RXO Q3 earnings: First look

Here are some highlights from RXO’s third-quarter earnings report:

• The earnings are the first at RXO (NYSE: RXO) to reflect numbers from Coyote Logistics. However, that deal closed Sept. 16, so it is a relatively minor part of the numbers.

• RXO’s operations lost money in the quarter. The operating loss was $20 million compared to operating income a year earlier of $6 million. RXO had transaction, integration, restructuring and other costs that impacted GAAP earnings by $1.86 per share. It showed up on the earnings report under “other expense” and was $216 million. The net loss of $243 million came out to $1.81 per share.

• Operating revenues were higher. Truck brokerage revenues rose 10.8% to $655 million. Last-mile revenue was up 4.7% to $268 million. Managed transportation revenue, however, dropped 7.4% to $151 million. 

• The truck brokerage gross margin fell 140 basis points, to 13.7%. Complementary services, which includes last mile, managed transportation and freight forwarding, rose by 150 bps to 21.5%. The end result was a corporate gross margin of 17.3%, down 40 bps. RXO doesn’t expect the brokerage group to move much in the fourth quarter, foreseeing a Q4 gross margin of between 12% and 14%.

• The earnings report breaks out what it called “legacy RXO” from Coyote data. For the almost 12-month period between Oct. 1, 2023, and the last day before the Coyote closing, Coyote had adjusted earnings before interest, taxes, depreciation and amortization of $66 million. During that same period, legacy RXO had adjusted EBITDA of $130 million. Coyote’s adjusted EBITDA for the two weeks it was part of RXO during the quarter was negative $2 million.

• The earnings statement cited two numbers about complementary services beyond the financial figures. It said the managed transportation operationssigned on more than $300 million in new freight under management in its sales pipeline. And last-mile stops rose 11% year on year.

RXO’s earnings call was scheduled for 7 a.m. EST Thursday.

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