RXO - Earnings call 1 2023

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Operator

Welcome to the RXO Q1 2023 Earnings Conference Call and Webcast. My name is Laura, and I will be your 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 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.

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

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

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

Drew Wilkerson

Good today's morning, earnings call. Thanks for everyone. joining

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

RXO best-in-class delivered by points results the profitability. adjusted company-wide brokerage driven brokerage remained another backdrop. economic XXXX first quarter year-over-year solid Overall, the at basis our tough despite XX were margin XX.X%, in up QX gross year-over-year. quarter and results strong growth The of of volume

Our tech-enabled industry. the brokerage outperform business to significantly continued

gross most growth up achieved was margin. and volume share volume. contractual was driver took important best-in-class We Brokerage The of year-over-year. X% our

managed volume the including To synergy and the in We also margin modes other consistent was color, from quarter, loads cross-border transportation Brokerage more year-over-year some XX.X%, loads flat business, give was quarter. gross year-over-year. growth throughout LTL. grew our

there the and positions at e-commerce improvements From our perspective, have in vertical retail customers. some been the inventory

We have and seen increased brokerage customers. volumes from products home furnishing, technology building

quarter. sales our robust conversion we're first pleased the and highlighted pipeline, we quarter, Last our in with

our contractual resulted growing Our in pipeline year-over-year. conversion volume XX%

As a our XX% of brokerage volume. result, contract represents our business now

measured bids in with in annual first sequentially, And the as bids. up We continued were momentum also saw quarter, revenue. XX%

And relationships, to so of and service, part because the of volumes. is hardest cycle able customer the do to technology scale. our were This we grow

inflects, confident we are are position great in the to win. market a when We that

execute XXX to the adjusted margin services gross points also and in basis expanded Our complementary by quarter complementary continued year-over-year. well services

to truck freight handle synergy Transportation brokerage companies Managed turning it to outsourcing trend. The our world's needs. in largest of provided continues business. their benefit Transportation significantly transportation from increased Managed are loads, RXO the the to number

supporting for is help fact, also work for an Motors General trend. consistent, year, like quarter, to want needs. process their In brokerage and the reliable services RXO our contracting site first near-shoring Year. to cross-border by This cross-border Laredo. RXO's efforts increased the in than shipping our with solutions the capitalizing customers large through We're year-over-year. to more offers. of on In straight Supplier global several array XX% facility GM customers' the in loads provide of powerhouses who We're fifth wide honor utilize new named the the the with We're

is U.S. business. the Turning our RXO bulky big and the Last to services provider of Mile in largest

customers tell us the best industry. Our service the we in offer

we to actions XXXX. provide, that premium pricing EBITDA for Last recent year-over-year Mile service grow we the expect now reflect within Our and full year

into expand a to $XXX pleased had good a also repurchase adjusted deployment Jamie fits has Directors our This program. converting announce cash flow cash on to quarter, of that Board balanced very authorized share which I'm also adjusted of capital later. approach, million We our free program will flow. XXX% EBITDA

a first digitally. Our And helps million were which RXO which make improve Drive-out, also technology, milestone carriers downloads of surpassed sound by business underpinned the loads quarter. and In productivity. or covered decisions our results X for created were customers the adoption the and XX% in best-in-class we quarter, hit of

continues developing our grow, people. we focused As RXO remain on to

Paul years, managed named the I highlight management Under of Mile. business. bench customers talent, more of operational brings high-profile that under several expertise strong has profitability we the Boothe, us structural last transportation for $X has the freight Last and of billion. improve we been who X leadership onboarded Mile successfully Paul and a X help We wanted in will the to have our Paul's made changes leadership, to quarter. led Last than business our President doubled

delivering I'd President. will transition Paul a deliver with largest to Rabel, and closely Mile interim will Transportation continue Fernando thank Managed served to customers. Dean ensure like has Last work for as Fernando RXO's to to lead Brian been results promoted our smooth as with who of President business. their Brian transportation a driver XX our spend. has most more designing been solutions Transportation. them been than has and Brian that for customers help for in Vice Managed RXO years. Operations recently and key optimize for served

and Brian been on we I'm internally, to looking team. my able these closely continuing thrilled with roles to work leadership I'm forward have to fill that and Paul

Looking ahead, further moderation in similar to gross macro the what second to to quarter. environment tough grow we volumes year-over-year quarter, continue on still We in saw again basis, per a anticipate in the brokerage we expect but anticipate load. first a profit

about have detail While more expectations a last the improve. minutes. will seen April provide volumes started Jared few slow, we off X in our weeks, in

We growth. our are playbook remain focused executing profitable on and

Our playbook long well of and term. proves the positions disruption. us It terms its value chaos for in

Customers they consolidate RXO work financial a partner. to best-in-class continue and many to strategic have stability the our as service, technology choose with number and led carriers of

focused fit for more everyone stand-alone results customers purpose, for a shareholders. delivering at our is As on company, and that's RXO

are when positioning accelerating returns market significant we profitability, inflects. to market the over best-in-class the deliver business our gains Jamie. to With And share and now

