RXO Delivers Strong Fourth Quarter Driven by Brokerage Volume Growth

• Companywide gross margin was 19.6 percent, up 250 basis points year-over-year; brokerage profitability remained strong with 17.9 percent gross margin in the fourth quarter, up 290 basis points year-over-year
• Brokerage volume increased by 4% year-over-year and set a company record for loads per day
• Downloads of RXO Drive™ app increased 45% year-over-year, and 87% of loads in the quarter were created or covered digitally
• Company expects continued year-over-year brokerage volume growth in the first quarter of 2023, driven by strong sales pipeline

RXO (NYSE: RXO) today announced its financial results for the fourth quarter of 2022.

Drew Wilkerson, chief executive officer of RXO, said, “We’re proud of what we were able to accomplish in our first quarterly report as a standalone company, despite the dynamics of the current freight cycle and the challenging macroeconomy. We achieved record volume in our brokerage business, with volume growth of 4 percent year-over-year in the quarter. Importantly, companywide gross margin was 19.6 percent, up 250 basis points year-over-year.

“Demand for our managed transportation and last mile services remained strong in the quarter. Also, our best-in-class technology continued to be adopted by some of the world’s largest and most well-respected companies,” Wilkerson continued. “Eighty-seven percent of brokerage loads in the fourth quarter were created or covered digitally, and downloads of our driver app, RXO Drive™, increased by 45 percent year-over-year.”

Wilkerson concluded, “We remain focused on taking profitable market share. With our massive capacity and best-in-class technology, RXO remains in a great position to deliver our long-term financial targets.”

Companywide Results

The company’s revenue was $1.1 billion for the fourth quarter, compared to $1.3 billion in the fourth quarter of 2021. Profitability remained strong, with 19.6 percent gross margin, up 250 basis points year-over-year.

Due to $44 million in spin-related transaction, integration and restructuring costs, the company reported a fourth-quarter 2022 GAAP net loss of $4 million, compared to net income of $42 million in the fourth quarter of 2021. Adjusted net income in the quarter was $33 million, compared to $47 million in the fourth quarter of 2021. Adjusted earnings before interest, taxes, depreciation and amortization (adjusted

EBITDA) was $64 million, compared to $77 million in the fourth quarter of 2021. Adjusted EBITDA margin was 5.7 percent, down 10 basis points year-over-year.

Spin-related transaction, integration and restructuring costs, and amortization of intangibles, impacted GAAP earnings per share by $0.31, net of tax. For the fourth quarter, RXO reported a GAAP diluted loss per share of $0.03. Adjusted diluted earnings per share were $0.28.

RXO remains confident in achieving its five-year financial targets, which call for the company to deliver $500 million of adjusted EBITDA at the midpoint in 2027.

Brokerage

RXO’s brokerage business grew volume 4 percent year-over-year and set a new volume record in the fourth quarter.

Brokerage gross margin was 17.9 percent in the fourth quarter, up 290 basis points year-over-year.

The company expects brokerage volumes to continue to grow on a year-over-year basis in the first quarter of 2023.

Complementary Services

Approximately 62 percent of RXO’s full-year 2022 revenue came from customers that conducted business with more than one service offering.

Customer demand for managed transportation services increased during the fourth quarter of 2022, and last mile stops remained robust driven by customers in the appliance, electronics and fitness industries.

Technology Update

In the fourth quarter of 2022, 87 percent of RXO’s brokerage loads were created or covered digitally using RXO’s best-in-class technology platform.

Additionally, downloads of the company’s driver app, RXO Drive™, increased by 45 percent year-over-year in the fourth quarter to more than 920,000.

The company increased registered carriers on its RXO Connect™ platform by 42 percent and increased average weekly users by 30 percent year-over-year in the fourth quarter.

Conference Call

The company will hold a conference call and webcast on Wednesday, February 8 at 8 a.m. Eastern Time. Participants can call in toll-free (from U.S./Canada) at 1-888-886-7786; international callers dial +1-416-764-8658. The conference ID is 54142388.

A live webcast of the conference call will be available on the investor relations area of the company’s website, investors.rxo.com. A replay of the conference call will be available through March 1, 2023, by calling toll-free (from U.S./Canada) 1-877-674-7070; international callers dial +1-416-764-8692. Use the passcode 142388#. Additionally, the call will be archived on investors.rxo.com.

For the full earnings release, click here