GXO Logistics (GXO) 9 Nov 222022 Q3 Earnings call transcript

Company Profile

Participants

Malcolm Wilson	Chief Executive Officer
Baris Oran	Chief Financial Officer
Bill Fraine	Chief Commercial Officer
Mark Manduca	Chief Investment Officer
Scott Schneeberger	Oppenheimer
Chris Wetherbee	Citi
Stephanie Moore	Jefferies
Allison Poliniak	Wells Fargo
Brian Ossenbeck	JPMorgan
Ari Rosa	Credit Suisse
Casey Deak	Stifel

Call transcript

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Operator

Welcome to the GXO Third Quarter 2022 Earnings Conference Call and Webcast. My name is Doug, and I'll be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded.

Before the call begins, let me read a brief statement on behalf of the company regarding forward-looking statements, the use of non-GAAP financial measures and company guidance.

During this call, the company will be making certain forward-looking statements within the meaning of applicable securities laws, which by their nature, involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those projected in the forward-looking statements. that in actual the factors materially to of contained is company's discussion could results cause differ A SEC filings. in are of except to statements on update any has forward-looking the extent forward-looking release to earnings The statements, these were no this obligation call and required made today as the of only the company company's made by law. rules refer to as applicable SEC measures certain defined financial may during non-GAAP also call. company The this under measures its GAAP contained measures related to the company's of release in Reconciliations non-GAAP earnings comparable the such financial financial most tables website. are and the are on Unless otherwise reported reported this in call stated, are all results dollars. United States on also trends you it to what company its guidance assumption. today remind to-date will and incorporates business believes The appropriate that be and foreign detailed various fluctuations maybe supply and consumer SEC. factors, including chain rates, exchange unpredictable demand markets inflationary by economic the filings inherently many in pressures affected are factors conditions in materially global in the constraints, in its results changes global with and labor company's spending, The and not the and materially company services, demand its could for results actual therefore, guidance. for is from possible to predict It differ

in forward-looking You and which contains Mr. you call over regarding a Executive Malcolm earnings non-GAAP Chief company's Officer, release, website. can important may on Wilson. information Wilson, financial now copy find additional the section turn the of the the begin. measures company's will Investors statements I to GXO's

Malcolm Wilson

Chief of posted joining our operating quarter quarter customers several of you Officer our Baris relationships and added Thank Commercial large and Bill for today in, you, Manduca, despite financial the our Logistics. acquisition we approval Markets the received GXO. Oran, Officer; was XXXX third Doug Financial from against the regulatory our Officer. U.S. UK of for from Clipper Competition of grew revenue me foreign softening with others, delivered third Mark for strong proud $X.X us Chief was our that euro another to many Jumping organic Fraine in exchange and the October and of of report growth retention. global with billion results, outstanding and Thank customer strong We impacts quarter, right level everyone. ever high Authority today, In our dollar. we've and our our result morning by revenue, driven quarter with Greenwich are in I'm XX% good Investment final the This and highest combined Chief pound

outsized expansion adjusted delivered was we've completed quarter, of EBITDA the operational year. We the startups that were early XX% we as the also volume which the sequential months up driving in in of margin record year-over-year implementing

Baris we've per will earnings delivered in free share. cash strong and discuss also moment, flow a adjusted on results As

to and to we with international It’s This customers existing business also share Syngenta, half contracts want first time contracts Boeing, in moment supply sites largely and TV, customers. are peers outsource from order costs. quarter take wins we a base to a market clear Samsung, Nike, We to market customers to in time signed look expertise service gains This grow share an our we've to LVMH, quarter with existing in market impressive is fantastic people. is diverse have touch customer a Clipper that reduce reassessing outsourcing signed more chains first just high new many acquired. and very true the new with our new and the continue as importantly, with customers brands. acquisition. and value-added service to continued Clipper as gain few. stellar name improve of a Sky We and and existing post-COVID. came both share Half our upon new customers range from They diamond. offerings that a most got from company outsourcing were I

Additionally, Clipper leading credentials. bolster our helps already ESG industry

customers on and do logistics Clipper With the for the great business manner helping to repairs, that is a environment. is in reverse focus good for

