RXO, INC., 10-Q filed on 8/7/2024
Quarterly Report
v3.24.2.u1
Cover - shares
 6 Months Ended
Jun. 30, 2024
Aug. 05, 2024
Cover [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Jun. 30, 2024  
Document Transition Report false  
Entity File Number 001-41514  
Entity Registrant Name RXO, INC.  
Entity Incorporation, State or Country Code DE  
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  
Title of 12(b) Security Common stock, par value $0.01 per share  
Trading Symbol RXO  
Security Exchange Name NYSE  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   117,626,483
Entity Central Index Key 0001929561  
Current Fiscal Year End Date --12-31  
Document Fiscal Year Focus 2024  
Document Fiscal Period Focus Q2  
Amendment Flag false  
v3.24.2.u1
Condensed Consolidated Balance Sheets - USD ($)
$ in Millions
Jun. 30, 2024
Dec. 31, 2023
Current assets    
Cash and cash equivalents $ 7 $ 5
Accounts receivable, net of $9 and $12 in allowances, respectively 725 743
Other current assets 44 48
Total current assets 776 796
Property and equipment, net of $319 and $293 in accumulated depreciation, respectively 118 124
Operating lease assets 210 195
Goodwill 630 630
Identifiable intangible assets, net of $124 and $118 in accumulated amortization, respectively 62 68
Other long-term assets 17 12
Total long-term assets 1,037 1,029
Total assets 1,813 1,825
Current liabilities    
Accounts payable 382 414
Accrued expenses 197 199
Short-term debt and current maturities of long-term debt 16 3
Short-term operating lease liabilities 54 53
Other current liabilities 13 13
Total current liabilities 662 682
Long-term debt and obligations under finance leases 370 356
Deferred tax liabilities 0 7
Long-term operating lease liabilities 160 146
Other long-term liabilities 42 40
Total long-term liabilities 572 549
Commitments and Contingencies (Note 10)
Equity    
Preferred stock, $0.01 par value; 10,000 shares authorized; 0 shares issued and outstanding as of June 30, 2024 and December 31, 2023 0 0
Common stock, $0.01 par value; 300,000 shares authorized; 117,607 and 117,026 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively 1 1
Additional paid-in capital 599 590
Retained earnings (Accumulated deficit) (16) 6
Accumulated other comprehensive loss (5) (3)
Total equity 579 594
Total liabilities and equity $ 1,813 $ 1,825
Common stock, shares outstanding (in shares) 117,607,000 117,026,000
Common stock, shares issued (in shares) 117,607,000 117,026,000
v3.24.2.u1
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Millions
Jun. 30, 2024
Dec. 31, 2023
Statement of Financial Position [Abstract]    
Accounts receivable, allowance $ 9 $ 12
Accumulated depreciation 319 293
Finite-lived intangible assets, accumulated amortization $ 124 $ 118
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, shares authorized (in shares) 10,000,000 10,000,000
Preferred stock, shares issued (in shares) 0 0
Preferred stock, shares outstanding (in shares) 0 0
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares) 300,000,000 300,000,000
Common stock, shares issued (in shares) 117,607,000 117,026,000
Common stock, shares outstanding (in shares) 117,607,000 117,026,000
v3.24.2.u1
Condensed Consolidated Statements of Operations - USD ($)
shares in Thousands, $ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Income Statement [Abstract]        
Revenue $ 930 $ 963 $ 1,843 $ 1,973
Cost of transportation and services (exclusive of depreciation and amortization) 700 723 1,399 1,482
Direct operating expense (exclusive of depreciation and amortization) 50 59 103 120
Sales, general and administrative expense 154 144 299 297
Depreciation and amortization expense 17 18 33 36
Transaction and integration costs 7 4 8 10
Restructuring costs 2 1 13 9
Operating income (loss) 0 14 (12) 19
Other expense 0 0 1 0
Interest expense, net 8 8 16 16
Income (loss) before income taxes (8) 6 (29) 3
Income tax provision (benefit) (1) 3 (7) 0
Net income (loss) $ (7) $ 3 $ (22) $ 3
Earnings (loss) per share data        
Earnings per share, basic (in dollars per share) $ (0.06) $ 0.03 $ (0.19) $ 0.03
Earnings per share, diluted (in dollars per share) $ (0.06) $ 0.03 $ (0.19) $ 0.03
Weighted-average common shares outstanding        
Basic weighted-average common shares outstanding (in shares) 117,579 116,894 117,398 116,748
Diluted weighted-average common shares outstanding (in shares) 117,579 119,457 117,398 119,414
v3.24.2.u1
Condensed Consolidated Statements of Comprehensive Income - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Statement of Comprehensive Income [Abstract]        
Net income (loss) $ (7) $ 3 $ (22) $ 3
Other comprehensive income (loss), net of tax        
Foreign currency translation, net of tax effect of $—, $—, $— and $— (2) 0 (2) 0
Other comprehensive income (loss) (2) 0 (2) 0
Comprehensive income (loss) $ (9) $ 3 $ (24) $ 3
v3.24.2.u1
Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Statement of Comprehensive Income [Abstract]        
Foreign currency translation adjustment, tax, portion attributable to parent $ 0 $ 0 $ 0 $ 0
v3.24.2.u1
Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Millions
 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Operating activities    
Net income (loss) $ (22) $ 3
Adjustments to reconcile net income (loss) to net cash from operating activities    
Depreciation and amortization expense 33 36
Stock compensation expense 11 11
Deferred tax expense (benefit) (9) 2
Other 2 1
Changes in assets and liabilities    
Accounts receivable 13 162
Other assets 1 (17)
Accounts payable (27) (73)
Accrued expenses and other liabilities 0 (59)
Net cash provided by operating activities 2 66
