Hello, everyone. Welcome to the RXO Q2 2026 Earnings Conference Call and Webcast. My name is Erica, 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 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 filings as well as in its earnings release. You should refer to a copy of the company's earnings release in the Investor Relations section on the company's website for additional important information regarding forward-looking statements and disclosures and reconciliations of 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. Thank you for joining today. With me here in Charlotte are RXO's Chief Financial Officer, Jamie Harris, and Chief Strategy Officer, Jared Weisfeld. We delivered strong results in the second quarter, including volume gains across the business and improved profitability. There are four main points I want to convey this morning. First, in brokerage, we gained profitable market share. Truckload volume grew by 2%, outperforming the market. As you'll recall, we previously committed to resuming our truckload outperformance as early as the middle of the year. We achieved that ahead of schedule. We had the largest sequential increase in the gross profit per load growth rate in four years, driven by our spot mix, which was 42% in the quarter. Second, complementary services delivered strong results. Last mile gained share and grew stops by 3%, and Managed Transportation was awarded about $100 million in freight under management in the quarter. Third, we expect the momentum in the business to continue with anticipated year-over-year brokerage volume and gross profit per load growth again in the third quarter. Lastly, our results are underpinned by our continuous innovation. We made significant advancements in our rollout of agentic AI tools in the quarter, which drove improvements in volume, margin, productivity, and service. I'll start by discussing our second quarter results. In brokerage, we grew overall volume by 2% year-over-year. Full truckload volume grew by 2%, and less-than-truckload volume grew by 3%. Full truckload volume grew sequentially every month in the first six months of the year. We also, again, increased our truckload spot mix, which we grew by 900 basis points sequentially. This helped to drive an 11% sequential increase in truckload gross profit per load, the highest growth rate in four years. Our focus on having deep customer relationships, providing exceptional service, and being staffed for growth to respond quickly to customer needs is enabling us to win spots, projects, and mini bids. In complementary services, managed transportation continues to win. We were awarded about $100 million in freight under management in the second quarter. These wins are significant because they result in increased synergy loads for RXO's other lines of business. Shippers continue to choose RXO for their managed transportation needs because we help them solve complex logistics challenges with unique high-tech solutions that leverage our scale and infrastructure. Our late-stage sales pipeline in managed transportation remains robust and composed of a diverse set of high-quality new names and long-tenured existing enterprise customers with whom we've built successful, deep relationships. In last mile, stops grew by 3% as a result of market share gains. RXO remains the preferred provider for leading big and bulky brands. Our exceptional service and significant last mile scale continue to help us gain profitable market share. Overall, RXO's EBITDA was $40 million in the quarter, exceeding the high end of the range we provided due to the rapidly improving dynamics in brokerage and better-than-anticipated last mile stop growth. We've seen all of the key brokerage trends, including volume, spot mix, and gross profit per load, continue into July. Managed transportation also won another $100 million in freight under management in July. Those results give us confidence in our third quarter outlook, which includes continued growth in brokerage volume and gross profit per load, but weakening within last mile. Jamie and Jared will talk more about our outlook in detail later in the call. Now I'd like to provide an update on the freight market and how we're winning. The supply-driven recovery is well underway. When regulatory enforcement began last fall, we said it was a structural change to the market, and that's proving to be true. This structural change will improve the safety of the industry, help combat theft and fraud, and set the market up for a multiyear recovery once there is a sustained improvement in demand. I'd like to talk about how this is affecting our business. The cost of purchased transportation continues to rise due to the capacity exits, but the contract rates are not rising fast enough to fully offset the increase in cost. You can see the effect this is having on the industry by looking at the industry-wide tender rejections rate as measured by FreightWaves SONAR, which approached 18% in June, the highest in more than four years. This is normal for this part of the cycle. In this environment, shippers turn to their most trusted partners to get their freight covered. They turn to the partners that have delivered unique solutions for them in all parts of the cycle, that provide deep relationships, and importantly, have the resources to be able to handle significant increases in volume. RXO is working closely with our customers to optimize service, volume, and price, and we're their partner of choice for covering spots, projects, and mini bids. This freight has a higher gross profit per load. We're growing volume and profitability and taking market share despite continued soft demand. I'd now like to talk about another important topic in today's freight market: carrier vetting, cargo security, and insurance programs. Our approach to these areas is also differentiated. We serve large enterprise shippers with complex needs and a strict standard, and we do not compromise on the quality of carriers we allow onto the RXO platform. Our cargo security program has been recognized externally, recently earning awards from both CargoNet and FreightWaves. As insurance providers put more emphasis on the quality of broker procurement and carrier vetting process, we believe RXO is well-positioned versus the broader industry. Shippers are becoming more selective about their partners, not only selecting providers based on their scale and service, but also on their rigorous carrier vetting process and financial stability. These strengths define the RXO brand and are why about half of the Fortune 500 trust us with their freight. Jamie will give you more details about our carrier vetting and insurance programs later in the call. Turning to technology, we continue to make significant progress on our roadmap in the second quarter, especially when it comes to our agentic AI initiatives. All are driving results when it comes to volume, margin, productivity, and service. Let me give you some examples of recent wins in this area. Earlier this year, we announced the launch of a new spot quote agent that was driving increases in both volume and gross profit per load for the reps that were using it. In the second quarter, we focused on driving adoption of this tool and processed