RXO, Inc.

of risks and 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 FEC 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 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. There are four main points I want to convey this morning. First, we completed the most significant technology milestone of the Coyote integration, and our carrier network along with RxO carrier representatives, are now covering freight out of one transportation management system. Second, we're again raising our estimate for acquisition synergies. We now expect more than $70 million of cash synergies, which includes both operating expense and capital expenditures. As a reminder, this does not include the significant cost of purchased transportation and cross-selling benefits we expect to see. Third, in brokerage, we achieved 26% less than truckload volume growth. We also continue to see productivity increases through our investments in technology, including AI and machine learning. Fourth, we maintain the momentum that we achieved over the last several quarters in complimentary services. Managed transportation increased the synergy loads it provides to brokerage, and we grew last-mile stops by an impressive 24% year-over-year. Putting it all together, our strong and growing business has significantly more scale and is powered by cutting-edge technology that is driving continuous productivity improvements. This uniquely positions RSO for increased earnings power and free cash flow conversion over the long term and across market cycles. I'll start by giving you an update about the integration of Coyotes. I mentioned earlier that our carrier and coverage operations are now working out of one platform, Freight Optimizer. Our carrier network now has access to significantly more freight, and our reps now have access to an even larger network of carriers to cover that freight. The increased capacity is helping us to find the best truck for each load, enabling us to better serve our customers. The early results from the migration have been encouraging. We've proved the scalability of our tech, which remains stable during the migration process. Second, our carrier operations team is working together as one network much faster than expected. As an example, about 20% of Legacy's Coyote sprate was covered by Legacy RxO reps, and about 20% of Legacy RxO's sprate was covered by Legacy Coyote reps. This exceeded our expectations, and we're already seeing signs of buying better when it comes to purchase transportation. We're now turning our attention to migrating legacy Coyote customers. In fact, we've already migrated all the master customer data, and we're already managing several legacy Coyote customers within our platform. We continue to expect the bulk of our tech integration will be complete by the end of the third quarter. Our technology and coverage teams have been working around the clock since the acquisition to ensure a smooth and successful transition. I'm extremely proud of what they've been able to accomplish in such a short amount of time. As the integration has progressed, we've found additional opportunities for synergies and now expect to achieve more than $70 million of total cash synergies, including more than $60 million of annualized operating expense synergies. This excludes the significant opportunities for improving our cost of purchase transportation and the impact of our cross-selling efforts. Jamie will talk in more detail about the synergies later in the call. Now I'd like to discuss our first quarter results, which were in line with our expectations. RSO delivered adjusted EBITDA of $22 million within the guidance range we provided you last quarter. RSO's company-wide gross margin was 16% in the quarter. Brokerage volume for our combined business declined by 1% year-over-year. We outgrew the market as measured by the cash rate index, despite a significant automotive headwind. Our volume performance was better than anticipated due to a substantial 26% year-over-year increase in LTL volume. Full truckload volume decreased by 8% year-over-year. Brokerage gross margin was 13.3% in quarters. We continue to achieve robust productivity gains in brokerage, driven by enhancements to our tech platform. Productivity over the last 12 months increased by about 17%, and over the last two years, by almost 40%. Our significant investments in technology, including AI and machine learning, have a strong return on investment. While we've made substantial productivity gains, we're still in the early innings and have lots of runway for further improvement. Momentum continued within complimentary services. Managed transportation increased the number of synergy loads it provided to brokerage in the quarter. And last mile, stops grew by 24% year over year, accelerating from the fourth quarter growth rate of 15%. We're also seeing the benefits from the productivity initiative The best-known brands in the big and bulky space are increasingly turning to RxO for last-mile delivery because of our exceptional service, scale, technology, and financial stability. Complementary services gross margin was 21%. I now want to talk about the overall market conditions. The weather-related tightness we saw in January and discussed on last quarter's call eased as the quarter progressed. We quickly reduced our cost of purchase transportation, resulting in an improved gross profit per load throughout the quarter. We also made significant progress improving Legacy Coyote's profitability. Legacy Coyote gross profit per load improved by approximately 20% from January to March. We made further progress in April and will continue to drive improvements. The current environment remains highly fluid. In response to changing trade policy, our customers are employing a variety of different strategies. Some have staged inventory in advance of increased tariffs, and others are taking more of a wait-and-see approach. This uncertainty is impacting near-term truckload demand. Specifically, in April, RXO's truckload volume was down by a mid-single-digit percentage when compared to March. RXO has several company-specific drivers improved gross profit per load in the second quarter. We also expect to grow EBITDA significantly when compared to the first quarter. The flexibility of RxO's asset-light model will continue to drive our performance in all market conditions. Jamie and Jared will discuss our outlook in more detail later in the call. RxO remains well-positioned to drive increased earnings over the long term. Our technology migration will enable us to realize the benefits of our increased scale, including cost of purchase transportation opportunities. As a reminder, we more than doubled our truckload volume as a result of the Coyote acquisition, which has provided us with better lane density. We're continually improving our tech platform, even as we complete integration. Our powerful pricing algorithms leverage AI and machine learning, and our employee-facing software continues to help improve productivity. When those algorithms are unleashed on our much larger set of carrier and customer data, we expect massive benefits. Our cross-selling initiatives are fueling new wins across the company. We're growing stable sources of EBITDA, including in LTL and managed transportation, and our last mile business has tremendous momentum. We have even more tenured talent within the organization, and our people are energized and dedicated to the success of our customers and our carrier network. We've been proactive when it comes to reducing costs, which has helped us mitigate the effects of a difficult freight market and will provide us with significant operating leverage once the market improves. We have a strong balance sheet and a unique platform that provides us with opportunities to drive both organic and inorganic growth. Now, Jamie will discuss our financial results in more detail.