Investing activities    
Payment for purchases of property and equipment (22) (28)
Net cash used in investing activities (22) (28)
Financing activities    
Proceeds from borrowings on revolving credit facilities 119 0
Repayment of borrowings on revolving credit facilities (92) 0
Payment for tax withholdings related to vesting of stock compensation awards (3) (9)
Repurchase of common stock 0 (2)
Other (1) (1)
Net cash provided by (used in) financing activities 22 (13)
Effect of exchange rates on cash, cash equivalents and restricted cash 0 1
Net increase in cash, cash equivalents and restricted cash 2 26
Cash, cash equivalents, and restricted cash, beginning of period 5 98
Cash, cash equivalents, and restricted cash, end of period 7 124
Supplemental disclosure of cash flow information:    
Leased assets obtained in exchange for new operating lease liabilities 49 36
Cash paid for income taxes, net 2 21
Cash paid for interest, net 15 17
Repayment of debt and finance leases $ (1) $ (1)
v3.24.2.u1
Condensed Consolidated Statements of Changes in Equity - USD ($)
$ in Thousands
Total
Common Stock
Additional Paid-in Capital
Retained Earnings (Accumulated Deficit)
Accumulated Other Comprehensive Loss
Beginning balance (in shares) at Dec. 31, 2022   116,400,000      
Beginning balance at Dec. 31, 2022 $ 587,000 $ 1,000 $ 588,000 $ 2,000 $ (4,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Net income (loss) 3,000     3,000  
Other comprehensive loss 0        
Stock compensation expense $ 11,000   11,000    
Vesting of stock compensation awards (in shares) 654,000        
Vesting of stock compensation awards $ 0        
Tax withholdings related to vesting of stock compensation awards (10,000)   (10,000)    
Repurchase of common stock (in shares)   (100,000)      
Repurchase of common stock (2,000)   (2,000)    
Ending balance (in shares) at Jun. 30, 2023   116,954,000      
Ending balance at Jun. 30, 2023 589,000 $ 1,000 587,000 5,000 (4,000)
Beginning balance (in shares) at Mar. 31, 2023   116,853,000      
Beginning balance at Mar. 31, 2023 585,000 $ 1,000 586,000 2,000 (4,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Net income (loss) 3,000     3,000  
Other comprehensive loss 0        
Stock compensation expense $ 6,000   6,000    
Vesting of stock compensation awards (in shares) 201,000        
Vesting of stock compensation awards $ 0        
Tax withholdings related to vesting of stock compensation awards (3,000)   (3,000)    
Repurchase of common stock (in shares)   (100,000)      
Repurchase of common stock (2,000)   (2,000)    
Ending balance (in shares) at Jun. 30, 2023   116,954,000      
Ending balance at Jun. 30, 2023 $ 589,000 $ 1,000 587,000 5,000 (4,000)
Beginning balance (in shares) at Dec. 31, 2023 117,026,000 117,026,000      
Beginning balance at Dec. 31, 2023 $ 594,000 $ 1,000 590,000 6,000 (3,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Net income (loss) (22,000)     (22,000)  
Other comprehensive loss (2,000)       (2,000)
Stock compensation expense $ 11,000   11,000    
Vesting of stock compensation awards (in shares) 581,000        
Vesting of stock compensation awards $ 0        
Tax withholdings related to vesting of stock compensation awards $ (2,000)   (2,000)    
Ending balance (in shares) at Jun. 30, 2024 117,607,000 117,607,000      
Ending balance at Jun. 30, 2024 $ 579,000 $ 1,000 599,000 (16,000) (5,000)
Beginning balance (in shares) at Mar. 31, 2024   117,544,000      
Beginning balance at Mar. 31, 2024 582,000 $ 1,000 593,000 (9,000) (3,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Net income (loss) (7,000)     (7,000)  
Other comprehensive loss (2,000)       (2,000)
Stock compensation expense $ 6,000   6,000    
Vesting of stock compensation awards (in shares) 63,000        
Vesting of stock compensation awards $ 0        
Ending balance (in shares) at Jun. 30, 2024 117,607,000 117,607,000      
Ending balance at Jun. 30, 2024 $ 579,000 $ 1,000 $ 599,000 $ (16,000) $ (5,000)
v3.24.2.u1
Organization
 6 Months Ended
Jun. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization Organization
RXO, Inc. (“RXO”, the “Company” or “we”) is a brokered transportation platform defined by cutting-edge technology and an asset-light business model. The largest component is our core truck brokerage business. Our operations also include asset-light managed transportation and last mile services, which complement our truck brokerage business. We present our operations in the condensed consolidated financial statements as one reportable segment.
v3.24.2.u1
Basis of Presentation and Significant Accounting Policies
 6 Months Ended
Jun. 30, 2024
Accounting Policies [Abstract]  
Basis of Presentation and Significant Accounting Policies Basis of Presentation and Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the rules of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements have been prepared on a basis that is substantially consistent with the accounting principles applied in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”). The accompanying unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the 2023 Form 10-K.
The Company’s condensed consolidated financial statements include the accounts of RXO, Inc. and its majority-owned subsidiaries. All intercompany accounts and transactions have been eliminated. In management’s opinion, the condensed consolidated financial statements reflect all adjustments that are of a normal recurring nature and are necessary for a fair presentation of financial condition, results of operations and cash flows for the interim periods presented. Operating results for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.
