RXO - Earnings call transcript Q4 2024

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Operator

Welcome to the RXO Fourth Quarter 2024 Quarter Earnings Conference Call and Webcast. My name is Jenny and I will be your operator for today's call. Please note that this conference call 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. A discussion of factors that could cause actual results to differ materially is contained in the company's SEC filings as well as in its earnings release.

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

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

Drew Wilkerson

and here Chief you in and Officer, morning, thank for Officer, joining Jamie With Financial everyone, Harris; are Charlotte Weisfeld. me Strategy RXO's Jared Chief Good today.

There main X points are convey I this want morning. to

of integration and benefits the of and service First, Coyote increased Logistics our continue the our remains ahead see portfolio of offerings. schedule, to larger scale we of

to we're As million. again $XX raising a now synergies, result, expect at be for least estimate cost our which we

this include to expect cost a the benefits and number see. transportation As not significant cross-selling does purchase of we reminder,

market the while on to continued commitments. Second, financial soft, our remains deliver RXO

these integration. achieved we solid progress making significant Importantly, the while Coyote results on

complementary Third, continued within momentum services.

sales another acceleration Transportation Our achieved by mile which stops, and last XX% is $X grew billion, pipeline now in we nearly Managed year-over-year. in

And earnings and cycles. cash fourth, our over making we're across flow and long power the term free increase will the market improvements business structural our to

our about our the I'll director people, and company. of mentioned comes across continuing acquisition top it technology on retain Coyote. that only case. customers, by to schedule, the the voluntary we're Since we're closed, was about above our partners, and and you level start people, an When synergies. of our the talent. Last giving to focused employees X% turnover our update We're ahead of carrier integration quarter, I that's still

share cohesive have seen with as the the wins workforce. with and and had to to carriers. engagement been employees I've team the customers me operating within regularly out been they've impressed I've We're reaching one

able with dedication are to with our people, our size employees, to were the our we the larger both commitments integration. our of stakeholders. financial external resonating Thanks and and and deliver scale on Our key

including Our people freight bid remain focused strategy season on we've customers reliably the taking and of awarded. been executing our our care servicing

one several effective team. shippers We of opportunities services portfolio eager in. the have been Cross-selling up broad services is have majority strategy goals the across collaboration who set the by last This RXO's that for to And brokerage, bids mentioned ourselves. participated areas we made ahead including cross-selling. exceeded beyond showing now internal Customers of was lofty vast are that the using in possible is one RXO the had the large mile. we we schedule. I of wins of leverage with is transportation integration key we've unified had more truck for and have and managed from the

the provides instant components technology greater tracking flexibility. scalability fourth integrating website unified quotes. new well in significant our that for a cloud platform shippers We the to our of and We experience We as a as on critical customers migrated made tech progress quarter. to with achieve launched

more cross-selling the by Coyote synergies, bulk at achieve We expect tech has The $XX future double in The call. later integration far integration talk now our third and smooth transportation initial continue of opportunities. the impact least in of estimate. our the will identify These growth. positions of detail us synergy purchase efforts. to for cost annualized synergies million organic Jamie so that to numbers about significant complete our us be of well opportunities exclude end improving acquisition to our the additional anticipate the of for cost We the will quarter. enabled

X% to in our million, fourth provided EBITDA you expectations. within the range which of results, expected by by volume. Now declined was line quarter. quarter range. volume decline truckload Brokerage by than X% truckload our were Less within full offset guidance the combined I'd $XX adjusted increased we like volume in but with our business RXO last about to talk year-over-year X%, for delivered

volume as result service, focus industry. the in continued solutions, our by in was quarter the and XX.X% quarter. the innovation a brokerage sequentially the gross providing on third from of increased Importantly, relationships best XX% margin Brokerage

within complementary Momentum continued services.

Our Converting sales pipeline Managed customers enterprise $X RXO. and up pipeline significant Transportation that provide will almost last opportunities from grow with cross-selling nearly billion, to continues is now across XX% quarter.

another to quarter big year-over-year. RXO exceptional XX%. of third growth Last of financial continue of stops acceleration services to bulky last-mile delivery our from rate turn technology, for well-known retailers scale, because grew Mile, In by and The service. XX% most and the goods stability

quarter. Services XX.X%, was margin margin XX.X% RXO's was gross the in gross and Complementary company-wide

the overall to freight market. Turning

We soft season environment, freight it peak continue a was in a to and had anticipated. we as operate muted

than However, quarter, during load-to-truck levels significantly national X reached load. The industry impacting ratio rejections by profit the per and more fourth their highest conditions tightened years. rates gross tender in and

to quarter these the still compared demand we've seen shippers, reaching the capacity progress dynamics. far, is state. the balanced continuation so from the there's too market In seeing a much first While more industry in towards making we're a of

market we in time weather of year, While softer severe from conditions January, the tightness. sustaining saw impacts market this see we typically also

carrier not but offset We to some enough the in have rates. seen project opportunities, increase

is still freight environment ]. [ solid Clearly, the

and remain quarter in of the and season discuss percentage will mid- year-over-year, high will tightening bid serving Jared our single-digit executing our catch on reliably shape market what environment. at more and time spot don't conditions telling increasing inflationary our we're year-over-year, us our continuing in to to rate The starting the but are years, customers' We with is but market of decline to recovery that into strategy we but volume buy outlook X.X an The equilibrium, However, rates. be. moving off Jamie combined an expect freight. are the for focused by brokerage coming pace to bottom the impact or detail, rates we we also still know first are data up. the the rates contract isn't cycle, first

strong on for basis Importantly, by team given the our volume our full from the year. customers, year-over-year and expect feedback we a execution to combined brokerage the grow

confident to provided that future. significant quarters. us purchase to XXX% of few with achieve the better to Ultimately, I'm freight cost structural award our result Coyote increased made density which last volume transportation. has We've when is as lane business well with a additional network. and us it changes acquisition, will our combined significant carrier enable cutting-edge our by of volume, more the positioned technology We over to our comes truckload the benefits our for the RXO

our go-to-market machine to new services We've enhanced We pricing the improved on wide wins that customers, is our fueling across our which platform, already of strategy leverage technology to array learning. and includes cross-selling algorithms AI which focus company. best-in-class

Our of and software competitive and our productivity a business. the operating is actions we're employee-facing improve significant The advantage. improving will leverage is taking efficiency continuously synergy today

our already balance we provides a improved growth. solid organic lastly, future And strong which foundation for inorganic sheet, and

benefits You're changes not market profit currently soft decreased of the persistent to conditions gross have these the structural per that due seeing load.

more term, building earnings our have business However, long in the taken long-term steps the We're for increased power this I'm future. than ever confident of RXO. we've and significantly the

detail. more will results Jamie in Now our Jamie? financial discuss

James Harris

Thank you, Drew, good and morning.

