Welcome to the RXO, Inc. Q4 2025 Earnings Conference Call and Webcast. My name is Ina, 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 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 Investor Relations 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, James E. Harris, and Chief Strategy Officer, Jared Ian Weisfeld. This morning, I want to cover three key points. First, we continue to take decisive actions to mitigate the effects of the prolonged soft freight market and significant capacity reductions which are squeezing our brokerage gross margin. We have a rigorous disciplined approach to optimizing our cost structure and our gross profit per load. We are taking steps to augment our carrier base, grow brokerage volume, grow businesses that are stable sources of EBITDA, and leverage our deep customer relationships and last-mile hub network to design unique solutions for customers. Second, we have a strong brokerage late-stage sales pipeline for new business, which grew more than 50% year over year. Most of that growth is driven by full truckload. Our managed transportation business continues to win and also has a very strong pipeline. Third, we finalized a new asset-based lending facility which replaces our revolver. Our new facility is right-sized for our needs, decreases our cost, and provides us with increased flexibility across all market cycles. Now let's discuss our fourth-quarter results. In brokerage, overall volume declined by 4% year over year. Less than truckload volume growth of 31% was more than offset by a 12% decline in truckload volume. Brokerage gross margin was 11.9%. In complementary services, managed transportation was awarded more than $200 million of freight under management, and last-mile stops grew by 3% year over year. Complementary services gross margin was 20.2%. Overall, RXO's EBITDA was $17 million in the quarter, below our expectations primarily due to a more pronounced brokerage margin squeeze towards the end of the quarter. This was primarily driven by capacity exits which led to…

Gross margin of 14.8%, adjusted EBITDA of $17 million, and adjusted EBITDA margin of 1.2%. Gross margin and adjusted EBITDA were negatively impacted by the increase in cost of transportation within our brokerage business and soft demand within Last Mile. Our interest expense was $9 million. For the quarter, our adjusted loss per share was $0.7. You can find a bridge to adjusted EPS on Slide eight of the earnings presentation. Of note, we had a $12 million goodwill impairment associated with the restructuring of our express service offering within our managed transportation business. This impairment was noncash. Turning to our lines of business. Brokerage revenue was $1.1 billion and was down 14% year over year due to continued soft freight market conditions. Brokerage represented 72% of total revenue in the quarter. Cost of transportation increased in the quarter due to tightening of the full truckload market, primarily driven by regulatory developments and associated capacity exits. This occurred without a meaningful corresponding increase in sales rates or sufficient spot opportunities causing a margin squeeze on our contractual book of business. Jared will provide more details later in the call. Given the market tightening, and resulting margin squeeze, brokerage gross margin was 11.9%. Slightly below the low end of our outlook. Brokerage gross margin declined 160 basis points sequentially and 130 basis points year over year. Complementary services revenue in the quarter $431 million was flat year over year and represented 28% of total revenue. Complementary services gross margin was 20.2%, down 110 basis points sequentially and 90 basis points year over year primarily due to weakening demand within last mile and the impact of the fixed cost structure of our last mile hubs. Within complementary services, managed transportation generated $133 million of revenue in the quarter, down 6% year over…

Overall brokerage volume declined by 4% year over year, outpacing the CAS freight index, declined by 8% year over year. LTL volume increased by 31% year over year and represented 26% of brokerage volume in the fourth quarter. Truckload volume declined by 12% year over year and represented 74% of brokerage volume. As a percentage of our brokerage business, truckload volume increased by 500 basis points sequentially. As a reminder, support of a seasonal ramp with some customers, our brokerage business typically sees higher truckload volume in the fourth quarter when compared to the third. Truckload volume was impacted by our continued efforts to optimize price, volume, and service with our customers. As well as broader market weakness, Let's now discuss what we saw within the we support within our truckload business. Industrial and manufacturing trends continue to outperform our broader truckload trends. Volume within this vertical declined just 1% year over year, benefiting from some special projects and opportunities. We remain well positioned to capture our customers' special project freight due to our close relationships, and excellent service. As Jamie mentioned, the year-over-year headwind in our automotive business eased in the quarter. Automotive volume and brokerage declined by a mid-teen percentage, easing from declines earlier in the year of almost 30%. And from a company-wide standpoint, overall automotive gross margin declined by only a low to mid-single-digit percentage. Contract volume was 72% of our overall truckload volume in the quarter. Contract business increased by 100 basis points sequentially. Spot represented 28% of our truckload volume in the quarter. Total spot volume on an absolute basis increased slightly sequentially as we capitalized on some additional spot opportunities. However, these were not meaningful enough to offset the significant margin compression in our contractual business. I'll talk more about this shortly. Before…

