8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 8, 2024

RXO, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-41514	88-2183384
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

11215 North Community House Road	28277
Charlotte, NC
(Address of principal executive offices)	(Zip Code)

(980) 308-6058

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	RXO	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02.    Results of Operations and Financial Condition.

On February 8, 2024, RXO, Inc. (the “Company”) issued a press release announcing its results of operations for the fiscal quarter and year ended December 31, 2023. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

Item 7.01.    Regulation FD Disclosure.

On February 8, 2024, the Company released a slide presentation related to its results of operations for the fiscal quarter and year ended December 31, 2023. A copy of this slide presentation is furnished as Exhibit 99.2 to this Current Report on Form 8-K.

The slide presentation should be read together with the Company’s filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the fiscal year ended December 31, 2023 once available.

The information furnished in Items 2.02 and 7.01, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, and shall not be deemed to be incorporated by reference into any filing of the Company under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Item 9.01.    Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
99.1	Press Release, dated February 8, 2024, issued by RXO, Inc.
99.2	Investor Presentation, dated February 8, 2024
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.

Date: February 8, 2024	RXO, INC.
	By:	/s/ James E. Harris
		James E. Harris
		Chief Financial Officer

EX-99.1

Exhibit 99.1

RXO Announces Results for Fourth-Quarter 2023, Including Double-Digit Brokerage Volume Growth for Third-Consecutive Quarter

•Full-truckload brokerage volume increased 11 percent year-over-year and less-than-truckload volume increased 45 percent year-over-year

•Continued momentum in RXO's brokerage business with multiple brokerage records in the quarter including total volume and quarterly loads per day

•Companywide gross margin of 18.0 percent; brokerage gross margin of 14.8 percent

CHARLOTTE, N.C. — February 8, 2024 — RXO (NYSE: RXO) today announced its financial results for the fourth quarter and full year of 2023.

Drew Wilkerson, chief executive officer of RXO, said, “RXO continued to execute well in the fourth quarter despite the prolonged soft freight environment. For the third consecutive quarter, our brokerage business delivered double-digit volume growth with strong gross margin. Our managed transportation business secured several new managed expedite customers, solidifying our position as a leading provider of this service. Our focus on profitable growth and cost discipline enabled us to expand companywide gross margin sequentially.

“I’m proud of all that we achieved in 2023, our first full year as a standalone company. We responded quickly to our customers’ needs and changing market conditions; as a result, our customers awarded us more freight,” Wilkerson said. “In 2024, we will remain focused on our playbook – taking profitable market share while making strategic investments in our business. Given the current market conditions, we continue to reduce costs, which, combined with our strong brokerage sales pipeline, will position RXO to deliver rapid earnings growth when the market inflects.”

Companywide Results

The company’s revenue was $1.0 billion for the fourth quarter, compared to $1.1 billion in the fourth quarter of 2022. Gross margin was 18.0 percent, compared to 19.5 percent in the fourth quarter of 2022.

The company reported fourth-quarter 2023 GAAP net income of $2 million, compared to a net loss of $4 million in the fourth quarter of 2022. Fourth-quarter 2023 GAAP net income included $4 million in transaction, integration, restructuring and other costs. Adjusted net income in the quarter was $7 million, compared to $33 million in the fourth quarter of 2022.

Adjusted EBITDA was $31 million, compared to $64 million in the fourth quarter of 2022. Adjusted EBITDA margin was 3.2 percent, compared to 5.7 percent in the fourth quarter of 2022.

Transaction, integration, restructuring and other costs, and amortization of intangibles, impacted GAAP earnings per share by $0.04, net of tax. For the fourth quarter, RXO reported a GAAP diluted earnings per share of $0.02. Adjusted diluted earnings per share were $0.06.

RXO 4Q 2023 Earnings Press Release | 1

Brokerage

RXO’s brokerage business grew volume 15 percent year-over-year in the fourth quarter, including full truckload volume growth of 11 percent and less-than-truckload volume growth of 45 percent. Brokerage gross margin was 14.8% in the fourth quarter.

Brokerage contract volume increased by 23 percent year-over-year in the fourth quarter, the result of a strong brokerage sales pipeline, which has increased in size by 24 percent since the fourth quarter of 2022.

The company expects brokerage volumes to continue to grow on a year-over-year basis in the first quarter of 2024.

Complementary Services

RXO’s complementary services gross margin was 20.9% for the quarter, up 40 basis points year-over-year. Loads provided by RXO’s managed transportation business to its brokerage business increased both year-over-year and quarter-over-quarter.

RXO’s last mile business grew EBITDA year-over-year in the fourth quarter and for the full year.

Technology Update

In the fourth quarter of 2023, 97 percent of RXO’s brokerage loads were created or covered digitally using RXO’s cutting-edge technology platform, up from 87 percent in the fourth quarter of 2022.

The seven-day carrier retention rate was 76 percent, up 200 basis points year-over-year.

Conference Call

The company will hold a conference call and webcast on Thursday, February 8 at 8 a.m. Eastern Standard Time. Participants can call in toll-free (from U.S./Canada) at 1-888-259-6580; international callers dial +1-206-962-3782. The conference ID is 34416829.