Jamie? Thank you, Drew, and good morning. Let's review our first quarter performance in more detail. Our results were in line with our expectations in the first quarter. We generated $1.4 billion in total revenue. Gross margin was 16%. We delivered adjusted EBITDA of $22 million. Our adjusted EBITDA margin was 1.5%. One item to note regarding our EBITDA results was the impact of our automotive business. The slowdown in automotive volume represented a company-wide gross profit headwind of approximately $10 million year over year. This volume, because of its time-critical nature and higher service requirements, typically carries a higher gross margin with strong flow-through to EBITDA. Below the line, our interest expense was $9 million. For the quarter, our adjusted earnings per share was negative 3 cents. You can find a bridge to adjusted EPS on slide 9 of the earnings presentation. Now I'd like to give an overview of our performance within our lines of business. Brokerage revenue was $1.1 billion and represented 72% of our total revenue. Please note, we have a small piece of business within legacy Cody brokerage that is fee-based in nature. similar to our managed transportation business. We made a decision to account for this on a net revenue basis, which reduced reported revenue by approximately $35 million. This change had no impact to gross profit or adjusted EBITDA. Turning to volume, we had strong LTO growth driven by new customer wins, offset by a decline in truckload volume given continued soft rate market conditions. Broker's gross margin was 13.3%. Complementary services revenue in the quarter of $415 million increased by 8% year over year and was 28% of our total revenue. Complementary services gross margin of 21% remained strong and increased by 40 basis points year over year. Now let's move to each line of business within complementary services. Managed transportation generated $137 million of revenue in the quarter, down 10% year-over-year. Managed transportation continues to be impacted by lower automobile volumes in our managed expedite business. Our last mile business generated $278 million in revenue in the quarter, about 20% year-over-year, better than our expectations. Last mile stops grew by 24%. accelerating from last quarter's growth rate. We continue to gain share within the big and bulky category, and are winning profitable business from both existing and new customers. We also continue to see the benefits from the productivity initiatives we launched last year. Let's now discuss cash, and please refer to slide 10. Adjusted free cash flow in the first quarter was $6 million. a 27% conversion from adjusted EBITDA. The conversion rate was impacted by lower profitability at the bottom of the freight cycle. Longer term, given our asset-light business model, we remain confident in the 40% to 60% conversion through market cycles. We ended the quarter with $16 million of cash on the balance sheet, consistent with our expectations. As we discussed in February, our fourth quarter cash balance was higher than anticipated due to the timing of transaction payments related to the Coyote acquisition, which was paid in the first quarter. We also had a cash usage of $17 million for tax withholdings, which was the final tax payment related to pre-spend RSUs. As you can see on slide 11, our liquidity position continues to be strong with more than $575 million of total committed liquidity at the end of the first quarter. Quarter-end net leverage was 1.9 times trailing 12 months bank-adjusted EBITDA, but slightly when compared to the prior quarter. We continue to have significant capacity to deploy our balance sheet in line with our balanced capital allocation philosophy. Let's move to the COTI integration. We're again increasing our synergy estimates. We now expect more than $70 million of cash synergies. We expect more than $60 million of annualized operating synergies, $10 million higher than last quarter's estimates. We also expect at least $10 million in capital synergies, which will benefit 2026. It's important to note that the cash outlay required to generate these savings is approximately $50 million, which will generate a strong return of almost 150%. These synergies exclude opportunities for optimizing our cost of purchase transportation spend. With carrier and coverage migration complete, there is a significant opportunity to purchase transportation more effectively. As a reminder, we had a combined brokerage transportation spend of about $4 billion in 2024. A 1% improvement in buy rates would represent a $40 million opportunity. These synergies also include revenue and cross-selling opportunities across the company, which have already begun to materialize. Now let's discuss our expectations for the second quarter. The current macroeconomic environment is creating significant shipper uncertainty, which we've incorporated into our outlook. For the combined company in the second quarter, we expect to generate between $30 and $40 million of adjusted EBITDA. For the second quarter, you should model depreciation expense of approximately $17 to $19 million, amortization expense of approximately $9 to $11 million, and an adjusted effective tax rate of approximately 30%. Jared will provide more details on our second quarter outlook shortly. Slide 16 includes our 2025 modeling assumptions. There are a few things I'd like to highlight. We're reducing our 2025 capital expenditure estimate by $10 million to approximately $65 to $75 million. We're also lowering our depreciation expense estimate accordingly and now expect depreciation to be in the range of $65 to $75 million. We're also lowering our 2026 capital expenditure estimate, which will benefit from the previously discussed HODES synergies. We anticipate 2026 CapEx to be between $45 and $55 million, down materially from 2025. You'll also notice this year's estimated adjusted effective tax rate moved higher and is expected to be between 30 and 33 percent. This is solely a function of lower pre-tax income given the current state of the freight market. Our long-term target of 25 percent remains unchanged. Before handing it over to Jared, I want to highlight the benefits of our asset-light operating model, which is a key strategic benefit, especially in periods of volatility. We have minimal maintenance capex requirements and can move quickly on cost. While we continue to operate in a soft environment, we're investing for the long term, making significant progress with the integration of COTI and scaling the business to position us for when the market recovers. We've taken out significant cost, executed aggressively on our synergy targets, and successfully migrated carrier and coverage operations, enabling opportunities for cost-to-purchase transportation synergies. These actions position us well to produce strong results over the long term. 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.