To close,

Capacity exits and tighter market conditions are impacting the near-term profitability of our brokerage business. This supply-side shock is a result of continued enforcement of nondomiciled CDL restrictions, and English language proficiency. These changes represent a major structural change to the industry which we expect will lead to an increased freight rate environment. Continued enforcement will also improve safety, and reduce theft and fraud. Longer term, this is a very positive development. For large-scale brokerages like RXO that have access to massive high-quality capacity. While the current demand environment remains soft, and it's difficult to predict the timing of the recovery, the supply-demand balance in the industry is fragile. With generally lean inventory positions. Any significant improvement in demand could set up for a sharp inflection. We are also not waiting for the market recovery. We are taking aggressive actions to improve results including reducing buy rate volatility, going after new profitable truckload volume, growing our SMB business, growing stable sources of EBITDA, including LTL and managed transportation, and leveraging our hub network. With our focus on best-in-class service, and continued investment in transformational AI capabilities, we are well-positioned to drive significant long-term earnings and free cash flow growth. With that, I'll turn it over to the operator for Q and A. Thank you.

Ladies and gentlemen, we will now begin the question and answer session. And should you wish to cancel your request, please press 4 by the 2. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. And your first question comes from the line of Ravi Shanker from Morgan Stanley. Please go ahead.

Great. Thanks. Good morning, everyone. So Drew, you mentioned the 50% increase in the late-stage brokerage pipeline. Can you just unpack that a little bit?

What drove that? What kind of customers are they? What kind of timing do you think with that starts to come on? And what kind of pricing does that look like?

Yeah. Good morning, Ravi. When you look at the pipeline apples to apples, from last year is up more than 50%. And I think it speaks to the focus of the team. Last year was a big year for us in terms of the integration of Coyote into the organization. This is the largest acquisition. That has ever happened in the brokerage space. And this is all about us returning to what we do. It's returning to growth mode for the organization. It speaks to the strength of the relationships that we have with our largest customers have been with us for more than fifteen years on. So a lot of the pipeline is existing customers. And then we do have some new names in there as well. And these are big new names and attract new names to do business with. For us, the pipeline is important because you don't get the spot opportunities without having a significant presence on the contract side. And so when you look at that, that's a huge opportunity for us. Second part on the timing, the bids are typically implemented throughout the second quarter, which is why we speak to the optimism and the confidence that we've got about being able to return to outperforming the truckload market around the middle of the year. On the pricing side, you know, I think in line with what most other public companies have said, you're talking about something on the contractual side. In the low to mid-single digits. On the spot side, we expect it to be significantly more than that.

Got it. And then maybe as a quick follow-up kind of on the on the AI initiative, kind of you you spoke of what you're doing there. I think late last year, you had spoken about a kind of midyear inflection, in that productivity coming through. You just talk about what the second half of the year looks like? And maybe kind of how much this AI is helping with your SMB outreach? Thank you.

Hey, Ravi. It's Jared. So we are making significant progress with continued investment in transformational AI capabilities. We really look at it across four key pillars, volume, margin, productivity, and service. And you hit it right on the head because it's it's really two components. When we think about the ability to go ahead and improve the cost structure of the business, by leveraging AI efficiently, We look at productivity in 2025. Up 19% year over year. On a two-year stack, up almost 40%. So being able to go ahead and drive incremental throughput throughout the network at a rate that is disproportionate to volume growth. When you think about that volume growth really decoupling from headcount growth, bringing those strong incremental contribution margins, really important we think we are still in the early innings. The other key aspect to it, to your other point, was driving incremental margin opportunity across the business. We look at the initiatives that we have across the company. Especially on the volume side. We talked about rolling out AgenTic AI capabilities and the quarter. We feel really strong as we think about the second half of the year and into into the rest of the year with rolling out these AI capabilities and what they mean from an incremental margin standpoint.

Understood. Thanks, guys.

Thank you. And your next question comes from the line of Stephanie Moore from Jefferies. Please go ahead. Hi. Good morning. Thank you.