Significant Accounting Policies
Our significant accounting policies are disclosed in Note 2 to the 2023 Form 10-K. There have been no material changes to the Company’s significant accounting policies as of June 30, 2024.
Accounting Pronouncements Issued but Not Yet Effective
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures.” The amendments in this update improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses. The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items and interim disclosures of a reportable segment’s profit or loss and assets. All disclosure requirements of the ASU are required for entities with a single reportable segment. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods for our fiscal years beginning after December 15, 2024, and should be applied on a retrospective basis to all periods presented. Early adoption is permitted. We are currently evaluating the impact of the new guidance.
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740) - Improvements to Income Tax Disclosure.” The ASU seeks to enhance income tax information primarily through changes in the rate reconciliation and income taxes paid information. The amendments are effective for annual periods beginning after December 15, 2024 on a prospective basis. Early adoption is permitted. We are currently evaluating the impact of the new guidance.
In March 2024, the SEC issued the final rules under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors. In April 2024, the SEC voluntarily stayed implementation of the final rules as a result of pending judicial review. These rules, if adopted, will require registrants to disclose certain climate-related information, including Scope 1 and Scope 2 greenhouse gas emissions and other climate-related topics, in registration statements and annual reports, when material. Disclosure requirements, absent the results of pending judicial review, will begin phasing in with the Company’s annual reporting for the year ending December 31, 2025. We are currently evaluating the impact the rules will have on our disclosures.
v3.24.2.u1
Acquisition
 6 Months Ended
Jun. 30, 2024
Business Combination and Asset Acquisition [Abstract]  
Acquisition Acquisition
On June 21, 2024, the Company, United Parcel Service of America, Inc. (“UPS”) and certain subsidiaries of UPS entered into a Purchase Agreement (the “Purchase Agreement”), pursuant to which, following the satisfaction or waiver of certain conditions, the Company will purchase (the “Coyote Acquisition”) UPS’ technology-driven, asset-light based truckload freight brokerage services business, as well as certain assets used to conduct haulage, dedicated transport and warehousing services in the United Kingdom for $1.025 billion in cash, subject to certain customary adjustments.
v3.24.2.u1
Revenue Recognition
 6 Months Ended
Jun. 30, 2024
Revenue from Contract with Customer [Abstract]  
Revenue Recognition Revenue Recognition
Disaggregation of Revenues
We disaggregate our revenue by geographic area, service offering and industry sector. The majority of our revenue, based on sales office location, is generated in the U.S. Approximately 8% and 7% of our revenues were generated outside the U.S. (primarily in Canada, Mexico and Asia) for the three months ended June 30, 2024 and 2023, respectively. Approximately 8% and 7% of our revenues were generated outside the U.S. (primarily in Canada, Mexico and Asia) for the six months ended June 30, 2024 and 2023, respectively.
Our revenue disaggregated by service offering is as follows:
Three Months Ended June 30,Six Months Ended June 30,
(In millions)2024202320242023
Truck brokerage$543 $557 $1,107 $1,157 
Last mile265 261 497 501 
Managed transportation156 176 308 373 
Eliminations(34)(31)(69)(58)
Total$930 $963 $1,843 $1,973 
Our revenue disaggregated by industry sector is as follows:
Three Months Ended June 30,Six Months Ended June 30,
(In millions)2024202320242023
Retail/e-commerce$366 $373 $713 $759 
Industrial/manufacturing184 193 377 374 
Automotive103 105 204 207 
Food and beverage96 107 199 212 
Logistics and transportation41 42 83 94 
Other140 143 267 327 
Total$930 $963 $1,843 $1,973 
Performance Obligations
Remaining performance obligations represent firm contracts for which services have not been performed and future revenue recognition is expected. As permitted in determining the remaining performance obligation, we omit obligations that: (i) have original expected durations of one year or less or (ii) contain variable consideration. As of June 30, 2024, the fixed consideration component of our remaining performance obligation was approximately $48 million, and we expect approximately 100% of that amount to be recognized over the next 3 years. We estimate remaining performance obligations at a point in time and actual amounts may differ from these estimates due to contract revisions or terminations.
v3.24.2.u1
Restructuring Charges
 6 Months Ended
Jun. 30, 2024
Restructuring and Related Activities [Abstract]  
Restructuring Charges Restructuring Charges
We engage in restructuring actions as part of our ongoing efforts to best use our resources and infrastructure. These actions generally include severance and facility-related costs, including impairment of operating lease assets, and are intended to improve our efficiency and profitability going forward.
The following is a rollforward of the Company’s restructuring liability, which is included in Accrued expenses in the Condensed Consolidated Balance Sheets:
Six Months Ended June 30, 2024
(In millions)Reserve Balance
as of
December 31, 2023		Charges IncurredPaymentsReserve Balance
as of
June 30, 2024
Severance$4 $9 $(9)$4 
Facilities2 3 (3)2 
Contract termination— 1 — 1 
Total $6 $13 $(12)$7 
We expect the majority of the cash outlays related to the remaining restructuring liability at June 30, 2024 to be complete within twelve months.
v3.24.2.u1
Debt
 6 Months Ended
Jun. 30, 2024
Debt Disclosure [Abstract]  
Debt Debt
The following table summarizes the principal balance and carrying value of our debt:
June 30, 2024December 31, 2023
(In millions)Principal BalanceCarrying ValuePrincipal BalanceCarrying Value
Revolver$18 $18 $5 $5 
7.50% Notes due 2027 (1)
355 348 355 347 
Finance leases, asset financing and short-term debt20 20 7 7 
Total debt and obligations under finance leases393 386 367 359 
Less: Short-term debt and current maturities of long-term debt16 16 3 3 
Total long-term debt and obligations under finance leases$377 $370 $364 $356 
(1)The carrying value of the 7.50% Notes due 2027 is presented net of unamortized debt issuance cost and discount of $7 million and $8 million as of June 30, 2024 and December 31, 2023, respectively.