A live webcast of the conference call will be available on the investor relations area of the company’s website, http://investors.rxo.com. A replay of the conference call will be available through February 29, 2024, by calling toll-free (from U.S./Canada) 1-877-674-7070; international callers dial +1-416-764-8692. Use the passcode 416829#. Additionally, the call will be archived on http://investors.rxo.com.

About RXO

RXO (NYSE: RXO) is a leading provider of asset-light transportation solutions. RXO offers tech-enabled truck brokerage services together with complementary solutions including managed transportation, freight forwarding and last mile delivery. The company combines massive capacity and cutting-edge technology to move freight efficiently through supply chains across North America. The company is headquartered in Charlotte, N.C. Visit  RXO.com  for more information and connect with RXO on Facebook,  Twitter,  LinkedIn,  Instagram  and  YouTube.

Media Contact

Erin Kelly

erin.kelly@rxo.com

Investor Contact

Kevin Sterling

kevin.sterling@rxo.com

RXO 4Q 2023 Earnings Press Release | 2

Non-GAAP Financial Measures

We provide reconciliations of the non-GAAP financial measures contained in this release to the most directly comparable measure under GAAP, which are set forth in the financial tables attached to this release.

The non-GAAP financial measures in this release include: adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”); adjusted EBITDA margin; and adjusted net income and adjusted diluted earnings per share (“adjusted diluted EPS”).

We believe that these adjusted financial measures facilitate analysis of our ongoing business operations because they exclude items that may not reflect, or are unrelated to, RXO’s core operating performance, and may assist investors with comparisons to prior periods and assessing trends in our underlying businesses. Other companies may calculate these non-GAAP financial measures differently, and therefore our measures may not be comparable to similarly titled measures of other companies. These non-GAAP financial measures should only be used as supplemental measures of our operating performance.

Adjusted EBITDA, adjusted EBITDA margin, adjusted net income and adjusted diluted EPS include adjustments for transaction and integration costs, as well as restructuring costs and other adjustments as set forth in the attached tables. Management uses these non-GAAP financial measures in making financial, operating and planning decisions and evaluating RXO’s ongoing performance.

We believe that adjusted EBITDA and adjusted EBITDA margin improve comparability from period to period by removing the impact of our capital structure (interest and financing expenses), asset base (depreciation and amortization), tax impacts and other adjustments that management has determined do not reflect our core operating activities and thereby assist investors with assessing trends in our underlying business. We believe that adjusted net income and adjusted diluted EPS improve the comparability of our operating results from period to period by removing the impact of certain costs that management has determined do not reflect our core operating activities, including amortization of acquisition-related intangible assets, transaction and integration costs, restructuring costs and other adjustments as set out in the attached tables, and thereby may assist investors with comparisons to prior periods and assessing trends in our underlying business.

Forward-looking Statements

This release includes forward-looking statements, including statements relating to our outlook and continued year-over-year brokerage volume growth in the first quarter of 2024. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. In some cases, forward-looking statements can be identified by the use of forward-looking terms such as "anticipate," "estimate," "believe," "continue," "could," "intend," "may," "plan," "predict," "should," "will," "expect," "project," "forecast," "goal," "outlook," "target,” or the negative of these terms or other comparable terms. However, the absence of these words does not mean that the statements are not forward-looking. These forward-looking statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances.

These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause or contribute to a material difference include the risks discussed in our filings with the SEC and the following: competition and pricing pressures; economic conditions generally; the severity, magnitude, duration and aftereffects of the COVID-19 pandemic and government responses to the COVID-19 pandemic; fluctuations in fuel prices; increased carrier prices; severe weather, natural disasters, terrorist attacks or similar incidents that cause material disruptions to our operations or the operations of the third-party carriers and independent contractors with which we contract; our dependence on third-party carriers and independent contractors; labor disputes or organizing efforts affecting our workforce and those of our third-party carriers; legal and regulatory challenges to the status of the third-party carriers with which we contract, and their delivery workers, as independent contractors, rather than employees; litigation that may adversely affect our business or reputation; increasingly stringent laws protecting the environment, including transitional risks relating to climate change, that impact our third-party carriers; governmental regulation and political conditions; our ability to develop and implement suitable information technology systems and prevent failures in or breaches of such systems; the impact of potential cyber-attacks and information technology or data security breaches; issues related to our intellectual property rights; our ability to access the capital markets and generate sufficient cash flow to satisfy our debt obligations; our ability to attract and retain qualified personnel; our ability to successfully implement our cost and revenue initiatives and other strategies; our ability to successfully

RXO 4Q 2023 Earnings Press Release | 3

manage our growth; our reliance on certain large customers for a significant portion of our revenue; damage to our reputation through unfavorable publicity; our failure to meet performance levels required by our contracts with our customers; the inability to achieve the level of revenue growth, cash generation, cost savings, improvement in profitability and margins, fiscal discipline, or strengthening of competitiveness and operations anticipated or targeted; a determination by the IRS that the distribution or certain related separation transactions should be treated as taxable transactions; and the impact of the separation on our businesses, operations and results. All forward-looking statements set forth in this release are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to or effects on us or our business or operations. Forward-looking statements set forth in this release speak only as of the date hereof, and we do not undertake any obligation to update forward-looking statements to reflect subsequent events or circumstances, changes in expectations or the occurrence of unanticipated events, except to the extent required by law.

