The word that came up repeatedly from RXO management during the 3PL’s earnings call with analysts was “squeeze.” RXO is facing a squeeze created by contractual rates the brokerage locked in at lower numbers and a suddenly rising level of rates needed to provide capacity into those obligations. And while the call with analysts may have been about RXO (NYSE: RXO), it is reasonable to assume it’s the same predicament that much of the 3PL sector finds itself in at present. The earnings call came soon after R ...

Financial Data and Key Metrics Changes - Overall brokerage volume grew by 1% year-over-year, with less-than-truckload (LTL) volume increasing by 43% and truckload volume declining by 11% year-over-year [4][16] - Adjusted EBITDA for the quarter was $32 million, below expectations, with a gross margin of 16.5% [16][4] - Adjusted free cash flow conversion was 56%, with cash on the balance sheet increasing by $7 million sequentially to $25 million [19][14] Business Line Data and Key Metrics Changes - Brokerage revenue was $1 billion, representing 70% of total revenue, with LTL growth offsetting a decline in full truckload volume [17][16] - Managed transportation revenue decreased by 9% year-over-year to $137 million, while last-mile business revenue grew by 14% to $305 million [18][16] - Brokerage gross margin decreased by 90 basis points sequentially to 13.5% due to increased transportation costs and demand weakness [18][16] Market Data and Key Metrics Changes - Industry tender rejections were at 6%, while RXO's were only 2%, indicating strong customer relationships [5] - Demand trends weakened throughout the third quarter, with cash freight shipments reaching their lowest level since 2020 in August [8] - Approximately two-thirds of RXO's freight came from regions where buy rates increased, impacting overall results [4][30] Company Strategy and Development Direction - RXO is focused on improving its cost structure, having removed over $125 million in costs since becoming a standalone public company [9][20] - The company is investing in technology, including AI, to enhance productivity and customer service [10][14] - RXO aims to capitalize on potential structural changes in the industry due to regulatory enforcement, which could lead to a tighter freight market in the long term [8][36] Management's Comments on Operating Environment and Future Outlook - Management noted that the market tightened in September, leading to a decline in gross profit per load [4][7] - There is uncertainty regarding the sustainability of recent supply exits and the need for demand recovery to improve market conditions [40][41] - The company expects fourth-quarter Adjusted EBITDA to be between $20 million and $30 million, reflecting a challenging macroeconomic environment [22][36] Other Important Information - The company has taken additional actions to achieve more than $30 million in incremental annualized savings [20][21] - RXO's liquidity position remains strong, with $590 million in total committed liquidity [19][20] - The company is closely monitoring macroeconomic factors, including interest rates and housing market trends, which could influence demand [24][70] Q&A Session Summary Question: Sustainability of recent supply exits and actions to manage gross profit per load - Management believes recent supply exits could lead to a significant reduction in market supply, but demand recovery is essential for a sharper market inflection [40][41] - The company is implementing cost initiatives to manage gross profit per load in the near term [42] Question: Concerns regarding Adjusted EBITDA guidance and Coyote acquisition - Management acknowledged that financial results from the Coyote acquisition have not met expectations, primarily due to pricing decisions impacting volumes [48][49] - They emphasized that the current market conditions are not typical and are influenced by structural changes in the industry [48][49] Question: Operating expenses and potential for rein in costs - Management confirmed ongoing efforts to optimize costs, including automation and footprint consolidation [66][67] - They are actively seeking opportunities to reduce direct operating expenses in response to market challenges [66][67] Question: Demand environment and potential recovery - Management is monitoring various factors, including interest rates and automotive demand, to gauge future demand recovery [69][70] - They highlighted the importance of strong customer relationships and technology in navigating the current market dynamics [71][72]