Revolving Credit Facilities
On October 18, 2022, we entered into a five-year, $500 million unsecured multi-currency revolving credit facility (the “Revolver”), with $50 million available for the issuance of letters of credit. Loans under the Revolver bear interest at a fluctuating rate plus an applicable margin based on the Company’s credit ratings, with interest payable quarterly. The Company is required to pay a commitment fee on any unused commitment, based on pricing levels set forth in the agreement. The covenants in the Revolver are customary for financings of this type. The Revolver requires the Company to maintain a maximum consolidated leverage ratio not greater than 3.50:1.00 and minimum interest coverage ratio of not less than 3.00:1.00. At June 30, 2024, the Company was in compliance with the covenants of the Revolver. There were no letters of credit outstanding on the Revolver at June 30, 2024.
On November 2, 2023, the Company exercised a feature to increase the total commitments under the Revolver from $500 million to $600 million.
On April 11, 2024, the Company and lenders entered into an amendment to increase the consolidated leverage ratio financial covenant level applicable under the Revolver from the fiscal quarter ending June 30, 2024 through the fiscal quarter ending March 31, 2025 (the “Covenant Relief Period”), as follows: (i) to 4.25:1.00 for the fiscal quarters ending June 30, 2024 and September 30, 2024; (ii) to 4.00:1.00 for the fiscal quarter ending December 31, 2024; (iii) to 3.75:1.00 for the fiscal quarter ending March 31, 2025; and (iv) returns to 3.50:1.00 beginning with the fiscal quarter ending June 30, 2025. In addition, during the Covenant Relief Period, the Company and its subsidiaries are subject to restrictions with respect to paying dividends or other distributions on equity interests, share repurchases, and other restricted payments, as well as certain material acquisitions, in each case subject to certain exceptions. The Company can elect to terminate the Covenant Relief Period and the restrictions thereunder if the consolidated leverage ratio financial covenant as of any fiscal quarter end is not greater than 3.50:1.00.
We also have a non-U.S. revolving credit facility with a maximum commitment of approximately $16 million. This facility has a one-year term and we had $13 million outstanding as of June 30, 2024 classified as short-term debt.
Notes
On October 25, 2022, we completed an offering of $355 million in aggregate principal amount of unsecured notes (the “Notes” or the “7.50% Notes due 2027”). The Notes bear interest at a rate of 7.50% per annum payable semiannually in cash in arrears on May 15 and November 15 of each year, beginning May 15, 2023, and mature on November 15, 2027, unless earlier repurchased or redeemed, if applicable. The Notes were issued at an issue price of 98.962% of par. The effective interest rate on the Notes was 8.13% as of June 30, 2024.
We may redeem the Notes, in whole or in part, at any time on or after November 15, 2024 at a redemption price equal to (i) 103.750% of the principal amount to be redeemed if the redemption occurs during the 12-month period beginning on November 15, 2024, (ii) 101.875% of the principal amount to be redeemed if the redemption occurs during the 12-month period beginning on November 15, 2025 and (iii) 100% of the principal amount to be redeemed if the redemption occurs on or after November 15, 2026, in each case plus accrued and unpaid interest, if any, to, but excluding, the redemption date. At any time prior to November 15, 2024, we may also redeem up to 40% of the Notes with the net cash proceeds of certain equity offerings at a redemption price equal to 107.500% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. In addition, at any time prior to November 15, 2024, we may redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date plus an applicable “make-whole” premium.
The Notes are guaranteed by each of our direct and indirect wholly-owned domestic subsidiaries (other than certain excluded subsidiaries). The Notes and its guarantees are unsecured, senior indebtedness for us and our guarantors. The Notes contain covenants customary for debt securities of this nature. At June 30, 2024, the Company was in compliance with the covenants of the Notes.
v3.24.2.u1
Fair Value Measurements
 6 Months Ended
Jun. 30, 2024
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The levels of inputs used to measure fair value are:
•Level 1—Quoted prices for identical instruments in active markets;
•Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets; and
•Level 3—Valuations based on inputs that are unobservable, generally utilizing pricing models or other valuation techniques that reflect management’s judgment and estimates.
Assets and Liabilities
The Company bases its fair value estimates on market assumptions and available information. The carrying values of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and short-term debt and current maturities of long-term debt approximated their fair values as of June 30, 2024 and December 31, 2023, due to their short-term nature and/or being receivable or payable on demand.
