Hey, good afternoon, everyone. Thanks for joining us today. For those who don't know me, I'm David Hicks, Senior Research Associate, covering transportation, environmental services, and heavy construction materials for Senior Analyst Tyler Brown. Today, we have the pleasure of having RXO with us, and joining us today is Jared Weisfeld, Chief Strategy Officer at RXO. So Jared, I guess, can you just kind of roll us through. I know you wanted to talk through the safe harbor for revisions, but also just kind of give a background for those of us that don't know much about RXO. Yeah, absolutely. Thanks for having us again at the conference. It's a pleasure to be here. During this presentation, I may make certain forward-looking statements within the meaning of 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 forward-looking statements. A discussion of factors that could cause actual results to differ materially is contained in the company's SEC filings as well as in its earnings release. You should refer to a copy of the company's earnings release in the IR section of the company's website for additional information regarding forward-looking statements and disclosures on reconciliations of non-GAAP financial measures that the company uses when discussing its results. All right, so, pleasure to be here. So when you think about RXO, RXO is one of the fastest-growing truck brokerages here in North America. We've now grown volumes for the last three quarters, in particular, by double digits year-over-year in what is very much a slow freight economy with declining volumes. So truck brokerage, it's about 60% of our revenue. And when you think about truck brokerage and what that means for RXO, we are aggregators of capacity. We have access to massive capacity in terms of 115,000+ carriers and over 1.5 million trucks. And if you think about who we do business with on the truck brokerage side, it is the largest shippers in North America. It's the Fortune 50, the Fortune 100, the Fortune 500 shippers. We do business with over 50 of the Fortune 100, over 200 of the Fortune 500. We then go ahead and match them with our network of carriers. What we do is we, we have invested a significant amount of capital in our technology platform, RXO Connect, over the last decade or so, hundreds and hundreds of millions of dollars. By leveraging our technology platform, we are able to go ahead and procure transportation at better than market rates, which have enabled us to not only lead to the fastest-growing volumes within truck brokerage in the industry, but also the best gross margins as well. So that truck brokerage business is complemented by three other lines of business within our complementary services, which comprise about the rest of the revenue, about 40% of the mix. That really is in three different main areas. That is managed transportation, where we effectively act as the outsourced transportation department on behalf of our customers, some of the largest shippers in North America. You know, that's gonna be. We talked about at Investor Day, when we spun from XPO, it was about $4 billion of freight under management, which had doubled over the last three years. That's come in a little bit, certainly with the lower freight rate environment, but, managed transportation continues to remain, incredibly strategic as it relates to, the portfolio and really does, fit very, very nicely within the truck brokerage business if you think about the ability for, synergy loads, as we call them, where managed transportation acts as a customer to our brokerage business. You think about last mile, we are the leader in big and bulky in the United States. We serve, over 90% of the U.S. population within 125 miles. Think appliances, electronic equipment, fitness equipment, where we've got over 70 last-mile hubs, really with that nationwide footprint and density to go ahead and serve our customers' needs. And then you think about the last piece of the business, which is freight forwarding, which is smaller, about mid-single-digit percentage of revenue. And over the years, we've really diversified that business, where now more than half the profits within that freight forwarding business are attributable to domestic services, including transloading, warehousing, and custom brokerage, which really go ahead and continue to fuel growth for our truck brokerage business. So that's RXO at a very high level. Yeah. Great. Thanks, Jared, and it's a great overview. I guess I just wanted to start kind of big picture. You obviously have been a publicly kind of standalone company since November 2022, kind of being divested out of or spun out of XPO. I'd love to just kind of get your take on kind of what's changed from when you were kind of underneath XPO's wing to now as a standalone entity. Sure. So we spun off in November 2022, and which was certainly a challenging part of the freight economy, and it's continued to remain soft. And we view that as an opportunity to get even closer to our customers. So you think about the fact that we are now a standalone asset-light transportation company in a market which has required, I think, really, I mean, we're always in contact with our customers, but getting even closer to our customers. Our top 20 customers have been with us for 16 years on average. So, you know, we were, we were part of XPO for a long, long time, and, being able to spin out and have those, conversations with our customers as a pure asset-light