Earnings call transcript Q4 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to the RXO Q4 2022 Earnings Conference Call and Webcast. My name is Michelle, and I will be the operator for today's call. Please note that this conference is being recorded.

During this call, the Company will make certain forward-looking statements within the meaning of the federal securities laws which, by their nature, involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those in the forward-looking statements.

A discussion of factors that could cause actual results to differ materially is contained in the Company's SEC files, as well as the earnings release.

statements, a Relations the website measures section important regarding to in earnings for that refer reconciliations information Investor and when the of forward-looking results. the should Company copy non-GAAP discussing Company's of release additional of uses You the disclosures its financial and the Company's

you I will over call begin. the to Drew may now turn Wilkerson. Mr. Wilkerson,

Drew Wilkerson

for since Thanks everyone. joining our from morning, call, first today's Good our spin-off XPO. earnings

Jamie Harris; in Weisfeld. Charlotte are Officer, Officer, Chief Joining Chief me Jared and Financial today Strategy

challenging Our company first of quarterly was a report environment. as a strong standalone one, We despite macroeconomic EBITDA adjusted reported $XX million. the

Our in QX a muted another quarter were by season. brokerage, of profitable despite driven volume peak growth results

transportation, also performed services, complementary Our well. managed including last and mile

Overall, up remained our points year-over-year. XX.X%, strong basis at XXX margin gross

significantly fourth brokerage volume grow record We share tech-enabled continued Our business quarter. the in industry, take new and outperform set volume the a profitably. to

up year-over-year of volume Brokerage fourth quarter XXXX. X% was in the

year, we For XX%. grew by the brokerage volume

We And are brokerage by XX%. sustained increased the Since brokerage has volume XXXX, growth. XX%. quarter volume of XXXX, has fourth increased RXO's our volume by proud since of our

profitable focused will and that momentum, We deliver. continuing we confident This are on are this is growth. we

was the complementary year-over-year. of Many In services XX.X%, of also gross quarter, fourth XXX brokerage margin our increase an basis points performed well.

more us large are the stay several contracts RXO. they years won shippers business with for to when to transportation managed and transportation they customers. strong is do, to pipeline In new now, Our come. And outsource with departments above-market, right especially large, their likely

e-commerce difficulties the despite in performance strong, mile the last facing and the retail was sectors. Additionally, quarter

have forwarding, air December since of strongest stops XXXX. terms rates In expected. ocean freight December as XXXX was our and declined in

spend of significant more now have approximately few strong. synergy flow, of about that done free is domestic capable and our a our business XX% forwarding's comprise will offerings business, remains of domestic generating balance services a in profitability. provides talk other business. this RXO's to parts model sheet These We freight diversifying minutes. and of job good cash Jamie

playbook our market. in We for maintaining are the market while best-in-class a have stage this of focused profitability. At on cycle, share, point every taking we the

volume though contract declining. is are rates Our growing,

Additionally, in and on But year. is putting load the the there favorite opportunities cycle. the are dynamics of in my limited are market, margin first these the spot part gross half pressure of the per this

RXO our our carriers. well delivering track is of positioned market Jared more massive win discuss choosing and the the our of They RXO market consolidate cycle in This best-in-class their technology capacity. positions record customers, will detail. inflects. our to for as because when us customers are results for

and was performance by winning technology. sales best-in-class underpinned financial our Our strategy

sales blue-chip with while continued Our on-boarding new long-standing team companies. expand customers, to business

pipeline an us stronger has impressive coming at than are customers and our to in been it New is sales rate, several years.

on annual brokerage more with XX% driven revenue the customers year-over-year RXO in quarter bid grow to bids. about Existing us. continue fourth by

The number generated the revenue year. years. customers increased by last million the of the the versus customers of more of two revenue For XX% generating over by us $X with has XX% who $X of than full-year, number increased brokerage over prior million

customers our unique XX% of also XXXX, best-in-class came one services. see revenue choose our of more portfolio Customers Our our customers RXO In technology. services. from than of in value about utilize of that because

growth representing the loads us. covered than been quarter, has created ever were In year-over-year. app digitally, RXO times, most The XX% or downloaded XXX,XXX our of the XX% fourth more for Drive

that new have and a XXXX. leaders performing company, heading how to smoothly pleased those We conditions, stand-alone I'm with will to have technology invest RXO bid and market volume significant with our into for with years. continue to are been well push for even more our in the Relative adoption. as are we integrating momentum

We've technologies. combination assembled and of strong leaders, seasoned in business, best-in-class cutting-edge of operators the some best the a minds

great startup. the entrepreneurial an combines and company We the a have culture, experience a which of industry of with spirit leader energy

of the were executing scenarios. in fourth are able proud while a accomplish volatile variety we planning environment, are we And what are quarter. a macro also for to well We we of in

