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]