transportation provider, and as well as just being more fit for purpose in terms of the ability to allocate capital more effectively, as part of a standalone company. So very fortunate to have, been with XPO for such a long amount of time. They really invested in this business in such a significant way, especially from an IT perspective, in terms of the hundreds of millions of dollars that I talked about earlier, that we've invested in building out RXO Connect, what is RXO Connect now. But I do think that as a, as a standalone company, the ability to go ahead and be a little bit more agile, and be able to get even closer to our customers and, and really play offense, right? I mean, think about 2023, we grew volumes in our truck brokerage business by 12% year-over-year in a market that was, you know, down mid to high-single digits. So, almost, you know, 1,500+ basis points spread in terms of that volume outperformance. I think that's, that's certainly helped in the context of being able to execute as a standalone public company. Great. Then kind of just more broadly on the truck brokerage market as a whole, it's obviously been gaining penetration, kind of at a solid clip, 1-2% per year for quite some time now. Curious, kind of, what do you think about that as a sustainable rate going forward? Is there kind of a limiting kind of adoption factor from here? Right now, we're at about 24-25%. Kind of where do you think that can end up going? You know, we operate in a massive market, a $400 billion for-hire truckload market. To your point, we think that when we spun out of XPO, we think that penetration rate was probably low 20%. And to put in context, you know, going back 15 years, that was probably in mid-single digits. So the penetration rate of the for-hire truckload market, the brokerage penetration rate, has quadrupled over the last 10-15 years. Why is that? If you're a shipper and you decide to use brokerage as a service, you get access to massive capacity. You get access to incredible product portfolio, services, technology. You think about what we offer relative to the asset-based carriers. We have the ability to go ahead and offer the same products and solutions, but with better technology and access to massive amount of capacity. We don't see that trend slowing down. Certainly, it can ebb and flow from a cyclical perspective, depending on how tight or loose the market is, but we think that over the long term, that has the potential to double again. So, we can think about the for-hire truckload market growing at, you know, a low, you know, 1%-2% clip, and we think that brokerage penetration can certainly make its way up to 40%-50% over the long term. Okay, and then kind of within that, the industry is growing, but you guys have also kind of consistently outperformed volumes more broadly in both kind of the COVID demand upcycle as well as this most recent downcycle. Can you kind of talk about the sustainability of that going forward, kind of leading the market in that aspect, as well as kind of what's been those driving factors for you guys that have made you exhibit so much more outperformance relative to the market? Sure. To your point, our outperformance is not an anomaly. It's been happening for the last decade. If you go back between 2013 and 2021, the brokerage industry, from a revenue standpoint, grew at approximately 9% CAGR. During that same time period, RXO grew at a 27% CAGR, consistently with best-in-class gross margins. If you look at over the last few years, which has certainly been a prolonged soft freight environment, our volume outperformance has actually accelerated relative to the competition. I mentioned earlier that our volume growth within the brokerage business has been at a double-digit rate over the last three quarters, on a consolidated basis, and I think that speaks to the long-tenured relationships with respect to our customers, right? Our top 10, 20 customers have been with us for 16 years on average. We still believe that we are under-penetrated relative to new customers, relative to our customer base. We also see a significant opportunity on the pipeline. Our brokerage pipeline, our late sales, late-stage brokerage sales pipeline in Q4 was up 90% on a two-year stack. So it goes back to what I was talking about earlier in terms of, you know, especially as a, as a pure play, asset light transportation provider, getting even closer to our customers, really engaging the sales force. When you think about, we've got an outside sales force that is dedicated to large strategic opportunities with some of our largest customers, continuing to get closer to those customers, continuing to advance the ball on technology to ensure that, our customers and carriers have the ability to take advantage of that leading edge technology. It's not just one thing. I think a lot of things go into that sustained outperformance, and we expect to continue to outgrow the market. And then kind of just on that last point, I wanted to kind of hammer home this technology point. I know a lot of your peers kind of use a combination of third-party and in-house. Can you just kind of talk to kind of what your mix is there in terms of internally developing technology as opposed to using, third parties, and kind of how it compares to other newer entrants that are kind of more focused on digital brokerage as opposed to more traditional brokerage? So within our brokerage business, we are using our homegrown technology