What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2024-02-13 compared with 2023-02-24 · 23 added, 25 removed, 223 unchanged (18% of the section changed)

Company Overview

is a high-performing brokered transportation platform defined by cutting-edge technology and a nimble, asset-light business model, with the largest component being our core truck brokerage business.

Based on 2021 revenues, we are the fourth largest broker of full truckload freight transportation in the United States, and have approximately 4% share of the entire $88 billion brokered truckload industry.

Our truck brokerage business has a variable cost structure with robust free cash flow conversion and a long track record of generating a high return on invested capital.

(“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 three asset-light, brokered transportation services, all of which complement our truck brokerage business:

managed transportation, last mile and freight forwarding.

Our truck brokerage business has a history of generating robust free cash flow conversion and a high return on invested capital.

Shippers create demand for our service, and we place their freight with qualified independent carriers using our technology.

We price our service on either a contract or a spot basis.

Notable factors driving growth in our business include our ability to access massive truckload capacity for shippers through our carrier relationships;

Notable factors driving volume growth in our business include our ability to access massive truckload capacity for shippers through our carrier relationships;

our proprietary, cutting-edge technology;

our strong management expertise;

and favorable industry tailwinds.

and favorable long-term industry tailwinds.

As of December 31, 2023, we had approximately 115,000 carriers in our North American truck brokerage network, and access to more than 1.4 million trucks.

1 unchanged sentence

This proprietary platform is a major differentiator for our truck brokerage business, and together with our pricing technology, we believe it can unlock incremental profitable growth well beyond our current levels.

Our other complementary services for managed transportation, last mile and freight forwarding also utilize our digital brokerage technology.

Our complementary services for managed transportation, last mile and freight forwarding also utilize our digital brokerage technology.

Our managed transportation service provides asset-light solutions for shippers who outsource their freight transportation to gain reliability, visibility and cost savings.

2 unchanged sentences

Our control tower solution leverages the expertise of a dedicated team focused on continuous improvement, and digital, door-to-door visibility into order status and freight in transit.

In addition, we offer technology-enabled managed expedite services that automate transportation procurement for time-critical freight moved by independent road and air charter carriers.

In addition, we offer technology-enabled managed expedite services that automate transportation procurement for time-critical freight moved by road and air charter carriers.

Our last mile offering is an asset-light service that facilitates consumer deliveries performed by highly qualified third-party contractors.

7 unchanged sentences

The Separation was completed under a Separation and Distribution Agreement and various other agreements that govern aspects of the Company’s relationship with XPO, including, but not limited to, a Tax Matters Agreement (“TMA”), an Employee Matters Agreement (“EMA”), a Transition Services Agreement (“TSA”) and an Intellectual Property License Agreement (“IPLA”).

For additional information regarding the agreements executed in connection with the Separation see Note 3 — The Separation to our consolidated financial statements.

Relationship-Based Operating Structure

7 unchanged sentences

We conduct our truck brokerage operations by striving to best utilize our resources of people, technology and data.

Our sales representatives communicate with customers about truckload freight that needs to be shipped, and we locate trucks with available capacity using our RXO Connect technology platform.

Our sales representatives communicate with customers about freight that needs to be shipped, and we locate trucks with available capacity using our RXO Connect™ technology platform.

In addition, our technology interfaces give customers the ability to post their freight loads and tap into truck capacity on our platform.

2 unchanged sentences

Our brokerage platform synergizes these operating strengths within a single digital freight marketplace.

Approximately 87% of our truck brokerage transactions have a digital profile — and, as that percentage continues to grow, we are able to process more volume per head over time.

In the fourth quarter of 2023, approximately 97% of our truck brokerage transactions were created or covered digitally — and, as that percentage continues to grow, we are able to process more volume per head over time.

Drivers of Value Creation

1 unchanged sentence

• Critical Scale in an Expanding Industry with Low Penetration :

We are the fourth largest broker of full truckload freight transportation in the United States, with a carrier pool that gives us access to vast truck capacity to serve high shipper demand for transportation.