Financial Data and Key Metrics Changes - Overall brokerage volume grew by 1% year-over-year, with less-than-truckload (LTL) volume increasing by 43% and truckload volume declining by 11% year-over-year [4][16] - Adjusted EBITDA for the quarter was $32 million, below expectations, with a gross margin of 16.5% [16][19] - Adjusted free cash flow conversion was 56%, with cash on the balance sheet increasing by $7 million sequentially to $25 million [19][14] Business Line Data and Key Metrics Changes - Brokerage revenue was $1 billion, representing 70% of total revenue, with LTL growth offsetting a decline in full truckload volume [17][18] - Managed transportation revenue decreased by 9% year-over-year to $137 million, while last-mile business revenue grew by 14% to $305 million [18][19] - Brokerage gross margin decreased by 90 basis points sequentially to 13.5% due to increased transportation costs and demand weakness [17][18] Market Data and Key Metrics Changes - Industry tender rejections were at 6%, while RXO's were just 2%, indicating strong customer relationships [5] - Cash freight shipments reached their lowest level since 2020 in August, reflecting weakened demand trends [8] - Approximately two-thirds of RXO's freight came from regions where buy rates increased, contributing to margin pressure [30] Company Strategy and Development Direction - RXO is focused on improving its cost structure, having removed over $125 million in costs since becoming a standalone public company [9][20] - The company is investing in technology, including AI, to enhance productivity and customer service [12][28] - RXO aims to capitalize on potential structural changes in the industry due to regulatory enforcement, which could lead to a tighter freight market in the long term [8][36] Management's Comments on Operating Environment and Future Outlook - Management noted that the market tightened in September, impacting results, and expressed confidence in RXO's ability to recover when demand returns [4][8] - The company expects fourth-quarter adjusted EBITDA to be between $20 million and $30 million, reflecting a challenging macroeconomic environment [22][34] - Management highlighted the importance of monitoring macroeconomic indicators, such as interest rates and housing market trends, which could influence demand [24][70] Other Important Information - RXO's liquidity position remains strong, with $590 million in total committed liquidity [19] - The company is taking additional actions to achieve more than $30 million in incremental annualized savings [20][23] - The impact of recent regulatory changes could lead to a significant structural shift in the trucking industry, benefiting larger brokerages like RXO [8][36] Q&A Session Summary Question: Sustainability of recent supply exits and actions to manage gross profit per load - Management believes recent supply exits are significant and could lead to a structural change in the industry, but demand must return for a sharper market recovery [40][41] - Actions to manage gross profit per load include new cost initiatives and improving productivity through technology [42][43] Question: Concerns about adjusted EBITDA guidance and Coyote acquisition impact - Management acknowledged that the financial results post-Coyote acquisition have not met expectations, attributing some challenges to pricing decisions made in 2025 [48][49] - The company remains focused on regaining market leadership and improving performance in the future [48] Question: Operating expenses and potential for cost reduction - Management has implemented significant cost actions and continues to seek opportunities for further expense reductions through automation and process improvements [66][67] Question: Demand outlook and potential recovery - Management is closely monitoring various factors affecting demand, including interest rates and automotive sector performance, and believes that a structural change in supply could benefit large carriers when demand returns [70][71][72]

Financial Data and Key Metrics Changes - Overall brokerage volume grew by 1% year-over-year, with less-than-truckload (LTL) volume increasing by 43% and truckload volume declining by 11% year-over-year [3][15] - Adjusted EBITDA for the quarter was $32 million, below expectations, with a gross margin of 16.5% and adjusted EBITDA margin of 2.3% [13][14] - Adjusted free cash flow conversion was 56%, with cash on the balance sheet increasing by $7 million sequentially to $25 million [17][18] Business Line Data and Key Metrics Changes - Brokerage revenue was $1 billion, representing 70% of total revenue, with LTL volume growth offsetting a decline in full truckload volume [15][16] - Managed transportation revenue decreased by 9% year-over-year to $137 million, while last-mile business revenue grew by 14% to $305 million [16] - Brokerage gross margin decreased by 90 basis points sequentially to 13.5% due to increased transportation costs and demand weakness [15][16] Market Data and Key Metrics Changes - Industry tender rejections were at 6%, while RXO's were just 2%, indicating strong customer relationships [4] - Cash freight shipments reached their lowest level since 2020 in August, reflecting weakened demand trends [6] - Approximately two-thirds of RXO's freight came from regions with increased buy rates, impacting overall results [4][27] Company Strategy and Development Direction - RXO is focused on improving its cost structure, having removed over $125 million in costs since becoming a standalone public company [7][18] - The company is investing in technology, including AI, to enhance productivity and customer service [11][25] - RXO aims to capitalize on potential structural changes in the industry due to regulatory enforcement, which could lead to a tighter freight market [6][32] Management's Comments on Operating Environment and Future Outlook - Management noted that demand trends weakened throughout Q3 and remained below typical seasonality, with expectations for continued softness in Q4 [6][30] - The company anticipates adjusted EBITDA for Q4 to be between $20 million and $30 million, impacted by higher transportation costs [19][30] - Management expressed confidence in RXO's long-term growth potential due to its improved cost structure and technology investments [12][34] Other Important Information - The company has taken additional actions to achieve more than $30 million in incremental annualized savings [18][20] - RXO's liquidity position remains strong, with $590 million in total committed liquidity [17] - The company expects CapEx for 2025 to be at the low end of the previously discussed range of $65 million to $75 million [19] Q&A Session Summary Question: Sustainability of recent supply exits and actions to manage gross profit per load - Management believes recent supply exits are likely sustainable due to regulatory changes, which could significantly reduce market supply [36][37] - Actions to manage gross profit per load include new cost initiatives and improving productivity through technology [39] Question: Concerns about adjusted EBITDA guidance and Coyote acquisition impact - Management acknowledged that while the Coyote acquisition has performed well in terms of people and technology, financial results have not met expectations due to pricing decisions [43][44] Question: Operating expenses and potential for rein in costs - Management confirmed ongoing efforts to optimize costs, including automation and footprint consolidation, with significant savings already achieved [61][63] Question: Demand outlook and potential recovery - Management is closely monitoring interest rates and housing market trends, which could drive demand recovery in the future [65][67]