RXO 4Q 2023 Earnings Press Release | 4

RXO, Inc.

Consolidated Statements of Operations

(Unaudited)

(Dollars in millions, shares in thousands, except per share amounts)	Three Months Ended December 31,				Years Ended December 31,
	2023		2022		2023		2022
Revenue	$	978	$	1,120	$	3,927	$	4,796
Cost of transportation and services (exclusive of depreciation and amortization)	743		842		2,967		3,624
Direct operating expense (exclusive of depreciation and amortization)	56		59		235		226
Sales, general and administrative expense	146		155		591		640
Depreciation and amortization expense	15		21		67		86
Transaction and integration costs	—		40		12		84
Restructuring costs	4		4		16		13
Operating income (loss)	14		(1)		39		123
Other expense	2		—		3		—
Interest expense, net	8		5		32		4
Income (loss) before income taxes	4		(6)		4		119
Income tax provision (benefit)	2		(2)		—		27
Net income (loss)	$	2	$	(4)	$	4	$	92
Earnings (loss) per share data
Basic earnings (loss) per share	$	0.02	$	(0.03)	$	0.03	$	0.80
Diluted earnings (loss) per share	$	0.02	$	(0.03)	$	0.03	$	0.79
Weighted-average shares outstanding
Basic weighted-average shares outstanding	117,012		115,848		116,871		115,335
Diluted weighted-average shares outstanding	119,575		115,848		119,456		115,791

RXO 4Q 2023 Earnings Press Release | 5

RXO, Inc.

Consolidated Balance Sheets

(Unaudited)

	December 31,
(Dollars in millions, shares in thousands, except per share amounts)	2023		2022
ASSETS
Current assets
Cash and cash equivalents	$	5	$	98
Accounts receivable, net of $12 and $13 in allowances, respectively	743		900
Other current assets	48		31
Total current assets	796		1,029
Long-term assets
Property and equipment, net of $293 and $241 in accumulated depreciation, respectively	124		119
Operating lease assets	195		159
Goodwill	630		630
Identifiable intangible assets, net of $118 and $106 in accumulated amortization, respectively	68		79
Other long-term assets	12		15
Total long-term assets	1,029		1,002
Total assets	$	1,825	$	2,031
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	414	$	501
Accrued expenses	199		256
Current maturities of long-term debt	3		4
Short-term operating lease liabilities	53		48
Other current liabilities	13		14
Total current liabilities	682		823
Long-term liabilities
Long-term debt and obligations under finance leases	356		451
Deferred tax liability	7		16
Long-term operating lease liabilities	146		114
Other long-term liabilities	40		40
Total long-term liabilities	549		621
Commitments and Contingencies
Equity
Preferred stock, $0.01 par value; 10,000 shares authorized; 0 shares issued and outstanding as of December 31, 2023 and 2022	—		—
Common stock, $0.01 par value; 300,000 shares authorized; 117,026 and 116,400 shares issued and outstanding as of December 31, 2023 and 2022, respectively	1		1
Additional paid-in capital	590		588
Retained earnings	6		2
Accumulated other comprehensive loss	(3)		(4)
Total equity	594		587
Total liabilities and equity	$	1,825	$	2,031

RXO 4Q 2023 Earnings Press Release | 6

RXO, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

	Years Ended December 31,
(In millions)	2023		2022
Operating activities
Net income	$	4	$	92
Adjustments to reconcile net income to net cash from operating activities
Depreciation and amortization expense	67		86
Stock compensation expense	19		32
Deferred tax benefit	(8)		(20)
Other	9		6
Changes in assets and liabilities
Accounts receivable	158		92
Other assets	(14)		14
Accounts payable	(86)		(14)
Accrued expenses and other liabilities	(60)		22
Net cash provided by operating activities	89		310
Investing activities
Payment for purchases of property and equipment	(64)		(57)
Proceeds from sale of property and equipment	—		1
Other	(2)		—
Net cash used in investing activities	(66)		(56)
Financing activities
Proceeds from borrowings on revolving credit facility	76		—
Repayment of borrowings on revolving credit facility	(71)		—
Proceeds from issuance of debt	—		451
Repayment of debt and finance leases	(104)		—
Payment for debt issuance costs	—		(9)
Payment for tax withholdings related to vesting of stock compensation awards	(14)		(3)
Repurchase of common stock	(2)		—
Net transfers to XPO	—		(621)
Other	(2)		(1)
Net cash used in financing activities	(117)		(183)
Effect of exchange rates on cash, cash equivalents and restricted cash	1		(2)
Net increase (decrease) in cash, cash equivalents and restricted cash	(93)		69
Cash, cash equivalents and restricted cash, beginning of period	98		29
Cash, cash equivalents and restricted cash, end of period	$	5	$	98
Supplemental disclosure of cash flow information:
Cash paid for income taxes, net	27		3
Cash paid for interest, net	32		—

RXO 4Q 2023 Earnings Press Release | 7

RXO, Inc.