Our business volatile thrives times. during

We in have that grow year-over-year industry, technology to the and outperform I'm the first a the volume the playbook, quarter. confident on basis and brokerage will people again the we

volume on brokerage compared the are Investor volume Our January targets XXXX the volume growth, year. to last meet when quarter and long-term for rate. RXO's our we long-term accelerated growth confidence. RXO of track supports fourth grew strongly to at and Day positioned we January year-over-year remains set

And will now Jamie Jamie? quarter. cover the

Jamie Harris

In Thank with and of generated everyone. $X.X company, to XXX year-over-year. up our strong good we Drew, in to quarter basis XX.X% margin, stand-alone a the revenue a morning $X.X compared quarter first XXXX. remained points billion as billion in Profitability gross fourth you,

the million quarter XXXX. quarter to $XX fourth adjusted XX fourth in $XX million XXXX. of our in the adjusted X.X%, And margin of was points EBITDA was compared the Our from quarter down EBITDA basis

results We environment. the are these economic with given overall very pleased

Adjusted earnings for the quarter was $X.XX per share.

offerings. by driven brokerage, quarter gains of another market profitable as share well last in and as managed transportation results in our were results mile our service good Our

grew year-over-year muted Importantly, we outperform and a we the X.X% to continued sequentially. volume peak season, brokerage X% industry. by Despite

quarter. set we volume to in a record that the fourth We report are pleased new

standpoint, gross a million. the $X year-over-year. From for line, brokerage interest was our profitability again the margins best-in-class Below were XXX up quarter expense points results brokerage basis with

rate XX.X% quarter, the tax Our in adjusted effective than by our driven tax lower items. expectations, non-recurring was discrete

balance strong to the had cash in continue we a cash, we Regarding quarter. a strong collections sheet, and have

like cash. will expectations cash quarter non-recurring investor the of the $XX which XX discuss post-spin, for as was We refer reference. of X. internal would cash with had ended is million the you on of deck to outflows $XX we today, I to with million I completed consistent As our Slide This November

including The $X tech-related of million CARES spin-off, related the which items outflows, of Act. money received final cash million portion prior of year such the related rebranding financing repay the and the and to $XX banking to as remaining CapEx. were in the costs, cash costs outflows

conversion our to flow. ending unusual items grow than strong, million, be expect $XXX cash more continue translates Prospectively, cash to EBITDA sequentially. into $XX was represents of these free This conversion to cash into of a Taking our we balance have we free cash very EBITDA expect XX% free would a million. been to to which strong. flow balance post-spin flow our cash and account, This

million are in cash expected the undrawn, our outflows. balance. Approximately in XX Available including cash our year. liquidity, be anticipate restructuring these and $XX spin-related weighted costs XXXX, million $XXX million remains and remains of to first with capital costs approximately half million revolver, approximately which We the heavily of $XX December of more strong to $XXX in million $XX

Our of net stated Xx. at Xx our to of target quarter-end leverage X.Xx low the adjusted was range end which EBITDA, remained at

expect we and $XX assumptions, effective the range modeling expense approximately of $XX XXXX tax $XX to an Regarding rate million depreciation million, in of adjusted and $XX million interest and XX%. amortization between million,

our Overall, You should our approximately operating also and of model are well shares. an as average results financial diluted sheet we position. balance as share XXX with pleased count million

outlook. Weisfeld, to like over Strategy who it long-term to Now about Jared our turn will Officer, Chief talk more I'd our

Jared Weisfeld

our like with It's a structural first morning, to profitability Jamie, with of our and on business. the be pleasure post-spin. good start earnings to Thanks, everyone. I'd you call

have enabled our market with volume We by growth best-in-class technology. gained share

profit have gross than adjusted business, XXXX. about brokerage we current get Importantly, load to roughly per since line our gross with EBITDA profitably, We three-year Within this done asked average. QX our per was in more our levels. relative our our often profit doubling historical load

helped business outperform our of us the quarter. diversity The in

retail year-on-year materials, expected services basis. our solidly volumes volumes and and and home a While professional all automotive, healthcare, declined on grew e-commerce as in building

and spot helped mix. also outperform and optimize technology profitability and us our Our contracts

XXX our This contractual representing QX, contract points again basis and we in had of fourth basis XXX quarter, mix favorable when quarter a compared points the sequentially of volume business XX% to XXXX. up with

technology continued addition the platform This to RXO or XX% adoption our measure. created was our covered that this within were a by continued of QX, Our our capability gains. previously also is In loads market captured of in digitally. technology not share of result was Connect fueling

to quarter. first of expect cover the digitally into We sequentially percentage loads the grow will created