September on the We referring which Let's to impact my fourth the acquisition. in XX, as-reported acquisition review Unless basis, prior an to more the closing financials our comments acquisition exclude noted, the detail. of XXXX. performance periods presented as includes of our of quarter otherwise of the Coyote

is significantly Our portion business our of now Brokerage company. a larger overall

the the can acquisition. year-over-year quarter and higher gross that in our You fourth because see revenue profit of significantly was

and margin gross historical periods. lower RXO, EBITDA comparisons Coyote's Additionally, impacted which than margin also to prior were

we quarter, Gross billion generated fourth $X.X XX.X%. total revenue. margin was the During in

EBITDA range. line Our was our with $XX adjusted million, in guidance

$X margin Our expense X.X%. EBITDA our was interest the adjusted line, Below was million.

adjusted earnings $X.XX. was per our share quarter, the For

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

billion business. midpoint expectations. Now I'd within a was give the gross above in to of XX.X%, and of and margin our perspective, revenue revenue our From of total our lines the outlook the consistent of represented was quarter. an XX% with performance profitability brokerage slightly Brokerage like $X.X overview

businesses Given given profiles, conditions. XX.X% different of the brokerage was legacy a the this we first market quarter that This to margin the gross wanted result legacy have approximately RXO was margin gross and quarter. combined note results tightening in full strong is because

the by XX increased quarter and $XXX services was of of increased year-over-year. Complementary million strong X% points total remained in year-over-year our by revenue and revenue. XX.X% basis XX% services gross Complementary margin of

Our million expectations. Last $XXX our in better Mile business generated the and than quarter, performed

We are Tops quarter's XX% gaining bulky grew category. year-over-year, share from within by accelerating rate. growth the last big

X% revenue our expected. than in volume which of attributable million quarter, was $XXX expedite lower to generated in the year-over-year. we The softer was primarily business, down Transportation decline managed automotive Managed

cash Longer term, from conversion fourth and confident at cycles, conversion the impacted semiannual freight the Adjusted the now adjusted cash we flows. $X rate cash. lower million. free of market XX% the conversion This capital refer strong Slide cash timing XX% given remain The payment, in in discuss a flow Let's through to by X. bottom profitability represents XX% free certain Please quarter was EBITDA. a our of interest characteristics was to flow the business. cycle of working

of cash with balance to end to first that and made We the the cash timing other you'll quarter, Coyote the was This to quarter. of $X due transaction acquisition. quarter a ended the lower we with $XX million first the payments $XX million higher so be shared report. sheet, last million you balance earnings in balance higher costs quarter our than on will range payments see solely the related of the cash These at of

company's be Slide As the you our on to position see can been our liquidity history. continues it's strongest in X,

undrawn the XX revolver forma trailing leverage end of X.Xx was the Our quarter. EBITDA. million gross pro adjusted $XXX was Quarter at end months fourth

capital We capacity line repurchases our and philosophy balance deploy with organic balanced sheet opportunistic in share M&A. have investments, our across to significant allocation

to the move Coyote Let's integration.

integration least and last million the now synergies, annualized and the cost well, cost We synergies. is cost [indiscernible] than expect quarter, estimate. higher again of estimate. we approximately our We've million by at quickly, annualized mentioned, the moved $XX Drew fourth of synergy quarter's As increasing we're of progressing completed end $XX

complete this We expect year. to the $XX million remaining

is included to platforms. in related million our cost will technology The $XX As realized a be XXXX. integration tied the of synergies reminder, technology the integration that to in number

Putting it operating $XX on to million savings expect of in we all XXXX. realized taken, million based expense together, incremental $XX actions

the believe cross-selling we'll from which Drew transportation these exclude of be that mentioned, the for we Importantly, synergies will significant. benefits opportunities purchase cost receive and

Now for quarter. let's first our the expectations discuss

the we're expecting The first softest our brokerage, is Within volume. lower quarter typically quarter of seasonally year.

rates tightening addition, buy our start conditions market the In quarter. impacted to

Moving services. to complementary

fourth weak seasonal first managed continued quarter. decline the better-than-expected performance, expedite. anticipating quarter into expect Mile, Last We we're the given automotive And volumes a in larger-than-normal

between we ] quarter. on first more For the expect combined outlook in EBITDA shortly. adjusted and $XX company, details [ of to generate provide million million the Jerry $XX will our

fully reflect acquisition which assumptions, XX Slide modelling the of includes XXXX our Coyote.

following: the operations Capital in and of Charlotte. $XX expect We our headquarters includes spend real million. million with approximately the $XX million expansion associated This strategic $XX brokerage expenditures between estate of and

XXXX, recur. the real will not estate For costs

In $XX $XX million than of expect materially reduction we implies approximately CapEx addition, our XXXX. of a million spend XXXX approximately a integration following CapEx This tech platforms. the in $XX of lower to million,

We and expense and $XX depreciation million restructuring, amortization compensation million; stock-based integration $XX and and million million $XX $XX between between expect and $XX transaction $XX between $XX million; million million. $XX between expenses million; expense

between associated periods. and rate $XX interest million, includes $XX $XX $XX from between XX% expense an restructuring, of and to million activities million with Cash transaction integration prior actions and million outflow effective XX%. and Net approximately adjusted tax which

fully average an model million count approximately shares. also should share XXX diluted of You

remains remains manufacturing indicators, index changes are at has low. any healthy. moderated we monitor upcoming including Core and As moving to to economy trade the reasonably the higher. inflation key the macro policy, year, tariffs. including many look continue ISM We'll Unemployment

making developments results. recent is term. near-term positioning earnings a long impacting will we're load increase has the which The Gross That we're is of the still is moved we're profit the structural integration have freight RXO environment. of While executing lower, soft market said, of been improvements, schedule, for Coyote and team well, power the business. in operating ahead encouraging, which rate per prolonged our

