RXO Inc

ITEM 1A. RISK FACTORS

For a discussion of our potential risks and uncertainties, see the information under the heading Risk Factors in the 2023 Form 10-K. There have been no material changes with respect to these risk factors, except as set forth below.

Risks Related to Pending Acquisition of Coyote Logistics

We may be unable to integrate the Acquired Business successfully and realize the anticipated benefits of the Coyote Acquisition.

On June 21, 2024, we entered into a Purchase Agreement to purchase the Acquired Business for $1.025 billion in cash, subject to certain customary adjustments. If the Coyote Acquisition is completed, the successful integration of  and Quarterly Report on Form 10-Q for the Acquired Business and operations into those of our own and our ability to realize the expected synergies and benefits of the transaction are subject to a number of risks and uncertainties, many of which are outside of our control. We will also be required to devote significant management attention and resources to integrating business practices, cultures and operations of each business. The risks and uncertainties relating to integrating the two businesses include, among other things:

the challenge of integrating complex organizations, systems, operating procedures, compliance programs, technology, networks and other assets of the Acquired Business;

the difficulties harmonizing differences in the business cultures of our company and the Acquired Business;

the inability to successfully integrate our respective businesses in a manner that permits us to achieve the cost savings, synergies and other anticipated benefits from the Coyote Acquisition;

the inability to minimize the diversion of management attention from ongoing business concerns during the process of integrating the Acquired Business into our businesses;

the inability to resolve potential conflicts that may arise relating to customer, supplier and other important relationships of our business and the Acquired Business;

difficulties in retaining key management and other key employees; and

the challenge of managing the expanded operations of a significantly larger and more complex company and coordinating geographically separate organizations.

We will incur substantial expenses to consummate the proposed Coyote Acquisition but may not realize the anticipated cost synergies and other benefits. In addition, even if we are able to integrate the Acquired Business successfully, the anticipated benefits of the pending Coyote Acquisition may not be realized fully, or at all, or may take longer to realize than expected. Given the size and significance of the Coyote Acquisition, we may encounter difficulties in the integration of the operations of the Acquired Business and may fail to realize the full benefits and synergies of the Coyote Acquisition, which could adversely impact our business, results of operation and financial condition.

22

The Acquired Business may have liabilities that are not known to ussix months ended June 30, 2024.

The Acquired Business may re have liabilities that we failed, or were unable, to discover in the course of performing our due diligence investigations of the Acquired Business. We cannot assure you that the indemnification available to us under the Purbeen no material chase Agreement in respect of the Coyote Acquisition in connection with such agreement will be sufficient in amount, scope or duration to fully offset the possible liabilities associated nges with the business of the Acquired Business or property that we will assume upon consummation of the Coyote Acquisition. We may learn additional information about the Acquired Business that materially adversely affects us, such as unknown or contingent liabilities and liabilities related to compliance with applicable laws. Any such liabilities, individually or in the aggregate, could have a material adverse effect on our business, financial condition and results of operations.

Acquisition accounting adjustments could adversely affect our financial results.

We will account for the completion of the Coyote Acquisition using the acquisition method of accounting. We will allocate the total estimated purchase price to net tangible assets, amortizable intangible assets and indefinite-lived intangible assets, and based on their fair values as of the date of completion of the Coyote Acquisition record the excess, if any, of the purchase price over those fair values as goodwill. Differences between preliminary estimates and the final acquisition accounting may occur, and these differences could have a material impact on the consolidated financial statements and the combined companys future results of operations and financial position.

The Coyote Acquisition may not be completed within the expected timeframe, or at all, and the failure to complete the Coyote Acquisition could impact our stock price and our future business and financial results. 

There can be no assurance that the Coyote Acquisition will be completed in the expected timeframe, or at all. The Purchase Agreement contains a number of conditions that must be satisfied or waived prior to the completion of the Coyote Acquisition. We can provide no assurance that all closing conditions will be satisfied (or waived, if applicable). Many of the conditions to completion of the Coyote Acquisition are not within our control, and we cannot predict when or if these conditions will be satisfied (or waived, as applicable).

If the Coyote Acquisition is not completed, our ongoing business and financial results may be adversely affected and we will be subject to a number of risks, including the following:

depending on the reasons for the failure to complete the Coyote Acquisition, we could be liable to UPS for monetary or other damages in connection with the termination or breach of the Purchase Agreement;

we have dedicated significant time and resources, financial and otherwise, in planning for the Coyote Acquisition and the associated integration, of which we would lose the benefit if the Coyote Acquisition is not completed;

we are responsible for certain transaction costs relating to the Coyote Acquisition, whether or not the Coyote Acquisition is completed;

while the Purchase Agreement is in force, we are subject to certain restrictions on the conduct of our business, including taking any action that that would reasonably be expected to have a material negative impact on or materially delay the satisfaction of the conditions in the Purchase Agreement required to consummate the Coyote Acquisition, which restrictions may adversely affect our ability to execute certain of our business strategies; and

matters relating to the Coyote Acquisition (including integration planning) may require substantial commitments of time and resources by our management, whether or not the Coyote Acquisition is completed, which could otherwise have been devoted to other opportunities that may have been beneficial to us.

23

In addition, if the Coyote Acquisition is not completed, we may experience negative reactions from the financial markets and from our customers and employees. We also may be subject to litigation related to any failure to complete the Coyote Acquisition or to enforcement proceedings commenced against us to perform our obligations under the Purchase Agreement. If the Coyote Acquisition is not completed, these risks may materialize and may adversely affect our business, financial results and financial condition, as well as the price of our common stock.

While the Coyote Acquisition is pending, we and Coyote Logistics will be subject to business uncertainties that could adversely affect our respective businesses.

Our success following the Coyote Acquisition will depend in part upon the ability of us and Coyote Logistics to maintain our respective business relationships. Uncertainty about the effect of the Coyote Acquisition on customers, suppliers, employees and other constituencies may have a material adverse effect on us and the Acquired Business. Customers, suppliers and others who deal with us or Coyote Logistics may delay or defer business decisions, decide to terminate, modify or renegotiate their relationships or take other actions as a result of the Coyote Acquisition that could negatively affect the revenues, earnings and cash flows of our company or the Acquired Business. If we are unable to maintain these business and operational relationships, our financial position, results of operations or cash flows could be materially affected.respect to these risk factors.