RXO (RXO) Morgan Stanley's 14th Annual Laguna Conference summary

Market outlook and Q3 momentum

• Q3 truckload volume expected up low to mid-single-digits YoY despite freight-market weakness, with growth accelerating slightly vs. Q2.

• Q3 Adjusted EBITDA outlook was $35M-$45M; truckload gross profit per load rose more than 10% MoM from July to August, versus a prior expectation of decline through September.

• Almost half of truckload volume is spot; higher spot mix, phasing in higher contract rates and effective capacity procurement supported the improved gross profit per load outlook.

• Q3 includes a $3M-$5M last-mile headwind from seasonality and soft housing demand, already embedded in outlook and more than offset by brokerage strength.

• July revenue per load was up almost 25% YoY, excluding fuel and length of haul; higher contractual rates are expected to phase in through year-end and support 2027.

Share gains and customer strategy

• Q3 truckload volume outlook implies mid-single-digit sequential growth and ~500 bps of share gains versus Cass’s typically flat sequential trend outside the pandemic period.

• Volume growth is attributed to broad-based execution and pipeline momentum following Coyote Logistics’ full integration; food and beverage turned positive and grew double-digits YoY in Q2 for the first time in two years.

• Spot complements rather than replaces contract freight; serving contract customers helps win spot loads, which can later support contract repricing at acceptable margins in upcoming bid seasons.

• Current staffing and technology support ~15%+ volume growth; Q4 is typically stronger than Q3 for peak-related Coyote and last-mile activity, with the scale dependent on consumer demand.

• Bid-season discussions in late Q4 into Q1 are expected to benefit from strong service on customers’ spot freight.

Freight supply and industry cycle

• Industry tender rejections and ex-fuel spot rates were expected to tighten and rise through Q3 and seasonally toward Thanksgiving; peak-season strength and consumer demand will affect the extent.

• Management sees a supply-driven recovery, with further capacity exits possible; large brokers may gain share into 2027 as shippers consolidate with trusted providers and industry capacity tightens.

• A multi-year recovery was anticipated beyond 2027, with a more measured supply response than the prior 15 years of capacity inflows.

• Spot rates were up more than 30% YoY while industry shipments had declined YoY each month since Jan. 2023, before a slightly positive Cass update.

• Diesel is passed through to shippers via fuel surcharges, with no material through-cycle P&L impact.