GXO Logistics Inc

Previous wording

Revenue for the three months ended June 30, 2024 increased by 19%, or $452 million, to $2.8 billion compared with $2.4 billion for the same period in 2023. The increase primarily reflects $396 million from the acquisitions of Wincanton and PFS. Revenue also increased due to growth in our U.K. and Ireland business, primarily driven by new contract implementations.

Current wording

Revenue for the three months ended September 30, 2024 increased by 28%, or $686 million, to $3.2 billion compared with $2.5 billion for the same period in 2023. The increase primarily reflects $591 million from the acquisitions of Wincanton and PFS. Revenue also increased due to growth in our Continental Europe business. Foreign currency movement increased revenue $35 million for the three months ended September 30, 2024.

Previous wording

Direct operating expense is comprised of both fixed and variable expenses and consists of operating costs related to our warehouses, including personnel costs, rent expenses, utility costs, equipment maintenance and repair costs, transportation costs, costs of materials and supplies, and information technology expenses. Direct operating expense for the three months ended June 30, 2024 increased by 22%, or $432 million, to $2.4 billion compared with $2.0 billion for the same period in 2023. The acquisitions of Wincanton and PFS increased Direct operating expense by $340 million. Direct operating expense also increased due to higher personnel and temporary labor expenses in the U.K. and Ireland from growth in the business. As a percentage of revenue, Direct operating expense for the three months ended June 30, 2024, was 83.9% compared with 81.7% for the same period in 2023.

Current wording

Direct operating expense is comprised of both fixed and variable expenses and consists of operating costs related to our warehouses, including personnel costs, rent expenses, utility costs, equipment maintenance and repair costs, transportation costs, costs of materials and supplies, and information technology expenses. Direct operating expense for the three months ended September 30, 2024 increased by 33%, or $659 million, to $2.7 billion compared with $2.0 billion for the same period in 2023. The acquisitions of Wincanton and PFS increased Direct operating expense by $523 million for the three months ended September 30, 2024. Direct operating expense also increased due to foreign currency movement in our U.K. and Ireland and Continental Europe businesses. As a percentage of revenue, Direct operating expense for the three months ended September 30, 2024, was 84.6% compared with 81.4% for the same period in 2023. The increase in Direct operating expense as a percentage of revenue was primarily related to the Wincanton Acquisition and higher personnel and temporary labor expenses associated with our new contract start-ups.

Previous wording

Selling, general and administrative expense (“SG&A”) primarily consists of salary and benefits costs for executive and administrative functions, professional fees, bad debt expense and legal costs. SG&A for the three months ended June 30, 2024 increased by $25 million, to $270 million compared with $245 million for the same period in 2023. SG&A primarily increased due to the acquisitions of Wincanton and PFS.

Current wording

Selling, general and administrative expense (“SG&A”) primarily consists of salary and benefits costs for executive and administrative functions, professional fees, bad debt expense and legal costs. SG&A for the three months ended September 30, 2024 increased by $7 million, to $265 million compared with $258 million for the same period in 2023. SG&A primarily increased due to the acquisitions of Wincanton and PFS, partially offset by higher bad debt expense in the prior year.

Previous wording

Depreciation and amortization expense for the three months ended June 30, 2024 increased by $15 million, to $99 million compared with $84 million for the same period in 2023. Amortization expense was $22 million and $19 million for the three months ended June 30, 2024 and 2023, respectively. Depreciation and amortization expense primarily increased due to the acquisitions of Wincanton and PFS.

Current wording

Depreciation and amortization expense for the three months ended September 30, 2024 increased by $10 million, to $111 million compared with $101 million for the same period in 2023. Amortization expense was $36 million and $18 million for the three months ended September 30, 2024 and 2023, respectively. Depreciation and amortization expense primarily increased due to the acquisitions of Wincanton and PFS, partially offset by accelerated depreciation expense in the prior period.

Previous wording

Transaction and integration costs for the three months ended June 30, 2024 were $15 million and primarily related to the Wincanton Acquisition. Transaction and integration costs for the three months ended June 30, 2023 were $6 million and primarily related to the integration of Clipper Logistics plc.

Current wording

Transaction and integration costs for the three months ended September 30, 2024 were $21 million and primarily related to the Wincanton Acquisition. Transaction and integration costs for the three months ended September 30, 2023 were $3 million and primarily related to the PFS Acquisition.

Previous wording

Restructuring costs and other are primarily related to severance, including projects to optimize finance, human resources and information technology functions, and are not associated with customer attrition. Restructuring costs and other for the three months ended June 30, 2024 were $1 million compared with $3 million for the same period in 2023.

Current wording

Restructuring costs and other are primarily related to severance, including projects to optimize finance, human resources and information technology functions, and are not associated with customer attrition. Restructuring costs and other for the three months ended September 30, 2024 were $9 million compared with $7 million for the same period in 2023.

