RXO (RXO) Q2 FY26 earnings call: guidance and Q&A

Inquiring about the long-term viability of the high spot mix, potential target mix, and hiring needs given increased spot volumes.

Drew Wilkerson explained that strong contract service enables spot participation, with the company converting spots into 30-90 day projects and leveraging its spot quote agent for speed. He noted that with capacity exits, the spot mix could continue to rise, and there isn't an optimal mix, but rather a focus on customer service. He also highlighted being staffed for growth.

“If you would have asked me a year ago, I would have told you 60-40 was a good target mix. But when you look at what's going on, on the capacity side and the exits that we have seen and that we're continuing to see, and you're seeing this without strong demand, I think that we still have room for spots to increase off of where we are now, and we're seeing that in the third quarter.”

asked by J. Bruce Chan · answered by Drew Wilkerson

Seeking clarification on what drives the high vs. low end of the Q3 EBITDA guidance and expectations for brokerage margins.

Jared Weisfeld stated the midpoint assumes a 10% decline in gross profit per load from July to September. Outperforming this decline would lead to the high end. He noted accelerating truckload volume growth and that brokerage momentum offsets Last Mile headwinds, with spot and gross profit per load expected to increase sequentially from Q2 to Q3.

“When you look at the range that we provided for the third quarter of $35 million to $45 million, we talked about embedded within that range is a compression in gross profit per load from the July jump-off point. So we've got that declining by about, call it, 10% from July through quarter end.”

asked by Ken Hoexter · answered by Jared Weisfeld

Asking if the rigorous vetting process is already attracting shippers and how much growth RXO can handle before needing to significantly increase headcount.

Drew Wilkerson confirmed that the differentiated vetting process, built for high-value and just-in-time shipments, is a key factor for large enterprise customers and is driving market share gains. He stated RXO aims to handle 15-20% overnight growth and is growing volume faster than headcount due to technology.

“We want to be able to grow 15% to 20% overnight because we know that the market can turn very, very quickly.”

asked by Stephanie Benjamin Moore · answered by Drew Wilkerson

Inquiring about the continuation of strong July trends despite seasonal softness and how RXO is managing potential risks from increased liability/nuclear verdicts.

Jared Weisfeld confirmed strong July momentum with spot mix at 50% and revenue per load up 25% YoY (ex-fuel). Drew Wilkerson highlighted RXO's top-percentile insurance coverage, differentiated vetting, and superior claims record as key advantages, viewing it as a market share opportunity.

“Our spot mix increased further and was 50% of truckload volume despite, obviously, July is typically a weak month from a seasonality perspective.”

asked by Christian Wetherbee · answered by Jared Weisfeld

Asking if Q3 guidance assumptions are conservative and what is needed for clarity on liability issues.

Jared Weisfeld clarified that July's strong start suggests a path to the high end of guidance if GP per load doesn't decline as much as the midpoint assumes. Drew Wilkerson emphasized RXO's existing robust vetting and technology, and suggested more data from FMCSA would help the industry.

“From July to September, the midpoint is anchoring to about a 10% decline in gross profit per load throughout the quarter. If you look over the last 3 to 5 years, it has been about flattish in terms of historical cadence. So to the extent that remains true, certainly, it would be at the high end of our outlook of $35 million to $45 million.”

asked by Fadi Chamoun · answered by Jared Weisfeld

Asking if Q3 guidance factors in insurance costs and for management's view on normalized earnings.

Jamie Harris stated current insurance rates are set until late December, so no Q3 impact. He reiterated RXO's advantageous position for renewals. Jared Weisfeld described normalized earnings as at least a mid-single-digit EBITDA margin business, with significant upside from volume recovery and technology.

“Our annual spend on casualty insurance runs from about $15 million to $20 million annually.”

asked by Brandon Oglenski · answered by James Harris

Seeking to size current insurance premiums and understand the deductible and claims expenses.

Jamie Harris stated annual casualty insurance spend is $15 million to $20 million, with a $5 million deductible per occurrence. He explained a robust risk management program is in place for claims and reserves, which are believed to be adequate.

“We have a $5 million deductible per occurrence in our insurance program.”

asked by Bascome Majors · answered by James Harris

Asking where July's GP per load stands historically and about steps to derisk the business given potential nuclear verdicts.

Drew Wilkerson said July GP per load is "getting close to in line with average of what the last 5 years has been" but still below peak. He reiterated that RXO's existing robust vetting, technology, and strong insurance coverage are key to protecting the business, and they continuously seek improvement.

“When you look at July, I mean, if you look at, call it, the last 5 years, it's getting close to in line with average of what the last 5 years has been.”

asked by Scott Group · answered by Drew Wilkerson