five times more spot quotes via email through the agent. This contributed to our strong spot mix in the quarter. We're also seeing increased engagement from our carriers as a result of deploying new tools. Our improved AI freight matching model, combined with a better carrier user experience, helped drive a 25% sequential increase in digital offers from carriers in the quarter. This is a powerful tool, especially given how tight capacity is in the market. We're deploying these types of tools within complementary services as well, and AI is helping onboard new managed transportation customers faster and enabling faster delivery within Last Mile. We remain focused on putting these types of powerful tools in more hands and expanding technology's impact across our business to improve volume, margin, productivity, and service. I'm excited for the momentum we've built across the business. In brokerage, we're gaining share, winning lucrative spot opportunities, and achieving significant increases in gross profit per load. In managed transportation, we have a robust sales pipeline and are winning new customers and expanding with existing customers, which in turn will fuel outperformance in brokerage. In Last Mile, we're the largest provider of home delivery services for the biggest brands in the big and bulky space. We're rolling out and are driving adoption of new tools that are having a significant impact on our ability to capture new business opportunities, improve the user experience for our network of carriers, and reduce the time it takes for people to handle routine tasks. This is helping free up time for our people to build even deeper relationships with our customers and carriers, which in turn helps drive the sales flywheel within the business. On top of the winning formula our business has, the market is much more favorable now than it has been in the last three years. Capacity continues to leave the market, spurring a supply-driven recovery, and we're clearly in the early innings of it. We've made the most of the current market conditions to fuel our outperformance in the second quarter. Any increase in overall demand will result in even more outsized growth for RXO. We haven't hit normalized earnings for RXO yet. We're not even close, but the path is visible and achievable. I couldn't be more excited for the future. Now, Jamie will discuss our financial results in more detail. Jamie? Thank you, Drew, and good morning. Let's review our second quarter performance in more detail. For the quarter, we reported $1.8 billion in total revenue, gross margin of 13.9%, adjusted EBITDA of $40 million, and adjusted EPS of $0.06. We exceeded the high end of our outlook, driven by better than expected performance within brokerage and Last Mile. Let's talk about our lines of business in more detail. Brokerage revenue was $1.3 billion, up 32% year-over-year, and was 73% of our total revenue. The year-over-year revenue growth was primarily driven by increased freight rates and higher fuel prices. We continued to capture additional spot opportunities in the quarter, with our spot mix increasing sequentially by 900 basis points to 42%. Spot volume carries a significantly higher revenue and gross profit per load when compared to contract volume. Cost of transportation increased in the quarter due to a continued tightening of the full truckload market, driven largely by regulatory enforcement, increased spot mix, and higher fuel prices. Brokerage gross margin was 10.7% in the quarter, declining by 70 basis points sequentially. This was due to higher fuel prices, which represented an approximately 90 basis point headwind. As a reminder, rising fuel prices lead to increased revenue without meaningful corresponding increase in gross profit dollars, as fuel costs are a pass-through over time. Importantly, truckload gross profit per load increased by 11% sequentially, which is reflective of the significant increase in spot loads. Complementary services revenue in the quarter of $488 million increased 7% year-over-year and represented 27% of total revenue. Complementary services gross margin was 21.1%, up 130 basis points sequentially and down 170 basis points year-over-year. Within Complementary services, Managed Transportation generated $144 million of revenue in the quarter, up 1% year-over-year. Our automotive business contributed to that performance. Specifically, Managed Expedite volume was up almost 30% year-over-year. Last Mile generated $344 million in revenue in the quarter, up 9% year-over-year. Stops increased by 3%, higher than our expectations of approximately flat, despite continued softness in the housing market. RXO outperformed the broader industry, and we gained share within the big and bulky category. Now turning to slide eight, let's discuss our capital structure and balance sheet. Quarter end net leverage was 4.1x LTM bank-adjusted EBITDA, reflecting the working capital usage of the business, which I'll discuss shortly. Importantly, we anticipate our LTM leverage ratio to decline significantly by year-end as results continue to improve. At the end of the second quarter, our total available liquidity was $350 million. We also have a $200 million accordion feature on our ABL. RXO has a strong capital structure and liquidity position that gives us the flexibility to invest and grow across all phases of the freight cycle. Moving to slide nine, let's talk about cash. For the quarter, adjusted free cash flow was - $42 million, primarily driven by working capital. There were two key drivers, revenue growth and carrier quick pay. Revenue growth represented approximately 2/3 of our working capital usage in the quarter. This is consistent with how our model typically performs early in a freight cycle recovery. As revenue growth accelerates, it has an outsized temporary impact on working capital before it normalizes. The rest was due to increased usage of quick pay, primarily within managed transportation. As a reminder, quick pay gives our carriers the option to get paid faster than standard terms. We view this as a good use of capital with a strong return. It also improves carrier liquidity and strengthens our carrier relationships, which matter more than ever in the current environment. From a cash balance perspective, we ended the quarter with $15 million of cash. Based on our current forecast, we expect strong adjusted free cash flow conversion in the third quarter as we collect cash associated with the working capital used during the second quarter. Given our asset-light business model, we remain confident in a 40%-60% conversion over the long term and across market cycles. Before turning to our outlook, given recent developments in the industry, I thought it would be useful to walk through our carrier vetting processes and insurance program. We believe that our carrier vetting process is best in class. In fact, our cargo security program recently won two industry awards. Our business was built on large enterprise shippers, many of which have complex needs that require superior service. To meet those needs, we built a network of loyal carrier partners, each of which has met some of the strictest vetting standards in the industry. We have invested significant time and money, and people