RXO Inc
For the period ended Jun 30, 2024. Filed Aug 7, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 7, 2024
RXO$27.60-1.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-07.
0001929561-24-000082
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0001929561-24-000102
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 49 previous paragraphs and 59 current paragraphs.
31 unchanged; 17 reworded; 6 added; 1 removed; 0 previous and 5 current paragraphs rearranged.
Tables are not compared: 3 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (6)
Current report
Pending Acquisition
Current report
On June 21, 2024, the Company, United Parcel Service of America, Inc. (“UPS”) and certain subsidiaries of UPS entered into a Purchase Agreement (the “Purchase Agreement”), pursuant to which, following the satisfaction or waiver of certain conditions, the Company will purchase (the “Coyote Acquisition”) UPS’ technology-driven, asset-light based truckload freight brokerage services business, as well as certain assets used to conduct haulage, dedicated transport and warehousing services in the United Kingdom (the “Acquired Business”) for $1.025 billion in cash, subject to certain customary adjustments.
Current report
Six Months Ended June 30, 2024 Compared with Six Months Ended June 30, 2023
Current report
Direct operating expense (exclusive of depreciation and amortization) of $103 million in the first six months of 2024 decreased $17 million, or 14.2%, from $120 million in the same period in 2023. As a percentage of revenue, direct operating expense (exclusive of depreciation and amortization) decreased to 5.6% in the first six months of 2024 compared with 6.1% in the same quarter of 2023 due to cost reduction initiatives.
Current report
Transaction and integration costs for the first six months of 2024 and 2023 were $8 million and $10 million, respectively, and primarily comprised acquisition and spin-off related costs.
Current report
Restructuring costs for the first six months of 2024 and 2023 were $13 million and $9 million, respectively, and primarily comprised severance costs.
Removed paragraphs (1)
Previous report
Our freight forwarding service is a scalable, asset-light offering managed with advanced technology that facilitates ocean, road and air transportation and assists with customs brokerage. We are a U.S.-based freight forwarder with a global network of company-owned and partner-owned locations and coverage of key trade lanes that reach approximately 150 countries and territories.
Reworded paragraphs (17)
Previous wording
RXO, Inc. (“RXO”, the “Company” or “we”) is a brokered transportation platform defined by cutting-edge technology and an asset-light business model. The largest component is our core truck brokerage business. Our operations also include three asset-light, brokered transportation services, all of which complement our truck brokerage business: managed transportation, last mile and freight forwarding.
Current wording
RXO, Inc. (“RXO”, the “Company” or “we”) is a brokered transportation platform defined by cutting-edge technology and an asset-light business model. The largest component is our core truck brokerage business. Our operations also include asset-light managed transportation and last mile services, which complement our truck brokerage business.
Previous wording
Notable factors driving volume growth in our business include our ability to access massive truckload capacity for shippers through our carrier relationships; our proprietary, cutting-edge technology; our strong management expertise; and favorable long-term industry tailwinds. As of March 31, 2024, we had approximately 115,000 carriers in our North American truck brokerage network, and access to more than 1.5 million trucks.
Current wording
Notable factors driving volume growth in our business include our ability to access massive truckload capacity for shippers through our carrier relationships; our proprietary, cutting-edge technology; our strong management expertise; and favorable long-term industry tailwinds. As of June 30, 2024, we had approximately 118,000 carriers in our North American truck brokerage network, and access to more than 1.5 million trucks.
Previous wording
We provide our customers with highly efficient access to capacity through our digital brokerage technology. This proprietary platform is a major differentiator for our truck brokerage business, and together with our pricing technology, we believe it can unlock incremental profitable growth well beyond our current levels. Our complementary services for managed transportation, last mile and freight forwarding also utilize our digital brokerage technology.
Current wording
We provide our customers with highly efficient access to capacity through our digital brokerage technology. This proprietary platform is a major differentiator for our truck brokerage business, and together with our pricing technology, we believe it can unlock incremental profitable growth well beyond our current levels. Our complementary services for managed transportation and last mile also utilize our digital brokerage technology.
Previous wording
Our managed transportation service provides asset-light solutions for shippers who outsource their freight transportation to gain reliability, visibility and cost savings. The service uses proprietary technology to enhance our revenue synergy, with cross-selling to truck brokerage, last mile and freight forwarding. Our managed transportation offering includes bespoke load planning and procurement, complex solutions tailored to specific challenges, performance monitoring, engineering and data analytics, among other services. Our control tower solution leverages the expertise of a dedicated team focused on continuous improvement, and digital, door-to-door visibility into order status and freight in transit. In addition, we offer technology-enabled managed expedite services that automate transportation procurement for time-critical freight moved by road and air charter carriers.
