RXO Shows Small Gains Amid Soft Freight Market

RXO (NYSE: RXO) posted mixed second-quarter results, with a few encouraging signs despite a still-sluggish freight environment.

Revenue came in at $1.41 billion, up from $930 million a year ago. The year-on-year comparison is skewed, though, because RXO’s acquisition of Coyote Logistics from UPS didn’t close until Q3 last year. Sequentially, revenue dipped slightly from $1.43 billion in Q1.

Gross margin was 17.8%, down from 19% a year ago but unchanged from the first quarter. Brokerage volumes rose 1% year-over-year, while full truckload volumes fell 12%. Less-than-truckload (LTL) volumes, however, surged 45% from the same quarter last year.

RXO’s truck brokerage margin improved to 14.4% from 13.3% in Q1, though still shy of last year’s 14.7%. On the bottom line, the company reported a $9 million net loss under GAAP — about the same as last year’s $7 million loss. Adjusted net income was $7 million, up from $4 million a year earlier.

Operating income was essentially breakeven, a notable improvement from Q1’s $30 million loss. Adjusted EBITDA climbed to $38 million, compared to $28 million a year ago and $22 million in Q1.

CEO Drew Wilkerson credited the company’s scale and technology for driving productivity gains, noting continued growth in its Last Mile segment, which saw a 17% increase in stops year-over-year.

“We executed well in the second quarter despite the prolonged soft freight market,” Wilkerson said. “We’re focused on growing profitably, and our increased scale is delivering results.”