For year, COX of the The now enabling and here X.X RFPs and last consumer across competitive the reducing repaired real pieces circular core And economy. example, our electronics emissions ESG of around a Clipper markets, is values. leadership reference position credentials majority million advantage.

that also us recall, integration continuity and ensure which with customers Baris be talent. forward the that deal put of will and May. the we top able Clipper's Day With our of borrowing the We'll XXXX may upon note Clipper approval XXXX. million you able to more in and £XX of As place delivering January. we're now closed the progress our I'm secured, to in in anticipate at cost detail Investor pleased favorable stability the regulatory time, we in to for we back discuss and This were moving At arrangements, touch shortly. XX for scheduled to planned lion share synergies enabled

we reiterating full for growth. early group, and continued fourth expect updated the our the peak we're at the margin forecast, guidance. of line on our Looking quarter and year Based indications top

our a labor of and experienced, year, have available. readily and sporadic season good This whole of disruptions, chain are peak customers much inventory the holiday anticipating supply is market labor. as scarcity well inventory more We smoother in levels Last year, most as XXXX. of

our next XXXX. Looking billion beyond $X.X already wins confident our Based and beyond. on strengthening nearly XXXX peak, year, for we've date, visibility secured revenue to on incremental of we're for

announcing for costs our accelerate sales uncertainty that loop you strong. Conversion continuing customers as accelerate. a period will significant $X grow as our is this during healthy, sales past to is while has demand pipeline even global to in Our of Warehouse solutions We've billion demand consumer the reduced exemplified and and pipeline continues outsourcing tech to can after expect, remained economic experience. the services improving seen wins. as by

productivity to enabler increasingly are drive customers We efficiencies us and through are business. the an technology seeking in of out

tech as differentiated leader. the We’re in industry the

XXXX our XXXX. Deployments in history. XX% are technology in most than North higher in Europe the and deployed we quarter America This in over

to we implementing quarters coming environment, while our contractual more us, the and base, customers. growth dynamic model degree macro the look hearing at speak XXXX. through high the closing, customer we're Baris continuing our to the performance in first, confident over outlook projects recognize our in commercial over business we the of affords But from will and we're relationships, visibility and to strategic Bill when on what So, we're in more I'll walk be about our Baris our hand to you financials. you.

Baris Oran

good Many and everyone. thanks Malcolm morning

quarter a of revenue double record our which growth This XX% retention and flow. rate. XXs growth, organic organic strong pleased consecutive delivered We excellent our adjusted free along our driven seventh and mid-to-high record. are digit all-time result quarter was EBITDA underpinned cash by as implementations with with results third and revenue for revenue This we was quarter by is

is quarter adjusted Adjusted of up Net to important growth $X.XX quality diluted organic was was strong balanced delivering is service. our per aggregate growth and financing. from all business. by strength It $XX technology diluted driven largest are vertical retention you by this $X.XX. was organic with Our goods, note similar lower consumer verticals rate in diverse insights vertical omnichannel are our revenue share cost consistent earnings a million which XX% year-over-years package shareholders and base across income and our coming seeing growth high recently per attributable was EBITDA that and retail. geographies we're to earnings particular maintaining and to share across This industrials, continued

our add The target is on second governance contracts. as set capital record was which year-over-year. invested was And new XX% quarter adjusted return our above up well we this EBITDA maintain $XXX XX% quality we our million our on

We strong we free the the the compared million, $XXX XX% was And fourth the of We the management flow, conversion Opening further end free shareholder cash track Turning delivering our operating to in at door begin period cash location. and trailing will last expected of the second X.X levels to X.X same putting leverage EBITDA, strong working leverage in the times for deleveraging from by cash we to stand for plan to our the quarter be our third end around quarter accretive flows to the adjusted had $XXX capital flow down flow year. $XX quarter. capital million months We end took cash Clipper for on from At year. anticipate quarter next adjusted the quarter. maintain trajectory our opportunity third of the EBITDA of times X.X at year. delivering us deliver times in XX million acquisition.

we balance Our to solid solid flow. sheet investment is generate grade and cash rock and continue

year our quarters. showing full is high-single internal digits XXXX current Looking the at fourth growth revenue forecast for the organic mid- ahead to

tight season season, As year's were including will to Malcolm our that noting which mentioned, worth finding it's last point, and we we to transient the incentives last labor to no retain attract necessary a our this On extraordinary the factors holiday volumes longer members. it are related year. don't expect few this retire peak timing of across business market startups, there and pay team