and process over the years to thoroughly vet carriers before assigning freight. As an example, we do not allow conditional carriers on the RXO network, and carriers must have an active authority for at least 90 days before they even have an opportunity to serve a customer. All carriers must speak with and be vetted by a member of our carrier team before they book their first load. These are a few of the policies that have led to our excellent safety record. Jared will provide more details about our program later in the call. As it relates to insurance, we maintain a comprehensive and data-driven program that we believe is appropriate given our scale and safety record. We have been in communication with our insurance partners and are confident that insurers will be even more focused on carrier vetting processes and controls as well as safety outcomes. We believe that our best-in-class process and safety record will continue to be a significant benefit when we renew our policies at the end of the year. While the situation is fluid, we're expecting the insurance market to be much more selective than in the past, which plays to RXO's advantage given our stronger infrastructure and tracking capabilities. We have heard some of the industry commentary around insurance renewals. Unlike RXO, we believe many brokers in the industry, small and large, are significantly under-insured, and those companies are likely to face larger increases in insurance capacity as well as premiums. Based on our initial analysis, we believe our renewal outcome should be more favorable than the broader market. Let's move to slide 15 and discuss our outlook. We expect to generate between $35 million and $45 million of adjusted EBITDA in the third quarter. Within brokerage, we're seeing continued momentum as the team improves contract pricing and capitalizes on spot opportunities. Last mile is expected to decline more than typical seasonality, primarily due to weaker demand and higher carrier cost. This is incorporated into our third-quarter outlook, and our broker's momentum will offset the impact. To close, we continue to believe that supply-side tightening is structural in nature, and any sustained broad-based improvement in demand will set up for a sharp inflection. RXO is well positioned to win. Now, I'd like to turn it over to Chief Strategy Officer, Jared Weisfeld, who will talk in more detail about our results and our outlook. Thanks, Jamie, and good morning, everyone. Let's start by reviewing our quarterly brokerage performance in more detail. Overall brokerage volume increased by 2% year-over-year, exceeding our expectations. Truckload volume increased by 2% year-over-year and was 76% of brokerage volume. Truckload volume improved every month in the quarter and outperformed the Cass Freight Shipments Index by 500 basis points. LTL volume increased by 3% year-over-year. This reflects the business that transitioned to managed transportation beginning in the second quarter, as we mentioned on last quarter's call. Across the verticals we serve in truckload, we saw significant improvements in automotive, food and beverage, and retail and e-commerce, all of which returned to growth for the first time in two years. This helped drive our profitable share gains. Let's talk about the momentum we're seeing in our spot business. Spot was 42% of our truckload volume in the quarter, increasing by 900 basis points sequentially and 1,500 basis points year-over-year. Because we're servicing our contractual freight exceptionally well, RXO is the broker of choice for spots, projects, and mini bids. This often includes spot freight we handle in partnership with our contract customers while we work with them to optimize service, volume, and price. This is part of our playbook at this point in the cycle. Contract volume remains foundational to our business and long-term growth and was 58% of overall truckload volume in the quarter. Contract rates continue to increase to better reflect current market conditions, and there is a long runway for growth. We're also focused on procuring capacity more effectively to improve our profitability. Recall, in times of market tightening, this acts as cost avoidance to the P&L. We've augmented our capacity to include dedicated and private fleets, which has enabled buy rate favorability on contract freight to improve by over 25% year-over-year. Moving to slide 10. In the second quarter, truckload revenue per load increased by 19% year-over-year, the fastest increase in five years. Note, this excludes the impact of both fuel prices and length of haul. Revenue per load benefited from a richer mix of spot freight and contract rates also moved higher. Let's now discuss market conditions and brokerage margin performance on slide 11. The truckload market remains tight, primarily driven by continued supply-side tightening as demand remains muted. From a profitability standpoint, truckload gross profit per load increased by 11% from the first quarter as a stronger spot mix more than offset the squeeze in our contractual book of business. Our unique algorithm allows us to capture significant spot opportunities, even in a soft demand environment. This is the power of the RXO model, delivering a significant gross profit per load increase despite a material increase in the cost to purchase transportation with market share gains. This is true competitive differentiation. I'd like to expand upon the structural supply-side changes taking place in our industry and the resulting impact on our business. Please turn to slide 12. The supply side has tightened materially, driven by federal enforcement actions and stricter safety rules. FMCSA's own estimate is that the vast majority of the roughly 200,000 non-domiciled CDL holders will not meet the new requirements, which is reflected in market indicators. Industry-wide tender rejections reached four-year highs in the quarter despite soft demand. Industry-wide volume, as measured by the Cass Freight Shipments Index, declined by 3% year-over-year in the quarter and has been down year-over-year since the beginning of 2023. Despite soft demand, the significant reduction in supply has resulted in additional spot opportunities, and our team has capitalized on them. Our truckload gross profit per load returned to year-over-year growth in the second quarter, and in July, it increased by approximately 20% year-over-year. With capacity this constrained, we'd expect any sustained recovery in demand to move freight rates meaningfully higher from here. Moving to LTL on slide 14. RXO's LTL brokerage volume continues to outperform the broader LTL market. We're winning LTL business with existing truckload customers and new customers that trust us with their freight because of our excellent service, increasing the stickiness of the relationships. I'd now like to give you some more details on our third quarter outlook. Let me first start with what we're seeing in the month of July in our brokerage business. Our spot mix increased further and was 50% of truckload volume. This, combined with continued contract repricing, has accelerated our truckload revenue per load growth. Revenue per load increased by more than 25% year-over-year in July, excluding the impact of fuel and length