Revenue Disaggregated by Service Offering

(Unaudited)

	Three Months Ended December 31,				Years Ended December 31,
(In millions)	2023		2022		2023		2022
Revenue
Truck brokerage	$	610	$	664	$	2,358	$	2,929
Last mile	257		277		1,014		1,061
Managed transportation	103		129		439		523
Freight forwarding	51		82		251		422
Eliminations	(43)		(32)		(135)		(139)
Total	$	978	$	1,120	$	3,927	$	4,796

RXO 4Q 2023 Earnings Press Release | 8

RXO, Inc.

Reconciliation of Net Income (Loss) to Adjusted EBITDA and Adjusted EBITDA Margin

(Unaudited)

	Three Months Ended December 31,						Years Ended December 31,
(Dollars in millions)	2023			2022			2023			2022
Reconciliation of Net Income (Loss) to Adjusted EBITDA
Net income (loss)	$	2		$	(4)		$	4		$	92
Interest expense, net	8			5			32			4
Income tax provision (benefit)	2			(2)			—			27
Depreciation and amortization expense	15			21			67			86
Transaction and integration costs	—			40			12			84
Restructuring and other costs	4			4			17			13
Adjusted EBITDA (1)	$	31		$	64		$	132		$	306
Revenue	$	978		$	1,120		$	3,927		$	4,796
Adjusted EBITDA margin (1) (2)	3.2		%	5.7		%	3.4		%	6.4		%

(1)See the “Non-GAAP Financial Measures” section of the press release.

(2)Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Revenue.

RXO 4Q 2023 Earnings Press Release | 9

RXO, Inc.

Reconciliation of Net Income (Loss) to Adjusted Net Income and Adjusted Diluted Earnings Per Share

(Unaudited)

(Dollars in millions, shares in thousands, except per share amounts)	Three Months Ended December 31,				Years Ended December 31,
	2023		2022		2023		2022
Reconciliation of Net Income (Loss) to Adjusted Net Income and Adjusted Net Income Per Share
Net income (loss)	$	2	$	(4)	$	4	$	92
Amortization of intangible assets	3		5		13		21
Transaction and integration costs	—		40		12		84
Restructuring and other costs	4		4		17		13
Income tax associated with adjustments above (1)	(2)		(12)		(10)		(29)
Adjusted net income (2)	$	7	$	33	$	36	$	181
Adjusted diluted earnings per share (2)	$	0.06	$	0.28	$	0.30	$	1.56
Weighted-average shares outstanding
Diluted weighted-average shares outstanding	119,575		117,671		119,456		115,791

(1)The tax impact of non-GAAP adjustments represents the tax benefit (expense) calculated using the applicable statutory tax rate that would have been incurred had these adjustments been excluded from net income (loss). Our estimated tax rate on non-GAAP adjustments may differ from our GAAP tax rate due to differences in the methodologies applied.

(2)See the “Non-GAAP Financial Measures” section of the press release.

RXO 4Q 2023 Earnings Press Release | 10

RXO, Inc.

Calculation of Gross Margin and Gross Margin as a Percentage of Revenue

(Unaudited)

	Three Months Ended December 31,						Years Ended December 31,
(Dollars in millions)	2023			2022			2023			2022
Revenue
Truck brokerage	$	610		$	664		$	2,358		$	2,929
Complementary services (1)	411			488			1,704			2,006
Eliminations	(43)			(32)			(135)			(139)
Revenue	$	978		$	1,120		$	3,927		$	4,796
Cost of transportation and services (exclusive of depreciation and amortization)
Truck brokerage	$	519		$	545		$	1,993		$	2,389
Complementary services (1)	267			329			1,109			1,374
Eliminations	(43)			(32)			(135)			(139)
Cost of transportation and services (exclusive of depreciation and amortization)	$	743		$	842		$	2,967		$	3,624
Direct operating expense (exclusive of depreciation and amortization)
Truck brokerage	$	—		$	1		$	1		$	1
Complementary services (1)	56			58			234			225
Direct operating expense (exclusive of depreciation and amortization)	$	56		$	59		$	235		$	226
Direct depreciation and amortization expense
Truck brokerage	$	1		$	—		$	1		$	—
Complementary services (1)	2			1			7			5
Direct depreciation and amortization expense	$	3		$	1		$	8		$	5
Gross margin
Truck brokerage	$	90		$	118		$	363		$	539
Complementary services (1)	86			100			354			402
Gross margin	$	176		$	218		$	717		$	941
Gross margin as a percentage of revenue
Truck brokerage	14.8		%	17.8		%	15.4		%	18.4		%
Complementary services (1)	20.9		%	20.5		%	20.8		%	20.0		%
Gross margin as a percentage of revenue	18.0		%	19.5		%	18.3		%	19.6		%

(1)Complementary services include freight forwarding, last mile and managed transportation services.

