RXO (RXO) investor relations material

Strategic transformation and integration

• Completed integration of Coyote, making the company the third largest brokered transportation provider in North America, with minimal customer and carrier overlap, and a diversified mix including food, beverage, and SMB exposure.

• Integration executed rapidly within 12 months, with unified sales, operations, back office, and technology platforms, enabling faster product and technology rollouts.

• Operational execution exceeded expectations, but financial results lagged due to market softness and aggressive contract pricing; stabilization and sequential volume growth achieved in Q3 and Q4.

• Carrier cutover and technology migration to RXO Connect completed without service failures, incorporating best features from both legacy systems.

• Positive feedback from customers and employees, with ongoing adaptation to new workflows and systems.

Market environment and industry trends

• Freight market remains in a prolonged soft environment, with Cass shipments at their lowest since the financial crisis, and muted peak season expectations.

• Despite weak demand, key freight KPIs like tender rejections and spot rates are rising due to significant supply reductions, driven by regulatory changes affecting non-domiciled CDLs and English proficiency requirements.

• Over the past three years, 10% of brokerage capacity exited the market, with small and mid-sized brokers squeezed by shipper consolidation and asset-based carrier failures.

• Large brokers benefit from scale, compliance, and technology investment, while small brokers struggle with heavy balance sheets and limited carrier access.

• Regulatory changes are expected to be the most significant industry shift since 1980 deregulation, potentially leading to a lower supply environment and higher rates over time.

Technology, AI, and productivity

• Over $100 million invested annually in technology, enabling advanced AI and machine learning deployment to improve productivity and margins.

• AI initiatives include agentic and generative AI, with a unified data lake and orchestration layer, driving a 38% productivity increase over two years.

• AI used for internal process automation, customer response, and last mile business, reducing manual labor and unlocking incremental margin.

• Technology and AI are leveraged to enhance, not replace, workforce productivity, supporting scalable growth and higher incremental margins.

• Productivity gains allow for volume growth without proportional headcount increases, positively impacting EBITDA margins.