Current wording
Our managed transportation service provides asset-light solutions for shippers who outsource their freight transportation to gain reliability, visibility and cost savings. The service uses proprietary technology to enhance our revenue synergy, with cross-selling to truck brokerage and last mile. Our managed transportation offering includes bespoke load planning and procurement, complex solutions tailored to specific challenges, performance monitoring, engineering and data analytics, among other services. Our control tower solution leverages the expertise of a dedicated team focused on continuous improvement, and digital, door-to-door visibility into order status and freight in transit. In addition, we offer technology-enabled managed expedite services that automate transportation procurement for time-critical freight moved by road and air charter carriers. We also offer freight forwarding services, including facilitation of ocean and air transportation, customs brokerage and additional domestic services.
Previous wording
The Company’s condensed consolidated financial statements include the accounts of RXO, Inc. and its majority-owned subsidiaries. All intercompany accounts and transactions have been eliminated. In management’s opinion, the condensed consolidated financial statements reflect all adjustments that are of a normal recurring nature and are necessary for a fair presentation of financial condition, results of operations and cash flows for the interim periods presented. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. Refer to Note 2—Basis of Presentation and Significant Accounting Policies for additional details regarding the basis of presentation used for the Company’s condensed consolidated financial statements.
Current wording
The Company’s condensed consolidated financial statements include the accounts of RXO, Inc. and its majority-owned subsidiaries. All intercompany accounts and transactions have been eliminated. In management’s opinion, the condensed consolidated financial statements reflect all adjustments that are of a normal recurring nature and are necessary for a fair presentation of financial condition, results of operations and cash flows for the interim periods presented. Operating results for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. Refer to Note 2—Basis of Presentation and Significant Accounting Policies for additional details regarding the basis of presentation used for the Company’s condensed consolidated financial statements.
Previous wording
Revenue decreased by 9.6% to $913 million in the first quarter of 2024, compared with $1,010 million for the same quarter in 2023. The year-over-year decrease in revenue in the first quarter of 2024 was driven primarily by (i) a $36 million decrease in revenue generated from our truck brokerage business, as a result of a 15% reduction in revenue per load, which was impacted by a combination of transportation market rates, fuel prices, length of haul, and freight mix, partially offset by an 11% increase in load volume, (ii) a $25 million decrease in revenue generated from our freight forwarding business, driven primarily by a decrease in ocean rates and volume, and (iii) a $20 million decrease in revenue generated from our managed transportation business, driven primarily by a decrease in expedite air rates and volume.
Current wording
Revenue decreased by 3.4% to $930 million in the second quarter of 2024, compared with $963 million for the same quarter in 2023. The year-over-year decrease in revenue in the second quarter of 2024 was driven primarily by (i) a $20 million decrease in revenue generated from our managed transportation business, driven primarily by a decrease in ocean and expedite air rates and volume and (ii) a $14 million decrease in revenue generated from our truck brokerage business, as a result of a 7% reduction in revenue per load, which was impacted by a combination of transportation market rates, fuel prices and freight mix, partially offset by a 4% increase in load volume.
Previous wording
Cost of transportation and services (exclusive of depreciation and amortization) in the first quarter of 2024 was $699 million, or 76.6% of revenue, compared with $759 million, or 75.1% of revenue in the same quarter of 2023. The year-over-year increase as a percentage of revenue during the first quarter of 2024 was driven primarily by a 2.1 percentage point increase in truck brokerage cost of transportation and services as a percentage of revenue, as lower freight rates were not fully offset by corresponding reductions in cost of purchased transportation during the quarter. This was partially offset by an improvement in mix in our freight forwarding business.
Current wording
Cost of transportation and services (exclusive of depreciation and amortization) in the second quarter of 2024 was $700 million, or 75.3% of revenue, compared with $723 million, or 75.1% of revenue in the same quarter of 2023. The year-over-year increase as a percentage of revenue during the second quarter of 2024 was driven primarily by a 0.5 percentage point increase in truck brokerage cost of transportation and services as a percentage of revenue, as lower freight rates were not fully offset by corresponding reductions in cost of purchased transportation during the quarter.
