RXO, Inc. Chicago Industrials Summit

Let us do it. Appreciate you having me. Thanks for having me here today.

Sure. Maybe just taking a step back in terms of how the year has progressed and I think speaks to the momentum that the company has been seeing. We started off the year, Q1 was about $6 million of adjusted EBITDA, and that has ramped significantly throughout the year to $40 million in Q2. At the midpoint of our outlook for Q3, another $40 million, despite some seasonal softness from our last mile business with the brokerage business more than offsetting that weakness. I think that speaks to the fact we talked about late last year, our brokerage late-stage sales pipeline was up more than 50% year-over-year, really entering in 2026 with tremendous amount of momentum. We have capitalized on that momentum.

When you look at our truckload brokerage volume in the business, we talked about our expectation of resuming outperformance versus the broader market as early as the middle of the year. We exceeded that goal, and we started resuming outperformance in the month of April. As you look at how the year has progressed, we ended up growing truckload volume by 2% year-over-year in Q2, 500 basis points above the market. We talked about an expectation for our truckload volume growth rate to accelerate into Q3, up about low to mid-single digits year-over-year in a market that still remains down. Cass rate index has been negative for every month on a year-on-year basis since January 2023.

Really when you think about just the improved brokerage performance at RXO, it's not only about volume, it's about profitable growth, which is the investment basis of the company. We've had an increase in gross profit per load in Q2, about 2% year-over-year, despite the significant tightening in the market. In fact, on a sequential basis, it was up about 11% on truckload gross profit per load, which was the fastest growth rate in four years. That's growing again into Q3 because we continue to execute on the spot opportunities. Maybe it's sort of, I know I've been outlining a lot of how the year's progressed, but maybe to close that and we can follow up because I know I've said a lot. I think that's a good place to end in terms of the spot opportunities that the team is capitalizing on.

Spot is now at about 50% of the mix in the month of July. We talked about on our earnings call last week, that was up in Q2. 1,500 basis points year-over-year continues to increase because RXO is proving to be the broker of choice for spots, projects, and mini bids at really accretive margins, and you're seeing that flow through the P&L.

Yeah. We don't look at the spot and contract business within the brokerage business in silos. We look at it holistically, and there's a strong interplay between the two businesses. You don't get the spot volume without the contract volume. You have to honor your contract freight if you want to capitalize on the spots. That's why we talked about on our earnings call last week, our tender rejections being better than industry. We're servicing that customer freight. When you're in an environment with double-digit tender rejections, right now, I think it's around 13%, 14%, went as high as, call it 17%, 18% in the month of June. That's a market that's conducive to spot opportunities, even though they're soft demand.

I think that's a really important point because even though aggregate demand still remains pretty soft, there generally is no housing market right now, which I don't think is going to be a surprise to many people. But despite that, because so much capacity has come out and that capacity is structural in nature in terms of the removal of that based on recent enforcement actions from the government, you're now at a point where there's been capacity attrition in excess of that rate of demand. So you're seeing a spot market that's developed, and it's pretty broad-based in nature across many different verticals, and RXO's capitalizing on that.

I think then the goal is you win that spot volume, and then eventually, as you think about converting that spot volume into longer-term contracts because you have the relationship, and you put something in place when you're dealing with large Fortune 100, Fortune 500 shippers, they want that predictability of the contract market. So we're able to go ahead and put that in at a fair margin and then capture a larger percentage of the volume on the contract market.

So it's going to be a function of where the market is, and I think that's the underlying premise, where ultimately if the market tightens from here, we're going to capitalize on the spot opportunities. If the market loosens and there's an opportunity to put some of that spot back into longer-term contracts at healthy margin, we're going to do that as well. So it really is going to be a function of the environment. There's no optimal percent contract versus spot mix. Over the long term, it really is going to be a function of where you are at any given point in the cycle. When markets are softer, you're going to want to lean into a larger contractual book of business.

When markets are tighter like they are right now, you want to make sure that you're capitalizing on those spots, because the spot opportunities can be significantly accretive relative to gross profit per load, and helps offset the rise and increase of cost of purchased transportation that impacts the contract book of business.