We are one of the largest brokers of full truckload freight transportation in the United States, with a carrier pool that gives us access to vast truck capacity to serve high shipper demand for transportation.

We are also well established as a truckload broker of choice across diversified industry sectors, with a notable presence in the e-commerce and retail sectors.

Despite our scale, we have just 4% of the brokered truckload industry revenue, which includes full truckload and LTL transportation provided direct to shippers and via managed transportation providers.

We expect to benefit from both overall industry growth in demand for truckload transportation, and a long runway for increased broker penetration of for-hire trucking.

23 unchanged sentences

Overview of Our Digital Brokerage Platform

Our self-learning RXO Connect™ digital brokerage platform (known as XPO Connect® prior to the completion of the Separation) gives us a scalable framework to continually enhance our service, capture share and reduce costs.

This fully automated, cloud-based platform encompasses Freight Optimizer, as well as our mobile app, API integrations, self-service dashboards and real-time functionality for transacting and tracking freight shipments.

Our self-learning RXO Connect™ digital brokerage platform gives us a scalable framework to continually enhance our service, capture share and reduce costs.

This fully automated, cloud-based platform encompasses Freight Optimizer, as well as our mobile app, application programming interface (“API”) integrations, self-service dashboards and real-time functionality for transacting and tracking freight shipments.

The technology gives shippers access to our growing transportation network and our valuable market data, and it gives independent truck drivers the ability to secure loads through our mobile app.

As of December 31, 2022, we had more than 920,000 cumulative truck driver downloads of the app.

Importantly, our digital brokerage platform creates ongoing value for RXO in four key areas:

4 unchanged sentences

Customers and Markets

RXO provides services to approximately 10,000 customers ranging in size from small businesses to Fortune 100 companies and sector leaders.

RXO provides services to customers ranging in size from small businesses to Fortune 100 companies and sector leaders.

The diversification of our customer base minimizes concentration risk:

7 unchanged sentences

Our competitors include C.H.

Robinson, Convoy, Coyote, Echo, Expeditors, Forward Air, Flexport, J.B.

Robinson, Coyote, Echo, Expeditors, Forward Air, Flexport, J.B.

Hunt, Landstar System, Total Quality Logistics, Transfix and Uber Freight.

64 unchanged sentences

We generally transport only hazardous materials rated as low-to-medium-risk, and only a small percentage of our total loads contain hazardous materials.

We believe that our operations are in substantial compliance with current laws and regulations, and we do not know of any existing environmental condition that reasonably would be expected to have a material adverse effect on our business or operating results.

We believe that our operations are in compliance with current laws and regulations, and we do not know of any existing environmental condition that reasonably would be expected to have a material adverse effect on our business or operating results.

Risk Management and Insurance

11 unchanged sentences

Of these employees, 45% were in hourly roles and 55% were in salaried positions.

None of our employees were covered by collective bargaining agreements.

Approximately 38% of our employees are female.

14 unchanged sentences

We value individuality and understand that a diversity of talents, identities, backgrounds and experiences is key to driving innovation and growth.

We mandate fair treatment and equitable opportunities for all individuals, and these cultural attributes allow us to be a more vital organization and a better partner to all RXO stakeholders.

Our Talent Engagement

13 unchanged sentences

It is RXO’s policy and practice to promote safety and health awareness and training throughout the Company, monitor compliance with all applicable laws and regulations, document and maintain a comprehensive, preventative safety and management program, and routinely conduct risk assessments and safety audits.

We continue to be diligent through the COVID pandemic.

Several safety protocols have remained in place, and we continue to offer fully paid pandemic sick leave.

RXO has high standards of health and safety for our employees and a desire to continuously assess, refine and implement improvements to policies and procedures.

3 unchanged sentences

Name Age Position

Drew Wilkerson 39 Chief Executive Officer

James Harris 60 Chief Financial Officer

Jeff Firestone 52 Chief Legal Officer

Drew Wilkerson 40

Chief Executive Officer

James Harris 61

Chief Financial Officer

Jeff Firestone 53

Chief Legal Officer

Drew Wilkerson is a transportation industry veteran with 17 years of experience in brokerage operations.

28 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business