RXO Announces Results for Second Quarter 2023, Including Double-Digit Brokerage Volume Growth
Press Release | Charlotte, NC | August 2, 2023
- Brokerage volume increased 10 percent year-over-year; set multiple records in the quarter including total volume, quarterly loads per day and monthly loads per day
- Companywide gross margin of 18.6 percent; brokerage gross margin of 15.4 percent
CHARLOTTE, N.C. — August 2, 2023 — RXO (NYSE: RXO) today announced its financial results for the second quarter of 2023.
Drew Wilkerson, chief executive officer of RXO, said, “RXO executed well in a soft freight market. In our brokerage business, we continued to gain significant market share and recorded 10 percent volume growth year-over-year. We set several brokerage volume records in the quarter, including total volume, quarterly loads per day and monthly loads per day. Companywide and brokerage gross margin remained strong at 18.6 percent and 15.4 percent, respectively.
“Our margin performance was the result of continued customer and carrier adoption of RXO’s cutting-edge, AI-enabled technology, including our industry-leading pricing algorithms,” Wilkerson said. “Ninety-six percent of RXO’s orders in the quarter were created or covered digitally and 78 percent of carriers using our technology returned to our platform within seven days.”
Wilkerson concluded, “Our market share gains are accelerating, and we are well-positioned at this stage of the freight cycle. We will continue to provide outstanding customer service, grow market share profitably and control costs while investing for the future. Following this playbook will enable significant earnings growth when the cycle inflects, and we remain confident in our ability to deliver our long-term adjusted EBITDA target.”
Companywide Results
The company’s revenue was $1.0 billion for the second quarter, compared to $1.2 billion in the second quarter of 2022. Gross margin was 18.6 percent.
The company reported second-quarter 2023 GAAP net income of $3 million, compared to net income of $44 million in the second quarter of 2022. GAAP net income included $6 million in transaction, integration, restructuring and other costs. Adjusted net income1 in the quarter was $10 million, compared to $64 million in the second quarter of 2022.
Adjusted EBITDA1 was $38 million, compared to $101 million in the second quarter of 2022. Adjusted EBITDA margin1 was 3.9 percent, compared to 8.2 percent in the second quarter of 2022.
Transaction, integration, restructuring and other costs, and amortization of intangibles, impacted GAAP earnings per share by $0.05, net of tax. For the second quarter, RXO reported GAAP diluted earnings per share of $0.03. Adjusted diluted earnings per share1 were $0.08.
Brokerage
RXO’s brokerage business grew volume 10 percent year-over-year in the second quarter. Brokerage gross margin was 15.4 percent in the second quarter.
Brokerage contract volume increased by 19 percent year-over-year in the second quarter, the result of the company’s increased bid activity in the fourth quarter of 2022 and the first quarter of 2023. RXO’s brokerage sales pipeline remains strong, and annual bid count increased by 23 percent year-over-year in the second quarter.
To position the company for further growth when the freight cycle inflects, RXO announced that it has invested in the expansion of its brokerage offices in Ann Arbor, Michigan; Columbia, South Carolina; and Kansas City, Missouri.
The company expects brokerage volumes to continue to grow on a year-over-year basis in the third quarter of 2023.
Complementary Services
RXO’s complementary services gross margin was flat year-over-year in the quarter and increased by 50 basis points sequentially. Loads provided by RXO’s managed transportation business to its brokerage business increased both year-over-year and quarter-over-quarter.
RXO’s last mile business grew EBITDA year-over-year in the second quarter, and the company continues to expect to grow full-year last mile EBITDA year-over-year.
Technology Update
In the second quarter of 2023, 96 percent of RXO’s brokerage loads were created or covered digitally using RXO’s best-in-class technology platform, up from 80 percent in the second quarter of 2022.
The seven-day carrier retention rate was 78 percent, compared to 73 percent in the second quarter of 2022. Weekly average users on the platform increased 3 percent year-over-year in the second quarter.
Conference Call
The company will hold a conference call and webcast on Wednesday, August 2 at 8 a.m. Eastern Daylight Time. Participants can call in toll-free (from U.S./Canada) at 1-888-259-6580; international callers dial +1-206-962-3782. The conference ID is 16669759.
A live webcast of the conference call will be available on the investor relations area of the company’s website, https://investors.rxo.com. A replay of the conference call will be available through August 23, 2023, by calling toll-free (from U.S./Canada) 1-877-674-7070; international callers dial +1-416-764-8692. Use the passcode 669759#. Additionally, the call will be archived on https://investors.rxo.com.
For the full press release, click here.
About RXO
RXO (NYSE: RXO) is a leading provider of asset-light transportation solutions. RXO offers tech-enabled truck brokerage services together with complementary solutions including managed transportation, freight forwarding and last mile delivery. The company combines massive capacity and cutting-edge technology to move freight efficiently through supply chains. RXO’s proprietary technology connects approximately 10,000 customers with over 100,000 independent carriers across North America. The company is headquartered in Charlotte, N.C. Visit RXO.com for more information and connect with RXO on Facebook, Twitter, LinkedIn, Instagram and YouTube.