Previous wording
Direct operating expense (exclusive of depreciation and amortization) of $53 million in the first quarter of 2024 decreased $8 million, or 13.1%, from $61 million in the same quarter of 2023. As a percentage of revenue, direct operating expense (exclusive of depreciation and amortization) decreased to 5.8% in the first quarter of 2024 compared with 6.0% in the same quarter of 2023 due to cost reduction initiatives.
Current wording
Direct operating expense (exclusive of depreciation and amortization) of $50 million in the second quarter of 2024 decreased $9 million, or 15.3%, from $59 million in the same quarter of 2023. As a percentage of revenue, direct operating expense (exclusive of depreciation and amortization) decreased to 5.4% in the second quarter of 2024 compared with 6.1% in the same quarter of 2023 due to cost reduction initiatives.
Previous wording
SG&A of $145 million for the first quarter of 2024 decreased $8 million, or 5.2%, from $153 million for the first quarter of 2023. As a percentage of revenue, SG&A increased to 15.9% in the first quarter of 2024 compared to 15.1% for the same quarter of 2023 due to higher compensation-related costs of 0.4 percentage points reflecting deleverage on lower revenue. This was partially offset by cost savings from restructuring actions executed in 2023 and the first quarter of 2024. We anticipate the restructuring actions executed in 2023 and the first quarter of 2024 will result in combined cost savings of more than $60 million annually.
Current wording
SG&A of $154 million in the second quarter of 2024 increased $10 million, or 6.9%, from $144 million in the second quarter of 2023. As a percentage of revenue, SG&A increased to 16.6% in the second quarter of 2024 compared with 15.0% for the same quarter of 2023 due to a 1.0 percentage point increase in professional and consulting expense. This was partially offset by cost savings from restructuring actions executed in 2023 and the first six months of 2024. We anticipate the restructuring actions executed in 2023 and the first six months of 2024 will result in combined cost savings of more than $65 million annually.
Previous wording
Transaction and integration costs for the first quarter of 2024 and 2023 were $1 million and $6 million, respectively, and primarily comprised spin-off related costs.
Current wording
Transaction and integration costs for the second quarter of 2024 and 2023 were $7 million and $4 million, respectively, and primarily comprised acquisition and spin-off related costs.
Previous wording
Restructuring costs for the first quarter of 2024 and 2023 were $11 million and $8 million, respectively, and primarily comprised severance costs.
Current wording
Restructuring costs for the second quarter of 2024 and 2023 were $2 million and $1 million, respectively, and primarily comprised severance costs.
Previous wording
Our effective income tax rates were 27.7% and 106.0% for the first quarter of 2024 and 2023, respectively. The effective tax rate for the first quarter of 2024 was calculated using the discrete method. The effective tax rate for the first quarter of 2023 was based on forecasted full-year effective tax rates, adjusted for discrete items that occurred within the period presented. Our effective tax rate for the first quarter of 2024 differs from the U.S. corporate income tax rate of 21% primarily due to state income taxes within the U.S. Our effective tax rate for the first quarter of 2023 differs from the U.S. corporate income tax rate of 21% primarily due to a tax benefit of $2 million from changes in reserves for uncertain tax positions. The impact of this driver was enhanced due to our low pre-tax loss in the first quarter of 2023.
Current wording
Our effective income tax rates were 11.3% and 44.0% for the second quarter of 2024 and 2023, respectively. The effective tax rate for the second quarter of 2024 was calculated using the discrete method. The effective tax rate for the second quarter of 2023 was based on forecasted full-year effective tax rates, adjusted for discrete items that occurred within the period presented. Our effective tax rate for the second quarter of 2024 differs from the U.S. corporate income tax rate of 21% primarily due to the effect of discrete tax items when experiencing a pre-tax loss. Our effective tax rate for the second quarter of 2023 differs from the U.S. corporate income tax rate of 21% primarily due to state income taxes within the U.S and non-deductible expenses. The impact of this driver was enhanced due to our low pre-tax income in the second quarter of 2023.
Previous wording
Depreciation and amortization expense for the first quarter of 2024 was $16 million, compared with $18 million for the same quarter in 2023, flat year-over-year as a percentage of revenue.
Current wording
Depreciation and amortization expense for the first six months of 2024 was $33 million, compared with $36 million for the same period in 2023, flat year-over-year as a percentage of revenue.
Previous wording
Total assets decreased by $26 million from December 31, 2023 to March 31, 2024, driven primarily by a $27 million decrease in accounts receivable as a result of a decrease in revenue. Total liabilities decreased by $14 million from December 31, 2023 to March 31, 2024, driven primarily by a decrease in third party transportation costs.
