RXO Q4 Earnings Call Highlights

Core Insights - RXO's fourth-quarter results were impacted by a significant squeeze in brokerage margins due to rising purchased transportation costs and soft demand, leading to an adjusted EBITDA of $17 million and an adjusted loss per share of $0.07 [3][4][6] Financial Performance - Total revenue for the fourth quarter was reported at $1.5 billion, with a gross margin of 14.8% [3][6] - Brokerage gross margin was 11.9%, slightly below the company's outlook, declining 160 basis points sequentially and 130 basis points year-over-year [1][4] - Adjusted EBITDA margin was 1.2%, with interest expense amounting to $9 million [3] Market Dynamics - Industry buy rates increased approximately 15% month-over-month in December, the largest increase from November to December in 16 years, while RXO's contractual sell rates did not keep pace [2][4] - Brokerage volume fell 4% year-over-year, driven by a 12% decline in truckload volume, despite a 31% growth in less-than-truckload (LTL) [6][7] Business Line Performance - LTL represented 26% of brokerage volume in the quarter, while truckload accounted for 74% [7] - Last-mile demand weakened, contributing to a flat revenue of $431 million in complementary services year-over-year [9] Strategic Initiatives - RXO's late-stage brokerage sales pipeline grew over 50% year-over-year, primarily driven by full truckload [5][10] - The company is advancing AI and platform integrations, with a focus on improving productivity and reducing costs [12][13] Outlook and Guidance - For Q1, RXO expects adjusted EBITDA between $5 million and $12 million, with total brokerage volume anticipated to decline 5% to 10% year-over-year [18] - Brokerage gross margin is projected to be between 11% and 13% in Q1, with continued tight market conditions [18] Balance Sheet and Cash Flow - RXO ended the quarter with $17 million in cash and an adjusted free cash flow for 2025 projected at $47 million [14] - The company announced a new $450 million asset-based lending facility, which is expected to improve financial flexibility [15]