The Registered RXO times, increased retention XX% up XXX,XXX strong XX%. was XX% more increased QX. been seven-day has weekly XX% carriers users year-over-year Average in than year-over-year. downloaded drive year-over-year. carrier app And importantly,

and we into single-digit in I basis. the a cycle. EBITDA. Looking are QX, broader high and volume to adjusted expect between wanted our full-year Historically, we've where at cognizant macroeconomic perspective. the anywhere and in represent its low-XX% outperformance of environment, to cycle, business of we the some year-over-year freight of on again this continue grow quarters stage brokerage We QX provide seen are still

in a for the it non-retail verticals our be have sales load, This profit gross a growth but per by when inflects. growing strong and reduction will nicely us mitigated volume pipeline, We are year-over-year. continued cycle positions

I be puts thought year. it takes helpful would to provide also for and the some

we Our supported outperformance strong and another by momentum, volumes the with XXXX brokerage volume earlier. significant be business to we confident of feel XXXX referred year exited that January will that

our us of restocking second could that lead XXXX the occurred Additionally, in are significant to in some telling XXXX. half customers of that destocking retail

per that It However, to stabilizes, into similar moderating, is load rates as our operating QX XXXX, will we even when still and cost transportation gross dynamics, contract moderate per to lower of effect. XXXX profitability gross load at profit purchase in to though levels. important profit the compared are note come best-in-class is

a a playbook profitably. gain RXO cycle, market for in and strong every is share We to have position

gross in approximate XX XX% in $XXX This remain me which brings outlook, million to calls confident That employee is our also our midpoint the embedded not organic. EBITDA an at for outlook. guidance through contemplates only with in increase margin XXXX, our of months. The EBITDA We load versus moderation the five-year expansion XXX% assumes five-year last embeds productivity. modest but profit guidance the environment, uncertain macro increased of an per XXXX. incremental It it growth

provide achieve income. EBITDA adjusted model relative we asset-light a strong with generation business net structure capabilities. us that free its conversion to free confident are continue and flow we variable cash cash significant cost will Prospectively, RXO's highly to and flow

us has Our free XXX% grow to use excess organically. within six brokerage, priority balance X that of years our It's stay our leverage intend growth providing flow Xx business the note organic. operating been low-end to cash currently the to that flexibility at is the over deploy are important last our to of range, sheet to and within our net effectively. we We to target,

plenty share our we with have taken with We profitably. generate meaningful We free and to deploy grow. a $XXX billion capital balance flow, us in strong To operate sheet provides market of our room flexibility effectively. cash to summarize, to plan

small runway strategy, and growth. of winning a We a and long team a an a proven profitable share have enormous market, for

turn over With it for operator I'll Q&A. the that, to

Operator

begin the Our first Jefferies. session. Moore now Please will Thank of you. we question-and-answer [Operator ahead. Ladies from Stephanie and gentlemen, go question comes Instructions]

Stephanie Moore

Thank Hi. Good nice morning. you, on a and quarter. congrats

Drew Wilkerson

Stephanie. you, Thank

Stephanie Moore

I quarter. fourth touch strong was continuing market quarter, just wanted fourth in in the just despite quite I think to on the in just opportunities, what softer Also, outperformance. to stood me bid increase volume the out the into the the first Clearly quarter.

little results? contract driving wins that volume you could Thank maybe of seen for any So if drivers of kind what really that of Or major seeing, you've the a might bit wins other strong be the outperformance? about large in you're this terms you some you. could pinpoint talk some

Drew Wilkerson

absolutely. Yes,

This for customers. in market, the at volume question, we've Stephanie. is got So outperformance you thank our the Drew. great with relationships When look our you

will their customers They best for the us to of their efficiently week they come service, technology year, place day their like provide should them that got with contribute helps decide they been years far grow because XX for solutions have route average. with use, supply decide the back we they they to in us transportation to customers should chain something, after and we us great help market on them transportation a what should create where top we've continue budget, and and of transportation. warehouses things as ship the to year that what efficiency Our as mode even

is year-over-year that we that us, look bring, you a we load in you at XX% the even customer when capacity that the count. look offer, XX% the technology. and customers revenue down. with When quarter, per fourth at choosing because is of more why of of our because because we service revenue that's is with are did on the So bid was up coming And basis,

we're and momentum got inflects. we've sales well when the great So for a on side, the positioning market ourselves

Stephanie Moore

that I just Act, then a Is any be something share which paid? do Just just I the there And you. being that's On commentary for. didn't Thank helpful. would that looking until preclude for share to CARES the question are didn't – account you. second Thank the at repayment would able of that slide was you am fully me. realize and from repurchases, repurchases

Drew Wilkerson

us this deferment No, – that And doing piece that Act happened that. payroll CARES final of from not couple the a prevent would is of years the ago.

So doing anything not we're should But – there. us require that. it done with totally from prevent

Stephanie Moore

it. much. Got Thanks so

Operator

next BofA. you. from Thank The Ken comes of question Please ahead. go Hoexter

Ken Hoexter

there congrats Is the confident created the finish, kind morning, I covered a maybe more on we about on thereafter? year? talk you any guess, and can obviously think how that? maybe or understand, season. into could You the pinpoint still bid of should to much about the good of positive bit you how gains is public quarter. you early just do can Drew, question Hey, fully fully quarter. too you little about, on are digital quantify say – XX% first Stephanie's on on start what the we How for so being can Is digitally, is you to it when And it or talk system? insight volumes talk first volume

Drew Wilkerson

Yes.