RXO 4Q 2023 Earnings Press Release | 11

EX-99.2

Fourth Quarter 2023 Results February 8, 2024

2 Non-GAAP financial measures and forward-looking statements Non-GAAP financial measures We provide reconciliations of the non-GAAP financial measures contained in this presentation to the most directly comparable measure under GAAP, which are set forth in the financial tables attached to this presentation. The non-GAAP financial measures in this presentation include: adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”); free cash flow and free cash flow as a percentage of adjusted EBITDA (“free cash flow conversion”); adjusted free cash flow and adjusted free cash flow as a percentage of adjusted EBITDA (“adjusted free cash flow conversion”); net debt, gross leverage and net leverage; and adjusted net income and adjusted diluted earnings per share (“adjusted diluted EPS”). We believe that these adjusted financial measures facilitate analysis of our ongoing business operations because they exclude items that may not reflect, or are unrelated to, RXO’s core operating performance, and may assist investors with comparisons to prior periods and assessing trends in our underlying businesses. Other companies may calculate these non-GAAP financial measures differently, and therefore our measures may not be comparable to similarly titled measures of other companies. These non- GAAP financial measures should only be used as supplemental measures of our operating performance. Adjusted EBITDA, adjusted EBITDA margin, adjusted net income and adjusted diluted EPS include adjustments for transaction and integration costs, as well as restructuring costs and other adjustments as set forth in the attached tables. Management uses these non-GAAP financial measures in making financial, operating and planning decisions and evaluating RXO’s ongoing performance. We believe that adjusted EBITDA and adjusted EBITDA margin improve comparability from period to period by removing the impact of our capital structure (interest and financing expenses), asset base (depreciation and amortization), tax impacts and other adjustments that management has determined do not reflect our core operating activities and thereby assist investors with assessing trends in our underlying business. We believe that adjusted net income and adjusted diluted EPS improve the comparability of our operating results from period to period by removing the impact of certain costs that management has determined do not reflect our core operating activities, including amortization of acquisition-related intangible assets, transaction and integration costs, restructuring costs and other adjustments as set out in the attached tables, and thereby may assist investors with comparisons to prior periods and assessing trends in our underlying business. We believe that free cash flow, free cash flow conversion, adjusted free cash flow and adjusted free cash flow conversion are important measures of our ability to repay maturing debt or fund other uses of capital that we believe will enhance stockholder value, and may assist investors with assessing trends in our underlying business. We calculate free cash flow as net cash provided by operating activities less payment for purchases of property and equipment plus proceeds from sale of property and equipment. We define adjusted free cash flow as free cash flow less cash paid for transaction, integration, restructuring and other costs. We believe that net debt, gross leverage and net leverage are important measures of our overall liquidity position. Net debt is calculated by removing cash and cash equivalents from the principal balance of our total debt. Gross leverage is calculated as the principal balance of our total debt as a ratio of trailing twelve months adjusted EBITDA. Net leverage is calculated as net debt as a ratio of trailing twelve months adjusted EBITDA. With respect to our financial outlook for the first quarter of 2024 adjusted EBITDA, a reconciliation of this non-GAAP measure to the corresponding GAAP measure is not available without unreasonable effort due to the variability and complexity of the reconciling items described above that we exclude from this non-GAAP measure. The variability of these items may have a significant impact on our future GAAP financial results and, as a result, we are unable to prepare the forward-looking statement of income and statement of cash flows prepared in accordance with GAAP that would be required to produce such a reconciliation. Forward-looking statements This presentation includes forward-looking statements, including statements relating to our outlook and financial year 2024 assumptions. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. In some cases, forward-looking statements can be identified by the use of forward-looking terms such as "anticipate," "estimate," "believe," "continue," "could," "intend," "may," "plan,“ "predict," "should," "will," "expect," "project," "forecast," "goal," "outlook," "target,” or the negative of these terms or other comparable terms. However, the absence of these words does not mean that the statements are not forward-looking. These forward-looking statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause or contribute to a material difference include the risks discussed in our filings with the SEC and the following: competition and pricing pressures; economic conditions generally; the severity, magnitude, duration and aftereffects of the COVID-19 pandemic and government responses to the COVID-19 pandemic; fluctuations in fuel prices; increased carrier prices; severe weather, natural disasters, terrorist attacks or similar incidents that cause material disruptions to our operations or the operations of the third-party carriers and independent contractors with which we contract; our dependence on third-party carriers and independent contractors; labor disputes or organizing efforts affecting our workforce and those of our third-party carriers; legal and regulatory challenges to the status of the third-party carriers with which we contract, and their delivery workers, as independent contractors, rather than employees; litigation that may adversely affect our business or reputation; increasingly stringent laws protecting the environment, including transitional risks relating to climate change, that impact our third-party carriers; governmental regulation and political conditions; our ability to develop and implement suitable information technology systems and prevent failures in or breaches of such systems; the impact of potential cyber-attacks and information technology or data security breaches; issues related to our intellectual property rights; our ability to access the capital markets and generate sufficient cash flow to satisfy our debt obligations; our ability to attract and retain qualified personnel; our ability to successfully implement our cost and revenue initiatives and other strategies; our ability to successfully manage our growth; our reliance on certain large customers for a significant portion of our revenue; damage to our reputation through unfavorable publicity; our failure to meet performance levels required by our contracts with our customers; the inability to achieve the level of revenue growth, cash generation, cost savings, improvement in profitability and margins, fiscal discipline, or strengthening of competitiveness and operations anticipated or targeted; a determination by the IRS that the distribution or certain related separation transactions should be treated as taxable transactions; and the impact of the separation on our businesses, operations and results. All forward-looking statements set forth in this presentation are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to or effects on us or our business or operations. Forward-looking statements set forth in this presentation speak only as of the date hereof, and we do not undertake any obligation to update forward-looking statements to reflect subsequent events or circumstances, changes in expectations or the occurrence of unanticipated events, except to the extent required by law.