James Harris

of freight first Thank the an adjusted revenue primarily in down the $X rates by as bring we compared basis In primarily Good $X.X XXXX. the was to to year-over-year, to year-over-year. ability XX.X%, transportation everyone. billion The you, cost billion up of to the market revenue purchase Profitability softened. with generated gross our decline driven XX points margin quarter in of remained first strong Drew. quarter, morning lower due

year-over-year Complementary expanded points and Managed Services by within margin gross forwarding. XXX by adjusted Transportation freight Additionally, basis driven

XXXX. was quarter of to EBITDA compared adjusted in first Our million the in million quarter $XX the $XX

being due year-over-year freight moderation costs down was the points resulting a year. declines the X.X%, margin of EBITDA to adjusted were prior lower XXX stand-alone the in per brokerage, from our public and load company. the basis incremental rates, gross profit And primarily corporate These

the Below the expense our quarter line, was $X interest million. for

income for driven per taxes Adjusted were favorable was quarter quarter tax nonrecurring $X.XX. items. the for earnings share diluted by Our discrete the

the on a You to of Slide raise adjusted the X can EPS find earnings presentation.

a Importantly, XX.X%, difficult quarter. Profitability of grew we best-in-class continued strong to outperform year-over-year. with X% the brokerage by gross It Despite macro we year-over-year. economy, remained cash industry. the volume margins brokerage was very flat in

the to fourth quarter. the million million $XXX quarter which Please of from We adjusted X, ended cash a of end walk flow. the refer to with versus $XX Slide at free has adjusted EBITDA cash

free EBITDA quarter, in adjusted adjusted flow XXX% cash result. to Our at the converted a great

compensation. payments cash note Please earlier-than-expected collection of semiannual bonds We The the the interest some quarter's payment the and X adjusted on items impacts quarters. quarter that during in results also second timing-related had of several included receivable, during the items fourth positive XXXX basis accounts included incentive on that quarter. a the quarter. included flow interest These our paid

the Most minimal in for on QX incurred and based We our paid timing. cash be taxes will QX the quarter. of second in quarter normal taxes cash first regulatory

our second cash As to we XX%. will these and quarter, we to items be XXXX the expect of first conversion approximately half look for the normalize,

a term, to restructuring discussing I XX% spend also across we the rate and and between cycles, costs. spend-related want with conversion remain Over long time some at market XX%. cash comfortable our

Last were we of the approximately $XX communicated million to quarter, $XX XXXX, for full cash outflows. which million million year $XX expected

to to several our in We initiatives and we entity. place optimize support stand-alone ensure that cost cost appropriate profitability processes the improve Since our continue have our spin-off, structure to structure launched a growth. we have as and

million the savings savings helped the approximately the and achieved reduction achieve us significant weak the $XX million. brokerage profit of return. restructuring to million quarter. incurred charges These We load we expeditiously moved Given quarter in sort environment, some ], freight run $XX [ in gross annualized rate the a per of savings in of $X

our Looking cycle the operating we're incremental optimizing leverage for our structure organization in ahead, the and position when proactively freight inflects. cost

be a million, XXXX expected costs closer we approximately million now $XX expect to and spend cash related As $XX with to result, restructuring outflows. of

our On Slide an balance XX, have update on sheet. we provided

revolver, undrawn. liquidity, have $XXX We $XXX remains our million million including in which

balance strong XX months end end Xx EBITDA. at Xx. to approximately adjusted This the trailing range remains quarter leverage at X.Xx our low a was and have We net of of sheet our stated

mentioned, of As program. repurchase Directors $XXX our Drew a share million authorized Board

are formal Given we as our framework. strong flow our balance sheet and pleased free cash authorization to this allocation capital part of generation, have a

enough that from shares on macroeconomic repurchase balanced At opportunistically market to value, restricted will basis. through a plan cover an approach and grants free shares minimum, overall annual cash include will to flow leverage, a we We conditions. dilution stock buy relative

cash. settle to of continue as pre-spend the saw a this all grant RSU will we quarter, obligations Additionally, withholding in for vesting you tax

help cash dilution. minimize shares lieu these to to selling will sell in Using of reporting tax obligations

was the the cash For million. balance estimate for this $XX year the total first of for approximately $X million outflow. We a of estimate quarter, $XX an a million XXXX additional

in line expenditures at X% approximately Day. million an between the capital of $XX in growth revenue modeling our XXXX with We $XX the in of investments expenditures guidance now Page find accommodate to estate to million. long can presentation. update strategic includes We our our on business. capital real spending You of assumptions This XX term, $XX committed brokerage to on over Investor remain expect and million

effective is will XXX and will between average compensation between be million $XX count than lower expense of adjusted These share $XX million. expected our shares. to and $X million model million, forecast, million $XX Depreciation million. be expected be Interest rate also and $XX be expect approximately $XX approximately between Stock-based is and million tax diluted we and million our $XX to amortization XX%. prior expense an should

this repurchases. are with the we our with backdrop, does any include results. pleased potential that note not current share impact Overall, associated macroeconomic financial Please given

a balance We cash flow solid sheet. well, have are generation and strong operating

