GXO Logistics, Inc.

Previous wording

On April 29, 2024, we completed the acquisition of Wincanton plc (“Wincanton”), a U.K. logistics provider specializing in both warehousing and transportation solutions (“the Wincanton Acquisition”). The Wincanton Acquisition is subject to a review by the Competition and Markets Authority in the U.K., which is expected to be completed by June 25, 2025. Due to the acquisition of Wincanton in 2024, comparisons in our results of operations between 2025 and 2024 are less meaningful. For additional information regarding our acquisitions see Note 5. “Acquisition” in Condensed Consolidated Financial Statements.

Current wording

On April 29, 2024, we completed the acquisition of Wincanton plc (now Wincanton Limited), a U.K. logistics provider specializing in both warehousing and transportation solutions (“the Wincanton Acquisition”). The Wincanton Acquisition was subject to review by the Competition and Markets Authority (the “CMA”) in the U.K. On June 19, 2025, the CMA approved the Wincanton Acquisition, subject to the divestment of certain grocery contracts in the U.K. Due to the acquisition of Wincanton in 2024, comparisons in our results of operations between 2025 and 2024 are less meaningful. For additional information regarding our acquisitions see Note 5. “Acquisition” in Condensed Consolidated Financial Statements.

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 March 31, 2025 increased by 24%, or $502 million, to $2.6 billion compared with $2.1 billion for the same period in 2024. The increase primarily reflects $447 million from the Wincanton Acquisition. Also, Direct operating expense increased due to growth in our business. As a percentage of revenue, Direct operating expense for the three months ended March 31, 2025, was 85.9% compared with 83.7% for the same period in 2024. The increase in Direct operating expense as a percentage of revenue was primarily related to the Wincanton Acquisition.

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 June 30, 2025 increased by 18%, or $424 million, to $2.8 billion compared with $2.4 billion for the same period in 2024. The increase reflects $148 million from the Wincanton Acquisition, growth in our business and foreign currency movements. As a percentage of revenue, Direct operating expense for the three months ended June 30, 2025, was 85.3% compared with 83.9% for the same period in 2024. The increase in Direct operating expense as a percentage of revenue was primarily related to the Wincanton Acquisition.

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 March 31, 2025 increased by $12 million, to $261 million compared with $249 million for the same period in 2024. SG&A increased primarily due to the Wincanton Acquisition.

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 June 30, 2025 increased by $2 million, to $272 million compared with $270 million for the same period in 2024.

Previous wording

Depreciation and amortization expense for the three months ended March 31, 2025 increased by $17 million, to $109 million compared with $92 million for the same period in 2024. Amortization expense was $29 million and

Current wording

Depreciation and amortization expense for the three months ended June 30, 2025 increased by $11 million, to $110 million compared with $99 million for the same period in 2024. Amortization expense was $30 million and $22 million for the three months ended June 30, 2025 and 2024, respectively. Depreciation and amortization expense increased primarily due to the Wincanton Acquisition.

Previous wording

Transaction and integration costs for the three months ended March 31, 2025 and 2024 were $22 million and $19 million, respectively and primarily related to the Wincanton Acquisition.

Current wording

Transaction and integration costs for the three months ended June 30, 2025 and 2024 were $14 million and $15 million, respectively, and primarily related to the Wincanton Acquisition.

Previous wording

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

Current wording

Other income (expense), net decreased to an expense, primarily due to increased unrealized foreign currency loss on foreign currency contracts. Other income (expense), net was as follows:

Previous wording

Interest expense increased primarily due to debt incurred for the Wincanton Acquisition in April 2024. Interest expense, net was as follows:

Current wording

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

Previous wording

Loss before income taxes for the three months ended March 31, 2025, was $93 million compared with $46 million for the same period in 2024. The increase in loss before income taxes was primarily due to higher SG&A expense, higher depreciation, amortization and interest expense, and lower other income, net.

Current wording

Income before income taxes for the three months ended June 30, 2025 was $43 million compared with $53 million for the same period in 2024. The decrease in income before income taxes was due to higher operating income, offset by higher other expense, net, and higher interest expense, net.

