RXO(RXO) - 2025 Q2 - Quarterly Results

RXO Second-Quarter 2025 Financial Results Financial and Operational Highlights RXO achieved 1% brokerage volume growth, a 45% LTL volume surge, and 17% Last Mile stop growth in Q2 2025, improving cash sequentially - Brokerage business outperformed the market, with volume growing 1% year-over-year[2] - Less-than-truckload (LTL) volume was a key driver, growing 45% year-over-year[2][6] - Last Mile segment achieved 17% year-over-year stop growth, its fourth consecutive quarter of double-digit growth[2][6] - The company is realizing early benefits from its newly combined carrier and coverage operations, achieving a Brokerage gross margin of 14.4%[2][6] - Cash performance was strong, with the cash balance increasing sequentially from Q1 2025[2][6] Companywide Financial Performance RXO's Q2 2025 revenue grew significantly, reporting a GAAP net loss, but achieving increased adjusted net income and adjusted EBITDA Q2 2025 Key Financial Metrics | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenue ($) | $1.4 billion | $930 million | | Gross Margin | 17.8% | 19.0% | | GAAP Net Loss ($) | $(9) million | $(7) million | | Adjusted Net Income ($) | $7 million | $4 million | | Adjusted EBITDA ($) | $38 million | $28 million | | Adjusted EBITDA Margin | 2.7% | 3.0% | | GAAP Diluted Loss Per Share ($) | $(0.05) | $(0.06) | | Adjusted Diluted EPS ($) | $0.04 | $0.03 | - The Q2 2025 GAAP net loss included $10 million in transaction, integration, restructuring, and other costs[4] - Adjustments for transaction, integration, restructuring costs, and amortization of intangibles impacted GAAP earnings per share by $0.09, net of tax[5] Segment Performance RXO's Q2 2025 segment performance was mixed, with Brokerage volume up 1% due to LTL, and Complementary Services achieving 17% Last Mile stop growth Brokerage The Brokerage segment's volume grew year-over-year, fueled by LTL volume offsetting a full truckload decline, achieving a solid gross margin Brokerage Segment Performance (Q2 2025 vs Q2 2024) | Metric | Change | | :--- | :--- | | Overall Volume | +1% YoY | | Less-than-truckload Volume | +45% YoY | | Full Truckload Volume | -12% YoY | - Brokerage gross margin was 14.4% in the second quarter[7] Complementary Services Complementary Services saw Last Mile stops grow significantly, with Managed Transportation providing synergy loads to Brokerage, and achieving a strong gross margin - Last Mile stops grew by 17% year-over-year[8] - Managed Transportation continued to increase synergy loads provided to the Brokerage segment[8] - Complementary services gross margin was 22.8% for the quarter[8] Third-Quarter Outlook RXO anticipates Q3 2025 adjusted EBITDA between $33 million and $43 million, with flat brokerage volume growth and a projected gross margin - Q3 2025 adjusted EBITDA is expected to be between $33 million and $43 million[9] - In Brokerage, Q3 2025 overall volume growth is expected to be approximately flat year-over-year[9] - Brokerage gross margin for Q3 2025 is projected to be between 13.5% and 15.0%[9] Financial Statements The unaudited condensed consolidated financial statements detail RXO's Q2 2025 net loss, total assets, and net cash provided by operating activities for the first six months Condensed Consolidated Statements of Operations For Q2 2025, RXO generated $1.419 billion in revenue, but increased costs led to a net loss of $9 million Q2 Statement of Operations Highlights (in millions) | Account | Q2 2025 ($) | Q2 2024 ($) | | :--- | :--- | :--- | | Revenue | $1,419 | $930 | | Cost of transportation and services | $1,118 | $700 | | Sales, general and administrative expense | $214 | $154 | | Operating income (loss) | $0 | $0 | | Net loss | $(9) | $(7) | Condensed Consolidated Balance Sheets As of June 30, 2025, RXO's balance sheet shows decreased total assets, with significant accounts receivable and goodwill, alongside total liabilities and equity Balance Sheet Summary (in millions) | Account | June 30, 2025 ($) | Dec 31, 2024 ($) | | :--- | :--- | :--- | | Cash and cash equivalents | $18 | $35 | | Total current assets | $1,184 | $1,339 | | Total assets | $3,201 | $3,414 | | Total current liabilities | $880 | $1,065 | | Total liabilities | $1,613 | $1,802 | | Total equity | $1,588 | $1,612 | Condensed Consolidated Statements of Cash Flows For the first six months of 2025, net cash from operating activities improved, while investing activities used cash and financing activities provided a net cash inflow Six Months Ended June 30 Cash Flow Summary (in millions) | Activity | 2025 ($) | 2024 ($) | | :--- | :--- | :--- | | Net cash provided by operating activities | $21 | $2 | | Net cash used in investing activities | $(43) | $(22) | | Net cash provided by financing activities | $4 | $22 | | Net (decrease) in cash | $(16) | $2 | Supplemental Financial Information This section provides detailed breakdowns of revenue by service, GAAP to non-GAAP reconciliations, and gross margin analysis by segment, offering deeper operational insights Revenue by Service Offering In Q2 2025, Truck Brokerage was the largest revenue contributor, with Last Mile revenue growing and Managed Transportation revenue seeing a slight decline Q2 Revenue by Service (in millions) | Service | Q2 2025 ($) | Q2 2024 ($) | | :--- | :--- | :--- | | Truck brokerage | $1,025 | $543 | | Last mile | $315 | $265 | | Managed transportation | $142 | $156 | | Total (after eliminations) | $1,419 | $930 | Reconciliation of Non-GAAP Measures The company reconciles its GAAP net loss to non-GAAP measures, adjusting Q2 2025's GAAP net loss to Adjusted EBITDA and Adjusted Net Income Q2 2025 Reconciliation of Net Loss to Adjusted EBITDA (in millions) | Line Item | Amount ($) | | :--- | :--- | | Net loss | $(9) | | Interest expense, net | $8 | | Income tax benefit | $(1) | | Depreciation and amortization expense | $30 | | Transaction and integration costs | $7 | | Restructuring and other costs | $3 | | Adjusted EBITDA | $38 | Q2 2025 Reconciliation of Net Loss to Adjusted Net Income (in millions) | Line Item | Amount ($) | | :--- | :--- | | Net loss | $(9) | | Amortization of intangible assets | $11 | | Transaction and integration costs | $7 | | Restructuring and other costs | $3 | | Income tax associated with adjustments | $(5) | | Adjusted net income | $7 | Gross Margin Analysis RXO's overall gross margin decreased in Q2 2025, with Truck Brokerage at 14.4% and Complementary Services achieving a higher 22.8% gross margin Q2 Gross Margin as a Percentage of Revenue | Segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Truck brokerage | 14.4% | 14.7% | | Complementary services | 22.8% | 23.0% | | Total Company | 17.8% | 19.0% | Important Disclosures This section provides legal and financial disclosures, explaining non-GAAP measures and including a forward-looking statements disclaimer outlining risks Non-GAAP Financial Measures RXO explains its use of non-GAAP financial measures like Adjusted EBITDA and Adjusted EPS to analyze ongoing business operations by excluding non-core items - The company uses non-GAAP measures like adjusted EBITDA and adjusted EPS to facilitate analysis of ongoing business operations and assist with comparisons to prior periods[15] - Adjustments include transaction and integration costs, restructuring costs, and amortization of acquisition-related intangible assets[16][17] - A reconciliation of the forward-looking Q3 2025 adjusted EBITDA to the corresponding GAAP measure is not available without unreasonable effort due to the variability of reconciling items[18] Forward-looking Statements This section serves as a legal safe harbor, cautioning that non-historical statements are forward-looking and subject to numerous risk factors - The release contains forward-looking statements regarding outlook, integration with Coyote Logistics, and cash synergies, which are based on current assumptions and are not guarantees of future performance[19] - Key risks that could affect future results include competition, pricing pressures, economic conditions, fuel price fluctuations, and the ability to successfully integrate the Coyote Logistics acquisition[20]