Welcome to the RXO Q4 2022 Earnings Conference Call and Webcast. My name is Michelle, and I will be your operator for today's call. Please note that this conference is being recorded. During this call, the company will make certain forward-looking statements within the meaning of the Federal Securities Laws, which, by their nature, involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those in the forward-looking statements. A discussion of factors that could cause actual results to differ materially is contained in the company's SEC files as well as the earnings release. You should refer to a copy of the company's earnings release in the investor relations section of the company's website for additional important information regarding forward-looking statements and disclosures and reconciliations of the non-GAAP financial measures that the company uses when discussing its results. I will now turn the call over to Drew Wilkerson. Mr. Wilkerson, you may begin. Good morning, everyone. Thanks for joining today's earnings call, our first since our spin-off from XPO. Joining me today in Charlotte, our Chief Financial Officer, Jamie Harris, Chief Strategy Officer, Jared Weisfeld. Our first quarterly report as a standalone company was a strong one despite the challenging macroeconomic environment. We reported adjusted EBITDA of $64 million. Our Q4 results were driven by another quarter of profitable volume growth in brokerage despite a muted peak season. Our complementary services, including last mile and managed transportation, also performed well. Overall, our gross margin remained strong at 19.6%, up 250 basis points year over year. Our tech-enabled brokerage business continued to significantly outperform the industry, take share, and grow volume profitably. We set a new volume record in the Q4. Brokerage volume was up 4% year-over-year in the Q4 of 2022. For the year, we grew brokerage volume by 12%. We are proud of our sustained volume growth. Since the Q4 of 2020, RXO's brokerage volume has increased by 27%. Since 2019, our brokerage volume has increased by 56%. We are focused on continuing this momentum, and we are confident that we will deliver. This is profitable growth. In the Q4, brokerage gross margin was 17.9%, an increase of 290 basis points year-over-year. Many of our complementary services also performed well. Our managed transportation pipeline is especially strong right now, and the business won several contracts with large new customers. In a volatile market, large shippers are more likely to outsource their transportation departments to RXO. When they do, they stay with us for years to come. Additionally, last mile performance in the quarter was strong despite the difficulties facing the retail and e-commerce sectors. December 2022 was our strongest December in terms of stops since 2019. In freight forwarding, ocean and air rates have declined as expected. We have done a good job of diversifying this business. Domestic offerings now comprise approximately 50% of freight forwarding's profitability. These domestic services provide synergy spend to other parts of our business. RXO's business model is capable of generating significant free cash flow. Our balance sheet remains strong. Jamie will talk more about that in a few minutes. We have a playbook for every stage of the market. At this point in the cycle, we're focused on taking market share while maintaining our best-in-class profitability. Our contract volume is growing, the rates are declining. Additionally, there are limited opportunities in the spot market, these dynamics are putting pressure on the gross margin per load in the first half of the year. This is my favorite part of the cycle. RXO is positioned to win as customers consolidate their carriers. They are choosing RXO because of our track record of delivering results for our customers, our best-in-class technology, and our massive capacity. This positions us well for when the market inflects. Jared will discuss the market cycle in more detail. Our financial performance was underpinned by our winning sales strategy and best-in-class technology. Our sales team continued to expand business with long-standing customers while onboarding new blue-chip companies. New customers are coming to us at an impressive rate, and our sales pipeline is stronger than it has been in several years. RXO bid on about 70% more brokerage revenue year-over-year in the Q4, driven by annual bids. Existing customers continue to grow with us. For the full year, the number of brokerage customers who generated over $1 million of revenue with us increased by 14% versus the prior year. The number of customers generating more than $1 million of revenue has increased by 66% over the last two years. Our customers see value in our unique portfolio of services. In 2022, about 62% of revenue came from customers that utilize more than one of our services. Customers also choose RXO because of our best-in-class technology. In the Q4, 87% of our loads were created or covered digitally, the most ever for us. The RXO Drive app has been downloaded more than 920,000x, representing 45% growth year-over-year. We will continue to invest in our technology to push for even more adoption. Relative to the market conditions, we are performing well as a stand-alone company and have significant volume and bid momentum heading into 2023. I'm pleased with how smoothly our new leaders are integrating with those that have been with RXO for years. We've assembled some of the best minds in the business, a strong combination of seasoned leaders, best-in-class operators, and cutting-edge technologists. We have a great company culture, which combines the experience of an industry leader with the energy and entrepreneurial spirit of a startup. We're proud of what we were able to accomplish in the Q4. While we're executing well in a volatile macro environment, we're also planning for