CHARLOTTE, N.C. - RXO (NYSE: RXO), a prominent provider of asset-light transportation solutions, revealed today their plan to offer $350 million of common stock. The company's stock is traded on the New York Stock Exchange under the ticker RXO. The announcement comes as RXO prepares to finance a portion of its acquisition of Coyote Logistics from UPS, a technology-driven freight brokerage business.
The underwriters have been given an option to purchase up to an additional $52.5 million of common stock. RXO has stated that the stock offering is not conditional upon the completion of the Coyote Logistics acquisition, which is anticipated to close by September 20, 2024. Should the acquisition not take place, the company plans to allocate the net proceeds for general corporate purposes.
Goldman Sachs (NYSE:GS) & Co. LLC, BofA Securities, Citigroup, and Morgan Stanley (NYSE:MS) are leading the offering as joint book-running managers. Barclays (LON:BARC), Wells Fargo (NYSE:WFC) Securities, and Scotiabank are also involved as joint book-running managers. The offering will be conducted through a prospectus supplement and the accompanying prospectus under RXO's effective registration statement on Form S-3 filed with the Securities and Exchange Commission (SEC).
RXO, headquartered in Charlotte, N.C., specializes in tech-enabled truck brokerage services and offers a suite of complementary solutions such as managed transportation and last-mile delivery. The company is known for leveraging massive capacity and advanced technology to optimize freight movement through North American supply chains.
This press release contains forward-looking statements regarding the potential transaction and the anticipated use of proceeds from the offering. These statements are based on current expectations and assumptions and are subject to risks, uncertainties, and other factors that could affect the actual outcomes, including potential delays in the transaction and the integration of Coyote Logistics. The information is based on a press release statement and does not constitute an offer to sell or a solicitation of an offer to buy any securities.
In other recent news, RXO, Inc. has announced plans to acquire a major freight brokerage business from United Parcel Service (NYSE:UPS) of America, Inc. for $1.025 billion. This acquisition is anticipated to enhance RXO's truckload freight brokerage services. In addition, RXO has introduced a prepay feature for its RXO Fuel Card that allows drivers to pre-fund their fuel purchases.
On the financial front, RXO has secured $550 million through private financing for the acquisition of Coyote Logistics. Furthermore, the company has extended its financial flexibility through amending its credit facilities, introducing a new $200 million delayed draw term loan facility, and extending a $600 million revolving credit facility.
In terms of analyst ratings, Susquehanna has increased RXO's stock price target to $20.00 but maintained a Negative rating on the stock. Similarly, TD Cowen has also maintained its Hold rating on RXO, raising the price target to $28.00. These recent developments highlight RXO's ongoing operations and strategic planning.
InvestingPro Insights
RXO (NYSE: RXO), while gearing up for a significant expansion through the acquisition of Coyote Logistics, presents a mixed financial outlook according to the latest data from InvestingPro. The company's market capitalization stands at approximately $3.7 billion, reflecting investor confidence to some extent. However, the financial metrics indicate some challenges. The P/E ratio, a measure of a company's current share price relative to its per-share earnings, is deeply negative at -152.54, suggesting that investors are not expecting earnings to cover the share price in the near term. This is further evidenced by an adjusted P/E ratio for the last twelve months as of Q2 2024, which is exceedingly high at 1122.09.
One of the InvestingPro Tips highlights that RXO is not profitable over the last twelve months, which aligns with the negative earnings per share (EPS) figures, both basic and diluted, standing at -$0.18 and -$0.19 respectively. This is a critical consideration for investors as the company moves forward with its public offering. On a more positive note, analysts predict the company will be profitable this year, and the stock has seen a strong return over the last three months, with a price total return of 30.53%. This optimism may be fueled by the expectation of net income growth this year, another key InvestingPro Tip.
Despite a revenue decline of 10.26% over the last twelve months as of Q2 2024, RXO has demonstrated the ability to maintain a gross profit margin of 18.3%, which may reassure investors of its operational efficiency. It is also worth noting that RXO operates with a moderate level of debt, which could provide some financial flexibility in pursuing growth strategies.
Investors considering RXO will find additional insights and analysis on the company's financial health and future prospects on the InvestingPro platform, which features a comprehensive list of 11 additional InvestingPro Tips to help make informed investment decisions.
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