What changed in this filing

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Item 1. Financial Statements

2024-08-07 compared with 2024-05-07 · 66 added, 48 removed, 267 unchanged (30% of the section changed)

1 unchanged sentence

Condensed Consolidated Balance Sheets

March 31, December 31,

June 30, December 31,

(Dollars in millions, shares in thousands, except per share amounts) 2024 2023

22 unchanged sentences

Long-term debt and obligations under finance leases 370 356

Deferred tax liability 1 7

Deferred tax liabilities — 7

Long-term operating lease liabilities 160 146

4 unchanged sentences

10,000 shares authorized;

0 shares issued and outstanding as of March 31, 2024 and December 31, 2023

0 shares issued and outstanding as of June 30, 2024 and December 31, 2023

Common stock, $ 0.01 par value;

300,000 shares authorized;

117,544 and 117,026 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

117,607 and 117,026 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 599 590

5 unchanged sentences

Condensed Consolidated Statements of Operations

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(Dollars in millions, shares in thousands, except per share amounts) 2024 2023 2024 2023

9 unchanged sentences

Interest expense, net 8 8 16 16

Loss before income taxes $ ( 21 ) $ ( 3 )

Income tax benefit ( 6 ) ( 3 )

Income (loss) before income taxes $ ( 8 ) $ 6 $ ( 29 ) $ 3

Income tax provision (benefit) ( 1 ) 3 ( 7 ) —

Net income (loss) $ ( 7 ) $ 3 $ ( 22 ) $ 3

7 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income (Loss)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(In millions) 2024 2023 2024 2023

2 unchanged sentences

Foreign currency translation, net of tax effect of $ — , $ — , $ — and $ —

$ ( 2 ) $ — $ ( 2 ) $ —

Other comprehensive income (loss) ( 2 ) — ( 2 ) —

2 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Three Months Ended March 31,

Six Months Ended June 30,

(In millions) 2024 2023

4 unchanged sentences

Stock compensation expense 11 11

Deferred tax benefit ( 7 ) —

Deferred tax expense (benefit) ( 9 ) 2

Changes in assets and liabilities

11 unchanged sentences

Payment for tax withholdings related to vesting of stock compensation awards ( 3 ) ( 9 )

Repurchase of common stock — ( 2 )

Repayment of debt and finance leases ( 1 ) ( 1 )

Other ( 1 ) ( 1 )

11 unchanged sentences

(Dollars in millions, shares in thousands) Shares Amount Additional Paid-in Capital Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Loss Total Equity

Balance as of March 31, 2024 117,544 $ 1 $ 593 $ ( 9 ) $ ( 3 ) $ 582

Net loss — — — ( 7 ) — ( 7 )

Other comprehensive loss — — — — ( 2 ) ( 2 )

Stock compensation expense — — 6 — — 6

Vesting of stock compensation awards 63 — — — — —

Balance as of June 30, 2024 117,607 $ 1 $ 599 $ ( 16 ) $ ( 5 ) $ 579

(Dollars in millions, shares in thousands) Shares Amount Additional Paid-in Capital Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Loss Total Equity

Balance as of December 31, 2023 117,026 $ 1 $ 590 $ 6 $ ( 3 ) $ 594

Net loss — — — ( 22 ) — ( 22 )

Other comprehensive income — — — — — —

Other comprehensive loss — — — — ( 2 ) ( 2 )

Stock compensation expense — — 11 — — 11

1 unchanged sentence

Tax withholdings related to vesting of stock compensation awards — — ( 2 ) — — ( 2 )

Balance as of June 30, 2024 117,607 $ 1 $ 599 $ ( 16 ) $ ( 5 ) $ 579

(Dollars in millions, shares in thousands) Shares Amount Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Equity

Balance as of March 31, 2023 116,853 $ 1 $ 586 $ 2 $ ( 4 ) $ 585

(Dollars in millions, shares in thousands) Shares Amount Additional Paid-in Capital Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Loss Total Equity

Net income — — — 3 — 3

Stock compensation expense — — 6 — — 6

Vesting of stock compensation awards 201 — — — — —

Tax withholdings related to vesting of stock compensation awards — — ( 3 ) — — ( 3 )

Repurchase of common stock ( 100 ) — ( 2 ) — — ( 2 )

Balance as of June 30, 2023 116,954 $ 1 $ 587 $ 5 $ ( 4 ) $ 589

(Dollars in millions, shares in thousands) Shares Amount Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Equity

Balance as of December 31, 2022 116,400 $ 1 $ 588 $ 2 $ ( 4 ) $ 587

Net income — — — 3 — 3

Other comprehensive income — — — — — —

Stock compensation expense — — 11 — — 11

1 unchanged sentence

Tax withholdings related to vesting of stock compensation awards — — ( 10 ) — — ( 10 )

Balance as of March 31, 2023 116,853 $ 1 $ 586 $ 2 $ ( 4 ) $ 585

Repurchase of common stock ( 100 ) — ( 2 ) — — ( 2 )

Balance as of June 30, 2023 116,954 $ 1 $ 587 $ 5 $ ( 4 ) $ 589

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

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 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.