Previous wording

For the three months ended March 31, 2025 and 2024, the Pillar Two Global Anti-Base Erosion rules issued by the Organization for Economic Co-operation and Development (“Pillar Two”) did not have a material impact on our income tax expense/benefit. Pillar Two did not have a significant impact on our fiscal 2024 and we currently do not expect it to have a significant impact on our fiscal 2025 income tax expense.

Current wording

While the United States has not adopted the Pillar Two Global Anti-Base Erosion rules issued by the Organization for Economic Co-operation and Development (“Pillar Two”), we have incorporated the estimated annual effect of Pillar Two into our income tax provision for the three months ended June 30, 2025. For the three months ended June 30, 2024, Pillar Two did not have a material impact on our income tax expense.

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 March 31, 2025 were $17 million compared with $16 million for the same period in 2024.

Current wording

Restructuring costs and other were primarily related to severance in connection with actions taken to optimize certain administrative functions. Restructuring costs and other for the six months ended June 30, 2025 were $19 million, compared with $17 million for the same period in 2024.

Previous wording

For the three months ended March 31, 2025, we recorded $66 million of a regulatory matter related to a contingency for the deductibility of value-added tax payments made by us to certain third-party service providers challenged by the Italian authorities. For the three months ended March 31, 2024, we recorded $63 million of litigation expense related to a dispute between us and one of our customers which was settled in the second quarter of 2024. For additional information regarding our regulatory and legal matters see Note 14. “Commitments and Contingencies”in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Current wording

Regulatory matter and litigation expense for the six months ended June 30, 2025 and 2024, were $65 million and $60 million, respectively. For the six months ended June 30, 2025, we recorded $65 million of expense related to a regulatory matter for the deductibility of value-added tax payments made by us to certain third-party service providers challenged by the Italian authorities. For the six months ended June 30, 2024, we recorded $60 million of litigation expense related to a dispute between us and one of our customers, which was settled in the second quarter of 2024. For additional information regarding our regulatory and legal matters, see Note 14. “Commitments and Contingencies”in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Previous wording

Income tax for the three months ended March 31, 2025, was a $2 million income tax expense compared with a $10 million income tax benefit for the same period in 2024. Our effective tax rate for the three months ended March 31, 2025, was an expense on a pre-tax loss of (2.7)%, compared to a benefit on a pre-tax loss of 21.1% for the same period in 2024. The change to our effective tax rate was primarily driven by non-deductible transaction costs and a non-deductible regulatory matter.

Current wording

Income tax expense for the six months ended June 30, 2025 was $17 million compared with $4 million for the same period in 2024. Our effective tax rate for the six months ended June 30, 2025 was an expense on a pre-tax loss of (35.3)%, compared to an expense on pre-tax income of 52.3% for the same period in 2024. The change in our effective tax rate was primarily driven by a decrease in pre-tax income, offset by non-deductible regulatory matter and transaction costs.

Previous wording

Our ability to fund our operations and anticipated capital needs is reliant upon the generation of cash from operations, supplemented as necessary by periodic utilization of our revolving credit facility and factoring programs. Our principal uses of cash in the future will be primarily to fund our operations, working capital needs, capital expenditures, repayment of borrowings and strategic business development transactions. The timing and magnitude of our new contract start-ups can vary and may positively or negatively impact our cash flows. We continually evaluate our liquidity requirements and capital structure in light of our operating needs, growth initiatives and capital resources.

Current wording

Our ability to fund our operations and anticipated capital needs is reliant upon the generation of cash from operations, supplemented as necessary by periodic utilization of our revolving credit facilities and factoring programs. Our principal uses of cash in the future will be primarily to fund our operations, working capital needs, capital expenditures, repayment of borrowings, repurchases of our common stock and strategic business development transactions. The timing and magnitude of our new contract start-ups can vary and may positively or negatively impact our cash flows. We continually evaluate our liquidity requirements and capital structure in light of our operating needs, growth initiatives and capital resources.

Previous wording

As of March 31, 2025, we held cash and cash equivalents of $288 million and restricted cash of $94 million, and we had $949 million of borrowing capacity, net of letters of credit under our revolving credit facilities.

