Matt Milask

Matt Milask asked about the extent to which demand recovery is needed to drive more spot opportunities, and, barring that, how much supply would need to tighten. He also requested a diagnostic of the expected Coyote synergies, whether they have been realized, and how to bridge any differential between expected EBITDA pre-integration versus current levels.

Answer

Drew Wilkerson, Chairman and CEO, RXO, explained that regulatory actions have already led to double-digit tender rejections with declining demand, creating supply-side pressure for spot loads. While demand recovery would certainly help, the current supply-side dynamics are already driving spot opportunities. Jamie Harris, CFO, RXO, stated that approximately $70 million in Coyote synergies were expected ($60 million OpEx, $10 million CapEx), with the majority realized in 2025 and an incremental $10 million in P&L benefits expected in 2026. He noted that while these savings continue, they haven't fully offset the gross margin changes but position the company for significant flow-through with demand inflection.

Matt Milask inquired about the extent to which demand recovery is necessary to drive increased spot opportunities, and, in the absence of demand improvement, how much supply would need to tighten to achieve the same effect. He also requested a diagnostic of the expected synergies from the Coyote acquisition, whether they have been realized, and how to bridge any differential between expected EBITDA pre-integration versus current levels.

Answer

Drew Wilkerson, Chairman and CEO, RXO, explained that regulatory actions have already caused tender rejections to rise to double digits despite declining demand, indicating supply-side pressure is driving spot loads. While demand recovery would certainly help, current supply tightening is already creating spot opportunities. Jamie Harris, CFO, RXO, stated that the majority of the expected $70 million in Coyote synergies (comprising $60 million in OpEx and $10 million in CapEx) were realized in 2025, with an incremental $10 million in P&L benefits expected in 2026. He noted that these savings, while significant, have not fully offset the gross margin changes but position the company for strong flow-through when demand inflects.