14Derivatives not designated as hedges

The gains recognized in earnings for foreign currency option and forward contracts were $16 million and $24 million, of which $9 million and $15 million were unrealized, for the three and six months ended June 30, 2022, respectively. These amounts are recorded in Other income (expense), net in the Condensed Consolidated Statements of Operations.

8. Employee Benefit Plans

Defined Benefit Plans

In July 2021, the Company became the plan sponsor for a retirement plan in the U.K. (the “U.K. Retirement Plan”). Components of the net periodic benefit cost under the U.K. Retirement Plan were as follows:

Three Months Ended March 31,
(In millions) 2022 2021
Interest cost $ (6) $ —
Expected return on plan assets 15 —
Net periodic benefit income (1)
$ 9 $ —


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In millions)	2022		2021		2022		2021
Interest cost	$	(5)	$	—	$	(11)	$	—
Expected return on plan assets	14		—		29		—
Net periodic benefit income (1)	$	9	$	—	$	18	$	—

(1) Net periodic benefit income is recorded within Other income (expense), net in the Condensed Consolidated Statements of Operations.

The Company also maintains defined benefit pension plans for ~~some of its~~other foreign subsidiaries that are excluded from the disclosures due to their immateriality.

Defined Contribution Plans

The Company’s costs for qualified defined contribution plans ~~were~~was $4 million for the three months ended ~~March 31,~~June 30, 2022 and 2021, and $8 million for the six months ended June 30, 2022 and 2021. Defined contribution costs were primarily ~~included~~recorded within Direct operating expenses in the Condensed Consolidated Statements of Operations.

9. Earnings per Share

The computations of basic and diluted earnings per share were as follows:

Three Months Ended March 31,
(Dollars in millions, shares in thousands, except per share data) 2022 2021
Net income attributable to common shares $ 37 $ 14
Basic weighted-average common shares (1)
114,731 114,626
Diluted effect of stock-based awards 838 —
Diluted weighted-average common shares (1)
115,569 114,626
Basic earnings per share $ 0.32 $ 0.12
Diluted earnings per share $ 0.32 $ 0.12


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars in millions, shares in thousands, except per share data)	2022		2021(1)		2022		2021(1)
Net income attributable to common shares	$	51	$	11	$	88	$	25

Basic weighted-average common shares	116,131		114,626		115,435		114,626
Dilutive effect of stock-based awards	515		—		676		—
Diluted weighted-average common shares	116,646		114,626		116,111		114,626

Basic earnings per share	$	0.44	$	0.10	$	0.76	$	0.22
Diluted earnings per share	$	0.44	$	0.10	$	0.76	$	0.22

(1) On August 2, 2021, 114,626,250 shares of common stock of the Company were distributed and began regular-way trading. This share amount is utilized for the calculation of basic and diluted earnings per share for the three and six months ended ~~March 31,~~June 30, 2021.

For the three and the six months ended ~~March 31,~~June 30, 2022, approximately ~~1.4~~1.8 million and 1.6 million shares, ~~are~~respectively, were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive.

10. Stockholders’ Equity

The following table summarizes the changes in AOCI by component:

(In millions) Foreign Currency Translation Adjustments Defined Benefit Plan Less: AOCI attributable to noncontrolling interest AOCI attributable to GXO
As of December 31, 2021 $ (53) $ (76) $ (1) $ (130)
Unrealized gain (loss), net of tax (43) — 1 (42)
Amounts reclassified from AOCI to net income (2) — — (2)
Other comprehensive income (loss), net of tax (45) — 1 (44)
Deconsolidation of variable interest entity 4 — (2) 2
As of March 31, 2022 $ (94) $ (76) $ (2) $ (172)


(In millions)	Foreign Currency Translation Adjustments		Derivative Hedges		Defined Benefit Plan		Less: AOCI attributable to noncontrolling interest		AOCI attributable to GXO
As of March 31, 2022	$	(94)	$	—	$	(76)	$	(2)	$	(172)
Unrealized gain (loss), net of tax	(73)		—		—		1		(72)
Amounts reclassified from AOCI to net income	(2)		—		—		—		(2)
Other comprehensive income (loss), net of tax	(75)		—		—		1		(74)

As of June 30, 2022	$	(169)	$	—	$	(76)	$	(1)	$	(246)


(In millions)	(In millions)	Foreign Currency Translation Adjustments		Defined Benefit Plan		Less: AOCI attributable to noncontrolling interest		AOCI attributable to GXO		(In millions)	Foreign Currency Translation Adjustments		Derivative Hedges		Defined Benefit Plan		Less: AOCI attributable to noncontrolling interest		AOCI attributable to GXO
As of December 31, 2020		$	61	$	(1)	$	(2)	$	58
As of December 31, 2021										As of December 31, 2021	$	(53)	$	—	$	(76)	$	(1)	$	(130)
Unrealized gain (loss), net of tax	Unrealized gain (loss), net of tax	(46)		—		4		(42)		Unrealized gain (loss), net of tax	(116)		—		—		2		(114)
Amounts reclassified from AOCI to net income	Amounts reclassified from AOCI to net income	—		—		—		—		Amounts reclassified from AOCI to net income	(4)		—		—		—		(4)
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	(46)		—		4		(42)		Other comprehensive income (loss), net of tax	(120)		—		—		2		(118)
As of March 31, 2021		$	15	$	(1)	$	2	$	16
Deconsolidation of variable interest entity										Deconsolidation of variable interest entity	4		—		—		(2)		2
As of June 30, 2022										As of June 30, 2022	$	(169)	$	—	$	(76)	$	(1)	$	(246)


(In millions)	Foreign Currency Translation Adjustments		Derivative Hedges		Defined Benefit Plan		Less: AOCI attributable to noncontrolling interest		AOCI attributable to GXO
As of March 31, 2021	$	16	$	(1)	$	(1)	$	2	$	16
Unrealized gain (loss), net of tax	26		—		—		(3)		23
Amounts reclassified from AOCI to net income	—		—		—		—		—
Other comprehensive income (loss), net of tax	26		—		—		(3)		23
As of June 30, 2021	$	42	$	(1)	$	(1)	$	(1)	$	39


(In millions)	Foreign Currency Translation Adjustments		Derivative Hedges		Defined Benefit Plan		Less: AOCI attributable to noncontrolling interest		AOCI attributable to GXO
As of December 31, 2020	$	61	$	—	$	(1)	$	(2)	$	58
Unrealized gain (loss), net of tax	(19)		(1)		—		1		(19)
Amounts reclassified from AOCI to net income	—		—		—		—		—
Other comprehensive income (loss), net of tax	(19)		(1)		—		1		(19)
As of June 30, 2021	$	42	$	(1)	$	(1)	$	(1)	$	39

11. Commitments and Contingencies

The Company is involved, and will continue to be involved, in numerous legal proceedings arising out of the conduct of its business. These proceedings may include personal injury claims arising from the ~~transportation~~handling and ~~handling~~transportation of goods, contractual disputes and employment-related claims, including alleged violations of wage and hour laws.