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

Jared Weisfeld

good Thanks, everyone. Jamie, morning, and

our the in quarter. results As typically in do, the forma numbers performance make Coyote's for I'll includes with combined business, I an for brokerage comparisons more you periods. of pro which useful start overview I'll prior To give you, our brokerage

represented sequentially XX% down declined in year-over-year. XX% quarter high brokerage XXX year-over-year, double-digit year-over-year. the and X% LTL volume was and up was year-over-year. the down of of fourth volume represented by of the XXX single-digit our volume increased at sequentially Contractual volume points LTL end volume. quarter, Brokerage Truckload points up basis LTL year-over-year our X% expectations, basis was LTL X% percentage. in a high XX% down up by while our brokerage Full volume volume transactional percentage and

We and points also business points sequentially full the maintained spot XXX basis year-over-year. volume, a truckload favorable represented mix XX% Contract quarter. of in and of of an basis XXX business our contract increase

Our business sequentially. decreased volume another was and our customer in and stronger Milton spot decreased expectations quarter last season fourth the from contract we disruptions Hurricane after opportunities by mix XXX It drives muted line the in full the basis truckload special Spot in project and typically with quarter. of XX% points and Helene was communicated East. peak This was the quarter. volume

about that technology primary more our and I'd confirmed operational system. Before in RXO financial our be quarter, talk to Connect detail, performance conditions market Last integration. we reviewing will more our like

great world RXO's strategy of is Coyote's our As into mentioned, best-in-class we've Drew integrating both made capabilities tech best platform. progress that unique with

one all Connect to and with them enhancements. RXO integrate our efforts. planning proprietary cloud part updates reps benefits Strategically, first purchase and to allowing We've us enable the architecture, built as transportation. to for microservices unified was efficient scaled cost our technology within a system. This we're our and components effectively our will of consolidation migrated capabilities and onto more leverage and achieve of critical coverage carrier algorithms pricing bring already

before, among opportunities. of cost we've said synergies will we largest As that purchase be transportation our believe

to Connect, integrate Importantly, while corporate core we're quickly moving progress excellent with including and RXO ERP. our systems, we're also CRM our making

be to anticipate integration quarter. will third continue by technology of We the complete our the substantially that end

as Our person per productive. day become by productivity technology also even On XX-month to enables our by loads people over more per measured basis, a improved rolling XX%.

to more brokerage like detail. performance now financial market our conditions and I'd review in

to and revenue load this per full helpful. full forward, revenue LTL this find Slide XX are revenue we per stable XX on trends. load trends the Please so of information to fuel the all when starting of compared XXXX fourth chart of the third be price quarter presentation. changes going prior You Coyote. on of with to We've and quarter XXXX the haul length give also impacts has and starting to view recast note we'll that a year-over-year discuss can XX. Slides for historical excluded of changes. of legacy through refers would prices underlying on you quarter thought Starting and been this includes in the load This per better periods, truckload RXO more truckload, with

truckload January full low quarter, per by load up fourth year-over-year. truckload flat single-digit encouraging percentage the was revenue per improved, load further In were revenue trends year-over-year. full a and

to transitioning cycle Drew bottom the mentioned, from we an are rate inflationary the As freight of environment.

up low digits XXXX year-over-year. expect We rates contract be to to mid-single

Slide fourth trends. to and monthly industry the gross move Let's XX brokerage as margin performance significantly conditions discuss quarter and tightened progressed. Market

intra-quarter X% X:X. are the Industry the XX%. hit XXXX. hit rejections to increased approximately and quarter above also Specifically, load-to-truck and a high metrics of increased These briefly since tender a full the the to highest point ratio by beginning [indiscernible] of

demand. to improvement The capacity supply, KPIs move from seasonality repositioning the industry all Helene to impacts typical higher driven in opposed The was and and an tightening. continued as contributed exits Milton, carrier Hurricane of in

compared truckload the too in in While to fourth quarter the increased when still there much is market, quarter. third significantly carrier exits capacity the

the of of in speaks XXXX, carrier the weeks the unsustainable exits unit fourth number for to Some which carriers. exhibited most all quarter economics highest throughout

has been balanced last market the the it's than more soft, we relative years. few still While believe is to it

to to improve will from exit a robust We capacity need demand and levels. continue will for to current need continue to recovery, believe that

buy progressed. rates in higher resulted quarter conditions the fourth as market Tightening

talked buy country, load the in Coyote margin Legacy expect in gross have with in gross rates. profit as described and weeks, to I continued the note, resulting about we The in across the earlier weather Jamie by quarter. the and early Additionally, XX.X%. of January, higher those XX.X% our has was rates throughout improve Brokerage a Encouragingly, expectations, lower severe first gross margin consistent RXO's profile. recent was just approximately rest exacerbated margin gross Of tightness brokerage quarter. per eased

profit go to XX quarterly trends. look load at gross the per and Slide Let's full truckload

can chart, XXX%, truckload volume our increased full you than by on our the see As Coyote, with more significantly of scale. acquisition the increasing

profit lower per market truckload moves load discussed, customer gross Our mix. the due sequentially just tightening to that we combined conditions with

continue Moving with more load. our doubled market to the profit to Coyote with LTL our gross per Slide to brokerage LTL customers We've LTL LTL opportunities outperform acquisition and accretive LTL Coyote's XX. per load volume broader with continues than is gross profit have size the business the of to of our significant to RXO's grow. stable business.

give to some forward look with more outlook, first like now I'd brokerage. color our starting quarter you and on

high to by volume year-over-year digits. expect mid- We single decline to

Coyote, additional to As greater a with has decrease the volume fourth volume a the first reminder, from the quarter. to brokerage quarter business seasonality leading

expect be the XX% due freight XX% to of sustained first and in market. quarter the gross tightening between margin We brokerage to the

talk about momentum managed automotive term, business the have continue now sales that pipeline impact Managed In approaching In us. Let's the tremendous continues headwinds Transportation, complementary near to $X expedite is billion. with the to now services.