3 Q4 2023 highlights 1 Solid execution in a prolonged soft freight market 2 Brokerage gaining profitable share with support from complementary services 3 Continued sales and pipeline momentum 4 Strategic technology and growth investments 5 Market conditions impacting brokerage gross profit per load

4 Fourth-quarter financial and operating results Solid execution in a prolonged soft freight market RXO’s brokerage business continues to outperform and gain profitable market share Adjusted EBITDA and margin %1 Brokerage y/y volume growth $218M $176M $0 $50 $100 $150 $200 $250 $300 Q4 22 Q4 23 18.0% 19.5% Gross margin $ and % (1) See the “Non-GAAP financial measures” section. $64M $31M 540.00% 545.00% 550.00% 555.00% 560.00% 565.00% 570.00% 575.00% 580.00% 585.00% 590.00% $0 $20 $40 $60 $80 $100 $120 $140 Q4 22 Q4 23 3.2% 5.7%

5 Diversified business; brokerage market share gains with strong margins Revenue by service offeringBrokerage • Volume growth of 15% y/y – Full-truckload volume growth of 11% y/y – LTL volume growth of 45% y/y • Sales pipeline +24% y/y, +90% on 2-year stack • Strong profitability, gross margin of 14.8% Complementary services • Gross margin 20.9%, +40bps y/y • Managed Trans. y/y synergy volumes up strongly – Secured key wins that will be onboarded in 2024 • Last Mile Q4 EBITDA up y/y – Successfully grew FY2023 Last Mile EBITDA y/y 60%25% 10% 5% Truck Brokerage Last Mile Managed Transportation Freight Forwarding Note: Excludes impact of eliminations. Numbers may not add up to 100% due to rounding.

6 RXO brokerage continues to invest in the future Growth and productivity investments (1) Brokerage headcount defined as customer and carrier representatives. • Expanded offices in strategic locations ‒ Plano, Texas and Dublin, Ohio • Continue to invest in other modes of transportation ‒ Significant momentum in LTL ‒ Added increased automation capabilities for LTL order creation • Remain staffed for growth while driving productivity gains ‒ 2023 loads per head per day increased by over 15%1 • Multiple technology enhancements to the RXO platform ‒ Tracking capabilities for cross-border freight ‒ Generative AI capabilities, including tools for sales enablement ‒ Increased fraud protection measures 97% Q4 loads created or covered digitally 76% 7-day carrier retention

7 Q4 2023 adjusted EPS bridge Earnings per share Q4-23 Q4-22 GAAP Diluted EPS $0.02 $(0.03) Amortization of intangible assets 0.03 0.04 Transaction, integration, restructuring and other costs 0.03 0.37 Income tax associated with adjustments above1 (0.02) (0.10) Adjusted Diluted EPS2 $ 0.06 $ 0.28 RXO reported Q4 2023 adjusted diluted EPS of $0.06 (1) The tax impact of non-GAAP adjustments represents the tax benefit (expense) calculated using the applicable statutory tax rate that would have been incurred had these adjustments been excluded from net income (loss). Our estimated tax rate on non-GAAP adjustments may differ from our GAAP tax rate due to differences in the methodologies applied. (2) See the “Non-GAAP financial measures” section.

8 Trailing six-month cash walks Note: In millions. (1) Adjusted EBITDA and Adjusted FCF are non-GAAP financial measures. (2) Adjusted EBITDA excludes certain NEO spin-related stock-based compensation. Adj. free cash flow impacted by lower levels of profitability at this stage of the freight cycle Adjusted free cash flow Cash balance1

9 Q4 capital structure snapshot Capital structure (millions) Q4 2023 Notes due 2027 $ 355 Revolver 5 Finance leases, asset financing & other 7 Total debt, principal balance $ 367 Less: Cash 5 Net debt1 $ 362 Committed liquidity (millions) Q4 2023 Cash $ 5 Revolver 595 Total capacity $ 600 (1) See the “Non-GAAP financial measures” section. (2) See appendix for calculations of gross and net leverage. • RXO continues to have a strong liquidity position – Total committed liquidity of $600M at the end of Q4 • LTM leverage increased as RXO lapped 2022 adjusted EBITDA, the peak of the prior freight cycle 2.5x 2.5x Leverage1,2