The Company establishes accruals for specific legal proceedings when it is considered probable that a loss has been incurred and the amount of the loss can be reasonably estimated. The Company reviews and adjusts accruals for loss contingencies quarterly and as additional information becomes available. If a loss is not both probable and reasonably estimable, or if an exposure to loss exists in excess of the amount accrued, the Company assesses whether there is at least a reasonable possibility that a loss, or additional loss, may have been incurred. If there is a reasonable possibility that a loss, or additional loss, may have been incurred, the Company discloses the estimate of the possible loss or range of loss if it is material and an estimate can be made, or discloses that such an estimate cannot be made. The determination as to whether a loss can reasonably be considered to be possible or probable is based on management’s assessment, together with legal counsel, regarding the ultimate outcome of the matter.

Management of the Company believes that it has adequately accrued for the potential impact of loss contingencies that are probable and reasonably estimable. Management of the Company does not believe that the ultimate resolution of any matters to which the Company is presently a party will have a material adverse effect on its results of operations, financial condition or cash flows. However, the results of these matters cannot be predicted with certainty, and an unfavorable resolution of one or more of these matters could have a material adverse effect on the Company’s financial condition, results of operations or cash flows. Legal costs incurred related to these matters are expensed as incurred.

The Company carries liability and excess umbrella insurance policies that are deemed sufficient to cover potential legal claims arising in the normal course of conducting its operations. In the event the Company is required to satisfy

a legal claim outside the scope of the coverage provided by insurance, its financial condition, results of operations or cash flows could be negatively impacted.

1720

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q and other written reports and oral statements we make from time to time contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. In some cases, forward-looking statements can be identified by the use of forward-looking terms such as “anticipate,” “estimate,” “believe,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “should,” “will,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target,” “trajectory” or the negative of these terms or other comparable terms. However, the absence of these words does not mean that the statements are not forward-looking. These forward-looking statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause or contribute to a material difference include those discussed below and the risks discussed in the Company’s other filings with the Securities and Exchange Commission (the “SEC”). All forward-looking statements set forth in this Quarterly Report are qualified by these cautionary statements, and there can be no assurance that the results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequence to or effects on the Company or its business or operations.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations ~~(“MD&A”)~~ should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed with the SEC on February 17, 2022 (the “2021 Form 10-K”)., and the unaudited condensed consolidated financial statements and related notes thereto included elsewhere in this Form 10-Q.

Business Overview

GXO Logistics, Inc., together with its subsidiaries (“GXO,” the “Company” or “we”), is the largest pure-play contract logistics provider in the world and a foremost innovator in an industry propelled by strong secular tailwinds. Our customers rely on us to move their goods with high efficiency through their supply chains — from the moment inbound goods arrive at our logistics sites, through fulfillment and distribution and the management of returned products. Our customer base includes many blue-chip leaders in sectors that demonstrate high growth and/or durable demand, with significant growth potential through customer outsourcing of logistics services.

We strive to provide all of our customers with consistently high levels of service and cutting-edge automation managed by our proprietary technology. We also collaborate with our largest customers on planning and forecasting and provide assistance with network optimization, working with these customers to design or redesign their supply chains to meet specific goals, such as sustainability metrics. Our multidisciplinary, consultative approach has led to many of our key customer relationships extending for years and expanding in scope.

The most dramatic growth in secular demand in recent years has been in ecommerce and related sectors, including omnichannel retail and other direct-to-consumer channels. As part of our growth strategy, we intend to develop additional business in consumer and other verticals where we already have deep expertise, prominent customer relationships and a strong track record of successful performance. We also intend to expand into new verticals by leveraging our capacity and technological strengths and by marketing the benefits of our proprietary platform for warehouse operations. We use technology to manage advanced automation, labor productivity, safety and the complex flow of goods within sophisticated logistics environments.

Our business model is asset-light and historically resilient in cycles, with high returns, strong free cash flow and visibility into revenue and earnings. The vast majority of our contracts with customers are multi-year agreements, and our facility lease arrangements generally align with contract length. Most of our customer contracts contain both fixed and variable components. The fixed component is typically designed to cover facility, technology and equipment costs and may cover management costs, while the variable component is determined based on expected volumes and associated labor costs.

We use technology to manage advanced automation, labor productivity, safety and the complex flow of goods within sophisticated logistics environments. We strive to provide all of our customers with consistently high levels of service and cutting-edge automation managed by our proprietary technology. We also collaborate with our largest customers on planning and forecasting and provide assistance with network optimization, working with these customers to design or redesign their supply chains to meet specific goals, such as sustainability metrics. Our multidisciplinary, consultative approach has led to many of our key customer relationships extending for years and expanding in scope.

The Separation

On August 2, 2021, ~~the Company~~we completed the separation from XPO Logistics, Inc. (“XPO”) (the “Separation”). Prior to the Separation, the Company’s financial statements were prepared on a standalone combined basis and were derived from the consolidated financial statements and accounting records of XPO. On August 2, 2021, the Company became a standalone publicly-traded company, and its financial statements post-Separation are prepared on a consolidated basis. The combined consolidated financial statements for all periods presented prior to the Separation are now also referred to as “condensed consolidated financial statements” and have been prepared ~~under GAAP.~~in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

Prior to the Separation, the Company’s historical assets and liabilities presented were wholly owned by XPO and were reflected on a historical cost basis. In connection with the Separation, the Company’s assets and liabilities were transferred to the Company on a ~~carry-over~~carryover basis.

Prior to the Separation, the historical results of operations included allocations of XPO costs and expenses, including XPO’s corporate function, which incurred a variety of expenses including, but not limited to, information technology, human resources, accounting, sales and sales operations, procurement, executive services, legal, corporate finance and communications. An allocation of these expenses is included to burden all business units comprising XPO’s historical results of operations, including GXO. The charges reflected have been either specifically identified or allocated using drivers including proportional adjusted earnings before interest, taxes, depreciation and amortization, which include adjustments for transaction and integration costs, as well as restructuring costs and other adjustments, or headcount. The majority of these allocated costs ~~are~~is recorded within Selling, general and administrative expense; Depreciation and amortization expense; and Transaction and integration costs in the Condensed Consolidated Statements of Operations.

The Company’s consolidated financial statements include the accounts of GXO ~~Logistics, Inc.~~ and its majority-owned subsidiaries and variable interest entities ~~where~~of which the Company is the primary beneficiary. The Company has eliminated intercompany accounts and transactions.

~~The Company has~~We have a single reportable segment.

Clipper Acquisition

On ~~February 28,~~May 24, 2022, the Company ~~and~~completed the ~~board of directors~~acquisition of Clipper Logistics plc a(“Clipper”), an omnichannel retail logistics ~~company~~specialist based in Leeds, England (“Clipper”), reached an agreement on the terms of a cash and share offer by the Company for the acquisition of the entire issued ordinary share capital of Clipper for approximately £1.0 billion (approximately $1.3 billion) (the “Clipper Acquisition”). The Company acquired Clipper for $1,103 million, consisting of $900 million in cash and the issuance of 3,749,266 shares of GXO common stock having a value of $203 million. The Competition and Markets Authority (the “CMA”) in the U.K. is currently reviewing the Clipper Acquisition. The Company estimates that the CMA’s review of the acquisition will be completed during the second half of 2022.