of haul. July truckload gross profit per load was up about 40% when compared to January. Turning to brokerage volume for the third quarter, we again expect to gain profitable market share. We expect truckload volume to be up a low to mid single digit percent year-over-year, accelerating from the second quarter growth rate. We also expect our LTL volume to grow by low to mid single-digit percent year-over-year. Based on the strength of our LTL pipeline, we anticipate our LTL growth rate to accelerate in the fourth quarter. Moving to truckload gross profit per load, we expect a higher spot mix and the phasing in of higher contract rates to result in another quarter of sequential truckload gross profit per load improvement. Let's now talk about complementary services. In managed transportation, we're winning new business and the pipeline remains strong. We expect automotive managed expedite volume to grow again on a year-over-year basis in the third quarter. In last mile, as a reminder, the second quarter is our seasonally strongest quarter. In addition to the typical seasonal decline in the third quarter, our outlook also incorporates an incremental sequential headwind of $3 million-$5 million. This is primarily due to weaker demand from our customers and higher carrier costs. Putting it all together, we expect RXO's third quarter adjusted EBITDA to be in the range of $35 million-$45 million, with brokerage momentum offsetting last mile weakness. We see a path to achieve the high end of our outlook. The midpoint of our range assumes truckload gross profit per load declines from July through September, with no meaningful uptick in demand. Before I close, I wanted to provide you with more details about our carrier vetting program, which both Drew and Jamie referenced earlier. Our approach is to build a vetting ecosystem around our carrier network so that we're not solely reliant on the FMCSA. This ecosystem is multilayered and always on. To ensure the highest level of integrity, our carrier compliance and carrier sales teams are completely separate, allowing our expert to enforce strict security protocols without operational bias. Our technology ecosystem includes trusted partners and vendors that help vet every partner thoroughly before they can access freight. We have a proprietary AI-powered system that evaluates carrier reliability and history. This system includes real-time identity verification with the FMCSA. We also aggregate real-time tracking from nearly all major ELD and visibility providers to eliminate blind spots. This proactive approach allows us to identify suspicious patterns long before they can impact our customers' supply chains. Our customers tell us that our carrier vetting program is a competitive advantage for RXO. As Jamie said, as we approach our insurance renewal, we believe that our rate of increase will be significantly better than the industry. To the extent higher insurance premiums become prevalent across the industry, these costs are likely to get passed on and lead to even higher freight rates. To close, we're entering the third quarter with strong brokerage momentum, with accelerating truckload volume and gross profit per load growth. Managed transportation continues to win new awards, and automotive expedite continues to grow. While last mile has headwinds, we are extremely well-positioned to gain share over the long term as the largest provider of big and bulky delivery. We are accelerating the deployment of our AI tools across the organization, decoupling volume growth from headcount growth. We are still in the very early innings of what is setting up to be a multi-year recovery. We're not even close to normalized earnings. There is a clear path ahead. Given the structural changes to industry capacity, any sustained recovery in demand would move gross profit per load and volume meaningfully higher from current levels. RXO is well positioned to deliver strong free cash flow and shareholder returns over the long term. With that, I'll turn it over to the operator for Q&A. We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Bruce Chan with Stifel. Your line is open. Please go ahead. Hey, good morning, guys. Very encouraging results here. You already gave us some good color on the spot mix, which seems pretty significant. Maybe you want to dig a little bit deeper there. One of your peers commented that they're still more focused on contractual volumes because they think it's more sustainable. Maybe we could get your perspective on that. How enduring do you think t he spot opportunity is here, just based on what you're seeing with capacity and project business, for example. Do you have a target mix in mind? Jared, I think you said there isn't any reason why the higher spot would affect your ability to service contract, but maybe any thoughts on incremental hiring needs to address the increasing mix? Good morning, Bruce. When you look at the contract book of business, you have to start there. The service that you provide on the contract business is what allows you the right to participate on the spots. We built the business on the contractual side. We're servicing that business extremely well. When you look at our tender rejections, they're below what the industry average is right now, which our customers appreciate during this tight environment. We have to go to our customers, and we've got to provide solutions. On the solution side, it's not just going out there and bidding a spot load. It's looking at the spot loads that are coming in, we see time and time again that we're able to go out there and we're able to create a solutions for our customers for 30, 60, 90 days that turned into a project for us. The next thing I would say is on the tech side. We talked last quarter of our new spot quote agent tool. We're seeing a lot of success off of that. One of the things that customers look for on spots is the speed of response, this has definitely helped us in that area, we're seeing significant gains. The last thing that you hit on is bandwidth. You have to be able to have the bandwidth to cover the loads. You can have the service, you can have the solutions, if you don't have the bandwidth to cover the loads from a coverage perspective, you can't participate in the spot market. As we've told you all for three years, we've been staffed for growth, we're hitting on all marks right now for the customers. That's super helpful. Just any thoughts on whether you have a target mix in mind? If you would've asked me a year ago, I would've told you 60/40 was a good target mix. When you look at what's gone 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. I don't know that there's an optimal mix. Our goal is just to service the customers well. We don't really look at it on spot versus contract. We look at our overall service metrics with the customer and being able to create results for them. I do anticipate spots continuing to rise from here. Okay, awesome. I'll hand it over. Thank you. Your next question comes from the line of Ken Hoexter with Bank of America. Your line is open. Please go ahead. Hey. Great. Good morning, Drew, Jamie, and Jared, and team. Maybe talk a little bit about the $35 million, $45 million outlook, if there are parameters on