On August 7, 2024, RXO Inc (RXO, Financial) released its 8-K filing detailing the financial results for the second quarter of 2024. RXO Inc is a brokered transportation platform defined by cutting-edge technology and a nimble, asset-light business model, with the largest component being core truck brokerage business. Its operations also include three asset-light, brokered transportation services: managed transportation, last mile, and freight forwarding.
Performance Overview
RXO Inc reported a revenue of $930 million for Q2 2024, falling short of the analyst estimate of $998.79 million and reflecting a decrease from $963 million in Q2 2023. Despite the revenue miss, the company achieved an adjusted diluted earnings per share (EPS) of $0.03, surpassing the analyst estimate of $0.02.
Key Financial Metrics
RXO Inc's gross margin improved to 19.0% from 18.6% in the same quarter last year. The company reported a GAAP net loss of $7 million, compared to a net income of $3 million in Q2 2023. Adjusted net income stood at $4 million, down from $10 million in the previous year. Adjusted EBITDA was $28 million, a decline from $38 million in Q2 2023, with an adjusted EBITDA margin of 3.0% compared to 3.9% last year.
"In the second quarter, RXO continued to execute well, including achieving 4% Brokerage volume growth despite the prolonged soft freight market. We focused on effectively managing our cost of purchased transportation and achieved Brokerage gross margin of 14.7%," said Drew Wilkerson, CEO of RXO.
Segment Performance
Brokerage volume increased by 4% year-over-year, with less-than-truckload volume growing by 40% and full truckload volume declining by 2%. The Brokerage gross margin was 14.7%. Complementary services, including managed transportation and last mile, saw a gross margin of 23.0%, up 170 basis points year-over-year. Managed Transportation was awarded more than $200 million in freight under management during the quarter.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Revenue | $930 million | $963 million |
| Gross Margin | 19.0% | 18.6% |
| GAAP Net Income (Loss) | ($7 million) | $3 million |
| Adjusted Net Income | $4 million | $10 million |
| Adjusted EBITDA | $28 million | $38 million |
| Adjusted EPS | $0.03 | $0.08 |
Balance Sheet and Cash Flow
As of June 30, 2024, RXO Inc reported total assets of $1.813 billion, slightly down from $1.825 billion at the end of 2023. The company had $7 million in cash and cash equivalents, up from $5 million at the end of 2023. Net cash provided by operating activities was $2 million for the first half of 2024, compared to $66 million in the same period last year.
Strategic Developments
RXO Inc is on track to close the acquisition of Coyote Logistics in the first half of the fourth quarter. This acquisition is expected to enhance the company's scale and market position.
"Our playbook, which keeps us focused on growing profitably, strategically investing in our business and controlling costs, will position us for rapid earnings growth when the market inflects," added Wilkerson.
Conclusion
While RXO Inc faced challenges in meeting revenue expectations, the company demonstrated resilience through strategic investments and effective cost management. The growth in brokerage volume and the upcoming acquisition of Coyote Logistics are positive indicators for future performance. Investors will be keen to see how these strategic moves translate into financial gains in the coming quarters.
Explore the complete 8-K earnings release (here) from RXO Inc for further details.