In connection with the Clipper Acquisition, (i) the Company and Clipper entered into a Cooperation ~~Agreement,~~Agreement; (ii) the Company entered into a ~~Bridge~~ Term ~~Loan Credit Agreement and~~Loan; (iii) the Company entered into a Five-Year Term Loan; and (iv) the Company terminated its Bridge Term Loan ~~Credit Agreement. In April 2022,~~agreement. For additional information regarding the financing agreements entered in connection with the Clipper Acquisition, ~~was approved by Clippers’ shareholders.~~see Note 6—Debt and Financing Arrangements.

The results of operations of Clipper are included in our consolidated financial statements from the date of acquisition. The Company recorded $80 million and $1 million of revenue and income before income taxes for both the three and six months ended June 30, 2022, respectively.

Results of Operations

Three Months Ended March 31,
(In millions) 2022 2021 $ Change % Change
Revenue $ 2,083 $ 1,822 $ 261 14 %
Direct operating expense 1,748 1,520 228 15 %
Selling, general and administrative expense 190 171 19 11 %
Depreciation and amortization expense 76 79 (3) (4) %
Transaction and integration costs 19 18 1 6 %
Restructuring costs and other 13 4 9 n/m
Operating income 37 30 7 23 %
Other income, net 16 1 15 n/m
Interest expense, net (4) (5) 1 (20) %
Income before income taxes 49 26 23 88 %
Income tax expense (11) (9) (2) 22 %
Net income $ 38 $ 17 $ 21 124 %


	Three Months Ended June 30,
(In millions)	2022		2021		$ Change		% Change
Revenue	$	2,156	$	1,882	$	274	15	%
Direct operating expense	1,775		1,554		221		14	%
Selling, general and administrative expense	220		177		43		24	%
Depreciation and amortization expense	77		95		(18)		(19)	%
Transaction and integration costs	24		35		(11)		(31)	%
Restructuring costs (credits) and other	1		(1)		2		n/m
Operating income	59		22		37		n/m
Other income (expense), net	23		(1)		24		n/m
Interest expense, net	(9)		(6)		(3)		50	%
Income before income taxes	73		15		58		n/m
Income tax expense	(21)		(1)		(20)		n/m
Net income	$	52	$	14	$	38	n/m

n/m - not meaningful

Three Months Ended June 30, 2022 compared with the Three Months Ended June 30, 2021

Revenue for the three months ended ~~March 31,~~June 30, 2022, increased by ~~14%~~15%, or ~~$261~~$274 million, to ~~$2.1~~$2.2 billion, compared with ~~$1.8~~$1.9 billion for the same period in 2021. For the three months ended ~~March 31,~~June 30, 2022, our North America, Asia and Pacific operations reported growth of ~~15%~~22%, and our European operations reported growth of ~~14%~~11%. ~~Foreign currency movement decreased~~The Clipper Acquisition contributed 6% to revenue ~~by approximately 5%~~in our European operations and 4% to total revenue for the three months ended ~~March 31,~~June 30, 2022. Foreign currency movements decreased revenue by approximately 9% for the three months ended June 30, 2022.

Direct operating expenses comprise both fixed and variable expenses and consist of operating costs related to our logistics facilities, including personnel costs and 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 three months ended ~~March 31,~~June 30, 2022 ~~increased by 15%,~~was $1.8 billion, or ~~$228 million, to $1.7 billion~~82% of revenue, compared with ~~$1.5~~$1.6 billion, or 83% of revenue, for the same period in 2021. ~~As a percentage of revenue, direct operating expense for~~For the three months ended ~~March 31,~~June 30, 2022, ~~was 84% compared with 83% for the same period in 2021. Direct~~direct operating ~~expense~~expenses increased ~~primarily~~by $147 million due to higher personnel and temporary labor ~~expense of $180 million,~~expenses, as well as higher third-party facilities and transportation costs of ~~$42~~$33 million.

Selling, general and administrative expense (“SG&A”) primarily consists of salary and benefits for executive and ~~administration~~administrative functions, professional fees and legal costs. SG&A for the three months ended ~~March 31,~~June 30, 2022, increased by ~~11%, or $19~~$43 million, to ~~$190~~$220 million, compared with ~~$171~~$177 million for the same period in 2021. SG&A for the three months ended June 30, 2022 increased compared with the same prior year period due to higher personnel costs, primarily for certain ~~administration~~administrative functions, reflecting the growth in our business.

Depreciation and amortization expense for the three months ended ~~March 31,~~June 30, 2022, ~~decreased by $3 million to $76~~was $77 million, compared with ~~$79~~$95 million for the same period in 2021. The decrease was primarily due to allocated corporate charges from XPO before the Separation of $9 million and the impact of foreign currency movements. Depreciation and amortization expense included ~~the~~ amortization of intangible assets of $13 million and $14 million for ~~both~~ the three months ended ~~March 31,~~June 30, 2022 and ~~2021. For the three months ended March 31,~~ 2021, ~~depreciation expense included $6 million allocated from XPO before the Separation.~~respectively.

Transaction and integration costs for the three months ended ~~March 31,~~June 30, 2022 were ~~$19~~$24 million ~~compared with $18 million for~~and primarily related to the ~~same period in 2021.~~Clipper Acquisition. Transaction and integration costs ~~in 2022 relate to~~for the ~~Clipper Acquisition~~three months ended June 30, 2021 were $35 million and ~~transaction and integration costs in 2021~~ primarily ~~relate~~related to the Separation.

Restructuring costs (credits) and other for the three months ended ~~March 31,~~June 30, 2022 ~~were $13~~and 2021 was not material.

Other income for the three months ended June 30, 2022 was $23 million. For the three months ended June 30, 2022, pension income was $9 million and the gain on foreign currency contracts was $16 million. Other expense for the three months ended June 30, 2021 was not material.

Interest expense, net for the three months ended June 30, 2022 was $9 million compared with $4$6 million for the same period in 2021. For the three months ended ~~March 31, 2022, restructuring costs and other included $5 million primarily related to severance costs and $8 million related to the deconsolidation of a joint venture.~~

Other income, net consists primarily of pension income and foreign exchange gains and losses. Other income, net for the three months ended March 31, 2022, was $16 million compared with $1 million for the same period in 2021. For the three months ended March 31, 2022, pension income was $9 million and the gain on foreign currency options was $8 million.

~~Interest expense, net for the three months ended March 31, 2022, was $4 million compared with $5 million for the same period in 2021. For the three months ended March 31,~~June 30, 2022, interest expense primarily ~~relates~~related to debt issued in the second half of 2021, debt issued in 2022, and capital lease obligations, partially offset by interest income on the cross-currency swap agreements. For the three months ended ~~March 31,~~June 30, 2021, interest expense primarily ~~relates~~related to related-party debt obligations with XPO before the Separation and capital lease obligations.

Income before income taxes for the three months ended ~~March 31,~~June 30, 2022 increased by ~~$23~~$58 million, to ~~$49~~$73 million, compared with ~~$26~~$15 million for the same period in 2021. The increase was primarily due to higher revenue and increased other income as a result of pension income and foreign currency ~~options,~~contracts.

