paid down term loan, Finance leases and other $7 $7 expecting >$1M of * Gr
Slide 11: Historical y/y brokerage revenue per load and gross margin trends
Historical y/y brokerage revenue per load and gross margin trends • Q3 y/y revenue per load decline moderated ~700 basis points when compared to Q2 • Length of haul and mix shift were headwinds to Q3 revenue per load • Revenue per load declined mid-teens % y/y in Q3 when adjusted for length of haul,
Slide 12: Q3 monthly brokerage gross margin trends
Q3 monthly brokerage gross margin trends • Improved freight market throughout the quarter ‒ Buy-rates cooled in produce regions that impacted Q2 ‒ Tender rejections increased ‒ National load-to-truck ratio increased throughout the quarter ‒ Improved retail/e-commerce customer inventory levels • RXO-
Slide 13: Historical volumes and gross profit per load trends
Historical volumes and gross profit per load trends RXO’s brokerage gross profit per load declines moderated in Q3 2023 with significant volume growth 13
Slide 14: Outlook commentary and FY 2023 assumptions
Outlook commentary and FY 2023 assumptions 1 Outlook commentary • Q4 companywide sequential adjusted EBITDA growth • Q4 year-over-year brokerage volume growth • Last Mile FY 2023 EBITDA growth vs. FY 2022 FY 2023 assumptions • Capital expenditures: $60-$65M, incl. strategic real estate investments •
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: RXO technology adoption update
RXO technology adoption update Loads created or covered digitally 7-day carrier retention Weekly average users 97% Flat y/y 81% 77% 75% Active network carriers +1% q/q Q3 23 Q3 23 Q3 22 Q3 23 Loads created or covered digitally increased and RXO maintained a strong 7-day carrier retention 17
Slide 18: Financial reconciliations
Financial reconciliations Reconciliation of net income (loss) to adjusted EBITDA and adjusted EBITDA margin Six Months Twelve Months Ended Ended Year Ended Three Months Ended September 30, Nine Months Ended September 30, September 30, September 30, December 31, (Dollars in millions) 2023 2022 2023 2
Slide 19: Financial reconciliations (cont.)
Financial reconciliations (cont.) Reconciliation of net income (loss) to adjusted net income and adjusted diluted earnings per share Three Months Ended September 30, Nine Months Ended September 30, (Dollars in millions, shares in thousands, except per share amounts) 2023 2022 2023 2022 Net income (l
Slide 20: 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 Nine Months Ended September 30, September 30, March 31, (Dollars in millions) 2023 2022 2023 2023 Net cash provided by operating
Slide 21: Financial reconciliations (cont.)
Financial reconciliations (cont.) Calculation of gross margin and gross margin as a percentage of revenue Three Months Ended September 30, Nine Months Ended September 30, (Dollars in millions) 2023 2022 2023 2022 Revenue Truck brokerage $ 591 $ 686 $ 1,748 $ 2,265 Complementary services 1 419 487 1,
Slide 22: Financial reconciliations (cont.)
Financial reconciliations (cont.) Reconciliation of net debt, gross leverage and net leverage September 30, (Dollars in millions) 2023 Reconciliation of net debt Total debt $ 454 Cash and cash equivalents 104 Net debt 1 $ 350 Reconciliation of gross leverage Total debt $ 454 Adjusted EBITDA for the
Slide 23: RXO
RXO