that, kind of top end, bottom end, what gets you there. Within that, your thoughts on brokerage margins going from the second quarter to third quarter, given your expectation for higher GP per load and growth across truckload and LTL. Hey, Ken. It's Jared. Good morning. When you look at the range that we provided for the third quarter of $35 million-$45 million, we talked about embedded within that range is a compression in gross profit per load from the July jump-off point. We've got that declining by about, call it, 10% from July through quarter end. To the extent that we outperform, certainly, as we said, there's a path to the high end. That's really the biggest variable across when you look from the bridge from Q2 to Q3. Truckload volume growth is accelerating. It's going to be up low to mid-single digits year-over-year. I think it's also important to put in context, this is despite incremental last mile seasonality, which is Q2 is our strongest quarter of the year. We do have embedded within the outlook incremental $3 million-$5 million of headwinds given some weak demand and rising carrier costs within last mile. Despite that, we're able to go ahead and more than offset that with the strength in brokerage. To your point, in terms of gross margin, we've got spot and gross profit per load increasing again sequentially from Q2 to Q3. Great. Thanks, Jared. Then, I guess, thanks for the oversight on the carrier insurance. Those are clearly the topics of the day. I think, Drew, your interesting points on the scaling of agentic AI. You talked a bit about that last quarter. Now you're seeing five times more spot quote emails processed. Maybe can you talk about the scale of the program? How big is this in terms of your winning that spot? Is that kind of what's defining this? Is that the shift that we're seeing? Is it maybe more? Just talk about the size and scale of that. Thanks. Yeah. We're in the early innings of our agentic AI journey. I think when you look at it, our team is seeing benefits. Productivity continues to increase. The biggest thing that as you walk onto the brokerage floor, they look at it as how does this help us service our customers better? How does this help us add gross margin dollars? How does this help us source capacity differently? We're seeing wins on all front. They're able to get to their customers faster. They're able to have more touch points. From a tracking and tracing standpoint, we see better visibility for our customers. On the carrier side, we're seeing a lot more adoption, it's creating higher digital loads on the carrier front. I think we're in the very early innings of it. We are making big investments there, we'll continue to make investments there. Our journey's just getting started. When you look at our tech team, they're not just great technologists, they're also people who understand the business. We're partnering great operators with great technologists, which is creating good results for us. Great. Thanks for the time, guys. Your next question comes from the line of Stephanie Moore with Jefferies. Your line is open. Please go ahead. Great. Good morning. Thank you. Appreciate all the color you've provided about your vetting process and the details behind that. Is this vetting process leading to some of the market share gains that you're seeing today? Are you already seeing shippers gravitate towards larger brokers or brokers like yourselves that have these standards in place? Absolutely. When you look at doing business with large enterprise customers, you're talking Fortune 100, Fortune 500 companies, it's the topic of every conversation. Our conversations didn't just start over the last couple of weeks. Our carrier vetting process has been differentiated because of how we built the business. Our business was built on high cargo value shipments, just-in-time shipments. Safety and service has always been at the forefront. When you're working with the biggest brands in the country, making sure that your service level metrics are there are important. I think it's important to note, these aren't new relationships for us. These are people that we have delivered results for time and time again. Our top customers have been with us for 16, 17 years on average, they know the results that we've created for them. You're seeing the first inning of the market starting to turn, it's good to see that they know who can service their freight the best in times of stress, that's RXO. Got it. Just as a follow-up, you commented on being staffed for growth here, part of why you've been able to successfully win some of these spot loads. Could you maybe talk about how much growth you can handle before needing to ramp hiring, or if or when demand really starts to bounce back? Thanks. Yeah. The way that we look at growth is we want to be able to grow 15%-20% overnight because we know that the market can turn very quickly. You saw that with spot loads increasing 900 basis points sequentially. We know the market can turn quickly, we want to be staffed for growth on the account side as well as on the carrier side. While technology is a differentiator for us, this is still a people business built on relationships, those take time. You have to invest in the training. It's not just looking to hire now. We've been hiring. Productivity continues to increase with the hiring that we're doing. Our hiring, we're not doing at the same rate because of the technology tools that we have built. We're growing volume faster than what we're adding headcount. Got it. Thank you, guys. Your next question comes from the line of Chris Wetherbee with Wells Fargo. Your line is open. Please go ahead. Hey, thanks. Good morning. Maybe if we could talk a little bit about July. Sounds like trends for you are quite good in July. We've seen spot rates come down, which I know is normal with seasonality, but it doesn't sound like there's been any sort of deceleration in the spot demand for your services. Maybe can you help us sort of piece apart what you're seeing from a share perspective and maybe what you're seeing from a broader market perspective here in the early third quarter? For sure. Chris, hey. It's Jared. To your point, the momentum is continuing into July, despite the seasonal softness of the month. Our spot mix increased further and was 50% of truckload volume, despite obviously July is typically a weak month from a seasonality perspective. I think that speaks to what Drew was just talking about. We are staffed for growth. We are capturing spot opportunities, and we're also pairing that with some of the best technology that's in the industry, and that AI spot quote agent that we talked about, we're seeing some nice results with. I think that speaks to some of the idiosyncratic levers that we have at RXO, where ultimately, while it is softer month on month from an industry-wide tender rejection standpoint, there are still lots of spots to be had, and our team is capitalizing on them. When you combine that with some of the contract repricing that we've talked about, revenue per load growth excluding fuel accelerated, and we were up 25% year-over-year, and that's translated into July truckload gross profit per load up about 40% since the beginning of the year. A ton of momentum in the business