Income tax expense for the three months ended June 30, 2022 was $21 million compared with $1 million for the same period in 2021. Our effective tax rate was 29.4% for the three months ended June 30, 2022 compared with 10.2% for the same period in 2021. The change in our effective tax rate was primarily driven by an increase in pre-tax losses in certain jurisdictions for which no benefit was recognized, non-deductible transaction cost, offset by deferred true-ups.


	Six Months Ended June 30,
(In millions)		2022		2021		$ Change		% Change
Revenue		$	4,239	$	3,704	$	535	14	%
Direct operating expense		3,523		3,074		449		15	%
Selling, general and administrative expense		410		348		62		18	%
Depreciation and amortization expense		153		174		(21)		(12)	%
Transaction and integration costs		43		53		(10)		(19)	%
Restructuring costs and other		14		3		11		n/m
Operating income		96		52		44		85	%
Other income (expense), net		39		—		39		n/m
Interest expense, net		(13)		(11)		(2)		18	%
Income before income taxes		122		41		81		n/m
Income tax expense		(32)		(10)		(22)		n/m
Net income		$	90	$	31	$	59	n/m

n/m - not meaningful

Six Months Ended June 30, 2022 compared with the Six Months Ended June 30, 2021

Revenue for the six months ended June 30, 2022, increased by 14%, or $535 million, to $4.2 billion, compared with $3.7 billion for the same period in 2021. For the six months ended June 30, 2022, our North America, Asia and Pacific operations reported growth of 18%, and our European operations reported growth of 12%. The Clipper Acquisition contributed 3% to revenue in our European operations and 2% to total revenue for the six months ended June 30, 2022. Foreign currency movements decreased revenue by approximately 7% for the six months ended June 30, 2022.

Direct operating expenses comprise both fixed and variable expenses and consist of operating costs related to our logistics facilities, including personnel costs and 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, 2022, was $3.5 billion, or 83% of revenue, compared with $3.1 billion, or 83% of revenue for the same period in 2021. For the six months ended June 30, 2022, direct operating expenses increased by $327 million due to higher personnel and temporary labor expenses, as well as higher third-party facilities and transportation costs of $67 million.

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, 2022, increased by $62 million, to $410 million, compared with $348 million for the same period in 2021. SG&A for the six months increased compared with the same prior year period due to higher personnel costs, primarily for certain administrative functions, reflecting the growth in our business.

Depreciation and amortization expense for the six months ended June 30, 2022 was $153 million, compared with $174 million for the same period in 2021. The decrease was a result of allocated corporate charges from XPO before the Separation of $14 million and the impact of foreign currency movements. Depreciation and amortization expense included amortization of intangible assets of $27 million and $28 million for the six months ended June 30, 2022 and 2021, respectively.

Transaction and integration costs for the six months ended June 30, 2022 were $43 million and primarily related to the Clipper Acquisition. Transaction and integration costs for the six months ended June 30, 2021 were $53 million and primarily related to the Separation.

Restructuring costs and other for the six months ended June 30, 2022, were $14 million. For the six months ended June 30, 2022, restructuring costs and other included $6 million related to severance costs and $8 million related to the deconsolidation of a joint venture. Restructuring costs and other for the six months ended June 30, 2021 were $3 million and primarily related to severance costs.

Other income for the six months ended June 30, 2022 was $39 million. For the six months ended June 30, 2022, pension income was $18 million and the gain on foreign currency contracts was $24 million. Other income for the six months ended June 30, 2021 was not material.

Interest expense, net for the six months ended June 30, 2022 was $13 million compared with $11 million for the same period in 2021. For the six months ended June 30, 2022, interest expense primarily related to debt issued in the second half of 2021, debt issued in 2022, and capital lease obligations, partially offset by interest income on the cross-currency swap agreements. For the six months ended June 30, 2021, interest expense primarily related to related-party debt obligations with XPO before the Separation and capital lease obligations.

Income before income taxes for the six months ended June 30, 2022 increased by $81 million, to $122 million, compared with $41 million for the same period in 2021. The increase was primarily due to higher revenue and increased other income as a result of pension income and foreign currency contracts, partially offset by the deconsolidation of a joint venture.

Income tax expense for the ~~three~~six months ended ~~March 31,~~June 30, 2022, was ~~$11~~$32 million compared with ~~a $9~~$10 million ~~expense~~ for the same period in 2021. Our effective tax rate was ~~22.1%~~26.4% for the ~~three~~six months ended ~~March 31,~~June 30, 2022 compared with ~~33.4%~~24.9% for the same period in 2021. The ~~effective tax rates for the first quarters of 2022 and 2021 were based on forecasted full-year effective tax rates, adjusted for discrete items that occurred within the periods presented. The~~change in our effective tax rate ~~for the first quarter of 2022~~ was primarily driven by ~~pre-tax losses in certain jurisdictions for which no benefit was recognized and~~$5 million non-deductible transaction cost, offset by ~~discrete items having a tax benefit~~$4 million of $3 million from stock-based compensation. The effective tax rate for the first quarter of 2021 was driven by pre-tax losses in certain jurisdictions for which no benefit was recognized and discrete items having a tax expense of $2 million for adjustment of prior period taxes offset by a tax benefit of $2 million from stock-based compensation.deferred true-ups.

Liquidity and Capital Resources

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. 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 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. We believe that our existing liquidity and sources of capital are sufficient to support our operations over the next 12 months.

Debt and Financing Arrangements

Five-Year Term Loan ~~Credit Agreement~~

On ~~March 22,~~May 25, 2022, we entered into a five-year unsecured Term Loan ~~Credit Agreement~~(the “Five-Year Term Loan due 2027”) that ~~provides~~provided a ~~£375~~$500 million ~~($493 million as of March 31, 2022)~~ unsecured term loan facility ~~which will~~to fund the Clipper Acquisition. ~~The Term Loan Credit Agreement consists of two delayed draw term loans of £187.5~~On May 26, 2022, we borrowed $500 million ~~($246 million as of March 31, 2022) each. The loans may be borrowed in multiple draws beginning on the acquisition date. The loans~~that will mature on ~~the second and third anniversary following the funding date, respectively. Loans under the Term Loan Credit Agreement bear~~May 26, 2027. The loan bears interest at a fluctuating rate per annum equal to, ~~(a) with respect to borrowings in U.S. dollars,~~ at our option, the alternate base rate or the adjusted ~~secured overnight financing rate and (b) with respect to borrowings in British Pounds Sterling, the daily simple Sterling~~Secured Overnight ~~Interbank Average rate (“SONIA”)~~Financing Rate (SOFR), ~~in each case,~~ plus an applicable margin based on the Company’s credit ratings.

21Delayed Draw Term Loan

On March 22, 2022, we entered into an unsecured delayed draw Term Loan (the “Delayed Draw Term Loan”) that provided a £375 million ($457 million as of June 30, 2022) unsecured term loan facility to fund the Clipper Acquisition. The loans were available to us in U.S. dollars or British pounds sterling. On May 26, 2022, we borrowed in U.S. dollars a $165 million 2-year term loan tranche (the “Two-Year Term Loan due 2024”) and a $235 million 3-year term loan tranche (the “Three-Year Term Loan due 2025”) that will mature on May 26, 2024, and May 26, 2025, respectively. Loans bear interest at a fluctuating rate per annum equal to, at our option, the alternate base rate or the adjusted SOFR, plus an applicable margin based on the Company’s credit ratings.