Ken, macro still it's the at in, So environment we're look a environment. tough that just when macroeconomic overall you

we're So fact proud going first the be we're again that of in to quarter. able grow volumes the to

That's half talking something more conversations from to be months and benefit something year, – some are is what that's were nine potentially restocking. not bit As towards will to about towards we're they six, from unique their back where you us. hearing ago the little of a our entire be shifting That's now the destocking, a that look the of customers industry.

to momentum business in the idiosyncratic have the is pipeline we that quarter. sales our What is the and

from that, we're ourselves that's that inflects, positioned very, for have-nots. market So when very really positive now I'm haves market right separates well. why the This we on in the the

for check that And have solutions efficiency. contribute they're chain working I of technology to with. them what that for have supply provide and by integrate looking mean carriers that for are carriers customers. of a looking that to consolidating scale. looking for who capacity something lot our with we the for them the That's at They're their customers their is system, number to and box of that can all they're carriers those carriers They're service to access on

on that. excited So we're

of we continuing or The were gain created is something customer. your The that question not digitally. it's look at covered of what to most feel that is important – point. order life second to a number half covered and grow, the part is a the we fully is or portion being metric. being of important that of disclosing created XX% order of carrier, the half what at continue but and it's That's this to And of order the what part we're we cycle the We think adoption of, digital. significant

Ken Hoexter

is that the those in that talk we as that when through to season, I message win market? to using bid read the share? want to pricing intending just understand volumes per wins load. Should should terms that Just in gross outpace we read of to you share winning clarify, Or the profit

Drew Wilkerson

in profit not. the We technology, of Absolutely We because what fourth at percentage are profit XX% operate brokerage, pricing percentages, up And the year-over-year basis best-in-class line you operated in on market. which we points is of a to with algorithms, at basis. able price saw our gross our we feel XXX actually quarter. gross because in

share, to business go to us, be take do So profitably. market but to we and it price able for

Ken Hoexter

Great.

Operator

Wolfe you. Research. Group comes Scott of next question Thank The from

Scott Group

sort get once morning. about of up. gross you would on assume it around EBITDA. you that of what of talked percentage sort start – of good Should to about high-single of historical should EBITDA rates there much so relative get some per of sort near made spot troughs, how profit Or decline load EBITDA. guess, How really thinking historical EBITDA year? as when bottom XX% did – you're or about moving you sure to full-year think to have any to averages. to how last million And cycle, the we're a $XXX the color Jared, what, about Thanks, you the I we be can not XQ full-year comment comments we I of then

Jared Weisfeld

Scott. Sure. the Thanks question. Good for morning,

respect your with second to first. So take question, I'll that

as So to context instructive first wanted be quarter current additional give color thought it helpful results historical We you give would cycle. cycle on based a of public to and dynamics. company, you and the this we point some at of

you wide we've perspective. we cycle high give referring of it's that are I digits color EBITDA. and to call a low-XX% can we anywhere full-year where that certainly single seen represent range. from dynamic some it, that's to But appreciate a wanted historically, quarters between, And

to QX to profit sense of profit question you basis. your to go-forward average. fact wanted the where three-year our per as we're gross line give In I currently punching load years relates of to that at we context historical comment seen terms to you with give that as we're at gross that a just relative my wanted We ultimately, first in respect our it our have operating on three load moderate. a with a in per

we optimistic year certainly are we half. about second trough, dynamics should where cautiously year-on-year. These about XXX bid in are prior we question, As Drew for we're the to think – margins out, go into and bidding quarter, the but to are gross basis current the continue we as the the think to profitable relative not into going playing mentioned in that in terms I'm growth. you points of up about

for second out. from and are half, that hearing in see we'll how the plays the our there's We customers potential restocking that

Scott Group

it than better January probably most commentary. January than strikes just companies that had on better your have expected peers And Okay. commentary me then or maybe volumes, on

just Just thoughts had weather? – this your new perspective, Any market signs bottom? the some of is this in this on trend seeing Is favorable January? we are we better

Drew Wilkerson

we it was year-over-year we've we're his year-over-year a like fourth a for that relationships that us basis. on it's in where month basis. of to idiosyncratic quarter January in for a on And comments, look whenever and grew on more Yes, when a customers. volume it that actually we And strong year-over-year Jared our said the at than at us basis with and what got us, grew the faster we

an we expect QX the take our able be and outperformance and to to go industry expect share. We volume again, market in be to out

we're Right has are now, what where the customers, for put position. positioning point separates And a carriers in and last this five in over we we cycle, have years at the for point the service that the them the is great given us of ourselves inflection.