QX digits XXXX are relationships, already of long-term billion continued our high currently and driven projecting revenue nearly at looking retention high-single incremental Beyond revenue contractual organic least secured. $X.X we into by our growth revenue rates

We will our provide on year full financial fourth targets quarter call. for next

improving year continuously be will of laser are We a business. productivity growth. XXXX our on balancing focused and

initiatives headwinds on as experiencing kicked further have FX implementing during the risks. a be most Accenture. With have by rising studies continue Like we for standalone due monitor assisted of and to measures interest companies, closely. the are of a are company detail we We'll operating number and benefit manage We'll internal one-year we off taken our sharing Investor to rates, our downside productivity Day. we global the markets

the you, in business Bill current of GXO, and and doing verticals. model are and walls the our inside guarantees. a we operations market that markets in fluctuations it over geographies to minimum risk exposed contracts to you we Over Moving the this are pass turn The volume for inflation markets. to have will gives tailwinds with more strong contract vast to of growth logistics troughs the hearing is who short-term give just driven in to Bill? balanced relationships With shipping provider, on what wheelhouse. I'll our business occur pure play opportunity contractual of or our to an low especially showcase resiliency from a by us business rate detail backdrop transportation we that This not model macro our And long-term majority outlook from there include customers. the and have significant four environment. are contractual being The that,

Bill Fraine

Thank you, Baris.

We're geography. are fill pipeline, is same time, best e-commerce growth sales opportunity projects in of is which in seeing exemplified is mix looking our food thing The to more transformational and balanced heavily are pipeline technology our that our growth strive customer billion. of service more pipeline partners diversifying. remains and is levels verticals. our Our to current at industrial, and At pre-pipeline help retail and $X companies skewing strong by to These right customer types reflecting GXO's exciting and our both beverage The them wheelhouse. as a footprint also GXO projects higher our of expand productivity. with the

customer quarter, to in delayed While the we some decisions see third primarily expansion. was related did this

a that. a a sort of their are of in customers is its reassess can GXO exceptional value projects As environment, partner forward. and pause doing strategy now environment customers, changing where just most chain these is took moving supply really to deliver to this This

the their past of three looking in us is with customers deliver to world. can supply for They're X XX use ways chain, how around in top person asking the the cost all They customers. the reduce driving we the use structural steps we where are finally, technology. and to productivity I've to topic technology savings impact of in conversation use And Over technology met Number weeks, we a improvements? technology their is build how This How cost GXO for to innovative chain? our solutions reduce in supply by deliver of better can inventory with consumer experience? can warehouse our

mentioned, live we a our record Malcolm deployed Recently As of we've with sites. business. technology across two went amount automated highly

improvement we customer, U.S. XXX% in space for a XX%. reducing new in flagship the drive where this a will First, technology by productivity while site

it In GXO customer they Europe in a per XXX,XXX Mark. during over this, tested important a site customers in million huge to for year a Technology in partner going this Second, of massive macro, Mark. a like to efficiency future and a deliver units increase All turn capacity battle a high market. This forward. over is e-commerce capacity with need this and this profile XX growth for a peak. implement strategy. our design is help key choose lever because to confident, With I'll margin today's yours, day

Mark Manduca

value share through through throughout the GXO has we that taking XXXX, tremendous strong tech Thanks Bill. customers. leadership delivered deliver and our growth to

robust let's We that expect next so down. growth to deliver year, break

explained, supply additional and for about embedded pipeline. long-term from current excited point worth revenue last and Bill X% to-date we've is on particularly transactional to short-term of inflation demand driven context our an year them. by are revenue Unlike business today, growth contracts as pricing revenue contracts won for with by XXXX through of And where gross XXXX. within driven pricing for model our we've X% side; Firstly, we the this won a protection is conditions, growth

So revenue, you high targets least we why about at overall growth on see confident are can year. for single-digit next our

were for margins That to we said implementing. as we least basis the up to well work Baris we through contracts, maturing highlighted the year our we margins be will on of that more margin expect quarters points productivity. the two would automation, due And XXXX, moving is expansion an focus improve underway to improve that year-over-year. margins and in last our and QX at increased Secondly, as now startups flood in our throughout margins core XX

