RXO(RXO) - 2024 Q1 - Quarterly Report

Part I—Financial Information Item 1. Financial Statements The company reported a $15 million net loss in Q1 2024, a decline from break-even, with total assets at $1.80 billion and operating cash flow at $7 million Q1 2024 Key Financial Metrics | Metric | Q1 2024 (in millions) | Q1 2023 (in millions) | | :--- | :--- | :--- | | Revenue | $913 | $1,010 | | Operating Income (Loss) | $(12) | $5 | | Net Income (Loss) | $(15) | $0 | | Diluted EPS | $(0.13) | $0.00 | Balance Sheet Summary | Account | March 31, 2024 (in millions) | Dec 31, 2023 (in millions) | | :--- | :--- | :--- | | Total Current Assets | $770 | $796 | | Total Assets | $1,799 | $1,825 | | Total Current Liabilities | $674 | $682 | | Total Liabilities | $1,217 | $1,231 | | Total Equity | $582 | $594 | Cash Flow Summary | Activity | Q1 2024 (in millions) | Q1 2023 (in millions) | | :--- | :--- | :--- | | Net Cash from Operating Activities | $7 | $42 | | Net Cash used in Investing Activities | $(11) | $(12) | | Net Cash from (used in) Financing Activities | $6 | $(8) | Notes to Condensed Consolidated Financial Statements The notes detail the company's brokered transportation platform, revenue disaggregation, debt, and legal contingencies, including Q1 2024 restructuring charges - RXO operates as a technology-driven, asset-light brokered transportation platform, with its core business in truck brokerage, complemented by managed transportation, last mile, and freight forwarding services[24] Revenue by Service Offering (Q1 2024 vs Q1 2023) | Service Offering | Q1 2024 (in millions) | Q1 2023 (in millions) | | :--- | :--- | :--- | | Truck brokerage | $564 | $600 | | Last mile | $232 | $240 | | Managed transportation | $97 | $117 | | Freight forwarding | $55 | $80 | - The company recorded restructuring charges of $11 million in Q1 2024, primarily for severance and facility costs, with a remaining liability of $12 million expected to be paid within twelve months[33] - The company is involved in several class action lawsuits alleging misclassification of independent contractors in its last mile business. The company believes the claims are without merit but is unable to estimate the possible loss or range of loss[50][53] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Revenue declined 9.6% due to lower rates and volumes, causing margin compression, with a credit facility amendment providing increased financial flexibility - Revenue for Q1 2024 decreased by 9.6% to $913 million from $1,010 million in Q1 2023[69] - The revenue decline was driven by a $36 million decrease in truck brokerage (15% lower revenue per load, partially offset by 11% higher volume), a $25 million decrease in freight forwarding, and a $20 million decrease in managed transportation[69] - Cost of transportation and services as a percentage of revenue increased from 75.1% to 76.6% year-over-year, primarily due to margin pressure in the truck brokerage segment[70] - The company amended its Revolver in April 2024 to temporarily increase the maximum consolidated leverage ratio, raising it to 4.25:1.00 for the quarters ending June 30 and September 30, 2024[80] Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes occurred in market risk exposures, including foreign currency, commodity, interest rate, and fuel price risks, since the 2023 Form 10-K - There have been no material changes to the company's market risk exposures related to foreign currency, commodity prices, interest rates, or fuel prices since the 2023 Form 10-K[86] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2024[87] - No material changes were made to the company's internal control over financial reporting during the first quarter of 2024[88] Part II—Other Information Item 1. Legal Proceedings This section refers to Note 9 of the financial statements for details on legal proceedings, including misclassification claims against its last mile subsidiary - For information on legal proceedings, the report directs readers to Note 9—Commitments and Contingencies in the financial statements[90] Item 1A. Risk Factors No material changes to the company's risk factors were reported since the 2023 Form 10-K - There have been no material changes to the company's risk factors as disclosed in the 2023 Form 10-K[91] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered securities were issued, and no shares were repurchased in Q1 2024, with $123 million remaining for future repurchases - No unregistered securities were issued in the three months ended March 31, 2024[92] - The company did not repurchase any shares during Q1 2024. As of March 31, 2024, $123 million remains authorized under the share repurchase program[93] Item 6. Exhibits Exhibits filed include CEO and CFO certifications as required by the Sarbanes-Oxley Act - Exhibits filed with the report include certifications from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act[98]