Scott Group

Thank guys. Great. you, Okay.

Drew Wilkerson

Thank you.

Operator

next Scott comes Thank question you. Schneeberger of The go Please from Oppenheimer. ahead.

Scott Schneeberger

of you any productivity productivity you now on track enhancement, metric that much a orders this expect how us very any that digitally. how as can any just how But topic, give covered side looks – maybe much of to I there? within just much. And covered what with that? measure by metric that to covered that? looking? is to a years morning. a is circle this technology looking you Thanks you Good trajectory digitally? maybe magnitude of or to as Do follow-up Could few shipper I per or sense you measuring is give mix fully. how you it Could sense in back and know you Thanks. of if type want created want us – driver are ago? disclose for a employee opposed how give side then feel is you And

Drew Wilkerson

space I'll room go adoption for or is a smaller the these on and we're When on greater Jared side of off, to out side. at go trucking your let portion at of lot created the percentage made you customer with on a have to question. bit green start or able It second a I'll we're on customer inroads customer And companies, drive we've working lot of little the of in be a there small covered, the the we take to in the carrier have owner-operators cycle. as look Yes. We side. the and business. to got continue the side, still where

Jared Weisfeld

midpoint, your productivity, the on that. standpoint, That's second and as at levels. we're to from of we look is relative to about We're $XXX going respect With very the in question. QX and XXXX focused continue brokerage our of higher it on brokerage guide Scott, to anchored And forward. did – QX we're million long-term what of to so productivity from EBITDA increased yield proud on going to XX% improve at a current

certainly that. we're on to So executing looking forward

for our realize ability can we respond dynamic that our ability think upside we XX% also business, we're to capacity. XX% to staffed we our within to. to the look respond I in brokerage environment, it's important When need to volumes, to – a at if for

Scott Schneeberger

Appreciate guys. that. Thanks

my meaningful For season, last the a follow-up, over was to I'm going switch that it peak with Obviously, mix. part mile. to of

you have Just in you're there? would how from imagine and seeing going how carry But through the Thanks. just approach that trending to – business takeaways peak and how that season, curious, you that's to XXXX? opportunity. I an this pricing

Drew Wilkerson

Yes.

really peak First, of much Scott, a there wasn't season.

in our and you why mile, best the December who look we we're since that's so having in performance we last had of of what are the and the at so times. space. we're mile When last And leader proud pre-COVID

for been have a long time. very We

because When put customers we us facilities XXX the got to XX% are doing miles talk of business want they national to within with of population. footprint, us a that U.S.

a the pricing, last opportunity into we some us, head able as we got of those that, in XXXX. We're right to a now. second think grow to lot grow be and negotiations of on bid be that's should in mile, we've And opportunity customers. your for with large an part to In us, question continue your of that for tailwind. So

services We be service. As to got we're the that the to we've fairly leader in want according provide. great space, we compensated the

Scott Schneeberger

it turn on I guys. over. Thanks, quarter. Congrats will the Great.

Drew Wilkerson

you. Thank

Operator

next Please ahead. Wadewitz go comes UBS. from The you. question of Tom Thank

Thomas Wadewitz

revenue load. you were Yes. in big ask loads you about a I something order pretty revenue the you about wanted a contractual comment Good per morning. thinking saw on load, of bit in to that still XX% I'm decline per XQ, the XX%. but

Or revenue goes you think do I season contracts at the how that and would bid we XQ, bottom load more revenue out, being load your further look in driven think as through market if step quickly? So per you per of per XQ? down spot maybe your load meaningful about have think rates about Do XXXX? as kind spot revenue stabilize repriced, more see you that by say you there's in that XQ, that's that might

Drew Wilkerson

brokerage. Yes. per a revenue look performance They're Thanks and and three look our are the volume percentage XX% the profit reasons regards the the proud performance and quarter, up that, quarter, having declining. first you at especially there question, In down. to for low. at you rates When fourth for were the at load spot of we're fourth of in spot a Tom. our is And in it. When gross

of last You look is around haul. the length we XX%. we then number. somewhere that a third at you basis midpoint, full-year last about We're contract I XXXX a that And talked contract holding to still this told thing pricing expect on to be the at in down quarter. the quarter And pricing,

our saw in quarter. with fourth haul reduced We be have customers' year-over-year great customers. and We've basis we a done length the on our shift job a of of able to our demand, answering to

Thomas Wadewitz

Is shifting have of the you look, further – about when I any think how should forward half? terms guess in – look do you? load contracts revenue in you but you stabilize? down Or do maybe thoughts it per for second So – as might bottom on XQ fall would you that the we think you

Drew Wilkerson

didn't expect market. the it going we not take industry share anchor to for and is down able this Tom, to Yes, full-year, one. call We're roughly overall. the year-over-year to basis. point the to we that contract to top in We're be pricing bottom on out go outperform call towards we'll the the And confident be a and XX% in previous