You know, maybe as I as I think through the the results and and your commentary, I mean, I think it's very clear that there's kinda two dynamics underway right now. You know, the first, the cycle does appear to be turning, and then second, I mean, you guys do have kind of numerous company actions underway. I mean, you called out a lot of them. For AI actions, the Coyote integration, you know, buy rate. Improvements. You also have, you know, you know, easier comps in 2026 as well. So can you speak to how and when these two dynamics can maybe start working together in 2026? Meaning, can your own actions start to offset some of the market dynamics near term, or do we need to see the market improve first? Thanks.

Hey, Steph. It's Jared. I can start, and, the rest of the team can come in. We think about RXO entering in 2026, to your point, we're certainly seeing some positive developments as it relates to the macro earlier this week. Jamie talked about encouraging results from the ISM hitting its highest level in four years, but we're not waiting just for the macro to turn. And we do company-specific initiatives, and I would point to that late-stage pipeline that Drew just talked about, up more than 50% year over year with high-quality enterprise accounts, existing customers, new customers, the ability to go ahead and drive growth and resume our historical outperformance versus the truckload market. The team is very confident in executing on that pipe and resuming our truckload outperformance.

Great. And then maybe just as one follow-up. I know that you called out a little bit of winter weather activity in the first quarter. I'm certainly not I'm certainly very familiar with that activity, but, you know, maybe talk a little bit you know, any impact that it could have had, in the first quarter thus far. Thanks.

Yes. Stephanie, it's Jamie. We did have some a lot of winter weather in the Southeast, Southwest had two major snow, ice storms back to back, which is

very unusual.

We've quantified it through January to tune of about $2 million of our EBITDA impact to the negative. So it's, you know, definitely impacted.

Thanks, guys.

Stephanie, just to add to that, it's not just on the brokerage side that it impacts. If you think about the last mile section of the business, it has a huge impact on there whenever driveways are iced over and you can't get into them. So the the brokerage piece is one on the purchase transportation, but it also has an impact on our last mile business. As well.

Thank you. And your next question comes from the line of Scott Group from Wolfe Research. Please go ahead.

Hey. Thanks. Good morning. So Drew, a couple of things. For for a while, you've been saying, hey. Once we get these tender rejections north of 10, we're gonna start seeing spot volume. Why do you think it's been a couple months now. Why do you think we're not seeing the spot volume? And then I get, you know, one q squeeze. I get that. Like, what I'm not sure how to think about is you know, if this market stays tight and we get some seasonal

demand improvement, like,

how much of a of a bounce in EBITDA earnings do you think is realistic as we look out

quarter or two?

Yes. Thanks, Scott. When you look at Tinder rejections being north of 10, I would say you are starting to see spots. When you look from the third quarter to the fourth quarter, you saw an increase in spot loads. And a lot of that was driven in December when you saw the tender rejection start to climb right there around 10. You saw that increase continue into January. But it has not been enough to offset the compression of what we've seen on the contractual side of the business in terms of gross profit per load. I think that we're in the early innings of continuing to see that as you look out this week, tender rejections continue to climb. When you look at what's going on in the regulatory side, we think that you know, you're setting up with any sort of demand to where you're going to see tender rejection come, and the spots will be more robust. We're already starting to see it in the waterfall routing guides. Where it's making it past the first, second, third, fourth carrier. So you are starting to see some waterfall routing guides break down. On the impact to EBITDA, Scott, know, we talked about gross profit per load being more than 30% below our average excluding the COVID highs, off of that. And when you look at that, you know, we've said in the past that for every dollar that gross margin per load improves, is well north of a million dollars in EBITDA annualized. So when you think about the earnings power during a recovery, it's extremely strong.

K. Just a quick

Do you can you just say, like, what are spot volumes

tracking up or down year over year so far in Q1? And then maybe just Jamie, can you just walk us through puts and takes on cash and confidence in free cash flow positive free cash flow this year.

I'll take the first part. Spots are up on a year over year basis as we look into January, and then I'll I'll turn it over to Jamie on the cash.

