RXO Reports Revenue Increase to Just More Than $1B for Q3

RXO completed its acquisition of Coyote Logistics in the third quarter. The company said the integration of Coyote’s operations is well underway and progressing smoothly. (RXO)

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RXO posted an increase in third-quarter revenue despite a persistently soft market environment by focusing on its customer relationships, the company reported Nov. 7, even as its bottom-line result worsened.

The Charlotte, N.C.-based asset-light transportation provider posted a net loss of $243 million, or negative $1.81 a diluted share, for the three months ending Sept. 30. That compared with a net loss of $1 million, 1 cent, during the same time the previous year. Total revenue increased 6.6% to $1.04 billion from $976 million.

“We didn’t see many changes in the freight market conditions when compared to the previous quarter,” RXO CEO Drew Wilkerson said during a call with investors. “The national load-to-truck ratio declined, while industry tender rejections increased slightly.”

RXO highlighted in the earnings report that the net loss was primarily due to a $216 million noncash accounting charge associated with the private placement of equity in the quarter. The figure represents the difference between the issuance price and the closing market price of common stock belonging to the company at the time.

“On the demand side, conditions remain soft,” Wilkerson said. “Port volumes remain strong, but they have not yet translated into over-the-road volume strength. On the supply side, carriers continue to exit each month in the quarter. However, the rate of exits continues to slow. Freight rates continue to be challenging for many carriers. In October, we did see acute tightness in the market due to hurricanes Helene and Milton as well as the brief port strike.”

Wilkerson said that while the company is closely monitoring the macroeconomic environment, it is anticipating another muted peak season this year. Still, he noted some positive economic signs. “Inflation has moderated,” he said. “Retail inventory positions are healthy, and consumer confidence has recently rebounded. However, the labor market and the industrial sector of the economy have weakened. We continue to lean into our playbook to ensure RXO is properly positioned no matter the market conditions. We remain focused on reliably servicing our customers’ needs and honoring our contractual rates.”

Wilkerson stressed that this strategy contributed to the third-quarter revenue gains, and he expects it to position RXO to capture spot volume and project freight.

Today, RXO's CEO Drew Wilkerson joined Yahoo Finance's Seana Smith and Brad Smith to discuss three things investors should note about RXO's 3Q earnings. https://t.co/Xtf8rQ8mnv — RXO (@rxoinc) November 7, 2024

“Recently, several customers came to us for assistance as they worked to serve their customers that were affected by hurricanes Helene and Milton. I’m proud that the deep relationships that we’ve built with our customers are enabling us to serve both them and our communities during crisis and other times of stress,” he said.

Also, on Sept. 16 RXO completed its acquisition of Coyote Logistics. The company said the integration of Coyote’s operations is well underway and progressing smoothly.

RXO has released its 3Q 2024 results, with the Coyote Logistics integration ahead of schedule and complementary services momentum. https://t.co/wF9Bn7lA9i pic.twitter.com/QFX0zyIYGc — RXO (@rxoinc) November 7, 2024

Truck brokerage segment revenue increased 10.8% to $655 million from $591 million, even as segment volumes overall declined by 5% year over year. While less-than-truckload volume increased by 13%, this was offset by a 9% decline in full truckload volume. Full truckload contract volumes grew by more than 30% from the prior-year period.

This segment also includes RXO’s legacy brokerage business, which saw volume decline 5% during the quarter.

“We expect combined brokerage volume to be up sequentially in the fourth quarter, with tightening market conditions impacting our buy rates in the short term,” Wilkerson said. “While no one knows when the freight market will turn, I believe that RXO is uniquely positioned to capitalize on opportunities as they arise. With larger scale, we can provide our customers with a broader array of services and buy transportation even more cost effectively. Our differentiated portfolio of complementary services will drive organic growth across RXO.”

Complementary services revenue was virtually unchanged from the year-ago period at $419 million. The earnings report noted that managed transportation operations were awarded more than $300 million in new freight under management in the quarter. The business also had more than $1.3 billion of new freight under management in its sales pipeline. The segment includes last-mile and managed transportation services. The number of last-mile stops grew by 11% year over year.

Drilling down, last-mile revenue increased 4.7% to $268 million from $256 million, while managed transportation revenue decreased 7.4% to $151 million from $163 million.

RXO ranks No. 20 on the Transport Topics Top 100 list of the largest logistics companies in North America.