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

Jared Weisfeld

like market by good technology again the our volume profitability our testament dynamics, pricing growth our freight and business. algorithms. brokerage Thanks, was of margin technology. to Brokerage We gross year-on-year this and with cycle flat XX.X% quarter the a Jamie, I'd profitability of with difficult to the best-in-class start structural despite enabled everyone. and morning, outperformed

weekly balanced market And X% users XX% Average in as quarter, active a XX% exit in driver the sequentially supply app, lead million network began X-day increased QX year-over-year dynamics. demand declined quarter, which RXO strong and was ultimately more to QX. XX%. Our surpassed importantly, to the carrier carriers up carriers Drive, during retention downloads X year-over-year. the will

full the covered XXXX. of of This the quarter impact In last the was of and within quarter technology Connect we first in result was addition our the loads to in RXO discussed continued versus digitally that XX% or the XX% last quarter adoption our first created quarter, of of capability platform XX% quarter.

created excellent we the priority quarters, fully an around with expect the stabilize still on platform to digitally carrier white customer the integration, next done current digital side. the is while stopping of of number job ahead We've not a strategic few on Over are there. plenty of the we us for there's Increasing or top business. but of on percentage loads side the loads the space covered level, the digital

and with by value rate. and retention our Connect as drive proposition clear, and carrier is Drive helps stickiness evidenced X-day carriers RXO The engagement and of our customers

increases, Importantly, load contribution digital as higher we anticipate the margins. would of percentage

though XX% enviable and an from deep and of XXXX. position carrier Even as first base. points relationships. This with ongoing points consolidation contractual to our demand in to quarter, share our across when viewed exceptional a we freight customer the representing compared business, basis basis weakening, given service, volume carrier and are our strategic sequentially we RXO are up is of technology, quarter we, gaining customer continues benefit XXX were XXX again,

moderated but RXO's been e-commerce customers rate XX quarter, quarter retail decline years the on with perspective, as us a have top volumes as to customers' relative of improved. XX the average. positions and expected, vertical inventory fourth declined From for the in

our health in care, growth volume including biotech significant and other saw verticals, technology. homebuilding, we Additionally,

helpful our refer told and to gross brokerage current per be you prior cycles, average. line per quarter load volumes that share historical and roughly was XX, details to I Slide to which X-year fourth profit freight Last would I'll profit relative our load thought in with you trends. trends quarter, our I gross it

by is volume. X our are that More X-year We while within This approaching grown and the pandemic. with trough, for has our load the strategically XX%. our $XXX profit invest part now trough well XX% our per than the the Since are business gross profit positions low next brokerage of cycle, rate volume gross playbook per we years, for profitability, more to over share the of load we us in this million important EBITDA. very best-in-class the specifically, excluding road COVID-XX the increasing in of last inflection

I'd new give remain moderation in cycle. expecting in of now more color to major do the you run as not anticipate quarter like We second economy do the Both reflect the a rates. some to challenging. freight or We per the contract quarter. rate will state on gross forward continue profit the second expect we and are look in impact of load what changes any will full the

momentum, that all a second on second quarter. verticals e-commerce non-retail volume again brokerage move expect XX% in are a giving the we growing compared However, are our and adjusted to sequentially and April pipeline with we year-over-year. it stack, year-over-year quarter to and will and ended respectively. We Putting X-year the still moderating, remains first XX% up on grow our Retail in declines strong confidence when volume volume brokerage X- company-wide brokerage sales basis together, robust, us quarter. EBITDA

the Turning full year. to

Our in within year-over-year some quarter continues outperforming volume to inventory the brokerage industry. by growth growth second of customers e-commerce has volume the momentum have sectors that significantly position supported and expectation retail our first and improved. quarter business year-over-year the mentioned I for the

the to second lead in This may restocking activity half.

operational we improvements, remains service and limited. on continue work Mile, Last visibility Within pricing. execution, to However,

Given of confident per profit helping strategic moderating partially will Mile grow the that versus Last EBITDA XXXX actions, brokerages to success pricing are we XXXX levels, our mitigate gross load.

significant free we EBITDA. flow. remain model Our strong adjusted cash to conversion continue flow free to achieve confident cash that we asset-light generates adjusted Prospectively, business relative a will

flow $XXX share a capital value growth free we long-term program per the of We repurchase this of allocation million will deploy primary capital thoughtfully balanced a that cash through announced that driver a morning. share is basis believe approach including We creation. on

remain a room about of We market and to we plenty current why challenges cycle with operate the our of the $XXX you so grow. leave despite billion economy. I'll excited with the business freight in

flow our Our financial returns share balance with profile shareholders. strong can our cash generate meaningful new sheet us flexibility free authorization repurchase to and provides and deliver to

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

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

Operator

Your first line Instructions] the Hoexter question of America. comes of Ken [Operator Bank from from

Ken Hoexter

on of Maybe just dig into X% maybe the outlook a little bit, face your you continued solid -- volume performance the thoughts that in about. margins softening with volume talked thought the of of terms that growth growth, in

peers You're still outpacing your margins. on

showed some the noted weeks last improvement. You X

with obviously, any seasonal what market can that still understand in. is the think trying contrast there's terms data in the conflicting I that means to coming a that is in margins of bounce, if insight still you of compare and and provide maybe

on the maybe a few us just could and last walk outlook in little that through you're bit the quarter turnaround if seeing you second So weeks? more detail