Previous wording

Other income, net was as follows:

Current wording

Other income (expense), net decreased primarily due to foreign currency loss. Other income, net was as follows:

Previous wording

Interest expense, net increased primarily due to debt incurred for the Wincanton Acquisition, partially offset by higher gains on cross-currency swaps in the current period. Interest expense, net was as follows:

Current wording

Interest expense, net increased primarily due to debt incurred for the Wincanton Acquisition. Interest expense, net was as follows:

Previous wording

Income before income taxes for the three months ended June 30, 2024 was $53 million compared with $86 million for the same period in 2023. The decrease was primarily due to higher transaction and integration costs and interest expense, net.

Current wording

Income before income taxes for the three months ended September 30, 2024 was $42 million compared with $83 million for the same period in 2023. The decrease was primarily due to higher transaction and integration costs and interest expense.

Previous wording

Income tax expense for the three months ended June 30, 2024 was$14 million compared with $20 million for the same period in 2023. Our effective tax rate for the three months ended June 30, 2024 was 25.4%, compared with 23.0% for the same period in 2023. The increase in our effective tax rate was driven by non-deductible items partially offset by a return-to-provision benefit in 2024.

Current wording

Income tax expense for the three months ended September 30, 2024 was$7 million compared with $15 million for the same period in 2023. Our effective tax rate for the three months ended September 30, 2024 was 16.5%, compared with 17.9% for the same period in 2023. The decrease in our effective tax rate was primarily driven by fluctuations in our jurisdictional income profile.

Previous wording

Six Months Ended June 30, 2024 compared with the Six Months Ended June 30, 2023

Current wording

Nine Months Ended September 30, 2024 compared with the Nine Months Ended September 30, 2023

Previous wording

Revenue for the six months ended June 30, 2024 increased by 12%, or $585 million, to $5.3 billion compared with $4.7 billion for the same period in 2023. The increase primarily reflects an increase of $459 million from the acquisitions of Wincanton and PFS. Revenue also increased due to growth in our U.K. and Ireland business, primarily driven by new contract implementations. Foreign currency movement increased revenue $50 million for the six months ended June 30, 2024.

Current wording

Revenue for the nine months ended September 30, 2024 increased by 18%, or $1.3 billion, to $8.5 billion compared with $7.2 billion for the same period in 2023. The increase primarily reflects an increase of $1.1 billion from the acquisitions of Wincanton and PFS. Revenue also increased due to growth in our U.K. and Ireland and Continental Europe businesses. Foreign currency movement increased revenue $85 million for the nine months ended September 30, 2024.

Previous wording

Direct operating expenses is comprised of both fixed and variable expenses and consist of operating costs related to our logistics facilities, including personnel costs, facility and equipment expenses, such as rent, utilities, equipment maintenance and repair, transportation costs, costs of materials and supplies and information technology expenses. Direct operating expense for the six months ended June 30, 2024 increased by 15%, or $582 million, to $4.4 billion compared with $3.9 billion for the same period in 2023. The acquisitions of Wincanton and PFS increased Direct operating expense by $391 million. Direct operating expense also increased due to higher personnel and temporary labor expenses in the U.K. and Ireland from growth in the business. As a percentage of revenue, Direct operating expense for the six months ended June 30, 2024, was 83.8% compared with 81.9% for the same period in 2023.

Current wording

Direct operating expenses is comprised of both fixed and variable expenses and consist of operating costs related to our logistics facilities, including personnel costs, facility and equipment expenses, such as rent, utilities, equipment maintenance and repair, transportation costs, costs of materials and supplies and information technology expenses. Direct operating expense for the nine months ended September 30, 2024 increased by 21%, or $1.2 billion, to $7.1 billion compared with $5.9 billion for the same period in 2023. The acquisitions of Wincanton and PFS increased Direct operating expense by $914 million for the nine months ended September 30, 2024. Direct operating expense also increased due to foreign currency movement in our U.K. and Ireland and Continental Europe businesses. As a percentage of revenue, Direct operating expense for the nine months ended September 30, 2024, was 84.1% compared with 81.7% for the same period in 2023. The increase in Direct operating expense as a percentage of revenue was primarily related to the Wincanton Acquisition and higher personnel and temporary labor expenses associated with our new contract start-ups.

Previous wording

Selling, general and administrative expense (“SG&A”) primarily consists of salary and benefits for executive and administrative functions, professional fees and legal costs. SG&A for the six months ended June 30, 2024 increased by 3%, or $16 million, to $519 million compared with $503 million for the same period in 2023. SG&A increased primarily due to the acquisitions of Wincanton and PFS.