Current wording

As of June 30, 2025, we held cash and cash equivalents of $205 million and restricted cash of $2 million, and we had $1,003 million of borrowing capacity, net of letters of credit under our revolving credit facilities.

Previous wording

On February 18, 2025, our board of directors authorized and announced the repurchase of up to $500 million (the “Repurchase Plan”) of our common stock. The Repurchase Plan permits shares of common stock to be repurchased from time to time in management’s discretion, through a variety of methods, including a 10b5-1 trading plan, open market purchases, privately negotiated transactions or otherwise. The timing and number of shares of common stock repurchased will depend on a variety of factors, including price, general business and market conditions, alternative investment opportunities and funding considerations. We will fund the repurchases with existing cash, borrowings on our revolving credit facility, and/or other financing sources. The Repurchase Plan does not obligate the Company to repurchase any specific number of shares of common stock and may be suspended or discontinued at any time. As of March 31, 2025, the remaining authorization under the Repurchase Plan was approximately $390 million.

Current wording

On February 18, 2025, our board of directors authorized and announced the repurchase of up to $500 million (the “Repurchase Plan”) of our common stock. The Repurchase Plan permits shares of common stock to be repurchased from time to time in management’s discretion, through a variety of methods, including a 10b5-1 trading plan, open market purchases, privately negotiated transactions or otherwise. The timing and number of shares of common stock repurchased will depend on a variety of factors, including price, general business and market conditions, alternative investment opportunities and funding considerations. We will fund the repurchases with existing cash, borrowings on our revolving credit facility, and/or other financing sources. The Repurchase Plan does not obligate the Company to repurchase any specific number of shares of common stock and may be suspended or discontinued at any time. As of June 30, 2025, the remaining authorization under the Repurchase Plan was $300 million.

Previous wording

Cash flows provided by operating activities for the three months ended March 31, 2025 decreased by $21 million compared with the same period in 2024. The decrease was primarily due to less cash generated from income partially offset by lower working capital consumption for the three months ended March 31, 2025.

Current wording

Cash flows provided by operating activities for the six months ended June 30, 2025 decreased by $133 million compared with the same period in 2024. The decrease was primarily due to lower income and increased working capital consumption driven by accounts payable for the six months ended June 30, 2025, compared with the same period in 2024.

Previous wording

Investing activities used $77 million of cash for the three months ended March 31, 2025 and $82 million for the same period in 2024. During the three months ended March 31, 2025, we used $78 million of cash to purchase property and equipment and received $1 million of cash from sales of property and equipment. During the three months ended March 31, 2024, we used $73 million of cash to purchase property and equipment, $15 million to purchase Wincanton shares and received $6 million of cash from sales of property and equipment.

Current wording

Investing activities used $123 million of cash for the six months ended June 30, 2025 and $1.0 billion for the same period in 2024. During the six months ended June 30, 2025 we used $125 million of cash to purchase property and equipment and received $2 million of cash from sales of property and equipment. 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.

Previous wording

Financing activities used $66 million and $8 million of cash for the three months ended March 31, 2025 and March 31, 2024, respectively. The primary use of cash from financing activities during the three months ended March 31, 2025 was $106 million used to repurchase shares of our common stock pursuant to the Repurchase Plan, $11 million to repay finance lease obligations and $6 million in payments for employee taxes on net settlement of equity awards, partially offset by $56 million of net borrowings under revolving credit facilities. The primary uses of cash from financing activities during the three months ended March 31, 2024 were $8 million to repay finance lease obligations and $4 million in payments for employee taxes on net settlement of equity awards.

Current wording

Financing activities used $227 million and generated $857 million of cash for the six months ended June 30, 2025 and June 30, 2024, respectively. The primary use of cash from financing activities during the six months ended June 30, 2025 was $200 million to repurchase shares of our common stock under the Repurchase Plan, $55 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, partially offset by $64 million increase in bank overdraft and $8 million of net borrowings under our revolving credit facilities. The primary source of cash from financing activities during the six months ended June 30, 2024 was $1.1 billion of proceeds from issuance of long-term debt and $3 million increase in bank overdraft, partially offset by $196 million of cash used to repay debt, $19 million of cash used to repay finance lease obligations and $7 million in payments for employee taxes on net settlement of equity awards.