Core Insights - RXO reported quarterly earnings of $0.01 per share, missing the Zacks Consensus Estimate of $0.03 per share, representing an earnings surprise of -66.67% [1] - The company posted revenues of $1.42 billion for the quarter ended September 2025, missing the Zacks Consensus Estimate by 2.01%, compared to $1.04 billion in the same quarter last year [2] - RXO shares have declined approximately 26.1% year-to-date, contrasting with the S&P 500's gain of 15.6% [3] Earnings Performance - Over the last four quarters, RXO has surpassed consensus EPS estimates only once [2] - The current consensus EPS estimate for the upcoming quarter is $0.06 on revenues of $1.56 billion, and for the current fiscal year, it is $0.11 on revenues of $5.89 billion [7] Market Outlook - The company's earnings outlook is critical for assessing future stock performance, with recent estimate revisions trending unfavorably, resulting in a Zacks Rank 4 (Sell) [6] - The Transportation - Services industry, to which RXO belongs, is currently in the bottom 10% of Zacks industries, indicating potential underperformance compared to higher-ranked industries [8] Competitor Insights - PowerFleet, another company in the same industry, is expected to report quarterly earnings of $0.05 per share, reflecting a year-over-year increase of +350%, with revenues projected at $105.59 million, up 37.1% from the previous year [9][10]

Q3 2025 Performance - RXO's Q3 2025 revenue was $1421 million [12] - Adjusted EBITDA for Q3 2025 was $32 million [12] - Q3 2025 adjusted diluted EPS was $001 [25] - Q3 adjusted free cash flow conversion was 56% [28] - Gross margin was $234 million [12] Operational Highlights - Truckload (TL) volume was down 11% year-over-year (y/y), representing 69% of total volume, while Less-Than-Truckload (LTL) volume was up 43% y/y, accounting for 31% of volume [15] - Last Mile stop growth increased by 12% y/y [15] - Productivity gains in brokerage increased by 19% [15] Cost Savings Initiatives - Total annualized operating expense reductions are expected to be greater than $155 million, including over $60 million from Coyote synergies [18] - The company anticipates approximately 100 basis points of savings/avoidance in Cost of Purchased Transportation (COPT) [17] Q4 2025 Outlook - Adjusted EBITDA is projected to be between $20 million and $30 million [51] - Brokerage volume is expected to decrease by a low-single-digit percentage y/y [51] - Brokerage gross margin is anticipated to be in the range of 12%-13% [51] Capital Structure - Net debt stood at $395 million [32] - Gross leverage was 24x, and net leverage was 23x [33]

Core Viewpoint - RXO's third quarter earnings report led to a significant pre-market stock sell-off of over 14.8%, reflecting investor disappointment despite the earnings not being overly negative [1] Financial Performance - Adjusted net income decreased year-on-year from $7 million to $2 million, with non-GAAP EPS dropping to 1 cent from 5 cents, missing Wall Street estimates by 3 cents [2] - Total revenue for the quarter was $1.4 billion, falling short of consensus estimates by $30 million [2] - Adjusted EBITDA slightly declined to $32 million from $33 million year-on-year, with the adjusted EBITDA margin decreasing from 3.2% to 2.3% [3] - The net loss per share on a GAAP basis was 8 cents, accumulating to a total loss of 32 cents per share for the first three quarters [3] Strategic Positioning - RXO's CEO highlighted the company's strong positioning as the third-largest brokered transportation provider in North America, emphasizing the benefits of scale and technology [4] - The company anticipates over $30 million in savings from new cost initiatives, aiming for long-term strong cash flow due to its asset-light business model [4] Market Comparison - RXO's performance contrasts sharply with its peer C.H. Robinson, which has seen significant growth in key metrics and a stock price increase of over 45% in the last year [4] - RXO's stock has declined approximately 37.5% over the past year, although it has risen about 13.8% in the last three months prior to the recent sell-off [4] Revenue Drivers - The increase in RXO's revenue for the third quarter was partly attributed to the acquisition of Coyote Logistics, completed in the previous year's third quarter [5]