Bridge Term Loan ~~Credit Agreement~~

On February 28, 2022, we entered into aan unsecured Bridge Term Loan ~~Credit Agreement~~(the “Bridge Term Loan”) that provided a £745 million ($~~979~~907 million as of ~~March 31,~~June 30, 2022) unsecured term loan facility ~~for~~to fund the Clipper Acquisition. The Bridge Term Loan Credit Agreement matures 364 days after an advance. Loans under the Bridge Term Loan Credit Agreement bear interest at the daily simple SONIA rate plus an applicable margin calculated based on the Company’s credit ratings. Interest will be paid in arrears, initially on the three-month anniversary of the acquisition closing date and thereafter on the date that is three months following the previous payment date.

~~Concurrently with the effectiveness of the Term Loan Credit Agreement, we reduced~~ commitments under the Bridge Term Loan ~~Credit Agreement by~~were terminated with the ~~aggregate amount~~effectiveness of ~~commitments~~the Five-Year Term Loan and the Delayed Draw Term Loan. No amounts were drawn under the Bridge Term Loan ~~Credit Agreement.~~credit agreement.

Unsecured Notes

In 2021, we completed an offering of $800 million aggregate principal amount of notes, consisting of $400 million of notes due 2026 (the “2026 Notes”) and $400 million of notes due 2031 (the “2031 Notes”). The 2026 Notes bear interest at a rate of 1.65% per annum payable semiannually in cash in arrears on January 15 and July 15 of each year, beginning January 15, 2022, and maturing on July 15, 2026. The 2031 Notes bear interest at a rate of 2.65% per annum payable semiannually in cash in arrears on January 15 and July 15 of each year, beginning January 15, 2022, and maturing on July 15, 2031.

Revolving Credit Facility

In 2021, we entered into a five-year unsecured multi-currency Revolving Credit Facility (the “Revolving Credit Facility”). The Revolving Credit Facility provides commitments of up to $800 million, of which $60 million is available for the issuance of letters of credit. No amounts were outstanding under the Revolving Credit Facility as of ~~March 31,~~June 30, 2022.

Sales of Certain Receivables

We sell certain of our trade accounts receivables on a non-recourse basis to third-party financial institutions under various factoring agreements. ~~The Company~~We also sold certain European trade accounts ~~receivable~~receivables under a securitization program. In the first quarter of 2022, we terminated our securitization ~~program.We~~program. We account for these transactions as sales of receivables and present cash proceeds as cash provided by operating activities in the Condensed Consolidated Statements of Cash Flows. We use the sale of certain receivables to help manage our working capital.

Information related to the trade receivables sold was as follows:

Three Months Ended March 31,
(In millions) 2022 2021
Factoring agreements
Receivables sold in period $ 229 $ 100
Cash consideration 228 100
Securitization program
Receivables sold in period $ — $ 428
Cash consideration — 428


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In millions)	2022		2021		2022		2021
Factoring agreements
Receivables sold in period	$	228	$	100	$	457	$	200
Cash consideration	228		100		456		200
Securitization program
Receivables sold in period	$	—	$	474	$	—	$	902
Cash consideration	—		474		—		902

Covenants and Compliance

As of ~~March 31,~~June 30, 2022, we were in compliance with the covenants contained in our debt and financing arrangements.

Financial Condition

The following table summarizes our asset and liability balances as of ~~March 31,~~June 30, 2022 and December 31, 2021:

(In millions) March 31, 2022 December 31, 2021 $ Change % Change
Total current assets $ 2,030 $ 2,099 (69) (3) %
Total long-term assets 5,096 5,172 (76) (1) %
Total current liabilities 2,122 2,329 (207) (9) %
Total long-term liabilities 2,629 2,552 77 3 %


(In millions)	June 30, 2022		December 31, 2021		$ Change		% Change
Total current assets	$	2,256	$	2,099	$	157	7	%
Total long-term assets	6,450		5,172		1,278		25	%
Total current liabilities	2,364		2,329		35		2	%
Total long-term liabilities	3,781		2,552		1,229		48	%

~~There were no significant changes~~The increase in our ~~total~~ assets and ~~total~~ liabilities from December 31, 2021 to ~~March 31, 2022.~~June 30, 2022 primarily reflects the assets acquired and liabilities assumed, as well as various debt instruments entered into in connection with the Clipper Acquisition.

Cash Flow Activity

Our cash flows from operating, investing and financing activities, as reflected on our Condensed Consolidated Statements of Cash Flows, are summarized as follows:

Three Months Ended March 31,
(In millions) 2022 2021 $ Change % Change
Net cash provided by operating activities $ 46 $ 47 $ (1) (2) %
Net cash used in investing activities (44) (38) (6) 16 %
Net cash provided by (used in) financing activities (18) 80 (98) (123) %
Effect of exchange rates on cash and cash equivalents (5) (3) (2) 67 %
Net increase (decrease) in cash and cash equivalents $ (21) $ 86 $ (107) (124) %


	Six Months Ended June 30,
(In millions)	2022		2021		$ Change		% Change
Net cash provided by operating activities	$	200	$	146	$	54	37	%
Net cash used in investing activities	(1,003)		(71)		(932)		n/m
Net cash provided by (used in) financing activities	869		(78)		947		n/m
Effect of exchange rates on cash and cash equivalents	(15)		1		(16)		n/m
Net increase (decrease) in cash and cash equivalents	$	51	$	(2)	$	53	n/m

n/m - not meaningful

Operating Activities

Cash flows from operating activities for the ~~three~~six months ended ~~March 31,~~June 30, 2022 ~~decreased~~increased by $1$54 million compared with the same period in 2021. The ~~decrease is~~increase was primarily due to a ~~$28 million decrease in working capital, offset by a $21~~$59 million increase in net ~~income.~~income, partially offset by an $11 million decrease in non-cash items.

Investing Activities

Investing activities used ~~$44~~$1,003 million of cash for the ~~three~~six months ended ~~March 31,~~June 30, 2022, compared with ~~$38~~$71 million used for the same period of 2021. During the ~~three~~six months ended ~~March 31,~~June 30, 2022, we used ~~$65~~$874 million, net of cash received, to fund the Clipper Acquisition, used $154 million to purchase property and equipment, received $10 million in proceeds from cross-currency swap agreements, excluding accrued interest, and received $3$6 million ~~of cash~~ from sales of property and equipment. During the ~~three~~six months ended ~~March 31,~~June 30, 2021, we used ~~$67~~$119 million ~~of cash~~ to purchase property and equipment, received ~~$20~~$34 million net cash from the Kuehne + Nagel acquisition, received $12 million in connection with the purchase and sale of affiliate trade receivables, and received $9$2 million from ~~the Kuehne + Nagel acquisition.~~sales of property and equipment.