Drew Wilkerson

Good slower with April slow morning, Ken. off, look lot the X I'll the coming This end, quarter Yes, outlook. saw you had at Drew. holiday, what of we first When out started were hoped. start Easter April absolutely. than coming a of quarter second what as started fairly off we off weeks is

the year. be picked endorse that returns, in last growth good to were fairly full April of and up we we to well, saw half back -- volume for half enough returns back able the But X the comfortable weeks enough

the signs overall like bit we little things got out, in some you further market. As we're that of look a seeing we've that

technology, that's the started to we time, and increase. Growth been for furnishing first that year. able half more start to And inventory what's levels are the they back tender exit has rejection first through continue we thing to health than what strong see that first Retail, the for market. really than year. expect the the started before entering quarter, in And in better market see, much see to you capacity the us, home we care and were e-commerce last to of be the

that's of there's the But And that's unknown got as look a lot overall excited for looking the us, year. the in so for forward. that, rest with us we macro something

So foundation, we've playbook happy able the very where the and to right and to take now market to it that sit do be we with build got continue share profitably.

Jared Weisfeld

And Ken, this is Jared.

businesses, RXO give from growth as building comfortable to to Just standpoint. puts have we'll our what you was some QX on from the basis. relates in as seasonality respect within And growth, Drew saying on volume is to from benefiting to Mile of QX that including us year-on-year for respect it to volume with a it seasonally feel respect took relates benefit to and QX QX, with we well Mile, pricing a takes across Last as better the we actions That's the also quarter strategic Last quarter. with a

We'll the that run also that QX will the about QX. from takeouts EBITDA giving us benefiting we QX, in full impact cost talked of sequentially rate comfort company-wide adjusted QX, to grow have

Ken Hoexter

with my XQ before make want for clarify so you're sure question, XQ. Jared you in to growth to volume I confident Just just in the year second or endorsing to then talking jumped I Drew, you... said volume growth and get full through you're --

Drew Wilkerson

and we're year. sitting said was QX like full for I year-over-year I talking on that full year. the said, a basis With where

think QX Just market for still -- ball overall it's unknowns no said, the when QX, or as anybody QX. some crystal there's that the with I don't I macro. there's if inflects

Ken Hoexter

make just got I sure you that want to right. we -- Yes.

restructuring spin this is point? the dig going on raised little Can to the EBITDA complete. I growth comment. maybe Maybe Why $XX Jamie, you thoughts on costs, the And million. put your restructuring a at parameters costs into that? we are other mean and confused. You up I'm

James Harris

Yes, company, budgeting a is we spin-related -- into cost did public of a process, wanted Yes, Ken. take came zero-based every structures. all quarter, the as we our the the so we Jamie. company. to first every look restructuring looked all, we contract, We ground-up a This org and single vendor, at costs, stand-alone had of in look at every

able you savings of out $XX go-forward about run a we basis. on about take a were as a million And to saw, rate

we so million was And really aggressively million. that of That million the to after quarter. restructure middle included us about first in $X because went that that $XX costs not in the $XX

we forward that the savings we're raise of quarters, $X spent, number we we our already a the look to have for year, raised to in complete also the it, we we because did expect initiatives to $XX include but that that working let's we call to As several place today the basis. million we additional course million of out second, have on run rate during some third come and expect another

spent $X $XX we And rate the produce million so savings. more a were than the million million, but of $XX we run annualized for us, had in we communicated to core able

that it it on the also that's a work back happily service efficient when return us positions outlook, office return, take the functions our but shared for like the and cost to did with a structure very the to market inflects. And to be of ready we we advantage very well leverage very

Operator

Your question Stephanie the Jefferies. comes line Moore next from from of

Unknown Analyst

sign see that's rejections Drew, start kind before of exiting to [indiscernible] first mentioned for capacity the tender first pop we and Stephanie. you up. My question,

your weaker seasonally kind now? kind lower on we most kind out I and bit being on have at what's off where what of XQ And about XQ? view albeit was you talked of maybe of of the expected a of base Or kind in Do of are the is playing so things of point than stabilization. today? right cycle the feel I think the view cycle a kind your things move this normally, little that curious

Drew Wilkerson

Yes.

takes. for think years, for puts a I seasonality, the at lot there's you X and when it look been of last

and the QX from But perspective. rate to got the seasonality you've of QX. completed to So you bids that because QX in when see run from QX what exactly peg it's implementing a volumes happens increase typically, hard full that's you

ratio When at that the now, market, I is to rejections run. it we seen, because you will we're we've Right talked cycle lead that the this tender look seeing thing capacity market exiting over at around think that, load-to-truck and a about X:X. good long

XX for below I've X:X for been of any and seen this time. sustained go doing years, haven't amount I it

calling like look benefit are you not we that we're are felt difference. the direction while bottom, there when pointing will more -- And positive So capacity signs a it towards compare we're XXXX. from which at the a line we standpoint, in and that similar What 'XX from 'XX. to load-to-truck tender and saw with a to ratio we're in seeing runs is XXXX a previous not rejection what in cycles, ratio the something more and

Unknown Analyst

hoping, guys mentioned I you looking or away there is then can final you what sort back know could terms was And business the on how with some going give the quantifying metrics repricing But Mile? helpful. of walking you That's Final peel like be were little guys I more piece, on on was the a guys of hoping is mile the profitable. you maybe in is going going? that anything bit are what's in on onion that to I okay things

Drew Wilkerson

Yes.

to is customers were and scale, really service, mean, doing. the to customers us X last conversations months. partner we of the value continue we business with I we for in wanted because found X that what with pricing to So our of our And were our that our because

confident to and EBITDA happy Last for the that are grow to our full despite recognized and we'll that are we're tough customers. giving we So a year macroeconomics, the rewarded on basis Mile service be

on But was markets few there actually -- other small ways our a actually, we parting picked with piece up ended up the from several a from business we the of hand, that of And customer. we customers.

turned those how conversations with happy So out.