Debt
The fair value of our debt and classification in the fair value hierarchy is as follows:
(In millions)LevelJune 30, 2024December 31, 2023
Revolver3$18 $5 
7.50% Notes due 2027
1364 366 
We valued Level 1 debt using quoted prices in active markets. We valued Level 3 debt using unobservable inputs which reflect the Company’s best estimate of what hypothetical market participants would use to determine a transaction price for the asset or liability at the reporting date.
v3.24.2.u1
Earnings per Share
 6 Months Ended
Jun. 30, 2024
Earnings Per Share [Abstract]  
Earnings per Share Earnings per Share
The computations of basic and diluted earnings per share are as follows:
Three Months Ended June 30,Six Months Ended June 30,
(Dollars in millions, shares in thousands, except per share data)2024202320242023
Net income (loss)$(7)$3 $(22)$3 
Basic weighted-average common shares117,579 116,894 117,398 116,748 
Dilutive effect of stock-based awards— 2,563 — 2,666 
Diluted weighted-average common shares (1)
117,579 119,457 117,398 119,414 
Basic earnings (loss) per share$(0.06)$0.03 $(0.19)$0.03 
Diluted earnings (loss) per share$(0.06)$0.03 $(0.19)$0.03 
Antidilutive shares excluded from diluted weighted-average common shares2,638 333 2,576 629 
(1)Amounts may not be additive due to rounding.
v3.24.2.u1
Commitments and Contingencies
 6 Months Ended
Jun. 30, 2024
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
We are involved, and will continue to be involved, in numerous proceedings arising out of the conduct of our business. These proceedings may include claims for property damage or personal injury incurred in connection with the transportation of freight, environmental liability, commercial disputes, and employment-related claims, including claims involving asserted breaches of employee restrictive covenants. These matters also include several class action and collective action cases involving claims that the contract carriers with which we contract for performance of delivery services, or their delivery workers, should be treated as employees, rather than independent contractors (“misclassification claims”) and may seek substantial monetary damages (including claims for unpaid wages, overtime, unreimbursed business expenses, deductions from wages, penalties and other items), injunctive relief, or both.
We establish accruals for specific legal proceedings when it is considered probable that a loss has been incurred and the amount of the loss can be reasonably estimated. If a loss is not both probable and reasonably estimable, or if an exposure to loss exists in excess of the amount accrued, we assess whether there is at least a reasonable possibility that a loss, or additional loss, may have been incurred. If there is a reasonable possibility that a loss, or additional loss, may have been incurred, we disclose the estimate of the possible loss or range of loss if it is material and an estimate can be made, or disclose that such an estimate cannot be made. The determination as to whether a loss can reasonably be considered to be possible or probable is based on our assessment, together with legal counsel, regarding the ultimate outcome of the matter.
We believe that we have adequately accrued for the potential impact of loss contingencies that are probable and reasonably estimable. We do not believe that the ultimate resolution of any matters to which we are presently a party will have a material adverse effect on our results of operations, cash flows or financial condition. However, the results of these matters cannot be predicted with certainty, and an unfavorable resolution of one or more of these matters could have a material adverse effect on our results of operations, cash flows or financial condition. Legal costs incurred related to these matters are expensed as incurred.
We carry liability and excess umbrella insurance policies that we deem sufficient to cover potential legal claims arising in the normal course of conducting our operations as a transportation company. The liability and excess umbrella insurance policies generally do not cover the misclassification claims described in this note. In the event we are required to satisfy a legal claim outside the scope of the coverage provided by insurance, our results of operations, cash flows or financial condition could be negatively impacted.
Our last mile subsidiary is involved in several class action and collective action cases involving misclassification claims. The misclassification claims related solely to our last mile business, which operated as a wholly owned subsidiary of XPO until the spin-off of RXO was completed.
Pursuant to the Separation and Distribution Agreement between XPO and RXO, the liabilities of XPO’s last mile subsidiary, including legal liabilities, if any, related to the misclassification claims, were spun-off as part of RXO as of November 1, 2022. Pursuant to the Separation and Distribution Agreement, RXO has agreed to indemnify XPO for certain matters relating to RXO, including indemnifying XPO from and against any liabilities, damages, costs, or expenses incurred by XPO arising out of or resulting from the misclassification claims.
In one of the misclassification claims, Muniz v. RXO Last Mile, Inc., we recently reached an agreement to settle the matter without admitting any liability. We have accrued the full amount of the settlement which still requires court approval. Despite this settlement, we continue to believe the other misclassification claims are without merit and we intend to defend the Company vigorously against these matters. We are unable at this time to determine the amount of the possible loss or range of loss, if any, that we may incur as a result of the other misclassification claims.
v3.24.2.u1
Stockholders' Equity
 6 Months Ended
Jun. 30, 2024
Equity [Abstract]  
Stockholders' Equity Stockholders’ Equity
On May 2, 2023, the Company’s Board of Directors authorized the repurchase of up to $125 million of the Company’s common stock (the “2023 Share Repurchase Program”). During 2023, the Company repurchased 100,000 shares of its common stock for $2 million at an average price of $20.53 per share, funded by available cash. There were no share repurchases under the 2023 Share Repurchase Program in the six months ended June 30, 2024. As of June 30, 2024, $123 million remained approved to be used for share repurchases under the 2023 Share Repurchase Program. The 2023 Share Repurchase Program does not have an expiration date and may be suspended or discontinued at any time at the discretion of the Company’s Board of Directors. We are not obligated to repurchase any specific number of shares or use a specific dollar amount of the approved and remaining $123 million.
v3.24.2.u1
Basis of Presentation and Significant Accounting Policies (Policies)
 6 Months Ended
Jun. 30, 2024
Accounting Policies [Abstract]  
Basis of Presentation
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the rules of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements have been prepared on a basis that is substantially consistent with the accounting principles applied in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”). The accompanying unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the 2023 Form 10-K.