Financing Activities

Financing activities ~~used $18~~generated $869 million of cash for the ~~three~~six months ended ~~March 31,~~June 30, 2022, ~~including a $9~~compared with $78 million ~~use of cash to repay debt and finance leases. Financing activities generated $80 million of cash~~used for the ~~three months ended March 31,~~same period of 2021. The primary sources of cash from financing activities in the ~~three~~six months ended ~~March 31,~~June 30, 2022, were $898 million in proceeds from long-term debt, partially offset by $15 million repayment of debt and finance leases and $12 million in payments for employee taxes on net settlement of equity awards. The primary uses of cash from financing activities in the six months ended June 30, 2021, were ~~$138~~$128 million in the purchase of a noncontrolling interest, $56 million in repayments of debt and finance leases, and $25 million in repayment of debt related to a trade securitization program, partially offset by $116 million of net transfers from ~~XPO, partially offset by a $25 million repayment of debt related to securitization transactions and $26 million used to repay debt and finance leases.~~XPO.

Off-Balance Sheet Arrangements

We do not engage in any off-balance sheet financial arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Contractual Obligations

~~As of March 31, 2022,~~The Company’s contractual cash requirements have not changed materially since the ~~Company’s future contractual obligations had not materially changed as compared with December 31, 2021.~~2021 Form 10-K, except for the new term loan credit agreements described above.

Critical Accounting Policies and Estimates

Preparation of our condensed consolidated financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of certain assets, liabilities, revenues and expenses, as well as related disclosure of contingent assets and liabilities. There have been no material changes to the critical accounting policies and estimates as previously disclosed in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2021, and that are hereby incorporated by reference.

Accounting Pronouncements

Information related to new accounting standards is included in Note 1—Basis of Presentation and Significant Accounting Policies to the condensed consolidated financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our market risk disclosures involve forward-looking statements. Actual results could differ materially from those projected in such forward-looking statements. We are exposed to market risk related to changes in interest rates and foreign currency exchange rates.

Interest Rate Risk

Our long-term debt portfolio, ~~primarily~~excluding finance leases and other debt, consists of ~~fixed-rate instruments~~$800 million fixed rate and $900 million variable rate loans, complemented by a variable-rate revolving credit ~~facility that can be drawn on~~facility. In the second quarter of 2022, we entered into multiple swap agreements to convert $650 million of variable rate debt from ~~time~~SOFR-indexed to ~~time. For any variable-rate debt, interest rate changes~~EURIBOR-indexed. A hypothetical 1% increase in ~~the underlying index rates will impact future interest expense. Currently we do not hold any derivative contracts that hedge~~EURIBOR would, among other things, increase our interest expense by approximately $6.5 million. We also entered into multiple swap agreements to convert $250 million of variable rate ~~risk; however, we may consider entering~~USD-denominated debt into ~~such contracts in the future. A~~USD-denominated fixed rate debt. For our fixed rate notes, a 1% increase or decrease in interest rates would decrease or increase the fair value of our notes ~~and debentures~~ by approximately 6%4.5%.

Foreign Currency Exchange Risk

A significant proportion of our net assets and income are in non-U.S. dollar (“USD”) currencies, primarily the Euro (“EUR”) and British pound sterling (“GBP”). We are exposed to currency risk from potential changes in functional currency values of our foreign currency denominated assets, liabilities and cash flows. Consequently, a depreciation of the EUR or the GBP relative to the USD could have an adverse impact on our financial results.

We entered into cross-currency swap agreements to manage our foreign currency exchange risk by effectively converting a portion of the fixed-rate USD-denominated ~~notes,~~debt, including the interest payments, to fixed-rate EUR-denominated debt and a portion of the floating-rate USD-denominated loans, including the interest payments, to floating-rate EUR-denominated debt. We use foreign currency option contracts to mitigate the risk of a reduction in the value of earnings from our operations that use the EUR or GBP as their functional currency.

As of ~~March 31,~~June 30, 2022, a uniform 10% strengthening in the value of the USD relative to the EUR would have resulted in ~~a decrease~~an increase in net assets of ~~$26~~approximately $57 million. As of ~~March 31,~~June 30, 2022, a uniform 10% strengthening in the value of the USD relative to the GBP would have resulted in a decrease in net assets of ~~$46~~approximately $48 million. These theoretical calculations assume that an instantaneous, parallel shift in exchange rates occurs, which is not consistent with the

history of foreign currency ~~transactions.~~markets. Fluctuations in exchange rates also affect the volume of sales or the foreign currency sales price as competitors’ services become more or less attractive. The sensitivity analysis of the impact of changes in foreign currency exchange rates does not factor in a potential change in sales levels or local currency prices.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of ~~March 31,~~June 30, 2022. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of ~~March 31,~~June 30, 2022, such that the information required to be included in our Securities and Exchange Commission (“SEC”) reports is: (i) recorded, processed, summarized and reported within the periods specified in SEC rules and forms relating to the Company, including our consolidated subsidiaries and (ii) accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act, during our most recently completed fiscal quarter that materially affected or are reasonably likely to materially affect our internal control over financial reporting.

2530

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note 11—Commitments and Contingencies to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for a description of our legal proceedings.

ITEM 1A. RISK FACTORS

~~Except as set forth below, as of the date of this report, there are~~There have been no material changes to the risk factors previously disclosed under “Risk Factors” in the 2021 Form ~~10-K.~~

~~Risks Related to Russia’s Invasion of Ukraine.~~

~~In February~~10-K and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, Russia launched a large-scale military invasion of Ukraine. The United States and other countries and certain international organizations have imposed broad-ranging economic sanctions on Russia and certain Russian individuals, banking entities and corporationsexcept as a response, and additional sanctions may be imposed in the future. The extent and duration of the military action or future escalation of such hostilities, resulting sanctions and market disruptions and volatility are impossible to predict, but could be significant and could have a severe adverse effect on the regional and global economies. The ramifications of the hostilities and sanctions may not be limited to Russia, Ukraine and Russian and Ukrainian companies; ramifications may spill over to and negatively impact other regional and global economic markets. The potential for a wider conflict could further increase financial market volatility and could negatively affect our ability to raise additional capital when required. While we currently conduct limited business in Russia, the conflict and its effects could adversely affect our business, results of operations, cash flows and financial condition.set forth below.

Risks Related to the ~~Proposed~~ Acquisition of Clipper Logistics plc.

On February 28, 2022, the Company and the board of directors of Clipper Logistics plc (“Clipper”) reached an agreement on the terms and conditions of a recommended cash and share offer to be made by GXO for the entire issued and to be issued share capital of Clipper. It iswas intended that the acquisition of Clipper ~~will~~would be effected by means of a Court-sanctioned scheme of ~~arrangement.~~arrangement (the “Scheme”). On ~~April 11,~~May 24, 2022, ~~GXO~~the Company announced that ~~at a Court Meeting~~the Scheme had become effective and ~~General Meeting~~the acquisition of Clipper ~~shareholders,~~had been completed following the requisite majority of scheme shareholders voted to approve the scheme at the Court Meeting and the requisite majority of Clipper shareholders voted to pass the special resolution in connection with the amendmentsanction of the ~~Clipper articles~~Scheme by the High Court of ~~association~~Justice in England and ~~the implementation of the scheme at the General Meeting.~~Wales on May 20, 2022. The ~~completion of the~~ acquisition of Clipper remains subject to the ~~satisfaction or waiver of the other conditions, including the Court sanctioning the Scheme at the Scheme Court Hearing and the~~ receipt of regulatory ~~approvals~~approval from ~~relevant competition authorities~~the Competition and Markets Authority in the United ~~Kingdom and Poland. Our~~Kingdom. Regulatory approval for our acquisition of Clipper may not be completed on the currently contemplated timeline or in the currently contemplated form, or at all, and the acquisition may not achieve the intended benefits.

