RXO (RXO) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $930 million, down from $963 million in Q2 2023, reflecting a soft freight market and declines in managed transportation and truck brokerage revenue.

• Adjusted EBITDA reached $28 million (3.0% margin), at the high end of guidance, with adjusted EPS at $0.03 and GAAP net loss of $7 million.

• Brokerage volume grew 4% year-over-year, with LTL volume up 40% and Last Mile stops up 7%, the fastest in nearly two years.

• Managed Transportation secured over $200 million in new Freight Under Management, with a $1.6 billion pipeline.

• Announced $1.025 billion pending acquisition of Coyote Logistics, expected to close in early Q4 2024.

Financial highlights

• Q2 2024 revenue was $930 million, down 3.4% year-over-year; gross margin was 19.0%, up from 18.6% in Q2 2023.

• Adjusted EBITDA was $28 million (3.0% margin), down from $38 million (3.9% margin) in Q2 2023.

• Adjusted EPS was $0.03; GAAP diluted EPS was $(0.06); adjusted net income was $4 million.

• Adjusted Free Cash Flow was negative $9 million in Q2; first half 2024 adjusted free cash flow was $(8) million.

• Gross margin pressure continued as cost of transportation and services rose to 75.3% of revenue.

Outlook and guidance

• Q3 2024 adjusted EBITDA expected between $28 million and $34 million, with sequential and year-over-year growth.

• Brokerage volume expected to decline low- to mid-single digits year-over-year in Q3, but grow slightly sequentially; LTL volume projected to grow 10%-20% year-over-year.

• Brokerage gross margin anticipated at 13%-15% for Q3 2024.

• Full year 2024 capex expected at $40-$50 million; adjusted effective tax rate at 30%.

• Guidance excludes impact from the pending Coyote Logistics acquisition.