10 Historical y/y brokerage revenue per load and gross margin trends 7% -7% -14% -16% -13% -10% -8% 21% 41% 49% 45% 18% 11% 12% 7% -10% -23% -32% -33% -26% -20% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Rev / LD (% y/y) Brokerage GM % Consistently strong brokerage gross margin across freight cycles • Q4 y/y revenue per load decline moderated ~600 basis points when compared to Q3 • Revenue per load declined low-teens % y/y in Q4 when adjusted for length of haul, mix and changes in fuel prices – Low-teens y/y decline improved vs. last quarter and in-line with market – Length of haul and mix shift were headwinds to Q4 revenue per load 2019 20202018 2021 2022 2023

11 Q4 monthly brokerage gross margin trends Brokerage Q4 monthly gross margin impacted by limited peak opportunities, seasonal capacity reductions and inclement weather as the quarter progressed • Freight market weakness continued throughout Q4 ‒ National load-to-truck ratio averaged ~2:1 during the quarter ‒ Tender rejection rates were relatively unchanged ‒ Special projects wound down into November and December ‒ Muted holiday peak season • Market conditions limit ability to bring down buy-side ‒ Saw typical seasonal capacity reduction at the end of Q4, impacting ability to reduce cost of purchased transportation ‒ Amplified by inclement weather in certain regions ‒ Load-to-truck ratio moved above 3:1 at the end of December and sustained its move higher throughout January

12 Historical volume and gross profit per load trends RXO’s brokerage gross profit per load increased sequentially in Q4 with significant volume growth

13 Outlook commentary and FY 2024 assumptions • Q1 2024 year-over-year brokerage volume growth • Q1 2024 brokerage gross margin: 12%-14% • Q1 2024 companywide adjusted EBITDA1 : $12M-$18M Outlook commentary FY 2024 modeling assumptions • Capital expenditures: $40-$50M • Depreciation: $56-$58M • Amortization of intangibles: ~$12M • Stock-based compensation: $24-$26M • Restructuring + transaction & integration expenses: $20-$25M • Net interest expense: $31-$33M • Adjusted effective tax rate: ~30% • Diluted weighted-average shares outstanding: ~120 million 2 (1) See the “Non-GAAP financial measures” section. (2) Does not assume any reduction in share count associated with RXO’s stock repurchase program.

14 Key investment highlights 1 Large addressable market with secular tailwinds 2 Track record of above-market growth and high profitability 3 Proprietary technology drives productivity, volume and margin expansion 4 Long-term relationships with blue-chip customers 5 Market-leading platform with complementary transportation solutions 6 Tiered approach to sales drives multi-faceted growth opportunities 7 Diverse exposure across attractive end markets 8 Experienced and proven leadership team

15 Appendix

16 Financial reconciliations (1) See the “Non-GAAP financial measures” section. (2) Adjusted EBITDA margin is calculated as adjusted EBITDA divided by revenue. (3) Trailing six months ended December 31, 2023 is calculated as the twelve months ended December 31, 2023 less the six months ended June 30, 2023. Reconciliation of net income (loss) to adjusted EBITDA and adjusted EBITDA margin Six Months Ended December 31, Six Months Ended June 30, (Dollars in millions) 2023 2022 2023 2022 2023 3 2023 Net income (loss) 2$ (4)$ 4$ 92$ 1$ 3$ Interest expense, net 8 5 32 4 16 16 Income tax provision (benefit) 2 (2) - 27 - - Depreciation and amortization expense 15 21 67 86 31 36 Transaction and integration costs - 40 12 84 2 10 Restructuring and other costs 4 4 17 13 7 10 Adjusted EBITDA 1 31$ 64$ 132$ 306$ 57$ 75$ Revenue 978$ 1,120$ 3,927$ 4,796$ 1,954 1,973 Adjusted EBITDA margin 1, 2 3.2% 5.7% 3.4% 6.4% 2.9% 3.8% Three Months Ended December 31, Years Ended December 31,

17 Financial reconciliations (cont.) (1) The tax impact of non-GAAP adjustments represents the tax benefit (expense) calculated using the applicable statutory tax rate that would have been incurred had these adjustments been excluded from net income (loss). Our estimated tax rate on non-GAAP adjustments may differ from our GAAP tax rate due to differences in the methodologies applied. (2) See the "Non-GAAP financial measures" section. Reconciliation of net income (loss) to adjusted net income and adjusted diluted earnings per share (Dollars in millions, shares in thousands, except per share amounts) 2023 2022 2023 2022 Net income (loss) 2$ (4)$ 4$ 92$ Amortization of intangible assets 3 5 13 21 Transaction and integration costs - 40 12 84 Restructuring and other costs 4 4 17 13 Income tax associated with the adjustments above 1 (2) (12) (10) (29) Adjusted net income 2 7$ 33$ 36$ 181$ Adjusted diluted earnings per share 2 0.06$ 0.28$ 0.30$ 1.56$ Weighted-average common shares outstanding Diluted weighted-average common shares outstanding 119,575 117,671 119,456 115,791 Years Ended December 31,Three Months Ended December 31,