10 unchanged sentences

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 months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

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 March 31, 2024.

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

15 unchanged sentences

We are currently evaluating the impact the rules will have on our disclosures.

Pending 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.

Revenue Recognition

2 unchanged sentences

The majority of our revenue, based on sales office location, is generated in the U.S.

Approximately 7 % of our revenues were generated outside the U.S.

(primarily in Canada, Mexico and Asia) for the three months ended March 31, 2024 and 2023.

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 March 31,

Three Months Ended June 30, Six Months Ended June 30,

(In millions) 2024 2023 2024 2023

2 unchanged sentences

Managed transportation 156 176 308 373

Freight forwarding 55 80

Eliminations ( 34 ) ( 31 ) ( 69 ) ( 58 )

1 unchanged sentence

Our revenue disaggregated by industry sector is as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(In millions) 2024 2023 2024 2023

1 unchanged sentence

Industrial/manufacturing 184 193 377 374

Food and beverage 103 105

Automotive 103 105 204 207

Food and beverage 96 107 199 212

Logistics and transportation 41 42 83 94

5 unchanged sentences

(i) have original expected durations of one year or less or (ii) contain variable consideration.

As of March 31, 2024, the fixed consideration component of our remaining performance obligation was approximately $ 61 million, and we expect approximately 100 % of that amount to be recognized over the next 3 years.

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.

3 unchanged sentences

The following is a rollforward of the Company’s restructuring liability, which is included in Accrued expenses in the Condensed Consolidated Balance Sheets:

Three Months Ended March 31, 2024

Six Months Ended June 30, 2024

(In millions) Reserve Balance

December 31, 2023 Charges Incurred Payments Reserve Balance

March 31, 2024

June 30, 2024

Severance $ 4 $ 9 $ ( 9 ) $ 4

2 unchanged sentences

Total $ 6 $ 13 $ ( 12 ) $ 7

We expect the majority of the cash outlays related to the remaining restructuring liability at March 31, 2024 to be complete within twelve months.

We expect the majority of the cash outlays related to the remaining restructuring liability at June 30, 2024 to be complete within twelve months.

The following table summarizes the principal balance and carrying value of our debt:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(In millions) Principal Balance Carrying Value Principal Balance Carrying Value

6 unchanged sentences

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 $ 8 million and $ 8 million as of March 31, 2024 and December 31, 2023, respectively.

(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

4 unchanged sentences

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 March 31, 2024, the Company was in compliance with the covenants of the Revolver.

There were no letters of credit outstanding on the Revolver at March 31, 2024.

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;

(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;

5 unchanged sentences

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 March 31, 2024 classified as short-term debt.

This facility has a one-year term and we had $ 13 million outstanding as of June 30, 2024 classified as short-term debt.

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”).

1 unchanged sentence

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 March 31, 2024.

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.

4 unchanged sentences

The Notes contain covenants customary for debt securities of this nature.

At March 31, 2024, the Company was in compliance with the covenants of the Notes.

At June 30, 2024, the Company was in compliance with the covenants of the Notes.

Fair Value Measurements

8 unchanged sentences

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 March 31, 2024 and December 31, 2023, due to their short-term nature and/or being receivable or payable on demand.

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.

The fair value of our debt and classification in the fair value hierarchy is as follows:

(In millions) Level March 31, 2024 December 31, 2023

(In millions) Level June 30, 2024 December 31, 2023

Revolver 3 $ 18 $ 5

5 unchanged sentences

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 first quarter of 2024.

As of March 31, 2024, $ 123 million remained approved to be used for share repurchases under the 2023 Share Repurchase Program.

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.

2 unchanged sentences

The computations of basic and diluted earnings per share are as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(Dollars in millions, shares in thousands, except per share data) 2024 2023 2024 2023

29 unchanged sentences

RXO Last Mile, Inc.

, the court has granted plaintiffs partial summary judgment and determined our last mile subsidiary misclassified the plaintiff owner/operators as independent contractors when they should have been deemed employees.

We are vigorously defending the Company in this matter and believe we have a number of meritorious defenses, and there are unresolved questions of law and fact that could be important to the ultimate resolution of this matter.

We believe the misclassification claims, including Muniz v.

RXO Last Mile, Inc.

, are without merit and we intend to defend the Company vigorously.

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 these matters.

, 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.

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-Q

Item 1. Financial Statements