The Company’s condensed consolidated financial statements include the accounts of RXO, Inc. and its majority-owned subsidiaries. All intercompany accounts and transactions have been eliminated. In management’s opinion, the condensed consolidated financial statements reflect all adjustments that are of a normal recurring nature and are necessary for a fair presentation of financial condition, results of operations and cash flows for the interim periods presented. Operating results for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.
Accounting Pronouncements Issued but Not Yet Effective
Accounting Pronouncements Issued but Not Yet Effective
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures.” The amendments in this update improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses. The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items and interim disclosures of a reportable segment’s profit or loss and assets. All disclosure requirements of the ASU are required for entities with a single reportable segment. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods for our fiscal years beginning after December 15, 2024, and should be applied on a retrospective basis to all periods presented. Early adoption is permitted. We are currently evaluating the impact of the new guidance.
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740) - Improvements to Income Tax Disclosure.” The ASU seeks to enhance income tax information primarily through changes in the rate reconciliation and income taxes paid information. The amendments are effective for annual periods beginning after December 15, 2024 on a prospective basis. Early adoption is permitted. We are currently evaluating the impact of the new guidance.
In March 2024, the SEC issued the final rules under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors. In April 2024, the SEC voluntarily stayed implementation of the final rules as a result of pending judicial review. These rules, if adopted, will require registrants to disclose certain climate-related information, including Scope 1 and Scope 2 greenhouse gas emissions and other climate-related topics, in registration statements and annual reports, when material. Disclosure requirements, absent the results of pending judicial review, will begin phasing in with the Company’s annual reporting for the year ending December 31, 2025. We are currently evaluating the impact the rules will have on our disclosures.
v3.24.2.u1
Revenue Recognition (Tables)
 6 Months Ended
Jun. 30, 2024
Revenue from Contract with Customer [Abstract]  
Disaggregation of Revenue
Our revenue disaggregated by service offering is as follows:
Three Months Ended June 30,Six Months Ended June 30,
(In millions)2024202320242023
Truck brokerage$543 $557 $1,107 $1,157 
Last mile265 261 497 501 
Managed transportation156 176 308 373 
Eliminations(34)(31)(69)(58)
Total$930 $963 $1,843 $1,973 
Our revenue disaggregated by industry sector is as follows:
Three Months Ended June 30,Six Months Ended June 30,
(In millions)2024202320242023
Retail/e-commerce$366 $373 $713 $759 
Industrial/manufacturing184 193 377 374 
Automotive103 105 204 207 
Food and beverage96 107 199 212 
Logistics and transportation41 42 83 94 
Other140 143 267 327 
Total$930 $963 $1,843 $1,973 
v3.24.2.u1
Restructuring Charges (Tables)
 6 Months Ended
Jun. 30, 2024
Restructuring and Related Activities [Abstract]  
Schedule of Restructuring Reserve by Type of Cost
The following is a rollforward of the Company’s restructuring liability, which is included in Accrued expenses in the Condensed Consolidated Balance Sheets:
Six Months Ended June 30, 2024
(In millions)Reserve Balance
as of
December 31, 2023		Charges IncurredPaymentsReserve Balance
as of
June 30, 2024
Severance$4 $9 $(9)$4 
Facilities2 3 (3)2 
Contract termination— 1 — 1 
Total $6 $13 $(12)$7 
v3.24.2.u1
Debt (Tables)
 6 Months Ended
Jun. 30, 2024
Debt Disclosure [Abstract]  
Schedule of Carrying Values and Estimated Fair Values of Debt Instruments
The following table summarizes the principal balance and carrying value of our debt:
June 30, 2024December 31, 2023
(In millions)Principal BalanceCarrying ValuePrincipal BalanceCarrying Value
Revolver$18 $18 $5 $5 
7.50% Notes due 2027 (1)
355 348 355 347 
Finance leases, asset financing and short-term debt20 20 7 7 
Total debt and obligations under finance leases393 386 367 359 
Less: Short-term debt and current maturities of long-term debt16 16 3 3 
Total long-term debt and obligations under finance leases$377 $370 $364 $356 
(1)The carrying value of the 7.50% Notes due 2027 is presented net of unamortized debt issuance cost and discount of $7 million and $8 million as of June 30, 2024 and December 31, 2023, respectively.
The fair value of our debt and classification in the fair value hierarchy is as follows:
(In millions)LevelJune 30, 2024December 31, 2023
Revolver3$18 $5 
7.50% Notes due 2027
1364 366 
v3.24.2.u1
Fair Value Measurements (Tables)
 6 Months Ended
Jun. 30, 2024
Fair Value Disclosures [Abstract]  
Schedule of Carrying Values and Estimated Fair Values of Debt Instruments
The following table summarizes the principal balance and carrying value of our debt:
June 30, 2024December 31, 2023
(In millions)Principal BalanceCarrying ValuePrincipal BalanceCarrying Value
Revolver$18 $18 $5 $5 
7.50% Notes due 2027 (1)
355 348 355 347 
Finance leases, asset financing and short-term debt20 20 7 7 
Total debt and obligations under finance leases393 386 367 359 
Less: Short-term debt and current maturities of long-term debt16 16 3 3 
Total long-term debt and obligations under finance leases$377 $370 $364 $356 
(1)The carrying value of the 7.50% Notes due 2027 is presented net of unamortized debt issuance cost and discount of $7 million and $8 million as of June 30, 2024 and December 31, 2023, respectively.