a variety of scenarios. Our business thrives during volatile times. We have the playbook, the technology, and the people to outperform the industry, and I'm confident that we will grow brokerage volume again on a year-over-year basis in the Q1. Our January volume supports our confidence. RXO's January brokerage volume grew year-over-year and accelerated when compared to the Q4 of 2022 volume growth rate. RXO remains strongly positioned for long-term growth, and we are on track to meet the long-term targets we set at Investor Day last year. Now, Jamie will cover the quarter. Jamie? Thank you, Drew. Good morning to everyone. In our Q1 as a stand-alone company, we generated $1.1 billion in revenue, compared to $1.3 billion in the Q4 of 2021. Profitability remained strong with a 19.6% gross margin of 250 basis points year-over-year. Our adjusted EBITDA was $64 million in the quarter, compared to $77 million in the Q4 of 2021. Our adjusted EBITDA margin was 5.7%, down 10 basis points from the Q4 of 2021. We are very pleased with these results given the overall economic environment. Adjusted earnings for the quarter was $0.28 per share. Our results were driven by another quarter of profitable market share gains in brokerage, as well as good results in our last mile and our managed transportation service offerings. Imperatively, we continue to outperform the industry. Despite a muted peak season, we grew brokerage volume by 4% year-over-year and 6.5% sequentially. We're pleased to report that we set a new volume record in the Q4. From a profitability standpoint, brokerage results were again best in class with brokerage gross margins of 290 basis points year-over-year. Below the line, our interest expense for the quarter was $5 million. Our adjusted effective tax rate was 21.5% in the quarter, lower than our expectations, driven by discrete non-recurring tax items. Regarding cash, we continue to have a strong balance sheet, and we had strong cash collections in the quarter. As I will discuss the cash today, I would like to refer you to slide 10 of the investor deck for reference. We ended the quarter with $98 million of cash. This is consistent with our internal expectations as we had non-recurring cash outflows of $27 million post-spin, which was completed on November 1st. $21 million of the cash outflows were related to the spin-off, including items such as rebranding costs, banking and financing costs, and tech-related CapEx. The remaining $6 million of cash outflows were to repay the final portion of money received in a prior year related to the CARES Act. Taking these unusual items into account, our ending cash balance would have been $125 million. This translates into a free cash flow post-spin of $25 million, which was very strong. This represents a more than 60% conversion of EBITDA to free cash flow. Prospectively, we expect our EBITDA to free cash flow conversion to continue to be strong, and we expect to grow our cash balance sequentially. We anticipate approximately $10 million-$15 million of spin-related and restructuring costs in 2023, weighted more heavily in the first half of the year. Approximately $10 million of these costs are expected to be cash outflows. Available capital remains strong with approximately $600 million in liquidity, including our $500 million revolver, which remains undrawn, and our peak our December 31st cash balance. Our net leverage at quarter end was 1.2x adjusted EBITDA, which remained at the low end of our stated target range of 1x-2x. Regarding 2023 modeling assumptions, we expect depreciation and amortization in the range of $70 million-$75 million, interest expense between $33 million and $35 million, and an adjusted effective tax rate of approximately 25%. You should also model an average diluted share count of approximately 120 million shares. Overall, we are pleased with our financial and operating results as well as our balance sheet position. Now I'd like to turn it over to our Chief Strategy Officer, Jared Weisfeld, who will talk more about our long-term outlook. Thanks, Jamie, and good morning, everyone. It's a pleasure to be with you on our first earnings call post-spin. I'd like to start with the structural profitability of our business. We have gained market share with best-in-class volume growth enabled by our technology. Importantly, we have done this profitably, more than doubling our adjusted EBITDA since 2019. We often get asked about our current gross profit per load relative to historical levels. Within our brokerage business, our Q4 gross profit per load was roughly in line with our three-year average. The diversity of our business helped us outperform in the quarter. While our retail and e-commerce volumes declined as expected, volumes in automotive, home and building materials, professional services, and healthcare all grew solidly on a year-on-year basis. Our technology also helped us outperform and optimize our profitability in contract and spot mix. This quarter, we again had a favorable contract mix, with contractual volume representing 75% of our business in Q4, up 200 basis points sequentially and 600 basis points when compared to the Q4 of 2021. Our technology is also fueling our continued market share gains. In Q4, 87% of our loads were created or covered digitally. This was the result of continued adoption of our technology in addition to a platform capability within RXO Connect that was not previously captured by this measure. We expect the percentage of loads created or covered digitally to grow sequentially into the Q1. The RXO Drive app has been downloaded more than 920,000 times, up 45% year-over-year. Average weekly users increased 30% year-over-year in Q4. Registered carriers increased 42% year-over-year. Importantly, seven-day carrier retention was a strong 74%. Looking into Q1, we are cognizant of the broader macroeconomic environment and where we are in the freight