Unknown Analyst

that know profitability? I in business is guys be profitable are difficult this just growing historically and profitable, confirm, you to just to a maybe Final you're Mile And and

Drew Wilkerson

That is correct.

growing profitable, We are are profits the and on it. we

Operator

from line the from comes question of Oppenheimer. Scott next Schneeberger Your

Scott Schneeberger

pricing to pricing second similar on did Ken's and question into quarter first the spot of first on and just kind basis? throughout look half cadence. April, speak an volumes, and on of How to industry like I'd

the on response, a and about on pricing load-to-truck last the we that contract basis? see -- How that on potentially spot ratio. would Drew, And a bottoming when you would talking were in

Drew Wilkerson

Yes.

spot at load-to-truck bit talk the significantly. Spot of down the ratio X:X your pricing that that's well on that is. out a So one ratio is below loads. At they'll see little about spot we as than are exiting start you shift, see is things and load-to-truck thing capacity pricing, higher loads point, what the the market that the contractual contract pricing And a what of there see what positive that's you to you spots. because on it that creates go

part big for that to look positive of a as ago, look us. as what the overall year thing lot we a a is inventory a ahead. the we're they are business levels of optimism you those there call we've the far better As of Retail got going not and earn signs our that's than were position market, again, that but e-commerce bottom, bottoming

that seeing growth The exit, position that's we to XXXX XXXX health to come. you if Because last we're when downcycle, think we're look technology and volume that up, that create we're capacity loads. will XX% our win more loads spot or And the from you continue. spot up time going period. is tailwinds the like in from in the over to see if And care, specifically

was downturn. it the So during last our foundation bigger what much than is

that loads, position we'll mini a the turn to going So to bids, in be be place and spot we're customers win. projects, for

Scott Schneeberger

multi-parter. On looking my annual bit you is how the customer follow-up, that curious, quarter-over-quarter a bid opportunities quarter. a just XX% it's But a curious, just in up of measured from first revenue basis. by cited I'm

your Are these that tell? you customers just that a lot just And there smaller share? taking very there? a strong. you lumpy opportunities? bids in from clearly sounds are of still share from different all Or and large taking How that like You competitors what is Are it you're revenue. in measure whom are few some that is there -- is by can

opportunities? talking part this the business, last meaningful then new the a And that long development is is these is this question to how as as Laredo And maybe that you're this something is of border the -- estate is Jamie, bid facility else? real new cross-border well or about,

Drew Wilkerson

Yes.

gains you picky share at bid looking when or take into share everybody. come target don't what we from. We share how on the where walk that, needs. company we X look gains, with We big. from because best we're We're at it, to our we're align look match can where not to gains. services taking So winning asset-based customer it And competitor X a of

you mentioned our mean I customers.

look volume grew a basis. our we actually by top on customers, you If year-over-year XX at XX%

brokerage and to doing cross-border from So our freight largest we something been Mexico that's the is coming side, benefit that. we've recognizing with want moves us with that's back "Hey, of. We're XX% which business by another. solutions U.S. say, border cross-border, that side year-over-year stocks. Laredo, to to We're our going doing little doing storage run. long a and a as decade also they're volume that now of a transloading, you cross-border give do into to they're coming and customers continue bit are they're our of will one for the of waiting customers we for get array continue We do and a And basis. an cross that through product will more think to service, that investment happy business us, the offer." On not do to able nearshoring you're we and just very back because We've are of service and we truckload the for think of things going not to us lot out our grow that, helped on just the your Laredo. made It's

speaks solutions customers. we that the just we're create becoming and So services and with the it stickier array to our of

James Harris

more up expanding is And follow for our real to about or the offices the brokerage estate some The business. Scott, real opening question on estate.

volume So market inflects. we capacity as to grows fill have and as

So that's that we going really positioning ourselves believe to for the we're growth have.

Operator

comes Wolfe from the from line of Scott question Group Research. next Your

Scott Group

a there's helpful. EBITDA decent thinking expect Any on color sequential how double? of be would directional Any from range are growth color expectations, you QX, to mid-single, we much QX

Jared Weisfeld

it's Scott, Jared.

as puts you the QX. versus I'll for and think So about takes we QX give it some quarter,

by we QX gross versus offset volume partially expected. QX, As load expect continued production mentioned, the growth we year-on-year again, that profit we per

both we As started strong slow, month in script, growth back off versus QX basis. the the on half we for a to volume in the of about momentum talked endorse year-on-year QX, but had April

benefit As impact Mile, the a of better that across to have run as it's business. pricing about we aspects we'll whole for seasonally, it have cost lastly, in be relates Last from a the RXO we'll the the quarter took. We'll talked all rate we full actions benefits of then benefit that brokerage, seasonality, and we'll