Current wording

Selling, general and administrative expense (“SG&A”) primarily consists of salary and benefits for executive and administrative functions, professional fees and legal costs. SG&A for the nine months ended September 30, 2024 increased by 3%, or $23 million, to $784 million compared with $761 million for the same period in 2023. SG&A increased primarily due to the acquisitions of Wincanton and PFS, partially offset by higher bad debt expense in the prior year.

Previous wording

Depreciation and amortization expense for the six months ended June 30, 2024 increased by $24 million to $191 million compared with $167 million for the same period in 2023. Amortization expense was $41 million and $36 million for the six months ended June 30, 2024 and 2023, respectively. Depreciation and amortization expense increased primarily due to the acquisitions of Wincanton and PFS.

Current wording

Depreciation and amortization expense for the nine months ended September 30, 2024 increased by $34 million to $302 million compared with $268 million for the same period in 2023. Amortization expense was $77 million and

Previous wording

Transaction and integration costs for the six months ended June 30, 2024 were $34 million compared with $19 million for the same period in 2023. Transaction and integration costs for the six months ended June 30, 2024 primarily related to the Wincanton Acquisition. Transaction and integration costs for the six months ended June 30, 2023 primarily related to the integration of Clipper Logistics plc.

Current wording

Transaction and integration costs for the nine months ended September 30, 2024 were $55 million compared with $22 million for the same period in 2023. Transaction and integration costs for the nine months ended September 30, 2024 primarily related to the Wincanton Acquisition. Transaction and integration costs for the nine months ended September 30, 2023 primarily related to the integration of Clipper Logistics plc.

Previous wording

Restructuring costs and other are primarily related to severance, including projects to optimize finance, human resources and information technology functions, and are not associated with customer attrition. Restructuring costs and other for the six months ended June 30, 2024 were $17 million compared with $24 million for the same period in 2023. For the six months ended June 30, 2024, Restructuring costs and other relate to a restructuring plan designed to centralize certain processes and standardize operating structures. For the six months ended June 30, 2023, Restructuring costs and other included severance charges of $18 million and impairment charges of $6 million as a result of closing certain corporate and administrative offices.

Current wording

Restructuring costs and other are primarily related to severance, including projects to optimize finance, human resources and information technology functions, and are not associated with customer attrition. Restructuring costs and other for the nine months ended September 30, 2024 were $26 million compared with $31 million for the same period in 2023. For the nine months ended September 30, 2024, Restructuring costs and other relate to a restructuring plan designed to centralize certain processes and standardize operating structures. For the nine months ended September 30, 2023, Restructuring costs and other included severance charges of $24 million and impairment charges of $7 million as a result of closing certain corporate and administrative offices and the exit of non-core businesses in Asia.

Previous wording

Litigation expense related to a legal settlement. On June 14, 2024, the Company’s subsidiary GXO Warehouse Company, Inc. entered into a settlement agreement for the claims in connection with a dispute between the Company and one of its customers related to the start-up of the customer’s warehouse that occurred in 2018. We recognized $60 million expense for the six months ended June 30, 2024 for the settlement, associated legal fees, costs and other related expenses. For additional information regarding our legal matters see Note 13. Commitments and Contingencies.

Current wording

Litigation expense for the nine months ended September 30, 2024 related to a settlement agreement dated June 14, 2024. We recognized $59 million expense for the nine months ended September 30, 2024 for the settlement, associated legal fees, costs and other related expenses. For additional information regarding this settlement see Note 13. Commitments and Contingencies.

Previous wording

Other income, net increased due to higher pension income and foreign currency movements. Other income, net was as follows:

Current wording

Other income, net decreased due to foreign currency loss, partially offset by higher pension income. Other income, net was as follows:

Previous wording

Income before income taxes for the six months ended June 30, 2024 was $7 million compared with $115 million for the same period in 2023. The decrease was primarily due to higher costs associated with litigation expense, transaction and integration costs and interest expense, net.

Current wording

Income before income taxes for the nine months ended September 30, 2024 was $49 million compared with $198 million for the same period in 2023. The decrease was primarily due to higher costs associated with Litigation expense, Transaction and integration costs and interest expense.

Previous wording

Income tax expense for the six months ended June 30, 2024, was $4 million compared with $23 million for the same period in 2023. Our effective tax rate for the six months ended June 30, 2024 was 52.3%, compared to 19.9% for the same period in 2023. The increase in the Company’s effective tax rate for the six months ended June 30, 2024, was primarily driven by a decrease in pre-tax income partially offset by non-deductible items.

Current wording

Income tax expense for the nine months ended September 30, 2024, was $11 million compared with $38 million for the same period in 2023. Our effective tax rate for the nine months ended September 30, 2024 was 21.9%, compared to 19.1% for the same period in 2023. The increase in the Company’s effective tax rate for the nine months ended September 30, 2024 is due to a tax benefit related to a valuation allowance release in the prior year period.