called RXO Connect, which is effectively our transportation management system. If you think about how we've built the tech platform, we think it is very unique in the industry. When you think about RXO, we are a tech-enabled brokerage. We went ahead and invested in this platform effectively across three main cohorts: our carriers, our customers, and our people, in addition to how we think about pricing algorithms that we've invested significantly, leveraging AI and ML and all those great buzzwords that you hear about. But we've done that before AI and ML was a thing, right? We started investing in our artificial intelligence pricing algorithms over a decade ago when we were part of XPO. So if you break that across, from a customer standpoint, we are dealing with the largest customers in North America. It is table stakes for that connectivity to be digital and to be able to handle a lot of volume and do it seamlessly with our customers. We then have RXO Drive on the carrier side. If you think about our mobile app, which has been downloaded over 1 million times, the ability for our drivers to go ahead and use our system, book loads, they can bid on loads, they can bid leveraging our AI ML pricing algorithms on the other side. If they don't like the price, they can go ahead and do all of that digitally. You have the ability to go ahead and, as an RXO employee, leverage our technology. Our productivity gains have been significant. In 2023, productivity, as measured by loads per head per day, was up by 15% year-over-year, and we didn't cut our way of getting there. We did that on roughly flattish headcount, which speaks to the productivity gains enabled by our technology. So I think it's just a, it's a very different approach if you look at the landscape right now with respect to brokerages. You've got some traditional brokerages that are trying to infuse technology. You've got, to your point, some of the digital brokerages, which have invested in technology, but maybe not as much on the people side. And for RXO, it's about both, right? It's about the intersection of the technology investment with human capital. We are investing in tech to enable our people, not to replace our people. It is, and it's, a really important point, too, because at the heart of what we believe is a successful broker is the ability to leverage technology, but it's also a people-driven business, right? The relationships are so important. The sales force is so important. The ability to have the relationships with not just the shippers, but also the carriers, where, you know, in some cases we'll have carriers that are booking loads, but they actually want to speak to someone, right? They want to have that phone call with the carrier rep. So we're not gonna, we're not gonna force a certain channel from a distribution standpoint to the extent that it doesn't make sense, right? We're gonna offer best-in-breed technology, and we're gonna do it with best-in-class margins. And obviously, digitization is a big focus. Kind of, can you define those current penetration levels, or kind of how do you see that relative to the traditional brokerage market? Kind of where that. Or kind of what's the runway there in terms of digital loads, and kind of what's the gross margin differential between, say, a more traditional load and a fully digital load? So 97% of our loads are created or covered digitally. So if you break that down on the created side, that's the shipper side, and on the covered side, that's the carrier side. So from a created perspective, we're talking about the largest shippers in North America. That is a very large percentage in terms of that, the orders that are digital in nature. If you think about it from a carrier standpoint, we're dealing with a very fragmented carrier base. I think the largest TL carrier has 2% market share, so you're dealing with a much more fragmented carrier base, and in many cases have been somewhat hesitant to adopt technology. So I think that's in, that number has been growing, and it is large and significant, but I think there's a lot of headway longer term to increase the carrier adoption of technology. When you think about the advantages that RXO Drive and the tech system that we have has to enable the carriers, from a margin differential standpoint, generally, you know, pretty, pretty similar on the gross margin level, but where, where, where you will see the leverage on a, on a purely, automated load versus not is gonna be on the EBITDA standpoint. I think there's a, there's a lot of leverage in terms of, incremental operating efficiency from an EBITDA perspective. And then kind of combining that together with you being a top three broker and seeing kind of much better gains than the two brokers that are bigger than you. Kind of combining scale and technology, do you think is that gonna be kind of a constraining factor, where this market's gonna be able to consolidate more? 