As the we don't at level, the it takes. guidance of puts on guidance sequentially, to but in terms hopefully, specific and consolidated that's relates helpful provide EBITDA

Scott Group

you that profit profit And for gross helpful? then of bottom just load? you, was you Okay. wanted ask get context, this chart I'll to Do load your the back, historical per And like the maybe then quarter perspective. in gross think second per when is go

lag spot trough per trying with to it profit a per understand, at few look trough quarter I'm Or to more that yet we is this spot bottoming? rates or needs by or When X? is coincident in trough, rates profit take if and to quarters? trough are that -- you at prior that load a does load tend the just

Jared Weisfeld

ratio that's you and more when start from more exit we be cycle about could to extent you when here impact market, up? of, certainly per a see standpoint get that start have the loads certainly that think perspective, that Absolutely. move the the sustained will so dynamics think -- offer to pressure to a to load, to has we extent if really spot think of gross the offset ratio margin nice When supply the start load-to-truck higher. QX, the trough, obviously spot and to coming that's you do load-to-truck of couple profitability would when back, is you'll gross up when also I seeing mindful going some -- the yield down be starts moving the that from we'll come something move that contract things I profit Yes. higher, The about see we an in which the

and little our to ahead year-on-year And it's maintain color that's gives margins our best-in-class this as we you with algorithms what you're go that a bit looking pricing saw within profitability brokerage. you us -- quarter on and flat ahead I think ensure leveraging Hopefully, leverage technology, that gross to go for.

As chart you the back wanted freight the certainly to back of that years, you last to X over I relay we was look message Slide we think look different XX, the dynamics. give a provided that on cycle the sense to

a of this as questions, one XX%. of And I position in bottom, volume just excess a in freight like more stronger standpoint. earlier the per 'XX/'XX And with approaching are in recession just is cycle load said much gross think we're from as growth Drew we profit that our

on you'll moderates derivative significant second per see gross EBITDA that as So load, an profit impact from contribution a pretty standpoint.

Operator

of comes Shanker Your Stanley. Morgan line from next from the question Ravi

Ravi Shanker

far, on which So XQ than the the of call is we've pretty so this [indiscernible]. tone and very been have what content heard different call

you to idiosyncratic this is how genuinely of trying how So in couple job cycle guys last understand this an much of the execution like you much picking with to versus of that the up, especially fact April, the later doing just and good weeks the peers? incredibly you and is a little reporting I'm than bit you mentioned of guys market are of

seconds trying to versus execution? of much I'm you figure guys up Maybe, you a give to awesome cycle is just to teeing are, but how out us Drew, how tell just this XX

Drew Wilkerson

that And you we favor. of our things for Ravi. are Well, definitely at our that, idiosyncratic lot a to that thank play business have

at to continue none, margins become than to able it it and with where more helps clip integrated and it customers second are also industry. us at best-in-class operate we're If at most allows do is our to doing technology, faster it in the to to take what us it you a and our look grow share

to macro As going environment to move. see call in. see we're X:X be load-to-truck us clear, ratio Load-to-truck to overall start far for the a to that And you're at tone that inflection, the as start where ratio it's still a see tough of I we want is the and still ratio. to to macro, have

the a go to market is Jared being last on said more to our integrated to that at the us, of prepare and part the for were than foundation inflection, about For this really just we customers good bigger that. earlier, building is much much what run cycle with

And about not as what QX if like there there's of that data enough that inflection showed some call inflection, it's to be but we we an call could or see things the that seen QX. because to we've I've that noted not earlier, market this QX, you could we're point just ready

Ravi Shanker

X This has had follow-ups. quarter, for your long also the there. Or Got -- the maybe the into outlook on costs, this thing you quick guide the actions and outlook do do will maybe long a guidance. Understood. X-year restructuring slide, guys on it. you X-year these going you with just think you of Jared, very ROIC But kind in was And changed is going didn't. reiteration last I'm the formatting it how nothing restructuring the of assuming for understood the how for in time XXXX? you And think there. continue? One,

Jared Weisfeld

Ravi, foundation I'll I'll script to changed referenced of million to with then to Jared. I in Nothing $XXX start, and Jamie. the terms us when hand $XXX at really look the it think in momentum the a laying for confidence build downturn the in referring is to to, our from of the our we're I with over compared million. go it road has it's respect And EBITDA. that XX% presentation that and you XX if Slide ahead standpoint. in volume up to slide 'XX-'XX

at the ago. remain we we So months that Day provided Investor outlook with X comfortable very

James Harris

-- the restructuring, the on year. this materially And restructuring of by Yes. the spend-related should Ravi, end we diminish

restructuring same for the be to of be be going ways to constantly being company ourselves for That's itself, growth. capacity positioning that's to to time We're optimize going terms going be company. efficient always cost just have are In cost. looking a at a -- to we're who the as we

in a always a plans we're wise. market But be but going the look have So be looking to don't going 'XX. to, any way restructure at find we're if company better cost to for to a we dynamics to it, need say we

but you'll the year. down see -- costs the materially these of by so go end And

Operator

the comes from Your of Tom line Wadewitz from next UBS. question

Unknown Analyst

could This Tom. is for feedback what's on for ] regarding then was if And [ are the cycle? spot we think you And provide do Matea versus providing markets, also you any Michael inventory turn? bottoms where currently? on De shipper when additional confidence I commentary wondering in a