Current wording
Total assets decreased by $12 million from December 31, 2023 to June 30, 2024, driven primarily by a $18 million decrease in accounts receivable as a result of a decrease in revenue. Total liabilities increased by $3 million from December 31, 2023 to June 30, 2024, driven primarily by an increase in debt and operating lease liabilities, partially offset by a decrease in third party transportation costs.
Previous wording
Net cash provided by operating activities for the first three months of 2024 decreased by $35 million compared with the same period in 2023. The decrease in cash provided by operating activities reflects the impact of (i) a $15 million decrease in net income between periods and (ii) changes in working capital.
Current wording
Net cash provided by operating activities for the first six months of 2024 decreased by $64 million compared with the same period in 2023. The decrease in cash provided by operating activities reflects the impact of (i) a $25 million decrease in net income between periods and (ii) changes in working capital.
Previous wording
Investing activities used $11 million of cash for the first three months of 2024, compared with using $12 million of cash for the same period in 2023. The use of cash in both periods was to purchase property and equipment.
Current wording
Investing activities used $22 million of cash for the first six months of 2024, compared with using $28 million of cash for the same period in 2023. The use of cash in both periods was to purchase property and equipment.
Previous wording
Financing activities provided $6 million of cash for the first three months of 2024, compared with using $8 million of cash for the same period in 2023. The primary source of cash in the first three months of 2024 was $8 million in net proceeds from borrowings. The primary use of cash in the first three months of 2023 was $7 million for payments of tax withholdings related to vesting of stock compensation awards.
Current wording
Financing activities provided $22 million of cash for the first six months of 2024, compared with using $13 million of cash for the same period in 2023. The primary source of cash in the first six months of 2024 was $27 million in net proceeds from borrowings on revolving credit facilities. The primary uses of cash in the first six months of 2023 were (i) $9 million for payments of tax withholdings related to vesting of stock compensation awards and (ii) $2 million for the repurchase of common stock.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
Depreciation and amortization expense for the second quarter of 2024 was $17 million, compared with $18 million for the same quarter in 2023.
Current report — wording carried from elsewhere
Revenue decreased by 6.6% to $1.8 billion in the first six months of 2024, compared with $2.0 billion for the same period in 2023. The year-over-year decrease in revenue in the first six months of 2024 was driven primarily by (i) a $65 million decrease in revenue generated from our managed transportation business, driven primarily by a decrease in ocean and expedite air rates and volume and (ii) a $50 million decrease in revenue generated from our truck brokerage business, as a result of an 11% reduction in revenue per load, which was impacted by a combination of transportation market rates, fuel prices, length of haul and freight mix, partially offset by an 8% increase in load volume.
Current report — wording carried from elsewhere
Cost of transportation and services (exclusive of depreciation and amortization) in the first six months of 2024 was $1.4 billion, or 75.9% of revenue, compared with $1.5 billion, or 75.1% of revenue, for the same period in 2023. The year-over year increase as a percentage of revenue in the first six months of 2024 was driven primarily by a 1.4 percentage point increase in truck brokerage cost of transportation and services as a percentage of revenue, as lower freight rates were not fully offset by corresponding reductions in cost of purchased transportation.
Current report — wording carried from elsewhere
SG&A of $299 million in the first six months of 2024 increased $2 million, or 0.7%, from $297 million in the first six months of 2023. As a percentage of revenue, SG&A increased to 16.2% in the first six months of 2024 compared with 15.1% for the same period of 2023 due to a 0.7 percentage point increase in professional and consulting expense. This was partially offset by cost savings from restructuring actions executed in the first six months of 2024. We anticipate the restructuring actions executed in 2023 and the first six months of 2024 will result in combined cost savings of more than $65 million annually.
Current report — wording carried from elsewhere
Our effective income tax rates were 22.9% and (11.0)% for the first six months of 2024 and 2023, respectively. The effective tax rate for the first six months of 2024 was calculated using the discrete method. The effective tax rate for the first six months of 2023 was based on forecasted full-year effective tax rates, adjusted for discrete items that occurred within the periods presented. Our effective tax rate for the first six months of 2024 differs from the U.S. corporate income tax rate of 21% primarily due to state income taxes. Our effective tax rate for the first six months of 2023 differs from the U.S. corporate income tax rate of 21% primarily due to a discrete tax benefit of $2 million from changes in reserves for uncertain tax positions, partially offset by state income taxes within the U.S. and non-deductible expenses.