'Cause the smaller brokerages just won't be able to keep up on the technology side, and then your scale kind of, it kind of becomes a circular flywheel effect, where it just kind of further bolsters your value proposition in the market. Yeah, I would, I would absolutely agree with that. I mean, the top ten brokerages, we talked about at Investor Day, represented approximately 50% of the market. We think that number is probably a little bit higher now, and we think that, in the medium to long term, this is gonna be a winners take most type market structure, where, scale to get scale, the larger you are, I do think it creates that positive feedback loop. I think you're gonna need the ability to invest in the business. You're gonna need the scale to have the customer relationships, the carrier relationships. I mean, there are 17,000 brokerages that are out there, but the, you know, the top ten represent such a large percentage because you need the ability to go ahead and invest in your tech stack. You need to invest in generative AI, you need to invest in your pricing algorithms, and if you can't, you're gonna get competed away. And then, kind of going back to those scale and flywheel effects, is there an upper limit to the carriers that you can hire on, just because you wanna maintain a certain service level standard, kind of for your customers, so they don't wanna kind of shy away from you guys 'cause you—'cause they have a bad experience with a certain carrier? Yeah, 100%. I mean, if we're doing our jobs right, one side of the equation is obviously the customer but, you know, that customer is one part of the equation. You need to ensure that you are onboarding a very robust carrier base, and we have incredibly rigid guidelines in terms of what it takes to drive to RXO, right? For RXO. And I think that going back to that feedback loop, why do carriers continue to come back to RXO? It's because they know that they're gonna have access to a significant amount of freight. We are the fastest-growing truck brokerage that's out there. They know that they're gonna get access to the best technology. They know that we're gonna connect them with the largest shippers in North America. We have a 76% seven-day carrier retention rate, so carriers are coming back to the platform 76% of the time the following seven days after engaging on the platform. So, I think creating that feedback loop and incentivizing the carrier to continue to come back, right? We have RXO Extra, which is a very robust rewards program that measures the carrier on quality of service and how many loads they are driving for RXO. Think about it almost as a frequent flyer program for drivers. The more they drive with us, the more rebates they get, and so on goes the flywheel. So carrier retention is an incredible part of the story. You know, I'll give an anecdote. You know, we've got market research within the organization as well, and, you know, we just pulled a simple question to our drivers: What is your favorite restaurant, right? And it so happened to be Subway. So what do we do? We tag Subway on every single map, so our drivers know exactly where to go ahead and find their next meal. So it's things like that in terms of getting access to discount on tires and fuel, and maintenance, and repair. We wanna make the life of the carrier as easy as possible and incentivize them to continue to come back to the platform. Great. And then, as we're talking truck, and we obviously can't kind of avoid the big question in the room, which is always the cycle. You kind of gained some directional guidance on the volume perspective, that you'll be positive on volumes, but less than the double digits that you were seeing in 4Q. Can you kind of just talk through where you see demand kind of progressing throughout the year, from here? Sure. So, to set the stage, in Q4, we grew volumes by double digits, year-over-year, 15% consolidated, 11% on core truckload. To your point, in the month of January. Well, for Q1, we talked about, again, another quarter of year-on-year volume growth, which I think sets us apart very differently relative to the industry. January, we talked about, you know, call it high single digits in terms of year-on-year volume growth, so I think still pretty healthy in the context of the environment that we're in. You know, when we think about demand, I think that the inventory levels of our customers are in a much better position relative to 12-18 months ago. Not sure that we've seen the restocking yet, I think that's still yet to be determined, but I think inventory positions are in a much better place. The port data, which I'm sure you've seen, continues to look pretty strong, especially for the month of January, was up 19% year-over-year. Presumably, that needs to find its way on the roads at some point. So I do think that some of those indicators are constructive in terms of the port data, inventory levels. So I think that's sort of how we're thinking about our assumption for 2024, is that base case will have a recovery in the back half of the year. But I think the primary driver, you know, as we see it, really is rooted in capacity exits, right? There's still too much truckload supply relative to current and demand. Encouragingly, we did see in the month of January, the rate of capacity exits were about 30% above 2023 levels on a monthly basis. And I think that's also comes down to unit economics, right? The cost of the carrier, ex fuel, depending on the carrier, whether or not they paid off their truck, et cetera, are different variables, but it's about $1.70 a mile versus the current spot rate, call it $1.45 or so a mile. So that's not sustainable, and we certainly believe that carrier exit rates will accelerate into the back half of the year. Then combining those two together, we obviously get to kind of the contract and spot pricing. Can you just talk through kind of where those two, kind of how they move together, what it means for margins, kind of as those kind of gain