Previous wording

As of June 30, 2024, we held cash and cash equivalents of $469 million and we had $926 million of borrowing capacity, net of letters of credit under our revolving credit facilities. We believe that our cash and cash equivalents on hand, cash flows from operations, the revolving credit facilities, and the use of our factoring programs will provide sufficient liquidity to operate our business and fund our current and assumed obligations for at least the next 12 months.

Current wording

As of September 30, 2024, we held cash and cash equivalents of $548 million, restricted cash in Other long-term assets of $21 million and we had $959 million of borrowing capacity, net of letters of credit under our revolving credit facilities. In October and November 2024, we deposited an additional €34 million($38 million as of September 30, 2024)of restricted cash in connection with the investigation by the Italian authorities. We have agreed to deposit an additional €33 million($37 million as of September 30, 2024)of restricted cash in December 2024 and January 2025. We believe that our cash and cash equivalents on hand, cash flows from operations, the revolving credit facilities, and the use of our factoring programs will provide sufficient liquidity to operate our business and fund our current and assumed obligations for at least the next 12 months.

Previous wording

Total assets and liabilities increased from December 31, 2023 to June 30, 2024 primarily due to the Wincanton Acquisition. Total long-term liabilities increased from December 31, 2023 to June 30, 2024 primarily due to issuance of $1.1 billion of unsecured notes to fund the Wincanton Acquisition.

Current wording

Total assets and liabilities increased from December 31, 2023 to September 30, 2024 primarily due to the Wincanton Acquisition. Total long-term liabilities also increased from December 31, 2023 to September 30, 2024 due to the issuance of $1.1 billion of unsecured notes to fund the Wincanton Acquisition.

Previous wording

Cash flows provided by operating activities for the six months ended June 30, 2024 increased $65 million compared with the same period in 2023. The increase was primarily due to working capital changes, primarily driven by collection of receivables and timing of payments, partially offset by lower net income.

Current wording

Cash flows provided by operating activities for the nine months ended September 30, 2024 increased by $20 million compared with the same period in 2023. The increase was primarily due to working capital changes, primarily driven by higher factoring of receivables and timing of payments, partially offset by lower net income.

Previous wording

Investing activities used $1,014 million of cash for the six months ended June 30, 2024 and $140 million for the same period in 2023. During the six months ended June 30, 2024, we used $863 million, net of cash received, to fund the Wincanton Acquisition, used $161 million of cash to purchase property and equipment and received $10 million of cash from sales of property and equipment. During the six months ended June 30, 2023, we used $150 million of cash to purchase property and equipment and received $10 million of cash from sales of property and equipment.

Current wording

Investing activities used $1.1 billion of cash for the nine months ended September 30, 2024 and $192 million for the same period in 2023. During the nine months ended September 30, 2024, we used $863 million, net of cash received, to fund the Wincanton Acquisition, used $255 million of cash to purchase property and equipment, used $5 million of cash in settlement of cross currency swap agreements and received $16 million of cash from sales of property and equipment. During the nine months ended September 30, 2023, we used $205 million of cash to purchase property and equipment and received $13 million of cash from sales of property and equipment.

Previous wording

Financing activities generated $857 million and used $155 million of cash for the six months ended June 30, 2024 and June 30, 2023, respectively. The source of cash from financing activities during the six months ended June 30, 2024 was the issuance of long-term debt of $1,085 million, partially offset by cash used to repay $196 million of debt, $19 million to repay finance lease obligations and $7 million in payments for employee taxes on net settlement of equity awards. The primary uses of cash from financing activities in during the six months ended June 30, 2023 were $138 million to repay debt, $16 million to repay finance lease obligations and $6 million in payments for employee taxes on net settlement of equity awards.

Current wording

Financing activities generated $829 million and used $170 million of cash for the nine months ended September 30, 2024 and September 30, 2023, respectively. The source of cash from financing activities during the nine months ended September 30, 2024 was the issuance of long-term debt of $1,085 million, partially offset by cash used to repay $216 million of debt, $32 million to repay finance lease obligations and $8 million in payments for employee taxes on net settlement of equity awards. The primary uses of cash from financing activities during the nine months ended September 30, 2023 were $139 million to repay debt, $24 million to repay finance lease obligations and $7 million in payments for employee taxes on net settlement of equity awards.

Previous wording

During the six months ended June 30, 2024, we entered into a $1.1 billion of unsecured notes to fund the Wincanton Acquisition. Other than the unsecured notes noted herein, as of June 30, 2024, the Company’s contractual obligations had not materially changed compared with December 31, 2023.

Current wording

During the nine months ended September 30, 2024, we issued $1.1 billion of unsecured notes to fund the Wincanton Acquisition. Other than the unsecured notes noted herein, as of September 30, 2024, the Company’s contractual obligations had not materially changed compared with December 31, 2023.