Volume grew by 10% year-over-year at RXO’s brokerage business in the second quarter, CEO Drew Wilkerson said. (RXO)
Lower freight rates, a moderation in brokerage gross margin and the cost of operating as a stand-alone public company hurt profits at RXO Inc. in the second quarter of 2023.
Asset-light transportation provider RXO reported second-quarter 2023 net income of $3 million Aug. 2, compared with net income of $44 million in the second quarter of 2022. It posted second-quarter diluted earnings per share of 3 cents, compared with 38 cents in the year-ago quarter.
The company reported revenue of $963 billion for the second quarter, compared with $1.226 billion in the year earlier quarter. Analysts had expected revenue of $1.01 billion for the quarter.
Charlotte, N.C.-based RXO was spun out from XPO Logistics Inc. in November 2022. RXO ranks No. 18 on the Transport Topics Top 100 list of the largest logistics companies in North America.
Wilkerson
“RXO executed well in a soft freight market,” CEO Drew Wilkerson said in a statement accompanying the earnings. “We set several brokerage volume records in the quarter, including total volume, quarterly loads per day and monthly loads per day. Companywide and brokerage gross margin remained strong at 18.6% and 15.4%, respectively.”
During the quarter, however, brokerage gross margin in April was 16%, it fell to 15% in May and again to 14% in June, the company said.
The company’s truck brokerage operations posted revenue of $557 million in the most recent three-month period, compared with $755 million in the year-ago quarter.
Volume grew by 10% year-over-year at RXO’s brokerage business in the second quarter, Wilkerson said during the company’s analyst earnings call, without providing any further detail.
RXO has announced its 2Q 2023 results, including double-digit brokerage volume growth. #GrowGrowRXO https://t.co/5m27MkG6qk
— RXO (@rxoinc) August 2, 2023
Contractual volume grew 19% year-over-year in the most recent three months, and contractual business now represents 79% of the company’s brokerage volume, he said.
Retail and e-commerce volumes turned around, increasing by “low single digits” compared with the second quarter of 2022, having fallen by a similar amount in the first three months of 2023, Wilkerson said, adding that the most recent quarter saw the segment’s first year-over-year increase since the third quarter of 2022.
Customer inventories in the retail and e-commerce sector “are in a much better position than they have been in a long time,” said Wilkerson, adding that strength was also seen in the home furnishings, building and technology sectors.
RXO’s brokerage operation has its strongest sales pipeline since before the COVID-19 pandemic began, the company said.
The company’s last-mile segment reported revenue of $261 million in the three months that ended June 30, compared with $274 million a year earlier. Its managed transportation operations turned in revenue of $112 million in the quarter, down from $133 million in the year-ago period.