Yeah. Thanks, Scott. Cash, you know, we ended the quarter

17,000,000. We had a great year from a conversion standpoint. 43%. As we look into next year or or actually this year now, twenty six, know, Q1, you you heard it. The guide you know, if you take the midpoint of the guide, we'll use, you know, low single digit amount of cash for the quarter. I think as you look at the company, over the kind of the annualized basis, you know, if you take our cash outflows, which we've given in our guide, and you just apply, let's just say, 25 EBITDA as a proxy, you know, that ends up being in the 45% range of a free cash flow conversion. And we'd have a positive free cash flow. If you can, you know, extrapolate that to what the cash flow production of this company will be in an up and mid cycle. It'll be significant. You know, short term cash is good. We've, you know, had a good cash year, good cash quarter. But, you know, look forward to, you know, still being in that 40 to 60% conversion rate over the long term.

So so you think you have positive free cash flow on a reported basis this year?

It obviously depends on where earnings line up, but absolutely, we we believe it'll be a strong cashier.

K. Thank you, guys. Appreciate it.

Thank you. And your next question comes from the line of Lucas Cervera from JUVIS Securities. Please go ahead.

Hey, guys. Good morning. Thank you for the question.

So you took steps this quarter to streamline parts of managed transportation. How should we think about the earnings contribution from that business going forward after those changes?

Lucas, I don't know if I got the full question, but I think it was on managed transportation and the earnings of that business going forward. Is some of our higher EBITDA margin business comes through our Managed Trans Solutions business and so that's the first piece that I would say. It's measured on a net revenue basis, not a gross. When you look at that business, we continue to grow our FUM on a year over year basis. But importantly, for managed transportation, is the synergy that it provides to the rest of the organization. And you know, if our brokers team and our last mile team have the right service, have the right rate, they've got the opportunity to grow with Managed Trans as a customer. And you know, for every new win, it doesn't just impact managed transportation. It impacts the rest of the organization. So that's the beauty behind managed transportation is you actually get to touch a customer across multiple lines of business.

Okay.

Thanks.

Thank you. And your next question comes from the line of Ari Rosa from Citigroup. Please go ahead.

Hi, good morning. So Drew, you've mentioned a couple of times that you expect truckload year over year volume up performance, or to improve. I'm just curious how you how you define outperformance in that context. Like, what should we be looking for

from kind of a pricing standpoint, from a volume standpoint, and from a, you know, from an EBITDA

standpoint,

terms of what we could be looking at for second half of the year and into 2027. Thanks.

Yes. So, I mean, the the way that you broke it up was volume pricing and EBITDA on the outperformance. So first on the volume side, I think there's very clear external metrics of how well you're performing. Versus the market. And so when we say outperforming the market, that's what we mean, external met metrics. Is something that we've got a history of doing. Over the last decade plus We've been one of the largest share takers in the industry. And now that we've got Coyote largely integrated into RXO, we as expect to return to growth mode. The pipeline supports that. What we're hearing back from customers on the wind supports that. On the pricing side, I said earlier that I think that you know, we're we're setting up for somewhere in that low to mid single digits on the contractual side. And what we're paying close attention to is what happens on the spot rates because those are the rates that if you've got the contractual book of business, customers understand that typically during tighter times, you see contraction on that gross profit per load where you more than make up for us on the spot side. So I expect those rates to be significantly higher. And on the EBITDA, I think it goes back to to Scott's question. It's it's in the biggest driver there is in gross profit per load. And so when you look at what that does that every dollar of gross profit per load improvement on an annualized basis is well north of $1,000,000 of EBITDA. So for us, there is a lot of earnings power behind that as we continue to improve gross profit per load. We're not just sitting and waiting on the market to return to improve gross profit per load either. When you look at what we're doing on the purchase transportation side, we're expanding the utilization of private fleet You look at the investments that we've got in AI and the way that we're sourcing capacity, we expect to continue to improve our purchase transportation versus market as well.

Okay. That that's helpful. And then just as a follow-up, I was hoping you could talk about the different dynamics that you're seeing in LTL versus truckload. I understand that there's some things that are unique to RXO within those numbers given kind of the evolution of the business, but we saw a similar trend from one of your main competitors who reported recently. Just talk about how those dynamics are different and and why the strength is so much greater on the LTL side.