Thomas Wadewitz

Okay. Yes, fair enough.

be headcount. Second the volume you year, on are versus you continuing Kind adding of XQ thinking question guys January. in in to headcount volume just in nice growth? just this on about XXXX? growth you have that momentum how Thank support you. would Are resource Obviously,

Drew Wilkerson

to is if where that we The And volume we business. And grow be at XX% biggest and to have XX% overnight, as able grow we we for customers to their to. be growth. said, be for look felt as conversations staffed like continue could to being headcount, thing having to Jared good have your are with with they grow about capacity those talk them, able to the to staffed

So be but to we're able looking technology, employee staff our for efficiencies to gain to through continue out us, within stay we to growth. want base and up staffed for

Thomas Wadewitz

Okay. Great. Thank you.

Drew Wilkerson

Thank you.

Operator

Please Thank you. The Fargo. go next Wells question comes from of Allison Poliniak ahead.

Allison Poliniak

to going I'm morning. about ask retention. carrier the Good Hi.

any above in Is you Has give being that been us to six there? understand, range. shift has of Thanks. that Just there or if been? there's three any timeframe, the seven-day expand out we maybe color trying trend as to the about mid-XXs can that? talked sort been below months, what You that it

Drew Wilkerson

like an coming with with a lot things which around carriers carries smaller And because week. you with a on in load coming up roughly is base an to discounts is RXO that. for times where, no getting RXO access from easy things back of life, system And their matter can the tells all Connect. book for Allison. you talking owner-operator, back just system something And an cellphone, about pick that do to is most can important to human load, little can maintenance, and a you you, Extra next able to interaction, you our a built RXO be you within Connect business we've use, a to that's while them program, that tires, fuel, with roadside as your you're you truckers that, to that can line us, that do It's they're do negotiate, whenever business coming

for dividends you high why such it that's a pays us. retention So see and rate

Allison Poliniak

question some know sort maybe And to of about I I capital as the how that thinking you cash through Leverage get Great. is you're about as revisiting, that here? deployment those Thanks. the to lower we think want But capital end of end. at sort XXXX outflows in maybe you there's towards of back can talk go earlier. sort deployment of half. objectives first

Jamie Harris

question. our Allison, know. cash the We quarter. this is you the strong with really top a a is Capital good balance priority. good had We we Jamie. sheet, year deployment, – Yes. really Thanks as for growth entered organic did

mentioned, the six our last As is of years, organic. growth Jared XXX%

we're going good on that. lot opportunities So be to a have still We focused there. of

about think framework, you not our If is a top priority. M&A overall

We came it. that made If things look. a sense, look we along strategic will take at a

capital we're look look the with our also you returns But If of quarter form in number to one something dividend, that's now. that organic is going buyback a dictates. or going our cash. in the at to we're framework a good, And at strong priority right as market have really

to a things. keyword And with you I options. lot of is, But got look so the all think leave we're going I'd those at we've

Allison Poliniak

Thanks, Perfect. guys.

Operator

ahead. of The Please next JPMorgan. question comes from go Brian Ossenbeck

Brian Ossenbeck

Good for the questions. morning. Hey. Thanks taking

but you the pretty of turning look about on matter, talk still strong as us December, got just to terms feel the there What's market the a January, terms What in you more base base? adding of want don't you some support you topic you give know on can you the Are the keys? How the about to carrier the weaker or you I Drew, of their context like? in XXXX? side bottom January. in December, into go So is do people your are choppy of that supply retention seeing

Drew Wilkerson

a the of got carriers scale, we're they their added come to able where fourth to it's company be of quarter RXO platform. proud Connect to load program because book us. having lead rewards it. we're something to find in the that actually carriers And business to we Carriers, want do without a system to Yes. us next again for great our to can We've

not turning from our overall. the far as base So we seen have that in as carrier keys

Brian Ossenbeck

to Okay. Good know.

find about who are maybe technology account Are have any – mentioned picking outside. But reading space. and some So looking from able some kind from do you on into just attractive what on the I I interesting could talent of Maybe you to people normal? that. you consider the you and Or add talk other you are side. to more talent what been you I'm you above comment think would There's too that hiring integrating the reductions not much guess, the that that up front? beyond internally across and

Drew Wilkerson

is be our technology we for look to to the part have looking people not make space, the things talent solution when add at in And our us organization. to of always of It's the our to one that better. want DNA, We're in great technologists we've you hired us some who game-changing is create best world RXO of the the best able Connect. in industry, is but just technologists, the what a to

can We forward our street So with sit where the to and continued we'll growth. and provide that, able into very what absolutely we add is talent happy look to off pick do to it. up business, technology to

Brian Ossenbeck

you I natives more of of you pick usual do with this find talent? pullbacks than guess out digital to and some time that is do the some there, the better up think

Drew Wilkerson

They've it. I'm putting money over us team in to come organization, additive again, to our industry. do the over the seen to putting is that folks last in We talk But number a decade. results if something behind I'm if who technology it's I'm behind folks. haven't are like we'll amazing out we the very feel we'll huge digital the somebody, delivered And we've them. And that from there money And confident got.