cycle. I wanted to provide some perspective. Historically, at this stage of the cycle, we've seen quarters represent anywhere between high single-digit and low 20% of full-year adjusted EBITDA. We still expect our brokerage business to continue its outperformance in Q1 and grow volume again on a year-over-year basis. We have a strong sales pipeline, and our non-retail verticals are growing year-over-year. This volume growth will be mitigated by a continued reduction in gross profit per load, it positions us nicely for when the cycle inflects. I thought it would also be helpful to provide some puts and takes for the year. Our brokerage business exited 2022 with significant momentum, and we feel confident that 2023 will be another year of volume outperformance, supported by the strong January volumes that Drew referred to earlier. Additionally, some of our customers are telling us that significant retail destocking that occurred in 2022 could lead to restocking in the second half of 2023. However, similar to Q1 dynamics, gross profit per load in 2023 will moderate when compared to 2022 as the cost of purchased transportation stabilizes and lower contract rates come into effect. It is important to note that even though our gross profit per load is moderating, we are still operating at best-in-class profitability levels. We have a playbook for every cycle, and RXO is in a strong position to gain market share profitably. That brings me to our five-year outlook, which calls for $500 million of EBITDA at the midpoint in 2027, an approximate 60% increase versus the last twelve months. We remain confident in our five-year outlook. This guidance not only contemplates an uncertain macro environment, it also embeds a moderation of gross profit per load through 2027. It assumes modest EBITDA margin expansion with increased employee productivity. The incremental growth embedded in our guidance is 100% organic. RXO's asset-light business model and its highly variable cost structure provide us with significant free cash flow generation capabilities. Prospectively, we are confident that we will continue to achieve a strong free cash flow conversion relative to EBITDA and adjusted net income. Our priority is to use excess free cash flow to grow our business organically. It's important to note that within brokerage, 100% of our growth over the last six years has been organic. We intend to stay within our 1x-2x net leverage target, and we are currently operating at the low end of that range, providing us with flexibility to deploy our balance sheet effectively. To summarize, we have taken share profitably. We operate in a $750 billion market with plenty of room to grow. We plan to generate meaningful free cash flow, and our strong balance sheet provides us with flexibility to deploy our capital effectively. We have a small share of an enormous market, a proven team, and a winning strategy, and a long runway for profitable growth. With that, I'll turn it over to the operator for Q&A. Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by the one on your touch-tone phone. You will hear a three-tone prompt acknowledging your request. Should you wish to decline from the polling process, please press the star followed by the two. If you are on a speakerphone, please flip the handset before pressing any keys. We ask that you please limit yourself to one question and one follow-up. Our first question comes from Stephanie Moore of Jefferies. Please go ahead. Hi, good morning. Thank you and congrats on a nice quarter. Thank you, Stephanie. I wanted to touch on just the volume outperformance, clearly quite strong in the Q4, just continuing into the Q1. Also, I think what stood out to me was just the increase in bid opportunities despite the softer market in the Q4. Maybe you could talk a little bit about, you know, some of the volume wins that you're seeing, you know, really, you know, what you've seen in terms of some large contract wins that might be driving this outperformance or if you could kind of pinpoint any other major drivers for the strong results? Thank you. Yeah, absolutely. Thank you for the question, Stephanie. This is Drew. When you look at our volume outperformance in the market, we've got great relationships with our customers. Our top customers have been with us for 16 years on average. They come back to us year after year. They continue to grow with us because we provide great service. We create solutions for them that contribute to their supply chain efficiency and their transportation budget. We've got the best technology in the market that helps them decide things like what day of the week they should ship something, what mode of transportation they should use. We've even helped customers decide where they should place warehouses as far as to efficiently route their transportation. When you look at why customers are choosing us, it's because of the service that we offer, it's because of the capacity that we bring, it's because of the technology. When you look at in the Q4, our bid revenue was up 70% on a year-over-year basis, and that's even with revenue per load coming down, and we did that with 30% more customer accounts. We've got great momentum on the sales side, and, you know, we're positioning ourselves well for when the market reflects. Thank you. Just a second question from me. On share repurchases, I just looking at the slide and the repayment of the CARES Act, which I didn't realize was something that Origin account for. Would that preclude you from being able to do share repurchases until that's fully paid? Just any commentary there would be helpful. Thank you. No, that would not prevent us from doing that. This is the final piece of the CARES Act. It, you know, it was a payroll deferment that happened a couple years ago, so we're totally done with that. It should not prevent us from doing anything there. Got it. Thanks so much. Thank you. The