Well, I think, you know, typically, when you think of LTL in the brokerage market,

is

transactional loads and it's a lot driven by SMB type customers. We built out LTL in a different way. It was customers that we had really strong relationships with and a lot of them of the enterprise nature. And these customers came to us and said, LTL is a pain point. There's a lot of touches. There's a lot of different carriers. We're having to track down claims, lost shipments, and damages. And so it became more of an out or all of their LTL. And so when you look at our LTL, going to be lumpy because it's depends on when the onboardings happen. You saw us onboard several large customers last year. The pipeline in LTL is robust. Right now, but it'll depend on the timing of that as far as what that goes. On the truckload side, you know, those bids are typically implemented throughout the second quarter. And which is why we point to the confidence being able to return to outperformance on the truckload volume around the middle of the year.

Perfect.

Okay. Thank you.

Thank you. And your next question comes from the line of Ken Hoexter from Bank of America. Please go ahead.

Hey. Good morning, Drew and team.

Drew, if you could just maybe expand on that last answer. Right? So the volume is down in truckload. Versus, peer significantly outperforming and growing? I know you talked about flipping to growth and not using price. Is that is this something different in your end markets that you want to highlight? Guess, how should investors view the the the different compares we're seeing here? And then, essentially, maybe I'll explain on that. Sorry. Just let me throw it all in at once. But the in a view of where your first quarter outlook where EBITDA is getting worse sequentially, right, fourth quarter to first quarter, and I think well below consensus. So I maybe just helping people understand why the why the differential pressure points are, you know, continuing to expand.

I think I think, one, we've gotta acknowledge that the the peer you're referenced in CH Robinson is executing well, and they had they had a they had a great year last year. For us, our year was about integration and making sure that we were holding on to the people, to the customers, and integrating the technology, and we executed on that strategy. When you look back at 2025. You know, when when you look at integrating Coyote, we thought that we would stabilize the volume decline faster than what we did. As you start to look at what happened in Q3 and Q4, we actually outperformed the truckload market on a sequential basis and what happened there. So I think when you look at that, we've stabilized the business and it's returning to growth mode for us. And it's something that we have done in the past, something that we're confident in. And it's not just blind confidence. It's confidence based off of the feedback that we're getting from our customers. When you look at the last part of your question or two more parts of your question, the end markets as well as the EBITDA, The end market is a diverse pipeline, and we're touching a lot of different things. But where we're seeing some great wins is in high cargo value, and technology. We've seen some recent wins come over in the automotive side. And there's a strong pipeline in industrial and manufacturing as well right now. On the EBITDA Q1, you know, when you look at it, like, obviously, we've talked about the squeeze that is happening in the brokerage business. Last mile is a business that typically sequentially goes down from Q4 to Q1 That's being magnified this quarter because of the weather. So I I think when you look at it, that's where we're pointing to towards the optimism as you start to get towards the middle of the year and you start laughing some of these things.

Yeah. It it seems like a a a gap.

The the re restructuring costs seem to be, you know, still till still ramping up, maybe a little more aggressively than I would have expected. Is there you know, maybe walk through what what the costs are and and where that should head?

Yeah. Ken, this is Jamie. So year over year, you know, we are we are we do have some restructuring there. We still got some initiatives going on. But our restructuring charges are actually down about 60% year over year. Of that of that number we gave, 25 to 30 for the year, about a third of that relates to actions taken last year that are running through the p and l this year. So those actions, you know, we've already talked about. And then, you know, we are you know, couple of initiatives, and you still got some transformation work going on where we think there's some good opportunities for process improvement. We are you know, we're still not a 100% done with all the technologies side of the integration, so that's to come. And then we're really putting a big focus on our on our footprint and our our real estate, and we've got some plans to consolidate even some more real estate to make us more efficient there. And so those are the three big buckets. But, you know, keep in mind, down 60% a third of that number that we that we gave as we got is really actions that carry over from prior years. So we we feel like we're in a good spot, and we feel like we've got some really good initiatives of producing good ROI on it. Going forward.

Thank you.

Thank you. And your next question comes from the line of Tom Wadewitz from UBS. Please go ahead.

Yes. Good morning.

Drew, I wanted to get your thoughts on just

how much, I don't know, visibility. It's tough to visibility in these markets. But how are you thinking about second quarter and both from a gross margin perspective and then just kind of how much visibility on improvement in loads, mean, seasonally, you can see some pressure with you know, spot rates going up in May and road check and things like that, stronger freight. So, you know, seasonality might say gross margin percent could be lower 2Q, but if you get some catch up on contract prices going up a bit, that could help. So I mean, do you think gross margin could be show a little less pressure in 2Q? And then I guess, on the volume side, I don't necessarily recall brokers talking a lot about like pipelines. I think of that for more like logistics or a little longer cycle businesses. But how good of an indicator you think that is Is that I mean, you're so you're bidding on a lot more business, but are you confident that, that will actually flow through? It's just not necessarily something I I don't know how good the the read is from that. Thanks.