ITEM 6. EXHIBITS


Exhibit Number						Description






























































~~2.1~~						Recommended cash and share acquisition of Clipper Logistics PLC by GXO Logistics, Inc., dated as of February 28, 2022, incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K (Commission file no. 001-40470) filed with the SEC on ~~March~~1 ~~, 202~~2 .







~~2.2~~						Cooperation Agreement between GXO Logistics, Inc. and Clipper Logistics PLC, incorporated by reference to Exhibit 2.2 of the Company’s Current Report on Form 8-K (Commission file no. 001-40470) filed with the SEC on March 1, 2022.

~~10.1~~						~~Form of Deed of~~ I ~~rrevocable~~ ~~Undertaking,~~ ~~incorporated by reference to Exhibit~~ 10 .01 ~~of the Company’s Current Report on Form 8-K (Commission file no. 001-40470) filed with the SEC on~~ ~~March~~1, ~~202~~2 .

~~10.2~~						Bridge Term Loan Credit Agreement, dated as of February 28, 2022, by and among GXO Logistics, Inc., the lenders and other parties from time to time party thereto, and Barclays Bank plc, as Administrative Agent, incorporated by reference to Exhibit 10.02 of the Company’s Current Report on Form 8-K (Commission file no. 001-40470) filed with the SEC on March 1, 2022.

~~10.3~~10.1***						Term Loan Credit Agreement, dated as of ~~March 22,~~May 25, 2022, by and among ~~GXO Logistics, Inc.,~~the Company, the lenders and other parties from time to time party thereto, and Barclays Bank plc, as Administrative Agent, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (Commission file no. 001-40470) filed with the SEC on ~~March 23,~~May 26, 2022.

~~10.4*+~~						~~Form of Restricted Stock Unit Award Agreement~~ ~~(2021Omnibus Incentive Compensation Plan~~).



~~10.5*+~~						~~Form of Performance Share~~ ~~Unit Award Agreement~~ ~~(2021 Omnibus Incentive Compensation Plan).~~

31.1 31.1						Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended ~~March 31,~~June 30, 2022.

31.2 31.2						Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended ~~March 31,~~June 30, 2022.

32.1**						Certification of the Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended ~~March 31,~~June 30, 2022.

32.2**						Certification of the Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended ~~March 31,~~June 30, 2022.

101.INS 101.INS						Inline XBRL Instance Document.

101.SCH 101.SCH						Inline XBRL Taxonomy Extension Schema.

101.CAL 101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase.

101.DEF 101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase.

101.LAB 101.LAB						Inline XBRL Taxonomy Extension Label Linkbase.

101.PRE 101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase.

104 104						Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

*						Filed herewith.

**						Furnished herewith.

+***						~~This exhibit is a management contract~~Exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company will furnish supplementally copies of omitted exhibits to the Securities and Exchange Commission or ~~compensatory plan or arrangement.~~its staff upon its request.

2732

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		GXO Logistics, Inc.

Date: ~~May 5,~~August 3, 2022	By:	/s/ Malcolm Wilson
		Malcolm Wilson
		(Chief Executive Officer)

Date: ~~May 5,~~August 3, 2022	By:	/s/ Baris Oran
		Baris Oran
		(Chief Financial Officer)

2833


Delaware						86-2098312
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)
Two American Lane
Greenwich, Connecticut						06831
(Address of principal executive offices)						(Zip Code)


GXO Logistics, Inc.
Form 10-Q
For the Quarterly Period Ended ~~March 31,~~June 30, 2022
Table of Contents
						Page
Part I—Financial Information
Item 1. Financial Statements (Unaudited)						2
Condensed Consolidated Statements of Operations						2
Condensed Consolidated Statements of Comprehensive Income (Loss)						3
Condensed Consolidated Balance Sheets						4
Condensed Consolidated Statements of Cash Flows						5
Condensed Consolidated Statements of Changes in Equity						6
Notes to Condensed Consolidated Financial Statements						78
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations						1821
Item 3. Quantitative and Qualitative Disclosures About Market Risk						2429
Item 4. Controls and Procedures						2529
Part II—Other Information
Item 1. Legal Proceedings						2631
Item 1A. Risk Factors						2631

Item 6. Exhibits						2732
Signatures						2833


	March 31,		December 31,
(Dollars in millions, shares in thousands, except per share amounts)	2022		2021
ASSETS
Current assets
Cash and cash equivalents	$	312	$	333
Accounts receivable, net of allowances of $13 and $13, respectively	1,492		1,507
Other current assets	226		259
Total current assets	2,030		2,099
Long-term assets
Property and equipment, net of $1,145 and $1,128 in accumulated depreciation, respectively	833		863
Operating lease assets	1,771		1,772
Goodwill	1,986		2,017
Intangible assets, net of $414 and $407 in accumulated amortization, respectively	239		257
Other long-term assets	267		263
Total long-term assets	5,096		5,172
Total assets	$	7,126	$	7,271
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	549	$	624
Accrued expenses	940		998
Short-term borrowings and obligations under finance leases	32		34
Current operating lease liabilities	455		453
Other current liabilities	146		220
Total current liabilities	2,122		2,329
Long-term liabilities
Long-term debt and obligations under finance leases	907		927
Long-term operating lease liabilities	1,388		1,391
Other long-term liabilities	334		234
Total long-term liabilities	2,629		2,552
Commitments and contingencies (Note 11)	0		0
Stockholders’ Equity
Common Stock, $0.01 par value per share, 300,000 shares authorized, 114,840 and 114,659 shares issued and outstanding, as of March 31, 2022 and December 31, 2021, respectively	1		1
Preferred Stock, $0.01 par value per share, 10,000 shares authorized, 0 shares issued and outstanding, as of March 31, 2022 and December 31, 2021, respectively	—		—
Additional paid-in capital	2,349		2,354
Retained earnings	163		126
Accumulated other comprehensive loss	(172)		(130)
Total stockholders’ equity before noncontrolling interests	2,341		2,351
Noncontrolling interests	34		39
Total equity	2,375		2,390
Total liabilities and equity	$	7,126	$	7,271


