RXO (RXO) Q4 2024 earnings summary

Executive summary

• Coyote Logistics integration is ahead of schedule, with annualized cost synergy estimates raised to at least $50 million; $25 million realized by end of 2024 and $25–$30 million incremental savings expected in 2025.

• Brokerage volume increased 10% sequentially from Q3, though down 6% year-over-year; Last Mile stops grew 15% year-over-year.

• Managed Transportation sales pipeline is nearing $2 billion in freight under management.

• Structural improvements and technology integration are expected to enhance long-term earnings power and free cash flow, with most benefits expected in 2026.

• Brokerage market tightened in Q4, with improved revenue per load trends and a transition to an inflationary rate environment.

Financial highlights

• Q4 2024 revenue was $1.7 billion, up from $978 million in Q4 2023 (legacy RXO only).

• Adjusted EBITDA was $42 million (2.5% margin), up from $31 million (3.2% margin) in Q4 2023.

• Adjusted diluted EPS was $0.06; GAAP diluted EPS was $(0.12) in Q4 2024.

• Gross margin for Q4 2024 was 15.5%, down from 18.0% in Q4 2023.

• Adjusted Free Cash Flow for Q4 was $6 million, a 14% conversion from Adjusted EBITDA.

Outlook and guidance

• Q1 2025 adjusted EBITDA expected between $20 million and $30 million, with Brokerage gross margin projected at 12%–14%.

• Full-year 2025 capital expenditures expected at $75–$85 million, including $15 million for strategic real estate; expected to normalize at $50–$60 million in 2026.

• Brokerage volume projected to decline mid- to high-single digits year-over-year in Q1, but expected to grow for the full year.

• Contract rates anticipated to rise low- to mid-single digits in 2025.

• FY 2025 depreciation $70–$80 million, amortization of intangibles $45–$50 million, stock-based compensation $30–$35 million, restructuring/transaction/integration expenses $40–$50 million.