next question comes from Ken Hoexter of BofA. Please go ahead. Hey, good morning, congrats on the first public quarter. Drew, I guess maybe you could talk a little bit more on Stephanie's question on the bid season. How do you maybe can you quantify or talk about how we should think about volume gains into the year? Is it still too early to talk about that? You obviously are confident on volumes being positive for the Q1. Is there any insight thereafter? When you say 87% created or covered digitally, can you kind of pinpoint what is fully digital start to finish so we can understand how much of it is just fully on the system? Yeah. Ken, when you just look at the overall macro environment that we're in, it's still a tough macroeconomic environment, we're proud of the fact that we're gonna be able to grow volumes again in the Q1. As you look towards the back half of the year, some of what we're hearing from our customers is their conversations are shifting from where they were six, nine months ago towards destocking and now talking a little bit more about restocking. That's not something that's unique to us. That's something that could potentially be a benefit to the entire industry. What is idiosyncratic to our business is the pipeline and the sales momentum that we have in the quarter. For that's why I'm positive on when the market reflects, we've positioned ourself very, very well. This market that we're in right now really separates the haves from the have-nots. What I mean by that is customers are consolidating the number of carriers that they're working with. They're looking for carriers that provide solutions for them to contribute to their supply chain efficiency. They're looking for carriers that have technology that integrate with their system. They're looking for carriers who have access to a lot of capacity and can service them at scale. That's something that we check the box on all of those for our customers, so we're excited on that. The second part of your question is we're at 87% created or covered digitally. That's what we feel is the most important metric. The created and covered is something that we continue to gain adoption of, and it's a significant portion and continuing to grow, but not a number that we're disclosing at this point. We think it's important to look at half of the order being carrier, half of the order being customer, and what life of the cycle of the order is fully digital. Just to clarify, when you talk the share wins in bid season, is that and thinning gross profit per load, should we read that as using pricing to win those volumes to outpace the market? I just want to understand the message we should read through that in terms of winning that share. Absolutely not. We price in line with the market, and we feel because of our technology, because of our pricing algorithms, we are able to operate at best in class gross profit percentages, what you saw in the Q4. You know, we operated at 18% gross profit percentage in brokerage, which was actually up 290 basis points on a year-over-year basis. For us, we price business to be able to go and take market share, but to do it profitably. Great. Drew, appreciate the time and insight. Thanks. Thank you, Ken. Thank you. The next question comes from Scott Group of Wolfe Research. Please go ahead. Thanks. Good morning. Jared, any color on... You talked about gross profit per load, sort of near historical averages. How much would it have to decline to get to historical trough once, you know, I assume you get there sort of around the bottom of the cycle when spot rates start moving up. You made some comments about Q1 EBITDA can be high single to 20% of full year EBITDA. Should we think about that as a comment relative to sort of the $300 million or so of EBITDA you did last year? How should we what the percentage of what I guess we're not really sure how you're thinking about full year EBITDA. Sure. Good morning, Scott. No, thanks for the question. With respect to your second question, I'll take that first. It's our Q1 as a public company, and we wanted to give you some additional color of current cycle dynamics. We thought it'd be helpful and instructive to give you context based on historical results at this point of the cycle. I can certainly appreciate that it's a wide range, but historically, we wanted to give you some color that we've seen quarters represent anywhere between call it high single digits and low 20% of full year EBITDA, and that's referring to where we are from a cycle dynamic perspective. In terms of your first question, with respect to my comment that we're currently operating in Q4 at a gross profit per load inline with our three-year historical average. You know, I just wanted to give you that as a sense as it relates to the fact that ultimately, we have seen our gross profit per load moderate. Wanted to give you context of where we're punching at relative to our three years. On a go-forward basis, as Drew mentioned in the prior question, we continue to bid, but we're bidding for profitable growth. You saw gross margins in the current quarter up about 300 basis points year-on-year. I'm not gonna go into the dynamics in terms of where we are relative to trough, but you should certainly think about as we think about the year playing out, we are cautiously optimistic into the second half. We are hearing from our customers that there's the potential for restocking in the second half, and we'll see how that plays out. Okay. Just on your commentary on January volumes, you know, it strikes me that most companies have had probably better than expected or maybe better than feared January commentary. Just your perspective, are we seeing the signs of the market bottom? Is this just we had some favorable weather? Any thoughts on this better trend in January? Yeah. January was a strong month for us whenever we look at it for on a year-over-year basis. Like