(Dollars in millions, shares in thousands, except per share amounts)	June 30, 2022		December 31, 2021
ASSETS
Current assets
Cash and cash equivalents	$	384	$	333
Accounts receivable, net of allowances of $13 and $13, respectively	1,560		1,507
Other current assets	312		259
Total current assets	2,256		2,099
Long-term assets
Property and equipment, net of $1,172 and $1,128 in accumulated depreciation, respectively	905		863
Operating lease assets	1,900		1,772
Goodwill	2,769		2,017
Intangible assets, net of $413 and $407 in accumulated amortization, respectively	557		257
Other long-term assets	319		263
Total long-term assets	6,450		5,172
Total assets	$	8,706	$	7,271
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	592	$	624
Accrued expenses	1,012		998
Short-term borrowings and obligations under finance leases	84		34
Current operating lease liabilities	490		453
Other current liabilities	186		220
Total current liabilities	2,364		2,329
Long-term liabilities
Long-term debt and obligations under finance leases	1,801		927
Long-term operating lease liabilities	1,570		1,391
Other long-term liabilities	410		234
Total long-term liabilities	3,781		2,552
Commitments and contingencies (Note 11)	0		0
Stockholders’ Equity
Common Stock, $0.01 par value per share; 300,000 shares authorized, 118,610 and 114,659 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively	1		1
Preferred Stock, $0.01 par value per share; 10,000 shares authorized, 0 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively	—		—
Additional paid-in capital	2,561		2,354
Retained earnings	214		126
Accumulated other comprehensive loss	(246)		(130)
Total stockholders’ equity before noncontrolling interests	2,530		2,351
Noncontrolling interests	31		39
Total equity	2,561		2,390
Total liabilities and equity	$	8,706	$	7,271


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In millions)	2022		2021		2022		2021
United Kingdom	$	777	$	615	$	1,481	$	1,167
United States	685		551		1,366		1,135
France	183		190		359		370
Netherlands	163		157		333		305
Spain	123		122		243		241
Other	225		247		457		486
Total	$	2,156	$	1,882	$	4,239	$	3,704


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


									Three Months Ended				Six Months Ended
		Three Months Ended March 31,					June 30,				June 30,
(Dollars in millions, shares in thousands, except per share amounts)	(Dollars in millions, shares in thousands, except per share amounts)		2022		2021			(Dollars in millions, shares in thousands, except per share amounts)	2022		2021		2022		2021
Revenue	Revenue		$	2,083	$	1,822		Revenue	$	2,156	$	1,882	$	4,239	$	3,704
Direct operating expense	Direct operating expense		1,748		1,520			Direct operating expense	1,775		1,554		3,523		3,074
Selling, general and administrative expense	Selling, general and administrative expense		190		171			Selling, general and administrative expense	220		177		410		348
Depreciation and amortization expense	Depreciation and amortization expense		76		79			Depreciation and amortization expense	77		95		153		174
Transaction and integration costs	Transaction and integration costs		19		18			Transaction and integration costs	24		35		43		53
Restructuring costs and other			13		4
Restructuring costs (credits) and other								Restructuring costs (credits) and other	1		(1)		14		3
Operating income	Operating income		37		30			Operating income	59		22		96		52
Other income, net			16		1
Other income (expense), net								Other income (expense), net	23		(1)		39		—
Interest expense, net	Interest expense, net		(4)		(5)			Interest expense, net	(9)		(6)		(13)		(11)
Income before income taxes	Income before income taxes		49		26			Income before income taxes	73		15		122		41
Income tax expense	Income tax expense		(11)		(9)			Income tax expense	(21)		(1)		(32)		(10)
Net income	Net income		38		17			Net income	52		14		90		31
Less: Net income attributable to noncontrolling interests	Less: Net income attributable to noncontrolling interests		(1)		(3)			Less: Net income attributable to noncontrolling interests	(1)		(3)		(2)		(6)
Net income attributable to GXO	Net income attributable to GXO		$	37	$	14		Net income attributable to GXO	$	51	$	11	$	88	$	25

Earnings per share data	Earnings per share data							Earnings per share data
Basic earnings per share	Basic earnings per share		$	0.32	$	0.12		Basic earnings per share	$	0.44	$	0.10	$	0.76	$	0.22
Diluted earnings per share	Diluted earnings per share		$	0.32	$	0.12		Diluted earnings per share	$	0.44	$	0.10	$	0.76	$	0.22

Weighted-average common shares outstanding	Weighted-average common shares outstanding							Weighted-average common shares outstanding
Basic weighted-average common shares outstanding	Basic weighted-average common shares outstanding		114,731		114,626			Basic weighted-average common shares outstanding	116,131		114,626		115,435		114,626
Diluted weighted-average common shares outstanding	Diluted weighted-average common shares outstanding		115,569		114,626			Diluted weighted-average common shares outstanding	116,646		114,626		116,111		114,626


	Common Stock			XPO Logistics, Inc. Investment		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Equity Before Noncontrolling Interests		Noncontrolling Interests		Total Equity
(Shares in thousands, dollars in millions)	Shares	Amount
Balance as of December 31, 2021	114,659	$	1	$	—	$	2,354	$	126	$	(130)	$	2,351	$	39	$	2,390
Net income	—	—		—		—		37		—		37		1		38
Other comprehensive loss	—	—		—		—		—		(44)		(44)		(1)		(45)
Stock-based compensation	—	—		—		6		—		—		6		—		6
Vesting of stock compensation awards	181	—		—		—		—		—		—		—		—
Tax withholding on vesting of stock compensation awards	—	—		—		(11)		—		—		(11)		—		(11)
Deconsolidation of variable interest entity	—	—		—		—		—		2		2		(5)		(3)
Balance as of March 31, 2022	114,840	$	1	$	—	$	2,349	$	163	$	(172)	$	2,341	$	34	$	2,375


(In millions)	March 31, 2022		December 31, 2021
Contract assets (1)	$	146	$	147
Contract liabilities (2)	228		220


(In millions)
Balance as of December 31, 2021	$	3
Charges incurred	56
Payments	~~(4)~~(6)

Balance as of ~~March 31,~~June 30, 2022	$	43


(In millions)	Rate(1)	June 30, 2022		December 31, 2021
1.65% Unsecured notes due 2026(2)	1.65%	$	397	$	397
2.65% Unsecured notes due 2031(3)	2.65%	396		396
Two-Year Term Loan due 2024	2.58%	165		—
Three-Year Term Loan due 2025(4)	2.58%	234		—
Five-Year Term Loan due 2027(4)	2.71%	499		—
Finance leases and other	Various	194		168
Total debt and obligations under finance leases		$	1,885	$	961
Less: Short-term borrowings and obligations under finance leases		84		34
Total long-term debt and obligations under finance leases		$	1,801	$	927


	Three Months Ended March 31, 2022
(In millions)	Gain or (Loss) Recognized in Other Comprehensive Income		Gain or (Loss) Reclassified from AOCI into Net Income(1)		Gain or (Loss) Recognized in Net Income on Derivative (Excluded from effectiveness testing) (1)


Derivatives designated as hedges
Cross-currency swap agreements	$	3	$	—	$	2
Total	$	3	$	—	$	2


	Three Months Ended June 30, 2022						Six Months Ended June 30, 2022
(In millions)	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivative		Gain or (Loss) Reclassified from AOCI into Net Income(1)		Gain or (Loss) Recognized in Net Income on Derivative (Excluded from effectiveness testing)(1)		Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivative		Gain or (Loss) Reclassified from AOCI into Net Income(1)		Gain or (Loss) Recognized in Net Income on Derivative (Excluded from effectiveness testing)(1)
Derivatives designated as net investment hedges
Cross-currency swap agreements	$	43	$	2	$	—	$	46	$	2	$	2
Derivatives designated as cash flow hedges
Interest rate swaps	$	(1)	$	—	$	—	$	(1)	$	—	$	—