as we entered the third quarter. That's super helpful. Drew, maybe just sort of coming back to the Montgomery sort of liability issue, I guess a little bit bigger picture. It sounds like you guys feel confident around the insurance renewal dynamics, I guess. I know it's difficult to look at a "pipeline" of potential risk out there, but is there any way you can help us sort of think about it conceptually? How are you managing that process? Because clearly, I think plaintiffs' attorneys can get a little bit more aggressive once we've seen some of these decisions that are out there. Maybe just help us sort of frame up that potential risk and how you're managing it. I think, Chris, it's important to note that when you look at these insurance discussions that you're referencing, not all of us are starting at the same starting point. This is not a new discussion for us. When you look at our coverage, it's in the top percentile. It's right there with the largest asset-based carriers and some other peer in the industry that have significant coverage of excess liability. I think the starting point is not the same. There's top five and 10 brokers out there who are not in the same realm from an insurance coverage. The conversations with the insurance company is not something that we're just starting this year. If you look at the last couple of years, we've got a great data point out there. You saw the industry insurance costs rise. We were significantly better than what happened in the industry, the feedback that we got from our insurance brokers was that our carrier vetting processes were differentiated in the market. That's because of how we built the business of what I referenced on earlier. It was built off of service and safety, of being able to do just-in-time shipments, high cargo value shipments. The vetting process is different on those. I think the other thing that we could point to clearly is when you look at our claims record and our safety record, it is significantly better than the overall industry average, I'm talking asset-based carriers and brokerage. That's a selling point for us with customers. Now whenever you start to look at what happens, these customers, especially enterprise customers, are not just looking at what are your carrier vetting processes, they're also looking at where you're at from the insurance side, and we're in a good position on those. We see this as a great opportunity for us to be able to go out there and take market share and price. Got it. That's very helpful. Appreciate the time, guys. The next question comes from the line of Fadi Chamoun with BMO Capital Markets. Your line is open. Please go ahead. Yeah, good morning. Thank you. Just clarification maybe for Jared first. On the July data and what you're assuming for the rest of the quarter, I'm understanding that based on July, you're probably tracking towards the higher end of range for your guidance. What you've assumed for the rest of the quarter, is that typical kind of seasonality for you, or is that educated by what you're seeing in the market, or just a little bit of conservatism? I just want to understand what you need to see to see the higher end of that range for your guidance. The follow-up is, maybe for Drew on all this liability issue. It sounds like you're doing all you can on the vetting process and insurance and all that kind of envelope, are you considering or looking into other things that you can do to protect your company in this kind of post-Montgomery world? What does a resolution of this overhang look like from your perspective? What do we need to see to maybe have a little bit more clarity and a finality to this kind of liability issue from your perspective? Thank you. Hey, Fadi, it's Jared. I can start and hand it over to the team for the second part of the question. With respect to July, to your point, July is starting off quite strong, we've got revenue per load up more than 25% year-over-year, excluding fuel. Gross profit per load up about 40%. 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 three to five years, it has been about flattish in terms of historical cadence. To the extent that remains true, certainly it would be at the high end of our outlook of $35 million-$45 million. I think that's consistent with the commentary that we gave that we do see a path to the high end. We're certainly starting off the quarter quite strong as we capture spot opportunities with spot at about 50% of the mix in July. I'll hand it to Drew for the second part. Yeah, Fadi, we didn't just start thinking about protecting the company. I think that when you look at the carrier vetting process, that's differentiated. We know who we're doing business with. When you look at the RXO Connect platform, when you come into it, 75% of the time you're coming back to do business with RXO within a week. So for us, the repeat carriers that come back to the system time and time again create a consistency and an expectation on service. We've got flywheels that pull carriers back to us. We give them discounts on fuel, tire, roadside maintenance that is a differentiator for them. Then also, we base those things off of the service and the volume they're doing with us. We've been able to build the business that is, we don't judge our service metrics as a brokerage. Whenever we walk into a customer, we walk in there and say, "What's the best service metrics you've got? How are we exceeding that?" That's how we built the business. I think that one of the things that would help is as we continue to get better data from the FMCSA. Obviously, our vetting process, and Jared alluded to this in his prepared commentary, go above and beyond what is out there. The more data that we've got from the FMCSA, the better that we in the industry can continue to operate in. Your next question comes from the line of Ravi Shanker with Morgan Stanley. Your line is open. Please go ahead. Great. Thanks. Morning, gentlemen. I think you said that expedited was up 30% or something. Does that blow-out result kind of point to a pull forward of demand here? It feels like this is the very early innings of the demand recovery, but expediters usually ramps only towards the end of the demand cycle. Any color there would be great. Hey, Ravi. To your point, the team did a nice job in the quarter from a managed expedite standpoint within our managed transportation business with expedite volumes up about 30% year-on-year. The short answer is no, we don't think this represents a pull forward. We think this is a function of the team executing well. Remember also, we're in a pretty tight truckload market. You think about the overall expedite business, RXO, we are the largest provider of ground expedite in North America, and that's when our customers come to us as a trusted partner because we need to help them with their expedite moves, and this is sense of urgency in terms to make sure that the plants continue to operate. You're operating within a tight market. We are seeing demand from our expedite customers up 30% year-over-year, which is great to see. Remember also, we are still very far from peak. We are 25%+ below peak levels, and we've also onboarded a ton of new business over the last few years. There's a large runway for growth