steam here, as supply comes out of the market, potential demand rebound in the second half of the year? Sure. So our expectation are for contract rates in 2024 to be roughly flattish year-over-year relative to 2023. Like first half down a little bit, second half, up a little bit on average, depending by customer, but around, around flattish year-over-year. The way you should think about our business is that, by design, we are largely contractual with the largest shippers in North America. So about 80% right now of our total volume is contractual in nature. About 75% of our truckload-only business is contractual in nature, and as a reminder, truckload is about 86% or 84% of our mix. LTL is about 16% of our mix, and it's been growing very, very quickly. So when you think about the pivots in the market and the ability for us to go ahead and play in the spot market when the spot market does finally return, the way you should think about that is that the contractual business, the gross profit per load on the contractual business will certainly decline as the market tightens, but then we'll have the ability to go ahead and overlay that with spot volumes that will come in at pretty accretive gross margins. And we've seen this time and time again across multiple different cycles: 2015, 2016, 2018, 2019, and we certainly expect the same again. And that goes back to the ability to service freight with our largest customers, and service that across all market cycles, is critical to ensuring that we're gonna have the ability to win spot volumes, special projects, mini bids, when the cycle does finally inflect. So I think it really is all about servicing that contractual freight and servicing it really, really well. And that's how the, that's how the margin profile will differ. On, on average, depending on where we are in the cycle, you'll see that contract mix be anywhere between 60% and 80% of the mix, and spot around 20%-40%. And kind of speaking more to the cycle, we've obviously seen volatility of the cycles, ups and downs, accelerate, kind of over the past three, four cycles, and particularly over this past cycle, where we saw such a demand upswing caused by COVID, causing spot markets to spike, or spot rates to spike. And then we've also been in one of the most protracted down cycles in really in freight history. Where does that go from here? Does it kind of return to pre-COVID norms, and COVID was really an anomaly, or is that kind of more the same going forward, in your view? Well, if you look at what's going on right now, you're seeing carriers, carriers have exited the market every single month since October of 2022. Brokerages are also leaving the market, right? On average, I think 10% of the industry left last year. Expect to continue to see brokerages leave the industry in 2024. When you think about sort of what the state of the market looks like, relative to pre-COVID, I think there's a case to be made that you're gonna see supply continuing to exit. And I think the industry should be in healthier position, and I think our relative competitive advantages can actually be in even better position. If you think about what I was saying earlier in terms of market structure, winner-take-most type market structure, top 10 players representing about 50% of the market, and scale being so critical in this industry, and the larger players getting larger, I think that's gonna benefit us tremendously when the cycle does finally recover, and the ability to go ahead and continue to grow with best-in-class margins, continue to invest in the business to ensure that we can provide the services and the technology to our customer. I do think that the industry structure will probably be in a better place, relative to five years ago. Great. And then kind of speaking back - going back to kind of your Investor Day, call it 18 months ago, kind of laid out an EBITDA target of $500 million by 2027. Obviously, kind of the freight market has been worse than expected, I would think, generally speaking. What's kind of the runway to that? I know you guys think that's still very achievable, but what's your runway from here? Sure. So, yes, we still very much believe that the $500 million is achievable. We laid out a path to $475 million-$525 million of adjusted EBITDA by 2027. You know, if you want to break that down, I'd say, you know, the four most important variables to us achieving the $500 million are as follows: it'll be truckload volume growth, truckload gross profit per load, last mile performance, and managed transportation freight under management. From a truck volume perspective, truckload volume perspective, I think it's, it's been very clear that we continue to out-punch our weight with respect to truckload volume growth, with the last three quarters of double-digit volume growth. We're actually ahead of where we need to be, relative to truck volume growth. With respect to gross profit per load, clearly we're behind, but I think that's entirely cyclical, from our perspective. You think about just the rate of freight rate declines and what the impact has been from a gross profit per load standpoint. It goes back to what I was saying earlier about too much truckload capacity relative to end demand. To put a finer point on that, in the month of January, our gross profit per load was 40% below our five-year average, just to give you a sense of how cyclically depressed this earnings stream is. So I think that when we will go ahead