we're Last a although year-over-year slower another to quarter rate when fourth growth, In the compared of stock quarter. at Mile, expecting

more Given quarter adjusted fourth expected is decline, quarter Last Mile's half last seasonal results, a first decline are to mile. the than attributable better-than-expected we in we sequential of the quarter. than EBITDA first in anticipating the More

EBITDA quarter. adjusted quarter together, similar $XX Historically, million conditions slow it million. into assumes market and the $XX seasonally to adjusted opportunities. from limited in the expect of the first first spot increases This second range our quarter outlook freight we all RXO's be Putting EBITDA to

from brokerage our given full by a expect feedback year, the team year-over-year to grow basis. volume we the customers, execution combined to on and strong Looking

To is operating we're close, soft prolonged in Coyote environment, while of ahead schedule. integration progressing of well rate a still remains and our

the we're to don't of and the transitioning an are know confident shape of from power. While recovery, in the cross-cycle we cycle higher earnings structurally inflationary rate the bottom environment

a profile, balance which earnings for robust and liquidity M&A, the Our remains contribute growth. strong additional sheet with have can to capacity we future

the operator returns that, key our stakeholders We over the on delivering are With focused to over I'll term. it for Q&A. for turn long

Operator

[Operator Hoexter from Ken question America. Bank is first of Instructions] Your from

Ken Hoexter

to want understand original define can with much we Maybe And if to maybe to expectations Jamie gone in, your over with core the Drew today. on guess, backdrop? I Coyote how year, and the shifts RXO what's on you then so past shift seasonally but talk Jared, and jump about has going contribution, from maybe EBITDA and secondly, the the market

just then current And market. on real quick the

of but with noticed You've noted kind any have started costs, of I it or maybe we spot Have pulled changed inflection more guess, in higher PT terms shifting like rates back. that recently really you off looks anything outlook? really,

Jared Weisfeld

Jared. it's Ken,

So relates I can as it combined to comments you business. give the some seasonality

QX, to So new for across talking of inflationary of rate an to really see We'll ramp The have about across low a about. that books digits mid-single the compared about also XXXX. year-on-year complementary seasonally contract up typically the is with typically rates We'll talked XXXX And probably services. to winning. we we business volumes. talked moving we're lines when a that from all business We environment better newer contracts that seasonality we standpoint, brokerage QX to from see uplift. we're benefit on

volumes versus QX Last quarters seasonally as And automotive You'll warms QX transportation, weather QX. expect is we Mile, of see the one up. managed strong better

when looks you combined QX basis, are strongest seasonally business on quarters think combined the QX a the like. So what about typically and

improvement rate tailwind gross have has your buy profit last load, a rates, you're exactly terms per load the we an for gross On environment, first quarter. the weeks, increase to that been buy question, the And in the in higher profit seen for and right. throughout business second few brokerage we and per over of expect

Ken Hoexter

that? do market What fourth quarter high digits digits. think you if you're seeing in do accelerating How see to a compared to growing the you broker could single I market the mid- down and kind If squeeze of then. follow-up maybe mid-single to

Drew Wilkerson

I XX% one look in brokerage at back the it long been if think a you less this market. you mean, Ken, the I Drew. mean go is the of When for market, I than time. -- taking share has was overall for-hire XXXX, brokerage to trucking

in like pull stability, at through and strong business Now, on XXs. you to a asset who together it's who operate look have carrier an cycle. bring to look low and customers. like the the financial capacity we brokers flexible When able are who And customers trailers what bring at solutions to

I on share. just started getting taking we're brokers think

from as brokers look years, the we'll over then out move next XX% you I and trucking of will have think to higher continue market, for-hire X the overall roughly there.

Operator

Your from Oppenheimer. next Schneeberger question Scott is from

Scott Schneeberger

and over anticipate your grow. you what curious volume Just out -- XXXX as does look you that

of follow want to level potentially your and there? sense of a confidence magnitude up. degree I'll that Just And on get then

Drew Wilkerson

we're volume getting still confident. of that to confidence you Scott, and we're reason bid a at grow this and be we're middle feedback of that degree with returns in to the of The that we're customers. confident off because in basis. that we're on year-over-year we're we able now And the can it were quarter getting stay early going early the out with from putting that the we're results we that look based customers from this right is when season,

Scott Schneeberger

follow-up then and big issue. a is just obviously, I'll that, And have tariff another on a --

guys do of bit our a You with neighbors. business cross-border

there, how may affect that initial your other? seeing and on what you're thoughts automotive curious on Just

Drew Wilkerson

Something that closely. watching we're

that think the term, I and and short be across inventory the border, short-term forward to tailwind pull a business. pull implemented tariffs see will if see you will on the you

is shore that term, intermediate see would -- bullish a into tailwind that, as of on something vast the see business. which term, would implemented are more long you at If to slow out are that's for down. the U.S., you business headwind if would that the that held for business create it near are we're volumes because start our be And be majority would extend extremely the tariffs tariffs you and the look would it that our and something for

Scott Schneeberger

for just And Jamie. of a somewhat housekeeping

On to million, the elaborate for headquarters. million, Could $XX this then that discuss what's of $XX big you And expanding $XX the spend, what's the growth on Charlotte? year just kind number? of CapEx maintenance, million, related number, CapEx

James Harris

Yes.