within expedite. Got it. That's very helpful. Maybe as a follow-up here to the earlier question on how sustainable the spot trends might be. Obviously, again, feels like there's a long way to go in the cycle, but at the same time, there's a thesis out there that spot is particularly hot right now because of contract load spillover. Mini bids will probably fix that and move more business towards contract towards the second half of the year and into 2027. I'd just love more color on what do you guys think about that, and what do you see in terms of mini bid activity? Thank you. Yeah. Again, we don't look at spots different than contract. It's about servicing the customer for us, and spots are a function of tender rejections. You pick up spots as, for us at RXO, we pick up spot loads whenever other carriers are out there rejecting loads, and we're going in and we're providing solutions. In some of those cases, Ravi, we're turning those spots into contract exactly how you're talking about. What happens there is you're resetting the contract gross profit per load at a more reasonable rate than what it was six months ago, because the market has moved up since then. I do expect contract rates to continue to increase, which will have a strong correlation with what happens in our contract gross profit per load business. I also think capacity is still coming out of the market. I think we're in the early innings of spots. We haven't seen spots in a long time. I think one of the metrics that we pointed you all to in the past is as SONAR FreightWaves data starts crossing the 10% threshold on tender rejections, you typically start to see spots, and it's a little tight there at 10%, 11%, 12%. Obviously, as you get into mid-teens, the opportunities are there. Then it's important who's got the relationships with the customers, who's serviced the customers, who's delivered results for them in the past, and who's got the bandwidth to be able to handle the spots. Right now, we're proving to be the clear provider of choice there. Very good. Thanks, guys. The next question comes from the line of Brandon Oglenski with Barclays. Your line is open. Please go ahead. Hey, good morning, team. Thanks for taking the question. Maybe for Jamie or Jared, I know you guys talked about upcoming insurance renewals, is that cost base is factored into your guidance for the third quarter? Are you talking beyond the near term as you look out into 2027 or 2028? Thank you. Yeah. Hey, this is Jamie. Drew gave a good overview of how we view insurance and why we think we're positioned in an advantageous place. It goes back to care vetting back to our safety record. Our renewals happen late December of this year, we have nothing baked in for the rest of the year because our rates are set. As we look forward, one thing we would call upon the last two years in particular, our increases have been significantly below industry average. The feedback that we've gotten has been directly because our vetting process was very good and our safety record was very good. We expect going into this year's renewal cycle, that is going to be more important than ever for every carrier, we've already been through that many times. We feel like we're going to be significantly advantaged as we go into the market for renewal processes. The only thing that I would add, I agree completely with what Jamie said, but as this starts to reset and customers start to look at who they're doing business with, this is another market share opportunity moment for us because there's only a handful of providers that have the type of coverage that we have. It's a differentiator for us in the market. Appreciate that from both you and Drew and Jared. I think you both mentioned normalized earnings and how you're not even close to it yet. I guess we would agree, too, but if we were to help investors try to understand what is your idea of normalized earnings for this company now, especially post-Coyote and post-Montgomery? For sure. Brandon, this is Jared. Good morning. When you think about where we are right now, to your point, we very much agree. We are nowhere close to normalized earnings. There's a clear path ahead. When we think about this business through cycle, I think it would be at least a mid-single-digit EBITDA margin business. That's prior to any type of advantage that we'll have as we think about deploying technology across the organization to lead to further productivity gains. I think that's your starting point. You also have to think about further improvements in gross profit per load. The fact that we're seeing the current gross profit per load up 40% since January, and that's with Cass Freight Index still negative year-on-year. Demand is a huge factor here. Demand has been down as measured by Cass every month, year-on-year since January 2023. You think about the housing market as a big component of the freight market, can be up to 20% of overall freight demand, and obviously, the housing market is quite soft right now. I think that gets us even more bullish over the long term based on the structural changes that are occurring in the industry. Despite soft demand right now, we are seeing significant increases in gross profit per load. That's incremental leverage as well. It's about the other lines of business continuing to add more managed transportation, freight under management, continuing to execute on last-mile profitability initiatives, growing out the middle mile. There is a ton of opportunity for growth. You think about just getting volume back, more opportunities for gross profit per load and at least a 5% EBITDA-type margin. We're talking about a long runway from growth from current levels. Brandon, just as a reminder for everyone, that the transportation market moves really, really fast, and most of the time you're not in a normalized earning state for long because you're running right past it to the upcycle, which is high single digits to low double digits. Thank you both. Your next question comes from the line of Bascome Majors with Stephens. Your line is open. Please go ahead. Thanks for taking my questions. I wanted to circle back to the insurance questions and at least get us a baseline where we could do some sensitivity and investors can maybe do a better job of determining how much is too far on some of the fear in the stock price relative to potential earnings impacts of higher insurance and claims. You talked about a late December renewal earlier. Can you help us size up what your current premiums are in the business? I don't know if that's a percent of revenue or percent of brokerage revenue, but just anything to help us frame where we are today. You talk about expecting to do much better than the industry. Do you have an expectation on the industry renewal that we can use as a bogey there? Thank you. Yeah, Bascome. This is Jamie. First of all, our annual spend on casualty insurance runs from about $15 million- $20 million annually. That's the base we're starting on. I think Drew, when he gave his remarks, gave a very important point. Our starting point in regards to how much insurance we have is you got to take that into account because we are in the top percentile of amount of insurance tower that we have. As we look forward to