The fair value of our debt and classification in the fair value hierarchy is as follows:
(In millions)LevelJune 30, 2024December 31, 2023
Revolver3$18 $5 
7.50% Notes due 2027
1364 366 
v3.24.2.u1
Earnings Per Share (Tables)
 6 Months Ended
Jun. 30, 2024
Earnings Per Share [Abstract]  
Schedule of Earnings Per Share, Basic and Diluted
The computations of basic and diluted earnings per share are as follows:
Three Months Ended June 30,Six Months Ended June 30,
(Dollars in millions, shares in thousands, except per share data)2024202320242023
Net income (loss)$(7)$3 $(22)$3 
Basic weighted-average common shares117,579 116,894 117,398 116,748 
Dilutive effect of stock-based awards— 2,563 — 2,666 
Diluted weighted-average common shares (1)
117,579 119,457 117,398 119,414 
Basic earnings (loss) per share$(0.06)$0.03 $(0.19)$0.03 
Diluted earnings (loss) per share$(0.06)$0.03 $(0.19)$0.03 
Antidilutive shares excluded from diluted weighted-average common shares2,638 333 2,576 629 
(1)Amounts may not be additive due to rounding.
v3.24.2.u1
Organization (Details)
 6 Months Ended
Jun. 30, 2024
reportingSegment
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Number of reportable segments 1
v3.24.2.u1
Acquisition (Details)
$ in Millions
Jun. 21, 2024
USD ($)
UPS Truckload Freight Brokerage Services  
Business Acquisition [Line Items]  
Payments to acquire businesses, gross $ 1,025
v3.24.2.u1
Revenue Recognition - Narrative (Details) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Disaggregation of Revenue [Line Items]        
Amount of remaining performance obligation $ 48   $ 48  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-07-01        
Disaggregation of Revenue [Line Items]        
Percentage of remaining performance obligation 100.00%   100.00%  
Remaining performance obligation period 3 years   3 years  
Geographic Concentration Risk | Revenue from Contract with Customer Benchmark | Non-US        
Disaggregation of Revenue [Line Items]        
Percentage of revenue generated outside the U.S. 8.00% 7.00% 8.00% 7.00%
v3.24.2.u1
Revenue Recognition - Disaggregation of Revenue by Service (Details) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Disaggregation of Revenue [Line Items]        
Revenue $ 930 $ 963 $ 1,843 $ 1,973
Truck brokerage        
Disaggregation of Revenue [Line Items]        
Revenue 543 557 1,107 1,157
Last mile        
Disaggregation of Revenue [Line Items]        
Revenue 265 261 497 501
Managed transportation        
Disaggregation of Revenue [Line Items]        
Revenue 156 176 308 373
Eliminations        
Disaggregation of Revenue [Line Items]        
Revenue $ (34) $ (31) $ (69) $ (58)
v3.24.2.u1
Revenue Recognition - Disaggregation of Revenue by Industry Sector (Details) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Disaggregation of Revenue [Line Items]        
Revenue $ 930 $ 963 $ 1,843 $ 1,973
Retail/e-commerce        
Disaggregation of Revenue [Line Items]        
Revenue 366 373 713 759
Industrial/manufacturing        
Disaggregation of Revenue [Line Items]        
Revenue 184 193 377 374
Food and beverage        
Disaggregation of Revenue [Line Items]        
Revenue 96 107 199 212
Automotive        
Disaggregation of Revenue [Line Items]        
Revenue 103 105 204 207
Logistics and transportation        
Disaggregation of Revenue [Line Items]        
Revenue 41 42 83 94
Other        
Disaggregation of Revenue [Line Items]        
Revenue $ 140 $ 143 $ 267 $ 327
v3.24.2.u1
Restructuring Charges - Schedule of Restructuring Activity (Details)
$ in Millions
 6 Months Ended
Jun. 30, 2024
USD ($)
Restructuring Reserve [Roll Forward]  
Restructuring reserve, beginning balance $ 6
Charges Incurred 13
Payments (12)
Restructuring reserve, ending balance 7
Severance  
Restructuring Reserve [Roll Forward]  
Restructuring reserve, beginning balance 4
Charges Incurred 9
Payments (9)
Restructuring reserve, ending balance 4
Facilities  
Restructuring Reserve [Roll Forward]  
Restructuring reserve, beginning balance 2
Charges Incurred 3
Payments (3)
Restructuring reserve, ending balance 2
Contract termination  
Restructuring Reserve [Roll Forward]  
Restructuring reserve, beginning balance 0
Charges Incurred 1
Payments 0
Restructuring reserve, ending balance $ 1
v3.24.2.u1
Debt - Schedule of Carrying Values of Debt (Details) - USD ($)
$ in Millions
Jun. 30, 2024
Dec. 31, 2023
Debt Instrument [Line Items]    
Debt instrument, face amount $ 393 $ 367
Total debt and obligations under finance leases, principal balance 386 359
Short-term debt and current maturities of long-term debt 16 3
Total long-term debt and obligations under finance leases - principal balance 377 364
Long-term debt and obligations under finance leases 370 356
Unamortized discount (premium) and debt issuance costs, net 7 8
Revolver    
Debt Instrument [Line Items]    
Debt instrument, face amount 18 5
Total debt and obligations under finance leases, principal balance 18 5
7.50% Notes due 2027    
Debt Instrument [Line Items]    
Debt instrument, face amount 355 355
Total debt and obligations under finance leases, principal balance 348 347
Finance leases, asset financing and other    
Debt Instrument [Line Items]    
Debt instrument, face amount 20 7
Total debt and obligations under finance leases, principal balance $ 20 $ 7
v3.24.2.u1
Debt - Narrative (Details)
 1 Months Ended 6 Months Ended