$XX XX is So of real you're [ a nice ] estate. we the right, to operations we here. million strategic Charlotte lot really our these guide -- million, gave over well. A back-office services located here, kind a is does are of lease. X core has extending brokerage for headquarters the spend. it we're big have size it's as operations $XX But that and onetime decade house for XXXX It's been operations a home a

'XX If believe, million -- there's another as CapEx that $XX will about in beyond, you synergies. we included out come look

that's But we synergies will we 'XX. addition the out. $XX million million OpEx called approximately we in in to $XX going of into think drop Now

way heading X% 'XX a a that [indiscernible]. type million the of keeps we that $XX So think revenue which with number beyond, to in about long-term into million we more of and is of about $XX kind line talked CapEx

Operator

Your next is Moore Jefferies. from from Stephanie question

Joseph Lawrence Hafling

the provide front, to has last of historical you walk head on sometimes months $XX of maybe really combination the you've on guys over there terms to couple key from or million maybe integration the together? changed $XX you a in been know million, a Moore of out often And that kind what saves? different is to kind Can integration RXO count have talk maybe of integrating million I kind what at talent and keep us Hafling as brokerages, how on bit you able about what's synergies for can kind the about Coyote attrition going to wanted Could issue This of with well the incremental incremental Joe called Jefferies. ask strong that front. as Stephanie in found of I you the $XX front. of cost a be little what's on the maybe the the

James Harris

Yes. Jamie. is This

start the So with synergies.

are fit, together. a is been great all, people very we First integration, well. of cultural It's well working the very going believe,

We original from have XX%. now upped our target XX% to synergy

it So when seen we've to been double in opportunity to quarter, had space. technology the Last a ] XX, raised we able more that. lot we synergy [

called as out late actually half, of most XXXX. year the quarter, that, we in last Now be we'll back

in activities. been And been estate able flow P&L X took able a see that, secondly, footprint, companies, lot you of you'll sourcing or consolidation, really We've synergies same to there's procurement our And that. the to put together. if look then often out real spend. areas: contract look historically, work vendors, X benefit estate that services, at our at through we real scale [indiscernible] more primary 'XX. hard type type these came So begin some the from our really a we there some same because of getting the so of a through and to believe more

include cost nor now. synergies any include synergy transportation that think that does you can it if the the from of cross-sell. outlook spend, believe So, with And not synergies about again, it, from any come we're happy does very actually we right improved

Drew Wilkerson

and it building integration starts with trust I the employees Joe, piece, building think On relationships. the with

going. largest and build term able being the serve to with them North offer trust You being all There's broker now cycle. them about more relationships And long we to were offer customers excitement build gain in to before. and over our the for a for and where a America we're than of one services able through that working them and what share about show hear vision what's the third There's on excitement us time. talk relationships able lot the

Last prepared business talking that highlight and commentary, business to Coyote us that Managed that we've customers with that now Mile heard we're are got doing You Legacy there. doing in Trans are now in

array for continuing of is to built who that of to going for of being trust somebody now. values the business, right work has a and wider relationships and the across a to has and there's that extremely sell So vision excitement able morale know I the company work think high you're doing and services grow who lot a you strong the excitement

Joseph Lawrence Hafling

you something kind Jared, one landed? if squeeze I of on XXXX up, kind volumes X- I RXO Got where X-year Was wrapped stack. kind in was a the kind just it. curious is past and XXXX in. And could have given of of of

Jared Weisfeld

about. the Yes. moving Drew talked really just integration, We're as quickly in

So given go pretty growth as XXXX, year this the at the one ahead throughout when team right think strong -- Joe. execution we're really we unified able happy viewing volume be with strategy. of And to relative one XXXX, combined to and bid endorse now, business full season we're look to the I

viewing metric that because to anchor I'd we're at this this one business. point, So as combined

Operator

Brandon Barclays. Oglenski question from Your from next is

Brandon Oglenski

can come because back call. I I on if being think just there's this maybe it's important numbers so And to Drew, tossed many here. question Ken's

a your first little Coyote. up. on the just it's EBITDA investors of I hard or the operating to maybe low a the is end of to trying basis, more out what your consolidated day, here And than are at figure a especially pretty think going keep lot we So look quarter. here that thought of a I it's at lot earnings into integration guess, But

that the said a I in of anchor core share get that you'll something the marketplace. back just taking So there's And fear business. to deterioration a want in there's been you to

that Coyote. forward? a last something the rectify you has on RXO either looking back earnings So issue and And X can to been you this in better or think months an at get X there pace much is

Drew Wilkerson

we bid Well, Legacy pricing we XXXX at I you, of Brandon, volume go is you recovery. strong. we've would is EBITDA you early of that not and I were our to customers what we bit what told the that if played in told did And for in the returns with as sort would you, feedback is our strategy if The start some little potentially a bids of a that RXO, of positive. sacrifice a And that extremely of that by season bit little we was the happen, back that on said getting there's position there. earlier, we're momentum reminding we're And well. out. got that lot

being looks X- have. on at this a We of this through a term many to the what share view And don't cycle, never it like X-month long others able of that look to for look think if We history you you business through and it what business like and go a the have cycle. market take back We basis. got there's it. done I don't we've at

team to to has able to very So do. team of going what what and confident in the done be is continue proud the

the at with a profit piece first commentary, load. period which as years the rates per have your up transportation purchase When are deterioration has the rates happened was entering for going is thing you come in question, in now gross on cost time over last X.X that the I what basis. and a years. down is first of you We've where of into in overall the the X.X going a said look earnings, my That up sale prepared told we're year-over-year biggest

when I So we're happening confident are what's provider environment, there. turn people spots, and seen think hitting that with an many And to you've the be bids. inflationary the market rate we turns, that going that projects to for

Coyote that what load. raised about about transportation. general, there's per the of of we been the think question last I your brokerages was health cost We've acquired what far talked Coyote think market. I they is than compression versus year, is last time talked The the with the than cross-selling. overall synergy you gross We at that. on bigger in at a happy of acquisition, purchase But the opportunity profit is of why look which we've we business. performed how the And very our no realized When even piece different estimates. again

positioned turns, better been since than So as the what did have ever we market spin. we're the we

Brandon Oglenski

guess, can I context, but is one this don't if see that, for you Drew. put you the I want had contracts Maybe the maybe moving confused. to moving in a to, that moment? higher fourth in up, rates contractual Or I moving the think, Jared, you quarter? mix be And less Appreciate at

Drew Wilkerson

heavy remember contractual that we the customer I mix what that forgetting Brandon, large is that if a quarter. announced was acquisition, think was a weighted that the seasonally part whenever the you're that we Yes, to had said fourth you Coyote there

for you So market we projects as month the spot loads, and saw And of We tightening. mini in large I bids, about the biggest some think the contractual that's some some see talked piece. October driver did piece. the some that