Drew Wilkerson

Yes.

think retail a on inventory levels, better hearing specifically they So customers already lot we we're from back year than what as levels in inventory that's continue what a got far And one for grow. as e-commerce our ago. were we business that able look be the That's potential piece tailwind decent to to and a go out to our be and us. a of to

verticals, health other food now and and into look overall -- stable care and you extremely running specifically is and call I As right technology would levels, everything beverage, they inventory smooth. in efficient and are

tells going the going the As earlier, crystal far of is said there's bottom. as you bottom there the exactly we spot, to that what don't a think to ball calling the we're do. not market I call out

to the signals that are will we like brokerage in be share ones we're getting do not standpoint. industry. able could it that there call But the things out be I from to that and bottom. profit am be market show confident we the take go who at we there out best-in-class But a going and that gross see that better

Operator

the from question Wells line of next Poliniak comes from Allison Your Fargo.

Unknown Analyst

on the This want a to little I supply Allison. talk the is about for [ leaving just ] market. bit Ryan

think mentioned to long cycle process take going it I or process how was the the will was than be so. here? a that's you do longer run-up be? it that think will how You wondering long doing given you XXXX And

Drew Wilkerson

to long yet. Yes. it's don't I think how that take going we know

capacity at seeing levels load-to-truck the fast in enough exited our we continue inflects, hasn't it's the it able at of and but a inflects. this market of shift business at, to customers, market entering to sort than faster and ratio market prepared run dramatic the a to be are point. We're base exit our what call to whenever prepared good any in for we're with to really when rate go We grow

that thing the is market we -- that's down, down recently And But X From entering less exactly and we that they're will that the happen. think one seen don't when significantly. the capacity capacity talk exiting about from that's have market, you've know sign that orders when Class another also I been standpoint.

be could something that ratio as So as the trend I as view positive load-to-truck a that far outcomes.

Operator

line Jack Stephens. the from Atkins from Your next question of comes

Jack Atkins

Okay. Great.

look the Because a get guess the XX%-or-so down in quarter, here per revenue load sort bid how I Jamie to thoughts here? So you're I'd of are using first certainly Drew, not, at through love to or business I take your cycle -- you feels brokerage, your guys lever price Jamie, it on about if like in share. as the positioning

market But at is bottoming the the same here. potentially time,

a XX% be that flex, opportunity the on like that pressure So you market contracts spot of in and How an Because to it price moves way higher revenue a that up? come and are you spot take structuring the that? the thinking load. with that under feels per are could once about back you contract, give business

Drew Wilkerson

Yes.

as percentage the industry using way in So because first, And that I best see is our gross the is a business. can not of price now. you there getting profit right we're think

spots positive to shift what net net As you'll rates per spot far revenue impacting naturally than at coming load will being profit higher on as for spots thing per rates on a load. are us revenue today, actually load, would see a per which higher able contractual see be gross be because

view when thing. a So be will good inflects that that we the market

X,XXX business much us our You've as quarter-over-quarter. basis of as points mix seen shift

at react to positive for us, be for throws the we're an whatever group. market prepared will and So agile us inflection pricing from that an ready thing a we're with standpoint. We're a

Jared Weisfeld

of QX the QX, when right? Jared. 'XX, rates loosened from new And mindful QX after significantly already dynamics gone had market to Jack, effect. the Also be of into contract comparing to You're it's the

in when terms our about So even harder think comp you into QX is of and actually comp QX much of XXXX. year-on-year,

headwind it's think So QX I that up in reiterate remember to stepped profitable run we levels. is said, also using mindful basis, haul on think we absolutely how as to comp. growth lever. which And But this company. year-on-year what price are length not our a also Ultimately, was That's DNA. to Drew relative that about of a a

Jack Atkins

Okay.

kind it guess next hopefully Okay, maybe then capture getting activity spot Jared. I early later materializes, in able point to Drew, And year your when market or of, back appreciate I sometime on this Drew a being that. I year. gains, guess X your last X, over of great job leadership. kind years, your productivity I'd such and you curious on thoughts done be maximizing under get productivity have X, guys to the to

that loads X that the matching as digitally how up carriers, really with about forward move being over and you're additional the year opportunity? to So you percentage next really to ball you of do kind of the that drive here of sort able think or drive productivity

Drew Wilkerson

Yes.

there got from One over count. X the is an team you the things overall was at productivity productivity. a That that But see thing. that in head will in down positive the there. productivity We us be just to our increase long break times quarter-over-quarter. term see So look we've because really, gains we invest did

as And from the that up be we've we a and X- we're in past, basis continues to to more right. gains said what the trend X-year the doing. to look productivity on And at

prepared as the carrier the in the side space, far his remarks, to to integration got continue on that from opportunity be an standpoint. mentioned side, grow we've able got a ton as carrier As we've on to white of Jared

is them side great continue some a Connect done integrating customers the of we app. to RXO show the integrating continuing and moves, than with on continuous what on easier them these little able tires and pull customer maintenance, able on them able being to to give do, being fuel be keep job large to carriers discounts and and the whether a We've smaller bit of power as to it's back to can RXO it's with whether them Connect

one that continue to high do just a rate. things rate there. to XX% with that adoption the of the time. saw the they you got And we've come We've to retention come on, increase of business got them Connect, get we back on Once when carriers RXO is