Yeah. Tom, I think I'll break the question up into three parts. First, on the second quarter gross margin. I think it depends on what's happening in the market and where where we're sitting at in tender rejections. I think there's certainly opportunity whenever you start talking about the contractual price going up on a year over year basis you start talking about spot loads, there's certainly a a strong opportunity there, and we're ready to execute, and we're ready to execute in any market. This on the second part on the improvement in loads, high confidence in improving loads from Q1 to Q2. On the third part, pipeline indicator. So the way that you we break down the pipeline is there's a pre And, you know, when you look at the pre pipeline, that's what you're digesting this all coming in from the customers and it's big, big numbers. But that's more of what we would call a spray and pray where you're just putting out rates and just seeing what comes back. As you get into the late stage pipeline, this is where discussions become extremely targeted. It's a lane by lane basis. It's the value that you're adding to the customer. It's how much capacity you have coming in to a certain inbound lane. It's how much capacity did you've got to be able to reload certain lanes. We're whenever you're doing drop trailers, that you have trailer capacity that you're able to do. What what are you able to do from a consolidation standpoint? So when we get to the late stage pipeline, our confidence is pretty high.

Okay. Yep. That that's helpful. And then just one other one. On the cost side, so you got a lot of tech initiatives happening. Is there a way to think about translating those to kind of operating cost reduction whether that's like an impact in '26 or a kind of multiyear impact

Yes. So this is Jamie. I'll start and turn it over to Jared. Know, it it definitely has from a pure cost out standpoint. So some of the things I've talked about, you know, finishing up the completing integration, totally sunsetting old systems where way down the the field on that. Got a little bit more work to do that we'll finish early twenty six. Secondly, we've got a lot of initiatives that just bring automation to the table. All of those have good cost reductions. Jared talked about kinda what our overall tech and our AI strategy is. A lot of opportunity there to grow on the four pillars, and it definitely includes cost and and really honed in on productivity and service.

That's right. And, Tom, when you when you think about the other side of this, not only is you know, have we taken significant actions, to Jamie's point, on removing a $155,000,000 of cost post spin but then you think about leveraging technology to make the organization more structurally efficient. It's all about the incrementals. So like we talked about earlier, how do we decouple volume growth from headcount growth because the incremental margins in brokerage for every dollar that comes in in gross profit can be as high as 80% in terms of flow through to EBITDA. So making our people more productive by leveraging that tech it's not just about the cost out, but it's how do we our people more efficient. To benefit from the incremental margins.

Okay. But there's not necessarily a frame in terms of how much cost impact this year. It's maybe more further out, you can we can have a little more visibility to that, I guess.

I think that's fair. But to Jimmy's point earlier, we do have some cost benefits 26% versus 25% based on the actions we've taken. And we continue to drive incremental productivity that we expect to benefit in 2026. Six.

Right.

Okay. Thank you.

Thank you. And your next question comes from the line of Brian Ossenbeck from JPMorgan. Please go ahead.

Hey. Thanks a lot for getting me on the call this morning. I Appreciate it.

Maybe two quick ones for Jamie and then a strategy one for Drew. Jamie, can you just talk a little bit more about

I think you said restructuring in the express service line. I don't know if that were related to maybe some of the high value automotive stuffs. Maybe you could elaborate a little bit more on that. And then what's the cash component of restructuring and integration costs for this coming year? Drew, would be great to get your context on these customer conversations, you know, given the capacity squeeze we've seen here recently, is there any tilt towards asset based carriers? Are they indicating they have any more preference to that and maybe away from brokerage, or does that not come up in these conversations?

Thanks very much. Yeah.