Operator

from from next Wadewitz Tom Your is UBS. question

Thomas Wadewitz

to trying a you recall, I would quarter Wanted the could another about is seasonal a to up normal to about -- what see just point you a be year think, base if end I sense as of or see, the you a you'd you way I get for have to XQ. like or full XQ. where XQ about I you're can something if look I'm just the -- like like talking that. what like past guess at percent up you to than at perspective might it on of year think step first talked does maybe us there Jared, bigger any look off think looking full in that, wanted there's help offer

any So year? on I guess full thoughts just versus start to for with XQ that

Jared Weisfeld

to so it's percentage lowest go contribution So I'll QX, our as earlier. when you softest a year full Ken's think about of to back typically quarter, EBITDA. question from

from you that bouncing across business. about positive in rates moving we all the about and where we're have contractual now lines that seasonality If bottom, on side. QX, talking the know do an higher we we're environment off to ramp we're is think What QX of

So there first of of looks volumes But start point, when being high the many right? confidence what to half at on year recovery. the combined too to able how think is this what you like, look think the nature year-on-year it versus the hypothesizing to is terms on second are for about Our going of just just variables year-over-year. really depends about I half shape recovery when you in like, business look think the that could grow

us gross a we pivot that of and until special load, nice that market you'll business of be spot [indiscernible], you'll the If all a it's go with case, benefit see more to it's you'll us and book to their pretty with spot from see recovery, customers trust get the have see and squeeze a quickly on per higher our profit freight relationships able to projects. sharp in in ahead board we move conditions. the a contractual And get sharp little the healthier that bit of a strong of

Thomas Wadewitz

Right.

Okay.

we sounds makes lower that's might XQ maybe you today, where that full think if you than year? year? If normal from just improvement the a through of would assuming are if cycle -- the think some guess it of like I in sense we right? that be -- percent Do we're So kind we're assuming

Jared Weisfeld

coming a when QX is business. at contract comfortable to think QX about right? that different look terms we all Coyote, as RXO do this important low saying bottom, also a or versus you lines a into I combined it's about be entity, a business to don't we're whether right? think basis, notion or I the especially So the mean I you on point think at have into V first combined that higher an plus in go is the new going of get into that to a year I right? of think move feel that is should across Yes. QX the that of So of mix W What recovery, how this a the shape should business, that extent want contribution start we're to the we spot behaves. L, all So full that percentage as to and how as percent of the operating realize year getting off to it's is right? obviously as

Thomas Wadewitz

enough. Yes, fair Okay.

I second looking at it's For straightforward. mentioned think I you -- question, -- think

brokers step-up So percent, and be the margin like technology talking change? towards legacy's percent margin the get XQ, than technology you take lower assuming gross or percent you of Coyote could spread Coyote that, RXO in XQ, RXO. think the new And allow technology. structural to think would focused that carrier Do more that key a will the a in that kind Coyote's longer Legacy of might kind maybe about move implementation. difference gross do you're I gross is of quick that's lever guess that the there's -- mix business Or RXO. margin more fairly

Drew Wilkerson

Coyote business. at look in is lower business, difference carrier continue pieces but and steady moving our chunk it's is long-term volume. It business, X Thank with lower able large margin business It Coyote through grow, to It's business. with a the gross margin and a runs able at a piece. that is to we network appreciate want there gross When the margin good Tom. is percentage. One profitable of a the We're gross to you, who contracts the enterprise relationships you it. percent. There's it's good to deep to and there's customer really keep percentage. This structural that be like

us diligence. power We the business. profit a piece of SMB the we second And on improve at did their told SMB be that with is when per The able to business you load, will the runs early that transportation. business but the strong gross of on purchase you see very

Legacy things was, that length that that knew we RXO there there knew were bought One better. are [indiscernible] And got excited of were the Coyote that we bought us better.

So we would improve be able margins. to

similar improve market SMB, enterprise over And is those there the I middle that opportunity time. margins And and think business. well to piece is their to as the last the

again, gross load because, Legacy would we'll per in we that is The cycle there versus capacity one last we that buying that was as add I be market to come Coyote can lanes caveat better, profit that to tap RXO's improve able on are platform. into

Thomas Wadewitz

give forma That's any the that? mix, and of What Okay. enterprise you rough -- sense on and mentioned just -- you sense brokerage SMB mix pro helpful. between volume the can a in

Drew Wilkerson

of overall the business, being XX% overall At of talked about large gross the about around margin. we one and SMB XX% roughly time spin, the talked of being customer we

Thomas Wadewitz

Okay.

is with XX% combined So SMB [indiscernible]?

Drew Wilkerson

than higher in XX% heavy SMB, that SMB was Tom. but the RXO little the A was now, Legacy not bit Coyote.

Thomas Wadewitz

Legacy Coyote.

so not Okay, forma. pro

Operator

Wells And is Chris from your from Wetherbee next Fargo. question

Christian Wetherbee

some thinking about up gross moving to of on wanted I and pick the there. pieces per load Maybe trends profit

the profit I year-over-year But as you return I as about some see know was progress guess and move up sequential maybe I that quarter? first basis, between low So think of then think about you rest beyond maybe profit improvement volume there's about the know the we X that? the on a to you I it a per sequentially growth load mark balancing down think see guess step gross market as that and up through sequentially. per should Do the a in businesses. start growth, was how water guess, some is XXXX? Or to we we gross I in differences load

Jared Weisfeld

it's Jared. Chris,

the at gross that of the lower look you some was lower bit within in the that project customer mix, if So quarter a say with side which RXO and moved Coyote QX Legacy progression then profit We the part on at of by QX. And attributable profit that moved to had load also is And of to gross some runs the that start of for the I'd benefits to tightened. part QX, expected, Coyote, particular, market driven lower. opportunities, sequentially, seasonality inclusion business, special spot per but as load. from per some

So gross that profit on QX relative really drove the lower throughout move QX. load to per

bit weather move QX from we profit do progresses really the to expect inclement But from a we QX, because to market are the QX, load, bridge load that about a January think you QX here improve decrease with QX to point. to country. I'd year little per say When gross expecting pretty gross given tight marking across as lower on the start modest the did low per profit start the

with would So progression QX, from through season think about check. then from tighter X the produce of is to that's seasonally, QX market a I QX road QX, factors, And QX. and sort

that So a shape where recovery per the really I from load. we that gross to profit combine think of when you have to with standpoint get are

go back I prior when the profit about see think of strong I if a think you shape gross that recovery a per question recovery, it's And in if the V-shaped load. recovery, you'll where to

it's if opportunities. little And be a see spot the squeezed up. will a a recovery, more of modest it You'll bit

Christian Wetherbee

about towards the or quarter guess as synergies, of then that you think you maybe think I of Okay. as All about contribution it. half of XX when out about the cost color. right. kind think the progress that any play by cadence through That's by that of helpful year, you the to rest sort the Appreciate way And plus?