and normalize with respect to an improvement in gross profit per load as the cycle improves, you'll see a very, very nice contribution margin in terms of gross profit down to EBITDA. I'd say managed transportation, we're right on track in terms of where we need to be from a freight under management perspective north of $3 billion, and we think that there, the pipeline there continues to remain very, very strong. Similar to brokerage, scale to get scale and managed transportation. The deals that we can play in as being a larger managed transportation organization are significantly higher relative to what they were three to five years ago. So we're really, really bullish on managed transportation. Then last mile, we made significant progress last year in terms of the performance of that business. Last mile, EBITDA grew on a year-on-year basis, 2023 versus 2022, based on some of the strategic pricing actions that we took. We think there is still significant improvement going forward, especially from a carrier cost and efficiency standpoint. So putting that all together, I think if you were to cyclically adjust where we are right now in the cycle from an EBITDA perspective, I think we're probably closer to the $500 million than it optically looks otherwise. I think it's really also important to note that we're also being extremely diligent on taking costs out of the business. Last year, we took out $32 million of costs out of the business. This year, we plan to take out at least an additional $25 million, and we're moving expeditiously, so you should see the full run rate improvement associated with those cost outs by Q2. So I think that when you put all that together, there's gonna be significant operating margin leverage when the cycle does finally recover. Speaking of that operating margin kind of leverage from here, can you just talk through kind of how are you gonna scale personnel? Like, how much employees do you need to add to get, say, 10% volume growth? 'Cause I know that's a big, big factor for you guys with the digitization of loads, as well as just increased technology on kind of reducing kind of being a salesperson, you can have much more accounts than you have had historically. Can you just kind of talk through that? Sure. So specific to your question, we're staffed for growth right now, despite the, the cost actions that we're taking. So I think, we continue to remain a very efficient organization with respect to the productivity, enhancements that we have. So, we can handle 10% volume growth right now. I think longer term, as we grow into the $500 million of EBITDA, we're certainly gonna have to grow heads, right? But it is gonna be a non-linear growth rate, i.e., the volume growth is gonna significantly outpace the headcount growth that's required to grow this business longer term. I think that speaks to the productivity gains. 2023, we had a 15% increase in productivity. I expect we'll have another increase in productivity in 2024. I think it also speaks to the scalability of the platform that we've been talking about during the session in terms of all of the investments that have been made into RXO Connect. I think with that last cohort that I talked about in terms of the employee piece, right, how do we go ahead and enable our employees to do more, and then focus more time on creating solutions for customers and continue to automate the process from a load standpoint? Then we only have a few minutes left, so I'd just love to kind of touch on capital allocation to round us out here. Kind of how do you view it? Obviously, you just transitioned out of, spun out of XPO, so kind of the free cash usage has been different than, say, relative to other, brokers that are out there. Do you kind of see yourself more aligned to how they use their cash, from here? Do you see M&A opportunities? Can you just kind of talk us through how you're thinking about capital allocation, given the relative lack of history? Sure. We have a very balanced capital allocation philosophy, and I'd say it's spread across three main buckets. Number one is gonna be within organic growth of the business, making sure that we are making the investments necessary to sustain the outgrowth that we've had over the last decade or so, and we've got a very high return on invested capital within our brokerage business, so we're gonna continue to ensure that that business is being invested in accordingly. Secondly, we've got a $125 million share repurchase authorization that we are pleased that the board, board authorized. I think we're we've been a little bit slow to execute on that, just given current leverage, but I think that is definitely part of the toolkit that we have with respect to returning capital to shareholders. I'd say lastly is from an M&A standpoint, that this has been largely an organic growth story, for the last decade or so. I think 90% plus of the growth has been organic over the last decade. Over the last seven years, it's been 100%. But with that said, as you'd expect, right, we're not walking around with blinders on. We're aware of what's going on, in terms of the current landscape. I think the bar is high, but to the extent that something made sense within brokerage or managed transportation in particular, I'd say those two verticals are where something could make sense. Okay, great. Looks like we're right on time. Jared, thank you for coming, and we have a breakout room downstairs. Perfect. Thank you, everyone.