So targets just in giving open believe granularity we've long-term investor days summary, in you our our we'll to with us, scratched call at forward huge the opportunity of ahead January. of And more the and we to look we surface about the up that, Q&A. that

Operator

you. Instructions] you. Thank [Operator Thank

pursue Our first question. Scott Oppenheimer. from with with Schneeberger question Please is your

Scott Schneeberger

be presumably morning you might for season maintaining economic customers bunch up Thank GXO retailers Good be year-over-year is A Thanks. how we presumably much. lighter questions; and this your very of of bit Malcolm, its a the environment peak is extreme volume volume lower multi-channel minimum broadly requirements potentially so importantly to and many triggering more shaping everyone. few environment operationally an approaching and a profile?

Malcolm Wilson

Scott. Thanks,

well, alignment our already in We've got way now. going we're So through what peak. planning in in our we October We're that's already peak with season expected.

business UK across a directly than what is the mean I ground seeing we're America Europe expecting ago. from doing but buoyant into is year. it's regions, the on that be to actually – really is So our the business, our going our we're our in different well so what business, really of a And customers business, that all all year context, actually by North very

in me coming quarter I remember Product some let were quite So and out full warehouses all of just to products right several moment. everything the those that. the pandemic. of with everything in from Long on our coming ports. If I was delays on Remember go we availability and the give we in was all Beach; weren't four at last was picture scarce. actually back XXXX, coming visiting

So There the people consequence a a meant heavy really of still all challenge market that of labor was that year, also the chain was – a different. following lot was a of disruptions. remnants and there pandemic. all very really very, time workload very was season of out it's that supply company. availability Labor different the peak was for it at the This

labor are all are for deal to season. Bill's is warehouses be a readily case, now for January we'll a we've levels last in that having in right we new amidst our in in brought as for good get robust of that the up team mentioned, growth had and fact being resources and peak look in are but new of pay labor actually the And those members. not generally XX,XXX those to Not to good recruiting activation them incentivization sites importantly of that's around training, good available. our peak people we're year as them, peak and setting programs Baris inventory way This fact that is and quite need. the were we mentioned have at So extensive year

peak, summer, smoother. going that. we're think to year experienced And season. all is year This a speak in year It deliver our think was we if – pleased have holiday holiday a we're of – very So very be probably season operational smoother say to to much I buoyant the they'd going but in what about exceptional if tough you to more is teams, business it was probably going be to I to is our I XXXX. last than

Scott Schneeberger

the may XX that. open addition expanded I Okay, presented Clipper appreciate great. an initial quarter contracts, of and in basis Yes. imagine third have with points headwind. Thanks the predominantly The book year-over-year margin that integration

So you of I could the drivers margin third was hoping please upon elaborate expansion primary in quarter?

Bill Fraine

Sure.

driven high have because group. When the EBITDA technology, came vast with trading by improvement margins has look out. into than been highlighted, you our As But rolled it the well. existing has from efficiency headwind and year-over-years, was we a EBITDA as the advanced has some operations capital you into lower initiatives operational automation productivity intensity, of of the our already entire majority Clipper lower it retrofitting investment margin and

Scott Schneeberger

up following I bit is and less than, little remarks automation, automation. on but in, increasing GXO in a on of still that revenue prepared you just and a And then automation, automation XX% noted Thanks. than about Clipper comes there's lot And is. mix believe commentary these it's

So you. see will forward, of is on existing going are that the sense, alone you just in or automation of that be you when Clipper? start that to Thank a get the to push wins? to to automation left – go get forward? increasingly be going And be converted just it’s mix wanted more going operations we lift might Will

Malcolm Wilson

Yes. Malcolm. Scott, it's

on comment Let me that. back

incredible amount We last and significantly that was enablement So automation the more out we the quarter just up generally I out our warehouses. pushed in mean, into across an tech that. quarter business of were it's more and rolling the for

company, when to going site about typical tech visit but to to robots, comes Clipper actually arms. was to a GXO it automation, amount attracted things you're of so you One we good see a really that lots great customers, collaborative robots, when enablement, robotic person of of the great were it's

broadly actually manual when you based In Clipper see it's don't you more business. visit a a that, fact, site,