James Harris

in end the about range of head had Yes. This most that million can the be been to amount, we $XX fourth think in especially 'XX completed over around by incrementally, would is But year. million technology the of the quarter. year the this $XX of as course Of the that rays impact $XX 'XX into million realized implemented to from synergies. the going is some be Jamie. include

so that a really you see And progression QX in more in 'XX. begin --

see to [indiscernible] have frame. the dollars 'XX time we -- And far, roll will of additional begin of completed the that that so the the predominance you'll into but majority be thus 'XX, in the the 'XX

Operator

Morgan Shanker next Stanley. is from Ravi from question Your

Ravi Shanker

I Jared, the follow recovery. wanted on shape just to your on commentary of up the

said on pricing you that think single are looking asset-light part? carriers, high maybe maybe that. cycle? digit, getting that than you little in if you for think do between the double that, your gap Do bit sharper? that's ambitious think some you're asset-based cycle contract the just 'XX? more I prepared low I you a asset-based and you Or of to a think Do rates digits remarks, looking already of they think as available their for I in is to get there's opportunity for the well pushing and think is mid-single-digit

Jared Weisfeld

recovery is us see V-shape, will gives talking with I stronger so years. to volumes we're how our far, confidence what's seeing spot talking increases it able start Yes. our for point, go to that you're and that deep about. those And and that low But to the seeing here, Ravi, strong relationships and would we're your I XX-plus model develops works, reemphasize hearing kind the absolutely over of we that that we we're XXXX. we're cycle what can is be of speak to you price a customers have and type just the that know customers to and last ahead driven and we what extent what only seeing increases mid-single-digit about from that

has really us plus. inflationary rejections to environment as So our basis sharp getting XX% about think first spot points starting when call. rate the cycle in increased X,XXX days and come to approaching an you type In volume recoveries, because almost the recover XX tender our to by customers with

Ravi Shanker

a sorry Understood. to that? skewed And a little Do if as relative bit why customers? of follow-up, it unpack of kind to maybe of project more the base what's I'm Coyote's Or reason as mix you business? this, kind they have is Is of can seasonality a for missed I RXO. but kind

James Harris

but good fourth in Jamie. is The business customer who's factor one a seasonal have driven customer, contract piece it's business, lot quarter, got fourth they of one of some we particular Yes, uptick really partnership, strong large big a by provide in this quarter. the the

Operator

question next Jordan And Alliger your Goldman from Sachs. from is

Jordan Alliger

integration, you better if could what's terms about under And the does I'm the Coyote's in of restructuring the for it talk $XX And bought through that under generally transaction come million question operating EBITDA you don't operating know than since the thought. $XX not to stand-alone is, in trajectory or in stay the talk worse about buckets? Wondering you million you performance, profitability year. it if talking standpoint. about And could frame expectations? does performance you diminish those second a talk Or I it, year? paced? to of integration evenly and charges it from then Can Has

Drew Wilkerson

Jared second Jamie I'll take and portion. Thanks, Jordan. the will start and

grew our when to months. we look -- the what say being market, market across our has don't excited we're excited and we're versus over how Coyote, Coyote to I on you volume and what's about what that when like. exactly expectations, When able on it's think we're getting So the look we're look bought able spread transportation, XXX% do When in cost you versus platform, purchase looks excited. going about the being at about spread that at at next that. when was opportunity loads, knew and how to I X would the cost one reduce take fixed overall across you more overall by performed pleased, it you going do we and to performed look

a going now, the is lot may long-term now for with of compressed you right gross business. load profit of business confident see going that at we're piece do that the being per taking within the cycle. they're look the not in there the the the you cross-selling, if we're bottom what on at But to right actions So

James Harris

Yes.

this So is Jamie.

transaction some like fourth would moving sign as There the out real in of biggest related -- had quarter, was then contracts. tight be because costs, charge of restructure, a space. we get impaired we some be consolidation where example, the of will leases spend. the spend estate to were an general the some the out contract And the systems to into going On are vendor of question just together, around be, going are for obviously, costs transaction 'XX big spend Coyote. as got restructuring of we'll majority your items related, to bodes costs, we've put The costs, second that we and be to the 'XX going some be have we will can eliminating part we technology the -- so that

Operator

And Jason from question be would your next Seidl Cowen. TD

Jason Seidl

Can you little bit a the talk rejection about rates. tender

said I And in high, I think the we X% quarter to are where I is been hurricanes think the about hitting going you with XX%. XQ Where the really a in hasn't out? discussed. do currently market? it think, about And you of shape something then, guess, that was

about should freight bit that we progress how business guys trends in the of a You think have throughout 'XX? as business. a we forwarding Maybe

Jared Weisfeld

Jason. start tender with I'll I'll the start projections. relates as it to with, first

QX, X%. the X up Heading as rejections into about see high despite we X.X%. weeks, in last the moved weeks softness, still quarter got what for of now X.X% couple right, and tender seasonal So we're at you're over X% and to a fourth between typical We're as over XX%.

down look though come points. sustaining basis basis seasonality, given XX%, XXX tightening it And market we're it's it's up that you if from normalize So at even still to year-over-year conditions. a on XXX,

[indiscernible] now that our we're think bottom. of rate recovery. We're the the off I an question moving is coming rate environment. inflationary So commentary to The with

