RXO: Live From The Truist Securities Industrials & Services Conference

Research evidence excerpt

RXO: Live From The Truist Securities Industrials & Services Conference

lieve RXO is

Reasons for this report positioned to generate higher peak earnings and stronger FCF conversion than in previous

cycles. Recall, we previously outlined how the business can effectively reach FCF breakeven

✓ Quick Reaction to Newsflow/Volatility at approximately $100mm on EBITDA, with ~90% of EBITDA generated above that level

✓ Conference Takeaways converting to FCF given RXO's largely fixed cost structure and limited incremental capital

requirements.

On technology, the company emphasized that AI is primarily being deployed to improve

employee productivity rather than replace headcount. Loads per employee per day

increased ~15% in 1Q26, and management expects productivity gains to continue as

automated quote generation, carrier procurement, and workflow tools become more broadly

adopted across the organization.

With regard to the Montgomery Supreme Court ruling, we came away from our meetings with

an increased sense that it will be a positive for large-scale brokers. While insurance costs

are expected to rise industry-wide, RXO believes smaller brokers will face a disproportionate

burden due to higher compliance and insurance requirements. As a result, we believe

the ruling could accelerate industry consolidation, drive market share gains toward larger

operators, and increase M&A opportunities over time.

Bottom Line: Our takeaway is that RXO's confidence around the duration and magnitude of

the current upcycle continues to increase. While demand has yet to materially improve, RXO

is already benefiting from tightening industry capacity, rising spot exposure and improved

pricing. Should demand ultimately recover alongside supply discipline, the earnings power of