Operator

Securities. TD comes question the Jason from Your next Seidl from of line

Jason Seidl

Has reasons I are a I of one into job some wanted a you peers there in Transport made synergy Can we your Managed in customers? load of there? of about going terms been Has other? bit talk better you to little internally the revenues side about in that done that bit think dig on that that outperforming one shift growths. are a freight of guys been the from just what's to comment first about a little of sort pushing the there some the the

Drew Wilkerson

Yes. There hasn't been a shift.

time how one, far add wants as new on ourselves freight customer that's chain. because there Transportation. overall we first their to to go the we're going to as doing be is So bring new customer is supply known out us and at we've continued brought in to any And to there are a that a Managed able in the as places to on, value who's customers partner look one reliable of

to a loads close management. got billion really we're opportunities think to perspective, the forward in across continue to from company. going of freight synergy that cross-selling expect drive that We've we getting $X managing lot just and to under started increase So

our revenue XX% X overall, line of comes business. more And customers from do business than us if you who at with of look

So we've got company. -- we're very integrated the across

Jason Seidl

That's question Okay. side. circle color of back a wanted to Jack's bit good also little to I there. sort the technology on

bit. talked of around asked and you think I sort you I think it a

feels covered there. getting out loads that's the created like said topping it digitally You to are close -- probably XX%, it's and and

you You lot have on carrier of the side. opportunity a said

XQ grow for you So created breaking to guys start and loads investors? to should number we that covered and expect expect to us do when XQ? And out from digitally the

Jared Weisfeld

Jason, it's Jared.

talked loads percentage we covered -- about covered was loads that -- growing. what or is a creative or and and our significant So covered is loads XX% created covered From perspective, created a digitally. that of of

great really on customer the talked side. little about we As we've a bit, a done job

very of Connect. sticky we've proposition ton The It's of carrier space think Drive and ahead RXO white carriers in value with our of side. RXO us got clear. a the terms is on I

the very increasing we carrier nicely was then strong, once and them. XX%. about increase right? is up quarter rate, retention This adoption really it So is Q-on-Q the ahead And go to adoption rate that with rate

those ahead look when disclose in forward terms is and you time we're and going loads and to created when that So conversations covered go having we're appropriate. are certainly the of to that sharing you the percentage of with certainly digitally to

Jason Seidl

we look No, be forward time the would Appreciate to it always. as having helpful.

Drew Wilkerson

Thank you.

Operator

Your Partners. Vertical next from Research Jeff of from the line comes question Kauffman

Jeffrey Kauffman

been have of lot answered. A my questions

to like delve expense items, can. if line So I into I'd

the the think me $X for was I expense line revenue given about the operating year-on-year. down, surprises direct one was million up was of

down? or drove is, drove guess a little in something And is there and that we that I that that something this that? into dig So bit X level higher question XQ at what that can comes is cost sustains

then call. follow I to secondly, on want up Hoexter's Ken And

help expectations think restructuring what and really of were a the kind in this integration Just charge million the X that at costs because versus the those things. you I but those I this costs transition Can But covering us not rebranding understand would why I $X understand clarity wrong? at maybe were. point point? lot really are of you're out assume, what things, because of I'm some stood

James Harris

Yes.

our OpEx through Trans what Mile the Managed to our our Last and business related specifically, number expenses is So business. there generally runs

for of Last staging for ready it's the So like to labor transportation. a hub, when Mile the things the the you direct product facilities cost see direct the get it's OpEx, on the

see some of in those an did we So uptick costs.

-- most runs of of cost brokers to that through our little purchase Very because direct our trend. OpEx it's

trends. And that costs Last other Last OpEx and those stands or Mile support kind of so there to nothing Mile out than significant managed

In our actually mentioned if one terms of restructuring, in cost as you that's biggies. will, to some relates rebranding, it spend-related category, the things of of the you the

from quarter lot stand-alone on time out the but it started you facilities. company, our transition a of first being we into on. a would and diminish we as a goes was As will did public carried as over that we division at go the the of that That XPO think pre-spin, a rebrand cost into year

will noncompete expect. would diminish, also the dollars those to directly related we Other had you are spin, things, retention as some some that dollars,

in do to diminish year And related as we earlier, the the talked materially very concludes we'll expect a costs so spend but have few late carryover we 'XX, items little.

Operator

will the last to would call I Wilkerson any Mr. that be remarks. like back question. closing for And turn over to our for

Drew Wilkerson

and macro maintained model team. and with and Despite is best-in-class for a capacity on experienced took we massive the Lara. focused customers our for at all remain environment, and upcoming and investor differentiated employees. Thank climate along look along to best-in-class a many market weak the delivering navigating results current I going shareholders with RXO RXO time we're deeply your with brokerage for you, conferences. share margins. of We're your our business leadership today, the with forward partner you Thank seeing well, and to technology you carriers our economic

Operator

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

RXO (RXO) 3 May 232023 Q1 Earnings call transcript