18 (1) See the “Non-GAAP financial measures” section. (2) Includes the cash component of these line items. (3) Adjusted EBITDA for all periods presented is reconciled above. (4) Free cash flow conversion from adjusted EBITDA is calculated as free cash flow divided by adjusted EBITDA. (5) Adjusted free cash flow conversion from adjusted EBITDA is calculated as adjusted free cash flow divided by adjusted EBITDA. Financial reconciliations (cont.) Reconciliation of cash flows from operating activities to free cash flow and adjusted free cash flow Six Months Ended December 31, Six Months Ended June 30, (Dollars in millions) 2023 2022 2023 2023 Net cash provided by operating activities 89$ 310$ 23$ 66$ Payment for purchases of property and equipment (64) (57) (36) (28) Proceeds from sale of property and equipment - 1 - - Free cash flow 1 25$ 254$ (13)$ 38$ Transaction and integration costs 2 8 63 3 5 Restructuring and other costs 2 16 6 8 8 Adjusted free cash flow 1 49$ 323$ (2)$ 51$ Adjusted EBITDA 1, 3 132$ 306$ 57$ 75$ Free cash flow conversion from adjusted EBITDA 1, 4 18.9% 83.0% -22.8% 50.7% Adjusted free cash flow conversion from adjusted EBITDA 1, 5 37.1% 105.6% -3.5% 68.0% Year Ended December 31,

19 Financial reconciliations (cont.) (1) Complementary services include freight forwarding, last mile and managed transportation services. Calculation of gross margin and gross margin as a percentage of revenue               (Dollars in millions)   2023   2022 2023   2022 Revenue               Truck brokerage   610$   664$ 2,358$   2,929$ Complementary services 1   411   488 1,704   2,006 Eliminations   (43)   (32) (135)   (139) Revenue   978$   1,120$ 3,927$   4,796$                 Cost of transportation and services (exclusive of depreciation and amortization)               Truck brokerage   519$   545$ 1,993$   2,389$ Complementary services 1   267   329 1,109   1,374 Eliminations   (43)   (32) (135)   (139) Cost of transportation and services (exclusive of depreciation and amortization)   743$   842$ 2,967$   3,624$                 Direct operating expense (exclusive of depreciation and amortization)               Truck brokerage   -$   1$ 1$   1$ Complementary services 1   56   58 234   225 Direct operating expense (exclusive of depreciation and amortization)   56$   59$ 235$   226$ Direct depreciation and amortization expense Truck brokerage 1$ -$ 1$ -$ Complementary services 1 2 1 7 5 Direct depreciation and amortization expense   3$ 1$ 8$ 5$ Gross margin               Truck brokerage   90$ 118$ 363$ 539$ Complementary services 1   86 100 354 402 Gross margin   176$   218$ 717$   941$                 Gross margin as a percentage of revenue               Truck brokerage   14.8%   17.8% 15.4%   18.4% Complementary services 1   20.9%   20.5% 20.8%   20.0% Gross margin as a percentage of revenue   18.0%   19.5% 18.3%   19.6% Years Ended December 31,Three Months Ended December 31,

20 Financial reconciliations (cont.) (1) See the “Non-GAAP financial measures” section. (2) See reconciliation of net income (loss) to adjusted EBITDA. (3) Represents stock compensation expense included in Sales, general and administrative expense. December 31, (Dollars in millions) 2023 Reconciliation of Bank Adjusted EBITDA   Adjusted EBITDA 1, 2 for the year ended December 31, 2023 132$ Stock compensation expense 3 for the year ended December 31, 2023 14 Bank Adjusted EBITDA 146$ Calculation of Gross Leverage Total debt, principal balance 367$ Bank Adjusted EBITDA 146 Gross Leverage 1 2.5x Calculation of Net Leverage Net debt 1 362$ Bank Adjusted EBITDA 146 Net Leverage 1 2.5x Reconciliation of Bank Adjusted EBITDA; Calculation of Gross Leverage and Net Leverage

XML

Cover	Feb. 08, 2024
Cover [Abstract]
Document Type	8-K
Document Period End Date	Feb. 08, 2024
Entity Registrant Name	RXO, INC.
Entity Incorporation, State or Country Code	DE
Entity File Number	001-41514
Entity Tax Identification Number	88-2183384
Entity Address, Address Line One	11215 North Community House Road
Entity Address, City or Town	Charlotte
Entity Address, State or Province	NC
Entity Address, Postal Zip Code	28277
City Area Code	(980)
Local Phone Number	308-6058
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common stock, par value $0.01 per share
Trading Symbol	RXO
Security Exchange Name	NYSE
Entity Emerging Growth Company	false
Entity Central Index Key	0001929561
Amendment Flag	false