Drew Wilkerson

Jason, business Freight Forwarding piece, on well. the has performed the

picked punched and get piece forward last in for of and as business, weight Asia what it's for the they inventory some its quarters it's that done did But pulled have the in couple of business. smaller thing business, if domestic why is XXXX what a going class Managed We started and one that from contribution. able done have seen really is do they business was they a that a combine Laredo, The up. above and we to Trans. with as in they lot what's which pieces, been in there our XXXX, you of this and more diversifying facility what look has And did, at that through we've

to If at do you brokerage, from up. picked look able has customs a been what that we've

So out of in forwarding, happy credit overall, what to business. the team nice we're the done very with has see continue and

Operator

Your Group next Research. from question is from Scott Wolfe

Scott Group

at the so hour, quick. it We're keep I'll

in volume? seasonality think of Coyote, UPS? in the you the on way? think, talk you Amazon And You impact, is about around some And grow do and remind that When then, have on Trans Managed keep Managed QX just we big again? starts the does pipeline revenue Trans Drew, big to can Does how growing. drop us any any Coyote

Drew Wilkerson

XX% we've with described that around that of way margin it the The business. the business Coyote overall Yes. UPS was was

build grow could our to puts and break we like for them, with that for customer, of down of volume we Scott, build service. drive and to to the customers going we'll what Just other all with relationships. to like our look not ins show outs them We're UPS, great with strong and them, with can technology cause forward solutions going them with other declines, ways the we're do any do continue could what going help

and the Trans is dramatically supply driven the smooth. down volume volume. you been fairly look that have revenue, because running Managed automotive the the in at of expedite Automotive has decline automotive been If in lot chains a

pipeline the robust. is biggest So that's the But driver.

to I last remember the rest Transportation. thumb important, the lot because transportation we're big a on how the to drop onboarding and freight Scott, And allows talking we to quarter, onboarding Jamie business. quarters. next reason with potential overall much is We're synergy managed yesterday. over the of with in the customers you If several highlighted so that the were customer that's that looking at of were we Managed us

Scott Group

So overall when the revenue think again? grow you to do Trans Managed starts that

Unknown Executive

late think of and that in, the we lot of last takes we've the we into this year. of of model of late into time QX onboard flow the a Trans transportation into full the then did think begin first model I as the got get kind opportunity over to that to customers, these the get synergy It those business. of power Managed onboarding brokerage built but year going will see second impact through half, that we half to loads the side we

Operator

would And be Daniel your last from from Imbro Stephens. question

Daniel Imbro

around on the be term, near XQ will maybe you brief, Jared. I starting can guidance, the us help

end? goal I I million the guess, what to to guessing I'm get are variables or when think think we tight. $XX the January was post, to million the about low $XX high

XQ? takes we is at swing And should so move factor? come we be and a the is if it and market truck as puts we are margin -- watching loosens, Or in the the high through what gross end

Jared Weisfeld

for guidance specifically, variable to per million Yes. really the out in put that transportation. $XX we biggest is QX and cost Daniel, $XX of of purchase gross I'd load that million more say range profit terms

of load as upper depend to to We per of So to if ability gross down But half the as bit, rates bottom over half, buy have what do contracts of it's between buy. think quarter the down we've first a weeks, and the seen delineate newer think you purchase cost last profit little on continue quarter the our couple progresses. implemented to we'll some the will progresses. going that the bring really and about and transportation improve we'll

Daniel Imbro

on cash Jamie, Helpful. a flow. And maybe then, follow-up

a cash they're investing cash term? the given to It about year? coming probably they're drag maybe was up burn near the about should tightened. the is cash the expected. maybe in should then rates. flow the the move with market costs the on transaction And capital January we in this But quarter I cash in think I we think those questions to X this think flow costs? here I guide, that higher year, in in working how related Are of as truckload So than out. that, higher further here drag know adjusted CapEx guess fourth there. stepping Like

James Harris

Yes.

late call let's cash operating it some in the have year. So flow first. We timing did

are As bottom the we we of the at look into cycle. next year,

an cash think And million kind flow. flow-through about about once to $XXX so million of $XXX to opportunity operating of -- you to if EBITDA million as of we've cash structure got that to But interest you -- our of million, $XX CapEx, free we've flow-through think million from million the committed kind breakeven. company, $XXX about to contribution breakeven a spend above $XX you in for get about annually you've EBITDA XX% got $XX

some some the free P&L we'll Coming for cash if 'XX in so [indiscernible] charges. took mind, to deferred payments. of about we the Keep flow year. use at charges in think for restructuring, that to in purposes, restructuring of restructuring a your question do is the you that And portion that about cash of [indiscernible] about of portion

now mean, spent, very the overall, we Legacy return money RXO about is I nice. if But the and on integration, think whether investment Coyote you

to remain think down the of free flow and Switch confident you a so a cash we've you last cash. cash, about And spend, But of a cycles. on EBITDA for most get from in conversion it's term, we bottom if about of is time. through to the period generated XX% the We've And point at use been that market flow. good number in long the cycle free XX% XX% of cycle. great back actually the cash

a and of for And So it for up be about think if value power could generation you the take very us. the creator significant cycle, cash flow that's in we that think the business.

Operator

now closed. the the is now will remarks. to question-and-answer call for closing The hand I session back Wilkerson Mr.

Drew Wilkerson

Thank you, Jenny.

sequential quarter on synergies We're We Coyote the delivering is brokerage. Our of least ahead for have commitments in at our estimate fourth achieved we XX% increased annualized cost growth. in integration of million. schedule, and to our $XX volume

by freight Our Managed quarter. Mile, sales momentum complementary billion stops services in now grew in And Transportation. pipeline the the Last in nearly is The management. XX% under $X then continued

set best close We relationships. remain most continuous and customer comprehensive focused the the of service, innovation on providing solutions,

growth be well Thank all We market, in freight to cycles the significant but time continue are a and market across and free long to structural and term. the our we've you disciplined soft for changes morning. cash this over RXO in made business flow positioning earnings your our execution deliver

Operator

conference for you Thank you. ended. joining. now gentlemen, Ladies the and all has Thank

You lines. may all disconnect your

RXO (RXO) 5 Feb 252024 Q4 Earnings call transcript