So regulatory the the approval, already planning and our were automate opportunity one operations. deal a the to together, in teams when of following that. And of the able we're working things lot on we making we have be depth together, was a saw big been to obviously

So And environment on the more more sites. in refer challenging to clipper we're forward, what we definitely technical yes, I is more in go will answer we I think rolling see to whether and be out your tech don't in we're are macro recession. the XXXX, into broadly, to a we the then going recessions, think question a

to Our if business a along as consumers signs a seeing concession, of not is And that their business; things last up pipeline but into invariably, and it's you that you differently. in only isn't costs set pull when The we've in just automation. say mentioned two flagships transform about as months. are to of have to efficiently, recession. pipeline, coming customers can what if they're out More have behaving do our that lots is we need business. do lots transform of Bill and behaving the in opportunities the pre early you way leveraging you big your And

forward. as to of that. more and are us see to going going accelerate of for tide tech We we rollout is more are going The

forward. side environment going customers by to environment. that's period I more tech So It's well. we're super as it's retrofit the automation exciting to the make more for going partly to a macro driven go us, deployment more But to all and the of into move and higher as even an on think appealing the challenge we going be

Scott Schneeberger

Baris. Malcolm. Thanks All Thanks right, sounds good.

Operator

Thank you.

with Please Our from question. with Chris next Wetherbee Citi. question is proceed your

Chris Wetherbee

building we start for revenue that thanks. Okay, guys. could on pipeline Good the Maybe XXXX. you're morning

for, out Baris next year. digit, some for I million, build on already other in we at the the versus in guess you bit do about wins So customer go think single a third the is seen quarter; line the business potential half or I high there $XXX roughly speaking, we you decelerate little year. top year. And had new XXXX. said least the churn saw into growth the within of variables have maybe for how the We And think first rate next as then I though you retention run that think number? of for

there think likely just quarter digit start pipeline you single-digits to sort or certain of add of to can that that Is high that? and So how kind about win how you as you're of are that business fourth single sort more deconstruct to do in that rate? how you better, around the run

Bill Fraine

Bill. is this Chris, Hi

the is quarter billion. at answer is questions mentioned actually to strong. It's of one, very our three. So We now the billion $X $X.X asking end you're pipeline

are pre pipeline, which the new rapidly. growing from growing is accounts focus hunting really as it's we and very for what mentioned when So adding that We're strong is on we in, business we're coming new is from to – cost The from get industrial, and and the looking in benefit looking coming from food and economy of ways at beverage and contracts out. they're they're technology. these today for

while make to So sure want grow, want example I'll quick of give expand one. and viable they they're to you still they a and

the U.S. with work of a in them northeast. for lot they is We we in site in run that customer site would top So network. the you tell their a and do the work a

seven at and happening in efficiency to them help one another critical globe. that's sites their savings cost but to and now the sites today. before They've they it, today for over the to the we in some have it's them with us come have and place around something done they GXO us wouldn't that's that same do have take place move economic might the them they this, have have take change, This one to growth they want and current call get sites the been so opportunity a to that have us they other asked over look and other or They So providers. run. and eight they couple with

very working with mentioned The deals second deals are we're had that our – I and is always large we, and customers. a our we of one long-term lot

them take and their was one right environment. on we business to I'll GXO will worked that northeast, from work from them to cover and the site them some that for their and to to use customers in for that Europe be in wanted in site had and them in up going put cover – them into we're you And strategy on them in flagship we quarter, third they starting Chicago, will to look had make U.S. the LA, next pause location. that cover direct is gives start Dallas they just that we'll plan and they to U.S. Europe to They direct do it who strategy expand going to that We are just may that into them. the they developing. may into And and bespoke up the a and we're looking have sure Going the with going with an give They site where them move on coast the were planning on three for a they would decide of better way. year-and-a-half. we're and example we a on three work do one not put sites. What pace. They flexibility west if want today's stay at this,

really the is the on what's market at in can cost focused be are and out, So seeing understand XXXX. till on where ways flexible we're in those looking going they changes technology they

Chris Wetherbee

Okay.

kind to mentioned headwind which a deconstruct of you Mark, about probably think was margins. in very I I terms, color. maybe Clipper that And core as you in helpful Okay. is year. That's think – XXXX help next margins us up guess there, wondering have we if you margins could I

have year FX, year. think You than left this next you are I which you're hedge

to that what us it broadly the fit than you you'd of through those expect So through rapid just that was sort to you some of decelerate that the part new fact will of speaking please? that pace Can sort allow can that Is of margins dynamics it? less Is it business very walk walk to something this expand? here?