Revenue Performance - RXO reported third-quarter 2025 revenue of $1.4 billion, a 36.5% increase from $1.0 billion in the same quarter of 2024[3] - Total revenue for Q3 2025 was $1,421 million, a 36.6% increase from $1,040 million in Q3 2024[29] - Truck brokerage revenue reached $1,039 million in Q3 2025, up 58.6% from $655 million in Q3 2024[29] - Complementary services revenue was $442 million in Q3 2025, slightly up from $419 million in Q3 2024[34] - Total revenue for the nine months ended September 30, 2025, was $4.273 billion, a 48.3% increase from $2.883 billion in the same period of 2024[34] Profitability and Loss - The company experienced a GAAP net loss of $14 million in Q3 2025, significantly improved from a net loss of $243 million in Q3 2024[4] - Net loss for Q3 2025 was $14 million, significantly improved from a net loss of $243 million in Q3 2024[31] - Adjusted EBITDA for the quarter was $32 million, slightly down from $33 million in Q3 2024, with an adjusted EBITDA margin of 2.3% compared to 3.2% in the prior year[5] - Adjusted EBITDA for Q3 2025 was $32 million, with an adjusted EBITDA margin of 2.3% compared to 3.2% in Q3 2024[31] - Gross margin for Q3 2025 was $234 million, compared to $180 million in Q3 2024, reflecting a 30% increase[34] - Gross margin as a percentage of revenue decreased to 16.5% in Q3 2025 from 17.3% in Q3 2024[34] Operational Metrics - Brokerage volume growth was 1% year-over-year, driven by a 43% increase in less-than-truckload volume, although full truckload volume declined by 11%[6][7] - Last Mile service achieved a 12% year-over-year growth in stops, marking the fifth consecutive quarter of double-digit growth[6][8] - Cost of transportation and services for Q3 2025 was $1.137 billion, up from $809 million in Q3 2024, representing a 40.5% increase[34] - Direct operating expenses for Q3 2025 were $48 million, slightly down from $49 million in Q3 2024[34] Future Outlook - RXO expects fourth-quarter 2025 adjusted EBITDA to range between $20 million and $30 million, with a projected low-single-digit percentage decline in overall volume[9] - The company anticipates brokerage gross margin to be between 12% and 13% in Q4 2025, reflecting ongoing market tightness[9] - RXO's new cost initiatives are expected to yield over $30 million in incremental savings[6] - RXO, Inc. continues to focus on expanding its truck brokerage and complementary services to drive future growth[34] Balance Sheet Highlights - Cash and cash equivalents at the end of Q3 2025 were $26 million, down from $35 million at the end of Q4 2024[27] - Total assets decreased to $3,201 million in Q3 2025 from $3,414 million in Q4 2024[25] - Total current liabilities decreased to $907 million in Q3 2025 from $1,065 million in Q4 2024[25] - Long-term debt increased to $387 million in Q3 2025 from $351 million in Q4 2024[25] - The company reported a net cash provided by operating activities of $44 million for the nine months ended September 30, 2025, compared to a net cash used of $5 million for the same period in 2024[27] Business Acquisition Costs - Business acquisition costs amounted to $10 million in Q3 2025, a significant decrease from $1,019 million in Q3 2024[27]

Investors in RXO, Inc. RXO need to pay close attention to the stock based on moves in the options market lately. That is because the Nov 21, 2025 $7.50 Put had some of the highest implied volatility of all equity options today. What is Implied Volatility? Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean t ...

Core Viewpoint - Johnson Fistel, PLLP is investigating RXO, Inc. for potential violations of federal securities laws related to misrepresentation or failure to disclose material information to investors [1]. Group 1: Investigation Details - The investigation focuses on whether RXO, Inc. or its officers and directors misrepresented or failed to timely disclose material information to investors [1]. - Investors who purchased RXO securities and suffered losses are encouraged to join the investigation [2]. Group 2: About Johnson Fistel, PLLP - Johnson Fistel, PLLP is a nationally recognized shareholder rights law firm with offices across multiple states, representing both individual and institutional investors in securities class action lawsuits [3]. - The firm has been recognized as a top plaintiffs' securities law firm, having recovered approximately $90.725 million for clients in cases where it served as lead or co-lead counsel [4].