Jared said in his comments is that we actually grew that faster on a year-over-year basis than what we grew volume in the Q4 on a year-over-year basis. For us, you know, it's more of idiosyncratic to us and where we're at and the relationships that we've got with our customers. We expect our Q1 volume to be an outperformance in the industry again, and we expect to be able to go out and take market share. Right now, we're at the point in cycle where we are positioning ourselves for the point of inflection, and this is what separates carriers for customers. The service that we have given them over the last five years has put us in a great position. Okay, great. Thank you, guys. Thank you. Thank you. The next question comes from Scott Schneeberger of Oppenheimer. Please go ahead. Thanks very much. Good morning. The, I just wanna go circle back to orders covered digitally. Any could you give any, you know, the covered or created digitally, could you give us a feel for, maybe mix of how much is shipper side and how much is driver side, covered just within that? I know you won't disclose it fully, but any sense of magnitude in that? Then, as a follow-up on that topic, are you measuring how's productivity per employee looking, if you measure by this metric or any other you track, with this technology enhancement, how is that productivity looking? Do you, can you give us a sense of how that, how that metric looks now as opposed to maybe a few years ago and what type of trajectory you expect there? Thanks. Yeah. I'll start off, and I'll let Jared take the second portion of your question. When you look at the created order cover, we have made a lot of inroads on the customer side. It is a greater percentage on the customer side for where we're at in the cycle. We still have a little bit of room to go on the customer side. On the carrier side, as we're working with these smaller owner-operators or smaller trucking companies, we've got a lot of green space to be able to continue to go out there and drive adoption in the business. On, hey, Scott, good morning. On your second question, with respect to brokerage productivity, it did improve in Q4, relative to Q3 from a brokerage standpoint, so we're very, very proud of that. What we're anchored to and what we're focused on is, as we look at our long-term guide of 2027 of $500 million of EBITDA at the midpoint, about 60% higher from current levels, that's gonna continue to yield increased productivity going forward. We're certainly looking forward to executing on that. I think it's also important to realize that within our brokerage business, you know, we're staffed for capacity. When we look at the ability for our ability to respond to a dynamic environment, we can respond to 10%-15% upside in volumes if we need to. Thanks guys, appreciate that. For my follow-up, I'm gonna switch it over to last mile. Obviously, with peak season, that was a meaningful part of the mix. Just curious, you know, how you're seeing pricing trending there. I would imagine you have an opportunity. Just that and takeaways from this peak season and how that's gonna carry through to how you approach the business in 2023. Thanks. Yeah. First, you know, there really wasn't much of a peak season, that's why we're so proud of the performance of what we had in last mile and having our best December since pre-COVID times. You know, when you look at who we are in last mile, we're the leader in the space. We have been for a very long time. When customers are doing business with a national footprint, they want to talk to us because we've got facilities that put us within 125 miles of 90% of the U.S. population. For us in last mile, we've got a lot of opportunity to continue to be able to grow and grow with large customers. Your second part of your question on the pricing, that's an opportunity for us as we head into 2023. We're in some of those bid negotiations right now, you know, we think that that should be a tailwind. We're the leader in the space, we've got great service. We want to be compensated fairly according to the services that we provide. Great. Thanks guys. I'll turn it over. Congrats on your Q1. Thank you. Thank you. The next question comes from Tom Wadewitz of UBS. Please go ahead. Yeah. Good morning. Wanted to ask you a bit about revenue per load. I'm thinking about the comment that you were 75% contractual loads in Q4, but you still saw a pretty big decline in revenue per load, something on the order of 25%. How do I think about revenue per load as you look at 2023? Do you think that as the bid season goes through and you have contracts repriced, that there's further step down that's meaningful in Q2, Q3? Or would we think about your revenue per load more being driven by spot rates that, you know, maybe as you see spot market kind of bottom out, say in Q1, that your revenue per load might stabilize more quickly? Yeah. Thanks for the question, Tom. When you look at our performance in the Q4, we're proud of our performance in the Q4, and especially of having a gross profit percentage of 18% in brokerage. In regards to the revenue per load declining, when you look at that, there was three reasons for it. The first is spot volume and spot rates are down. They're at a low. You look at contract pricing, we talked about this in the last quarter, and I told you last quarter that we expected contract pricing on a full year 2023 basis to be at the midpoint, somewhere down around 10%. We're still holding to that number. Then the third thing is length of haul. We have to be able to shift with our customers. We've done a great job of answering our customers' demand, and we saw our length of haul reduce on a year-over-year basis in the Q4. I guess in terms of the forward look, how would you Do you have any thoughts on when revenue per load might bottom for you? Is it Q2 you think you stabilize, or should we think about contracts shifting down