RXO(RXO) - 2023 Q2 - Quarterly Report

Revenue Performance - Revenue for Q2 2023 decreased by 21.5% to $963 million, down from$ 1,226 million in Q2 2022, primarily due to a $198 million decrease in truck brokerage revenue and a$ 36 million decrease in freight forwarding revenue [76]. - For the first six months of 2023, revenue decreased by 22.3% to $1.973 billion from$ 2.538 billion in the same period of 2022, primarily due to a $422 million decrease in truck brokerage revenue [84]. Cost and Expenses - Cost of transportation and services for Q2 2023 was$ 723 million, representing 75.1% of revenue, compared to $904 million or 73.7% of revenue in Q2 2022, driven by a 5.4 percentage point increase in truck brokerage costs [77]. - Direct operating expenses for Q2 2023 were$ 59 million, or 6.1% of revenue, up from $56 million or 4.6% of revenue in Q2 2022, reflecting deleverage on lower revenue [78]. - SG&A expenses for Q2 2023 were$ 144 million, or 15.0% of revenue, compared to $166 million, or 13.5% of revenue in Q2 2022, with higher compensation-related costs contributing to the increase [79]. - Transportation and services costs for the first six months of 2023 were$ 1.5 billion, or 75.1% of revenue, down from $1.9 billion, or 75.8% of revenue in the same period of 2022 [85]. - Direct operating expenses for the first six months of 2023 were$ 120 million, or 6.1% of revenue, compared to $111 million, or 4.4% of revenue in the same period of 2022 [86]. - SG&A expenses for the first six months of 2023 were$ 297 million, or 15.1% of revenue, down from $327 million, or 12.9% of revenue in the same period of 2022 [87]. - Depreciation and amortization expense for the first six months of 2023 was$ 36 million, a decrease from $42 million in the same period of 2022 [88]. Net Income and Tax - Net income for Q2 2023 was$ 3 million, down from $44 million in Q2 2022, resulting in a net income margin of 0.3% compared to 3.6% in the prior year [75]. - The effective income tax rate for Q2 2023 was 44.0%, significantly higher than the 24.3% rate in Q2 2022, influenced by state income taxes and non-deductible expenses [82]. - The effective income tax rate for the first six months of 2023 was (11.0)%, compared to 24.3% for the same period in 2022 [90]. Cash Flow and Assets - Net cash provided by operating activities for the first six months of 2023 was$ 66 million, a decrease of $111 million (62.7%) compared to$ 177 million in the same period of 2022 [96]. - Cash used in investing activities for the first six months of 2023 was $28 million, compared to$ 24 million in the same period of 2022 [99]. - Financing activities used $13 million of cash in the first six months of 2023, compared to generating$ 30 million in the same period of 2022 [100]. - Total current assets decreased by $113 million (11.0%) from December 31, 2022, to June 30, 2023, primarily due to a$ 157 million decrease in accounts receivable [95]. - Total liabilities decreased by $121 million from December 31, 2022, to June 30, 2023, driven primarily by a$ 69 million decrease in accounts payable [95]. Business Model and Operations - The company had approximately 121,000 carriers in its North American truck brokerage network, with access to over 1.5 million trucks as of June 30, 2023 [64]. - The company operates an asset-light business model, focusing on truck brokerage, managed transportation, last mile, and freight forwarding services [62]. - Transaction and integration costs for Q2 2023 were $4 million, down from$ 18 million in Q2 2022, primarily related to spin-off costs [81].