Brian Ossenbeck

Thank Drew. Appreciate Okay. it. you,

Drew Wilkerson

you. Thank

Operator

go Thank next Please question Stephens. of Atkins comes ahead. you. Jack The from

Jack Atkins

you Good taking questions. my thank and for Okay. Great. morning

bit, to I into maybe kind guess growth back to just I'd the volume a dig So like circling that. of

So revenue to increased seeing full growth. there? Obviously, significant LTL lower Or about driving increased when you components the strong higher seeing market. the any mix you Just trying changes – you But the volume is are that's volume, revenue Like think driving drayage outperformance volumes. square versus volume? example, margins per are rest to that all of with load truckload that and the X% net that? mode is for

typically So that move same sort direction. of just in all those don't things

Drew Wilkerson

us to grew of transportation modes off able also to that at all We've truckload built grow LTL quarter. well. continue business and other to And the be and modes the in for We're to grow freight. continues Yes. looking of fourth out. driving That's something as

Jack Atkins

Okay.

just there. combination a truckload not it's full So of

So I just want to kind of clear that up.

Drew Wilkerson

correct. That's

Jack Atkins

And pressures, as as guidance be kind around then, there bit sort depreciation interest sort in sort the of below side, any either square and you sort guidance. if commentary think the would about the of up think revenue, the maybe of to about helpful. I could about us cost some net appreciate OpEx OpEx or guess, commentary Jamie, kind help any buckets we of talk But of that of expense of XXXX, XXXX. kind inflationary little we a I of

Jamie Harris

Yes.

So look first structure, variable on you all. line highly there OpEx, a if the we've below got of specifically, cost

do demand. with So we're able to

We're make lot stand-alone views efficiencies doing first how we We can a structure end-to-end. we cost translate cost easier can ultimately at optimizing begin in the process take decisions, RXO a thing being as from our quicker, make how are as we journey savings. company, the company, engineering our a and decisions done – into will separate company, which is we've cost that look of

Day. to seeing our the what is to Investor we to modeling good, vendors structure We're But cost OpEx, seeing it overall and In can't be what – to terms stay that. the year. standpoint, of is our for lower the guidance well. one directly it line thing overall really point an pools do out say can from with provided I structure want inflationary we we able is coming in with cost in where back negotiate we're on our interest, as want provide some at market we Back

So is see We Day. we're down down mentioned, $XX came you million million also modeled we at And million as I about $XX to range. – something in think year-over-year. depreciation $XX in we back Investor

Jack Atkins

that. would follow-up a variable portion like is we about of real quick If flow just on think Maybe would Okay. revenue? the What you SG&A say that item. line

Drew Wilkerson

Yes.

specifics of is before. given cost the haven't all almost mean We I you variable. about if think transportation that

we've that, take you mentioned structure was of total our XX% cost if variable. So

go by XX%. going it's definition, variable than to line, the So the SG&A you down to be if less

like; I to could you think XX% depending times. being that the on what see range topline XX% in at looks the

Jack Atkins

Thanks Okay. for very time. the much That’s super helpful.

Operator

Thank you.

Our next question comes from Jordan ahead. Alliger of go Goldman Sachs. Please

Jordan Alliger

Yes. Hi. morning. Good

a can on contract timing? looking And are process? contract that, curious, started? you then XX% just bit kind you is down it You're mentioned I Is where you're following of think through? little Like, talk about you rate in at. Just XX% the negotiation what

was the I think that for full-year.

So I'm hit just you point is as is contracts? you to the Thanks. still you yet think curious, Or come yet? that have that discuss something

Drew Wilkerson

Yes.

cycle part the far midpoint QX. bid in where in the is heaviest starting going of QX cycle, we're the As us at bid at as the through for and

up, looking So that contract, you full-year. right out wrapping at – and look we're XX% it of the comment at When at we're year looking on that was coming full it. the was

And so right coming those for of we're out rates now season. implementing that, bid

Jordan Alliger

Okay.

you ballpark this seeing the during of heavy period that you're just that's about. So about that sort talked

understand. Just to make I sure

Drew Wilkerson

correct. That's

Jordan Alliger

and and restructuring of then quarter the you follow-up. to Like, I some – is said costs? right. the think XXXX. sense these what And $XX of quick of you All million Thanks. are million just million can $XX integration in The what the fourth in $XX costs, transaction components a give

Drew Wilkerson

Yes.