that maybe you fall further in as you look in second half? Yeah. Tom, you know, we didn't call the top toward the bottom in the previous market. We're not gonna call it in this one. We're confident that we'll be able to go out and take share and outperform the industry overall. You know, the point to anchor to is, for full year, we expect contract pricing to be down roughly 10% on a year-over-year basis. Yeah, fair enough. Second question would just be on headcount. Obviously you guys have nice momentum on volume growth in Q4 continuing in January. Are you adding headcount this year just to support that growth? You know, kind of how are you thinking about the resource, you know, versus volume in 2023? Thank you. The biggest thing that we look at for headcount, as Jared said, is being able to be staffed for growth. We continue to be staffed to where we feel like we could grow volume 15%-20% overnight if we have to. Those are good conversations to be able to have with your customers, to talk about having the capacity to grow with them as they grow their business. For us, we're looking out to be able to continue to staff up and gain efficiencies within our employee base through technology, but we want to stay staffed for growth. Okay, great. Thank you. Thank you. Thank you. The next question comes from Allison Poliniak of Wells Fargo. Please go ahead. Hi. Good morning. Just want to ask about the carrier retention. You talked about the seven-day being in sort of that mid-seventies range. Is there any color you can give us as we expand out maybe that timeframe, three to six months, what that trend's been? Has it been above or below that? Just trying to understand if there's been any shift there. Thanks. It's roughly in line with that, Allison. You know, for us, that's an important base because whenever you're talking about smaller carriers coming back to do business with you, they're coming back to do business with you within a week, that tells you that a lot of times their next load is coming from RXO Connect. RXO Connect is an easy system for them to be able to use. It's something where, as an owner-operator, you can pick up your cell phone, you can book a load, you can negotiate. You can do all of that with little to no human interaction while getting access to our RXO Extra program, which gives carriers discounts on things like fuel, tires, roadside maintenance, the things that matter most in a trucker's life. We've built the system around that. That's why you see such a high retention rate, and it pays dividends for us. Great. I want to go back to sort of that the capital deployment question and earlier. You know, leverage is at that lower end. I know there's some cash outflows in the first half, but as you think about maybe revisiting, can you maybe talk about how you're thinking through sort of those capital deployment objectives as we sort of get towards the end of 2023 here? Thanks. Yeah. Allison, this is Jamie. Thanks for that question. We had a really good strong cash quarter. We entered the year with a really good balance sheet, as you know. You know, capital deployment, organic growth is our top priority. As Jared mentioned, last 6 years, 100% of our growth is organic, so we're gonna be focused on that. We still have a lot of good opportunities there. You know, if you think about our overall framework, you know, M&A is not a top priority. We will look at it. If things came along that made a strategic sense, we would take a look. If you look at capital returns in form of a buyback or dividend, something that's also in our framework that, you know, we're gonna look at as the market dictates, but organic is our number one priority right now. You know, we're gonna have a really good, strong quarter with cash. We're gonna look at all of those things. I think the key word I'd leave you with is we got a lot of options. Perfect. Thank you. Thank you. The next question comes from Brian Ossenbeck of J.P. Morgan. Please go ahead. Hey, good morning. Thanks for taking the question. Drew, I know you don't want to talk about going the bottom of the market or the top for that matter, but can you just give us some context in terms of your carrier base? I know it was a pretty choppy December, January. Strong December, weaker January. What are you seeing in terms of, you know, people turning in their keys? What's the retention look like? Are you still adding more to that base? How do you feel about the support you got there on the supply side as you go into 2023? Yeah. Carriers, we actually added carriers again in the Q4 to our RXO Connect platform, and it's something that we're proud of. Carriers want to come to us to do business because we're a company of scale where they can book their next load without having to leave the system to be able to find it. We've got a great rewards program for us. We have not seen that from our carrier base as far as turning in the keys overall. Okay. good to know. I think the other comments that you mentioned on integrating some, I guess people who are maybe from the outside may have been reading too much into that, but can you just talk about hiring from, you know, the technology side? There's been some headcount reductions across the space. Are you picking up any talent that you find interesting or attractive on that front? Or are you able to kind of do what you have internally and not looking to add more, more talent, you know, above and beyond what you would consider normal? We're always looking to add great talent to the organization. It's one of the things that is part of our DNA, is we want to add people who make us better. When you look at our technology space, we've hired the best technologists, not just in the industry, but some of the best technologists in the world to be able to create what is a game-changing solution for us in our RXO Connect. Very happy with where we sit and what technology is able to provide