Yeah. Hey. This is Jamie. I'll start. You know, the goodwill that you're speaking of wasn't an express service line that we had inside the managed transit. It we restructured how that delivery service was delivered. We know, we spread the customers out amongst other service lines in our business to continue to do a good job there. you know, over ten years ago that We had some old goodwill that related back to an acquisition that was required an impairment because we restructured how we deliver that. It did not specifically relate to any of our, you know, auto business. In terms of cash and the the restructuring charges for this coming year, We think you've counted the $30,000,000 range there. Half of that relates to actions taken prior to '26. You think about, you know, we take a charge to to for the p and l. Some of the cash flow will trail that as payout. Think about half of that number is cash out related to prior years. And then the the couple big initiatives, you know, footprint consolidation on the real estate, and just our general, you know, restructurings and cost savings initiatives will will be there the reason for the rest.

Yeah. And, Brian, on the

the

context on the customer conversations that we're having, obviously, we're very bullish about what we're seeing in the late stage pipeline, and if I think of conversion from asset base to brokers, you know, I mean, those conversations were the conversations in the early two thousands. And if you look at what's happened over the last twenty years, brokers have taken significant market share the truckload market. It it's gone from mid single digits to the mid twenties. Right now, the conversation with customers is all about consolidating the carriers and finding the right carrier for the right load. And brokers offer large brokers, financially stable brokers, offer a lot of flexibility in a market like this where you can flex capacity up and down. As you start to have brokers like RXO who have a strong trailer pool, actually able to flex capacity up and down on dropped trailers and take business that was typically held by large asset based carriers. So for us, like, like the setup we're in. And as you go into a tighter market, that's up for that sets up for brokers to take more share.

K. Great. Thanks guys for the time.

Thank you. And our last question comes from the line of Bruce Chan from Stifel. Please go ahead.

Hey, good morning team. This is Matt Myelas for Bruce this morning. Thanks for squeezing us in here. Just piggybacking off one of the earlier questions, we're curious to what extent you believe demand recovery is ultimately needed to really drive some more spot opportunity? And I guess, you know, maybe barring that demand improvement, you know, how much would supply need to tighten before you see the spot opportunities really flow into the business?

Yep. So I think when you look at what's happening on the regulatory side, basically gone from mid single digit tender rejections to double digit tender rejections with a decline in demand. And so for the first time, you're seeing pressure on the the supply side that is causing spot loads. Typically, do need a demand driven inflection, and demand will certainly help watching a lot of the data out there. When you look at what's going on in the ISM data, when you look at what's going on from some of the reports on the homebuilding side, when you look at where inventory levels are, demand will obviously be something that can be a catalyst there. But you got into double digits that what what was strictly happening off of the supply side.

Great. And then as a quick follow-up, if you could maybe provide sort of a diagnostic of the synergies that you expected from Coyote And if that's been sort of realized at this point, how you might bridge any differential between what expected EBITDA could have been pre integration versus maybe where it is now? Thanks.

Yeah. So I'll just I'll take kinda where we are, '25, and roll into '26. You know, we talked about around $70,000,000 of synergies, 60 of which was to hit OpEx, 10 of which hit CapEx. A majority of that has flown through the the p and l in '25. We see about an incremental $10,000,000 of additional p and l realized in '26 versus '25 related to synergies alone. The other $10,000,000 of CapEx spend we see you you see that through in our guide for CapEx in '26. That's where we've been making capital investments on kind of both legacy RXO, legacy Cody that has now been put into one. And so we continue to see those savings that will continue throughout They have obviously not been enough to offset the change in gross margin that we've had over the last couple of years. But we see that as put really positioning the company cost wise When we see demand inflection, we'll see a lot of flow through the p and l.

Thank you, guys.

Thank you. We have reached the end of the question. And answer session. I'll hand the floor back to Drew Wilkerson for any closing remarks.

Thank you, Ina. Our team has taken the right actions to navigate the current market conditions. We're in growth mode and focused on converting our very strong sales pipeline we expect to get back to outperforming when it comes to truckload brokerage volume as early as the middle of this year. We're operating on one tech platform, which is providing better data to our people and unparalleled visibility to our and carriers. We're making significant investments in our technology and are seeing real results from our AI initiatives. We have a slimmer cost structure, that we continue to optimize and our capital structure provides us with more flexibility across all parts of the freight cycle. We will continue to focus on what differentiates RXO. Exceptional service, comprehensive solutions, deep customer relationships, and cutting-edge technology. I remain confident in our ability to deliver outsized earnings growth over the long term. Thank you all for your time today, and we look forward to seeing you at the upcoming investor conferences.

And this concludes today's call. Thank you for participating. You may all disconnect.