next year, I think we'll have the exact same experience we've had in prior years, which is our vetting process, our safety record is at the top of the list of things carriers, the insurance providers look for. We're going to be best in class in that, and we've experienced that over the last two years. As it looks going into next year, we don't have a specific number to give you, but we will be, we believe, significantly better in the industry, much less impacted by an increase because of the program that we already have had in place for a long number of years and the amount of insurance that we're starting with. It's something we're working hard on. We're talking to our providers. At this point, we feel like we'll be at the low end of the range in terms of impact. I agree completely with everything Jamie said. We also have a claims history to be able to back that up that they can point to. Our claims history is significantly better than the industry. Again, we're not at the same starting point. We have better results than where the industry is. We've been recognized for our carrier vetting process. As we walk out of this, we feel like we're in a good position going into these negotiations on the insurance side, but we're in a good position with customers because there's not many people who have this. When you look at the opportunity to be able to go out there and service the customers of who they're going to turn to, it's going to be people they trust, people that have the coverage, and we're in the pole position there. Drew, thanks for that add on there. You kind of walked into my follow-up. On the claims side of the question here, can you share what your deductible or retention is on a per claim basis in the policy today? Are there any claims expenses of magnitude in the P&L historically rolling into adjusted EBITDA? Thank you. This is Jamie. We have a $5 million deductible per occurrence in our insurance program. We've had that in place for a number of years. Goes along with where we are in our tower. In terms of claims, our process, we have a very robust risk management program. We monitor all incidents, anything that becomes a claim to watch how that claim is progressing, the merits of the case. We have an actuary engaged that looks at all of our claims, helps us make a determination of what type reserves we should be taking in our P&L. Every P&L has a reserve that we believe is adequate and materially correct in terms of what might could occur. That process has been in place since the beginning of the company. It's very robust and we feel like we're very well reserved at this point. Thank you both. Thanks, and congrats on your new role, Bascome. The last question comes from the line of Scott Group with Wolfe Research. Your line is open. Please go ahead. Hey, thanks. Morning. Two things, I'll just lump it into one for sake of time. You said July gross profit per load up 40% from the beginning of the year. Where is that level today relative to sort of the historical average? And then, just, you know, there's been obviously a lot of questions on insurance side. Just I want to follow up on Bonnie's question about managing the business and de-risking the business. What thoughts or steps are you guys thinking about given the balance sheet and at least potential for nuclear verdicts to come? What steps are you thinking about to shore up the balance sheet? Thank you. Scott, I'll start on July. When you look at July, if you look at, call it the last five years, it's getting close to in line with average of what the last five years has been. We think there's still upside off of that from where we sit because it's still nowhere near what peak gross profit per load has been. It does start to get closer to the five-year historical average. On your question on protecting the business, I think, again, it starts with what we've already been doing and stuff that is not new to us. We haven't changed our processes a lot over the last two weeks, or any over the last few weeks. We already had a very good and robust carrier vetting process that's been recognized as best in class. Our customers tell us it's best in class. I think when you look at knowing who you're doing business with is extremely important. I think for us, being able to go out there and set ourselves as a differentiator in the market of having technology that goes through our system and our carrier network continuously throughout the day to make sure that everybody's up to date on the FMCSA, to make sure that their safety records are up to date, to see if there's been any claims brought out against them that we can update our system in real time, is a differentiator in the marketplace. We feel good about the processes that we have in place, but we're always looking to live in a state of continual improvement, and we'll look to continue to improve the company as we go forward. Yeah. Scott, the only thing I would add to that is, back to vetting, so important. We've got a long history, a lot of investment in people, good process, a lot of technology. While we have made no material changes because of Montgomery, we constantly are trying to get better at that, and we will continue to do so. The more information, Drew mentioned earlier, the more information we can get from FMCSA, the better that process goes. We're pushing that as we talk to regulators in terms of data that will make this industry better and better. We already are a leader. We have top-of-the-line safety claims. We're significantly better than industry average. It gets back to our insurance program we have today. We have a very comprehensive program. It's very data-driven in terms of how we structure our insurance tower. We're in the top percentile of cover, so we're starting in a really good place. We have a strong balance sheet. We will continue to strengthen that. We feel like we're well-positioned to address these issues. We intend to keep safety at the forefront because that is the most important, and we take it serious and our customers like it, and we believe we're well-positioned for this. We have reached the end of the Q&A session. I will now turn the call back to Mr. Wilkerson for closing remarks. Thank you, Erica. Our RXO team delivered strong second quarter results. The momentum that we built across the business has continued into the third quarter. Capacity continues to tighten, tender rejections are elevated. Shippers are turning to trusted partners that have scale, service, technology, and disciplined carrier vetting. RXO has all of the strengths. That's enabling us to win in this current environment. At the same time, our technology is creating meaningful differentiation. The agentic AI tools we're deploying are already improving volume, margin, productivity, and service. We believe there's a long runway to expand across the entire company. We're still in the early innings of a multi-year recovery. We're not even close to normalized earnings. The path is clear. With our people, our customer relationships, our technology, and our asset-light model, RXO is well-positioned to deliver meaningful earnings growth, free cash flow, and shareholder returns over the long term. Thank you all for your time today. This concludes today's call. You may now disconnect.