Oct. 18, 2022
USD ($)
Oct. 31, 2022
Jun. 30, 2024
USD ($)
Jun. 30, 2025
Dec. 31, 2023
USD ($)
Nov. 02, 2023
USD ($)
Oct. 25, 2022
USD ($)
Debt Instrument [Line Items]              
Debt instrument, face amount     $ 393,000,000   $ 367,000,000    
Line of Credit | Revolving Credit Facility | Non-US              
Debt Instrument [Line Items]              
Debt instrument, term     1 year        
Line of credit facility, maximum borrowing capacity     $ 16,000,000        
Remaining borrowing capacity     13,000,000        
Revolver              
Debt Instrument [Line Items]              
Debt instrument, face amount     $ 18,000,000   5,000,000    
Revolver | Line of Credit | Revolving Credit Facility              
Debt Instrument [Line Items]              
Debt instrument, term 5 years            
Line of credit facility, maximum borrowing capacity $ 500,000,000         $ 600,000,000  
Covenant, leverage ratio, maximum     3.50        
Covenant, interest coverage ratio, minimum     3.00        
Letters of credit outstanding, amount     $ 0        
Revolver | Line of Credit | Revolving Credit Facility | Forecast              
Debt Instrument [Line Items]              
Covenant, leverage ratio, maximum       3.50      
Revolver | Line of Credit | Revolving Credit Facility | Fiscal quarters ending June 30, 2024 and September 30, 2024              
Debt Instrument [Line Items]              
Covenant, leverage ratio, maximum     4.25        
Revolver | Line of Credit | Revolving Credit Facility | Fiscal quarter ending December 31, 2024              
Debt Instrument [Line Items]              
Covenant, leverage ratio, maximum     4.00        
Revolver | Line of Credit | Revolving Credit Facility | Fiscal quarter ending March 31, 2025              
Debt Instrument [Line Items]              
Covenant, leverage ratio, maximum     3.75        
Revolver | Line of Credit | Letter of Credit              
Debt Instrument [Line Items]              
Line of credit facility, maximum borrowing capacity $ 50,000,000            
7.50% Notes due 2027              
Debt Instrument [Line Items]              
Debt instrument, face amount     $ 355,000,000   $ 355,000,000    
7.50% Notes due 2027 | Debt Redemption, Scenario i              
Debt Instrument [Line Items]              
Debt instrument, redemption price, percentage     103.75%        
Debt instrument, redemption period     12 months        
7.50% Notes due 2027 | Debt Redemption, Scenario ii              
Debt Instrument [Line Items]              
Debt instrument, redemption price, percentage     101.875%        
Debt instrument, redemption period     12 months        
7.50% Notes due 2027 | Debt Redemption, Scenario iii              
Debt Instrument [Line Items]              
Debt instrument, redemption price, percentage     100.00%        
7.50% Notes due 2027 | Debt Redemption, Prior to November 15, 2024              
Debt Instrument [Line Items]              
Debt instrument, redemption price, percentage     107.50%        
Debt instrument, percentage of principal redeemed     40.00%        
7.50% Notes due 2027 | Debt Redemption, Entire Note, Prior to November 15, 2024              
Debt Instrument [Line Items]              
Debt instrument, redemption price, percentage     100.00%        
7.50% Notes due 2027 | Senior Notes              
Debt Instrument [Line Items]              
Debt instrument, face amount             $ 355,000,000
Debt instrument, interest rate, effective percentage     8.13%        
Debt instrument, interest rate, stated percentage             7.50%
Debt instrument, issuance discount, percentage   98.962%          
v3.24.2.u1
Fair Value Measurements (Details) - USD ($)
$ in Millions
Jun. 30, 2024
Dec. 31, 2023
Revolver | Fair Value, Inputs, Level 3    
Debt Instrument [Line Items]    
Debt instrument, fair value $ 18 $ 5
7.50% Notes due 2027 | Fair Value, Inputs, Level 1    
Debt Instrument [Line Items]    
Debt instrument, fair value $ 364 $ 366
v3.24.2.u1
Earnings Per Share - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($)
$ / shares in Units, $ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Earnings Per Share [Abstract]        
Net income, basic $ (7) $ 3 $ (22) $ 3
Net income, diluted $ (7) $ 3 $ (22) $ 3
Basic weighted-average common shares (in shares) 117,579,000 116,894,000 117,398,000 116,748,000
Dilutive effect of stock-based awards (in shares) 0 2,563,000 0 2,666,000
Diluted weighted-average common shares (in shares) 117,579,000 119,457,000 117,398,000 119,414,000
Basic earnings per share (in dollars per share) $ (0.06) $ 0.03 $ (0.19) $ 0.03
Diluted earnings per share (in dollars per share) $ (0.06) $ 0.03 $ (0.19) $ 0.03
Antidilutive securities excluded from computation of earnings per share (in shares) 2,638 333 2,576 629
v3.24.2.u1
Stockholders' Equity (Details) - USD ($)
$ / shares in Units, $ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2023
May 02, 2023
Stockholders' Equity [Line Items]        
Repurchase of common stock   $ 2 $ 2  
2023 Share Repurchase Program        
Stockholders' Equity [Line Items]        
Stock repurchase program, authorized amount       $ 125
Repurchase of common stock (in shares) 100,000      
Repurchase of common stock $ 2      
Stock repurchased and retired during period (in dollars per share) $ 20.53      
Stock repurchase program, remaining authorized amount $ 123