into our business and look forward to continuing to grow. If we can pick up talent off the street to add to that, we'll absolutely do it. I guess, do you think with some of the pullbacks and the more digital natives out there, do you find this time is better than usual to pick up some of that talent? We haven't seen a huge number come over to us from the digital folks. You know, again, we'll talk to folks who are out there in the industry, and if it's something that we feel like that is additive to our organization, we'll do it. I'm very confident in the technology team that we've got. They've delivered amazing results over the last decade. If I'm putting money behind somebody, I'm putting money behind them. Okay. Thank you, Drew. Appreciate it. Thank you. Thank you. The next question comes from Jack Atkins of Stephens. Please go ahead. Okay, great. Good morning, and thank you for taking my questions. I guess I'd like to maybe dig into the volume growth a bit, just kind of circling back to that. When you think about the components driving that 4% volume growth, obviously significant outperformance versus the rest of the market. You know, are you seeing any, you know, changes to mode mix there? Like, for, you know, for example, is that all full truckload driving that, or is, you know, are you seeing increased drayage volume, increased LTL volume? Just trying to square the lower revenue per load, with strong revenue margins and higher volume. Just those things typically don't sort of all move in that same direction. Yeah. We're looking at all modes of transportation to be able to continue to grow out. We built the business off of truckload, drive and freight. That's something that continued to grow for us in the Q4. You know, LTL and other modes also grew as well. Okay. Okay. So it's a combination of things, not just full truckload there. I just wanted to kind of clear that up. That's right. I guess, you know, I guess, Jamie, if you could maybe kind of talk a little bit about some of the expense buckets in 2023? You know, I appreciate the interest guidance and the depreciation guidance, but, you know, as we sort of, you know, think about OpEx, you know, below net revenue, you know, any sort of commentary either around, you know, inflationary cost pressures or just any sort of kind of commentary there to kind of help us square up, you know, the, you know, the OpEx side as we sort of think about 2023? That'd be helpful. Looking below the line there, on OpEx specifically, you know, we've got a highly variable cost structure, first of all, so we're able to move, you know, with demand. You know, as we begin our journey being RXO as a separate company, standalone company, you know, the first thing that we've done is take a look at optimizing our cost structure from end to end. We're doing a lot of process engineering, views in the company of how we can make decisions quicker, how we can make easier decisions, which ultimately will translate into cost efficiencies and cost savings. In terms of directly, you know, guidance on a, on a OpEx, we can't really provide that. What we can say is, you know, the market, you know, from an inflationary standpoint, we're seeing, you know, we're seeing a few good, able to negotiate with vendors well. We're seeing our overall cost structure, you know, stay in line with where we want it to be for the year. The, you know, back to the interest, you know, one thing I do wanna point out is it is coming in lower than what we provided as some modeling tools at Investor Day. We're down, I think we modeled about $37 million back in Investor Day. We came in in the $32-$34 range. As you mentioned, depreciation is something we also see down year-over-year. Okay. Maybe just real quick follow-up on that. If we think about, like, the SG&A line item, you know, what portion of that would you say is variable or would flow with revenue? We haven't given that specifics before. I mean, if you think about the cost of transportation is almost all variable. If you take that, we've mentioned 87% of our total cost structure was variable. If you go down to the SG&A line, by definition, it's gonna be less variable than the 87. You know, I think depending on, you know, what the top line looks like, you could see that being in the, you know, 50 to, you know, 65% range at times. Okay. No, that's super helpful. Thank you very much for the time. Yeah. Sure. Thank you. Our next question comes from Jordan Alliger of Goldman Sachs. Please go ahead. Yeah. Hi. Morning. Just curious, can you talk a little bit about contract negotiation timing? Like, where are you in the process? Has it just started? Are you 30% through? You know, following on that, I think you mentioned, Dan, 10% contract rates is kind of what you're looking at. I think that was for the full year. I'm just curious, have you hit that point yet, or is that something that you still think is yet to come as you discuss the contracts? Thanks. Yeah. As far as where we're at in the bid cycle, the heaviest part of the bid cycle for us is starting at the midpoint in Q4 and going through Q1. We're right as we're wrapping that up and coming out of it. When you look at the 10% comment on contract, that was looking at full year, it was looking at the full year. For that, you know, we're implementing those rates right now coming out of bid season. That's sort of about the ballpark that you're seeing during this heavy period that you just talked about, just to make sure I understand. That's right. All right. Just a quick follow-up. The transaction and integration costs, you know, the $40 million in the Q4, and I think you said $10 million-$15 million of restructuring in 2023. Like, Can you give some sense for what the components are of these costs? Thanks. Yeah. The things like rebranding, you know, and I'm gonna focus on what happened post-spin that impacted the $21 million we called out in our cash walk. You