RXO Reports $1 Billion Revenue for First Full Quarter
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RXO on May 3 reported revenue exceeding $1 billion for its first full quarter as an independent company.
The Charlotte, N.C.-based asset-light transportation provider posted no net income for the three months ending March 31. That compared with $39 million, or 34 cents a diluted share, during the year-ago period when the company was operating within XPO. Total revenue decreased by 23% to $1.01 billion from $1.31 billion.
RXO ranks No. 18 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
The company noted that the lack of net income was due to $14 million in spinoff-related integration and restructuring costs. The company became an independent and publicly traded business Nov. 1. But adjusted net income in the quarter was $13 million, compared with $45 million during the previous year.
“Despite the weak macro environment, RXO took market share and maintained best in class brokerage margins,” CEO Drew Wilkerson said during a call with investors. “RXO is a differentiated business model with best-in-class technology and massive capacity, along with a deeply experienced leadership team, we’re navigating the current economic climate well and we’re going to remain focused on delivering results for our shareholders and for our customers, along with the carriers we partner with and our employees.”
RXO highlighted in the report that it was able to gain market share despite headwinds the industry is facing. These gains came from the brokerage business, which recorded a 6% increase in volumes year-over-year.
“We’re not picky on where we take share gains,” Wilkerson said. “We don’t walk into a bid looking to target one competitor or one asset-based company where share gains come from. We look at it [as] how can we match our services to best align with what the customer needs, and because of that we’re winning big.”
Wilkerson added that out of the top 20 customers the company grew volume by 13% on a year-over-year basis. He noted that means the largest customers are recognizing the service and they’re coming back with more business.
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“We definitely have a lot of things to our business that are idiosyncratic that play in our favor,” Wilkerson said. “If you look at our technology as second to none, it allows us to operate at best-in-class margins, and it also helps us become more integrated with our customers to where we’re able to continue to grow and take share, and do it at a faster clip than what most are doing in the industry.”
Wilkerson added that despite these advantages it’s still a tough macro environment. He pointed to the load-to-truck ratio as still problematic being at about a 2 to 1. But he sees this part of the cycle as being the time to build on the foundation of the business and be more integrated with customers to take advantage of the market inflection when it does occur.
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“We’ve seen some things about this market that we like that show that you could see an inflection, but we’re just not ready to call the point of what that inflection could be because there’s not enough data there to call it as Q3, Q4 or Q1.”
Zacks Consensus Estimate had forecast EPS of 6 cents per share on quarterly revenue of $1.06 billion.
RXO made technology investments and developed a central focus of its business. That approach was reflected in the quarterly results with the company reporting 96% of its brokerage loads were created or covered digitally using its technology platform, up from 87% in the fourth quarter. The average weekly users of the platform increased 25% year-over-year as well.
- Truck brokerage revenue decreased 27.2% to $600 million from $824 million during the same time last year. The brokerage business grew volume 6% year-over-year. Brokerage contract volume increased by 19% due to increased bid activity in the fourth quarter of 2022. Annual bid opportunities continued to increase in the first quarter.
- Complementary services revenue decreased 16.6% to $437 million from $524 million year-over-year. Loads provided by the managed transportation business to its brokerage business increased significantly in the quarter. RXO also announced during the quarter that it has invested in a new cross-border facility in Laredo, Texas. The complementary services segment includes freight forwarding, last mile and managed transportation services.
- Last-mile service revenue decreased 2.4% to $240 million from $246 million.
- • Managed transportation service revenue decreased 15.8% to $117 million from $139 million.
- Freight forwarding service revenue decreased 42.4% to $80 million from $139 million.