XPO some costs we of had had stand to our impacted start what flow. of to logo. from going the move RXO we that. that things costs, to Rebranding the So like fees banking the into to had up We and stand-alone happened post-spin a million the called rebranding, that new we logo on cash things fell focus and where that some $XX cash out CapEx We financing to business. I'm want in

areas. had other about some type think tech restructuring. general in mainly You We

prior a of lot we to we were the there's spin, If while the pulling costs were together. that go spin duplicate running you

we that numbers more spin-related think would the the substantially. XXXX, versus think be million you being costs come down $XX the down in the year As million into plus just see second. P&L about will restructuring of expenditure. as of quite those I expenditure look half of We $XX I predominantly you million cash to come than in would see XXXX, $XX or year. first And but so forward the throughout comments, the into expect, – minus And those or that those materially you'll mentioned will

Jordan Alliger

you. Thank

Operator

Thank you.

ahead. Please Our last Susquehanna. question comes from Bascome Majors go of

Bascome Majors

taking for my question. Thanks

Dube excess you're Just cost to running kind OpEx agreements, the with there one systems thing. that where from of Are follow-up more transition on sort and side. or duplicate really of any

over two think the as about any can side? year age that Just come costs cost the out or we those naturally agreements on that next Thanks.

Jamie Harris

This Yes. Thanks Jamie. question. is for the

spin, of had through we As transition number the Most transition of very service we to short agreements. a those lives agreements had attached them.

that number where a those actually we agreements We services. ended we already. have service we call fact, In transition agreements had agreements reverse providing of some were

have if you completed. think been number into already I a look those of XXXX,

of amount that as this the first – of first rolling we year be quarter complete first being we'll a this have quarter in separate. off We large

As we one the cost our way look forward on structure, that's other. to the impact balance really of material or a not XXXX,

news is a of already about sort was stand-alone very as think this good self-contained. the it I business

cost well, very the going new we're And so stand-alone traded both pleased side a as side. performance setting it up with the publicly well company and as very is as

Bascome Majors

That's look the cash if as to from goes. there roughly that uncertainty And there. thank anchor understand $XXX would come to to of as the you components great maybe to – desire in can to you for if the call the in here, here a color you given news. far that EBITDA you we how full-year annual you were cap walk And around to free through get it of give not flow what But EBITDA, million like, could off can range? and the Street's just us it were EBITDA outlook

market the different once kind a even more to more any a to public and get quarter, it thoughts to like really lot a as [indiscernible] to stabilizes you've giving brokerage-related maybe you I just environment, And we you'd But whether at when experience higher love not company how as it come at be I'd stable of want hear, of forward your guide, public mean understand will Thank I seen approaches a We've how annually, go companies. your all. a level. different company. got on you. here. from

Jamie Harris

Yes.

that first is So take take let part Jared second. and of the this Jamie. I'll the

about If you annual point, reference will or that out We've a point have conversion, to think $XX the we free as use a modeled million we $XX range of year. service. starting cash million flow for the EBITDA debt an in

that that about X% see can talked over the We've years that. There X% CapEx. long-term, exceeds think long-term. where have revenues. the I be But over about will about our will average, you We of on

grow about obviously. what that But see working of And the is think see way as of talked use a payment, working we've tax dollar we capital we also, about growth X% working capital. revenue, capital. you'll cash dollar is a You'll about

an investment per about it's were to decline, it's X% if in So dollar Conversely, growth. revenues decline.

forward, very kind pleased times talked in XX-plus if you revenue. with. EBITDA At use free you into converted of we go which kind quarter, XX% our time to Day, fourth we And about cash we back to in of of a were Investor we XX% stable of look a the Now XX% can excess of of flow, growth. rate conversion as

And those holding the two see true in future. we so

Jared Weisfeld

the color company when it's your Hi, today. respect going With Jared. on will guidance to going when second be about we question we're give forward. not you we to appropriate formal like did think more certainly guidance, Bascome, But we providing

Bascome Majors

Thank right. you, guys. All

Jared Weisfeld

Thank you.

Operator

Thank you.

hand end the Wilkerson the our of reached question-and-answer have I'll for remarks. floor Drew session. We back to closing

Drew Wilkerson

I'm RXO's report as Michelle. and stand-alone quarterly company. pleased with you, our performance Thank first a

gain quarter-over-quarter. brokerage grow to volumes and continue year-over-year share We and

technology challenging very our are effectively carriers, through navigating drove of with a also increased We environment. and customers adoption macro and

right on turns. place this as playbook focused playbook, in at us is the outperform cycle volume, will point The in have the the of in market. technology growing a put the the the We freight position which cycle to and strength, team,

results today. upcoming the seeing Thank you on focused remains investor deliver week, team look a and our customers, of I shareowners, for continuing for and forward time to conferences. to management at Our rest carriers your the Have you all employees. great

Operator

We ask you this and Ladies your conclude the call does and conference for that participation please lines. for today. thank gentlemen, you your disconnect

RXO (RXO) 8 Feb 232022 Q4 Earnings call transcript