know, rebranding costs, where we wanna move things from the logo of XPO to the new RXO logo. We had some cash costs of banking and financing fees that fell into that. We had some CapEx that we had to stand to start up a standalone business. You think about mainly in tech type areas. We had some other general restructuring. If you go prior to the spin, you know, there's a lot of duplicate costs that we were running while we were pulling the spin together. As we look forward into 2023, as you would expect, those numbers come down quite substantially. We mentioned in the comments $10 million-$15 million of restructuring or spin-related costs into 2023. I would think about $10 million ± of that being cash expenditure versus just a P&L expenditure. I think those will be predominantly in the first half of the year, more so than the second. You will see those come down materially throughout the year. Thank you. Thank you. Our last question comes from Bascome Majors of Susquehanna. Please go ahead. Thanks for taking my questions. Just to follow up with one more on the OpEx side. Are there any duplicate or excess costs from transition agreements where you're really kind of running dupe systems and that sort of thing? Just any costs that come out naturally as those agreements age over the next year or two that we can think about on the cost side. Thanks. Thanks for the question. This is Jamie. As we transitioned through the spin, we had a number of transition service agreements. Most of those agreements had very short lives attached to them. In fact, we have ended a number of those agreements already. We actually had some agreements that were what we call reverse transition service agreements, where we were providing services. I think if you look into 2023, a number of those have already been completed. We have a large amount that will be rolling off in the Q1 as we complete, you know, this first year of this Q1 of, you know, being separate. We look forward to the balance of 2023, that's not a material impact on our cost structure really one way or the other. I think the good news about it is this business as a standalone was already very, sort of self-contained. Setting it up as a new, you know, publicly traded standalone company is going very well. We're very, very pleased with both the cost side as well as the performance side. You know, that's great news, and thank you for the color there. You know, maybe to cap it off here, you understand the desire not to give a full year outlook given the uncertainty around here as far as EBITDA goes. You know, can you just if we were to anchor to call it the streets $235 million of annual EBITDA, can you walk us through the components of how you would get to free cash flow from there and what that could look like if EBITDA were to come in roughly in that range and, you know, maybe even higher level? I mean, I understand you're kind of getting your sea legs as a public company here, but when we get to a more stable environment, any thoughts on how you wanna guide, whether it will be annually, go forward a quarter, not really at all? We've just seen a lot of different approaches from different brokerage-related companies. I'd love to hear how you'd like to come at it once the market stabilizes and you've got more experience as a public company. Thank you. This is Jamie. I'll tell you the first part of that and let Jared take the second. If you think about free cash flow conversion, you know, use EBITDA as a reference point or a starting point, you know, we will have an annual debt service. We've modeled that out in the range of $32 million-$34 million for the year. We will have CapEx. We've talked about that as over the long term, about 1% of our revenues. There'll be years where that exceeds that. On average, I think you can see about 1% over the long term. You'll see a cash tax payment, obviously, but also you'll see a working capital. What we've talked about is, you know, our... The way we think about working capital is, as we grow a $1 revenue, about 8% of that $1 growth is a use of working capital, so it's an investment in growth. Conversely, if revenues were to decline, it's about an 8%, you know, per $1 decline. Now, if you go back to Q4, we converted in excess of 60% of our EBITDA into free cash flow, which we were very pleased with. As we look forward, you can use, you know, kind of the 50%-60% conversion rate in a time of kind of stable revenue. In Investor Day, we talked about a 40+ in times of growth, so we see those two holding true in the future. Hey, Bascome, it's Jared. Good morning. With respect to your second question on guidance, we're not gonna be providing formal guidance when we think about the company going forward, we will certainly give you market color when appropriate like we did today. All right. Thank you both. Thank you. Thank you. We have reached the end of our question and answer session. I'll hand the floor back to Drew Wilkerson for closing remarks. Thank you, Michelle. I'm pleased with RXO's performance and our first quarterly report as a standalone company. We continued to gain share and grow brokerage volumes year-over-year and quarter-over-quarter. We also drove increased adoption of our technology with customers and carriers and are effectively navigating through a very challenging macro environment. We have the right team, the technology, and the playbook in place to outperform the market. The playbook, which at this point in the cycle is focused on growing volume, will put us in a position of strength as the freight cycle turns. Our management team remains focused on continuing to deliver results for our shareowners, customers, carriers, and employees. Thank you all for your time today. Have a great rest of the week, and I look forward to seeing you at the upcoming investor conferences. Ladies and gentlemen, this does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.