Baris Oran

during automation. retrofitting, Sure. existing including here. next we we is on secondly, our technology margin talked core initiatives, XX% have year Chris, And the our main months productivity in is with which last about continued of the advanced call, CapEx investment to The Remember expansions about Generally spent be reach those impact we Investor huge facilities two and takes first this start-ups more XXXX. for the which from Day are operation is in have to maturity. margin to a imply three and situation what our implemented margin will about our expanding, in – one January, into in Baris be. we And next that and will in going QX XXXX what full an will quarters more core drivers was XX progressively And highlight last the our tech. of highlighted in you margins the visibly year. our see anticipated will

combined XXXX. our drive core of those All will expansion into margin

Chris Wetherbee

a what sort within facilities the question know is Okay, one than that existing season said supply what get quarter? just earlier expected. for was the the third peak point got Malcolm, in else of want for activity or volume Do I facilities sentence. the that customers We're is it. And to just less clarification, you business was buoyant. number hearing of we chain everywhere existing from

Malcolm Wilson

the obviously some normalization business mentioned going of we've amount activity course a we quarter one, early That's and in. the brick but We've new the year, thing, year, of returning. good we mortar really an through as on pandemic, Yes. in of outsized saw obviously seen core Barry post had the two, just top quarter

the really So benefiting we're from quarter also. that in

to in elements volume our of be deploy a those way volumes, of very but bit was last seen teams of I'm went but have us. I challenge last product. through disruptions all more just because overall suits old buoyant. To to I exhibiting Clearly lot in have we've been we're quarter with environment more ought very all to smoother, really all kind softer impossible of through current and a disruptions an operational you a the year. the smoothly, we're channeling customers that's a So huge view seeing of frank, really getting of that that and certain the handled But think exceptional that customers why frank It think of environment. good that do giving was I think easier be to

rather – growth it's going what slightly part level my three – four any out, called year kind extreme of of If smoother in a than in this So it's how XXXX about year. the to quarter It's really we've we've of lower to last four through emphasis be if understand was that's first you that the exhibiting change quarters. a more than why this comment. been quarter

Chris Wetherbee

Appreciate that's helpful. Yes. clarification. it. Thanks the for do. very No I

Malcolm Wilson

Thank you.

Operator

Thank you.

proceed Our next Jefferies. to question is question. your from Moore Please with Stephanie

Stephanie Moore

good Hi, morning.

Malcolm Wilson

morning. Good

Stephanie Moore

appreciate I initial and with the as into we tailwinds the organic standpoint, morning. pricing. wins, XXXX from XXXX clearly look new contract color an certainly numerous Good on there's growth

it further, be the think was think talk through Clipper given but XXXX. weaker to to about hoping headwinds expectations it FX around just a the maybe as to going you organic, not total I I as could business growth, potential even taking is Maybe headwinds volume maybe performance, step obviously a to you macro. contributing talk

know offsets should should for Just are but sense, trying monitoring? to that We those us get of be what it's be prepared all hard know, to we a I for?

Baris Oran

Stephanie. Thanks

costs exposure we FX side. Like I'll come Let revenues headwinds volume me to take in purely our in Mark and we on FX all our is the translational. global where local companies ask our Both and and are experiencing first the one currencies operate. are

if impact year-over-year pounds. spot could for earning at our XXXX. in for XXX – increase we would EBITDA As and euro you been for the And exchanges what we provided score. The we've may take be the par million hypothetically rates to $XX different on view recall at prior headwind FX current

has XX% would been hedged of you hedged exposure our for recall, As XXXX, we in well as EBITDA QX.

into EBITDA. XXXX, our entire taking have And hedges we XXXX valid explained for the year for is going de-risk certain decided I some what of exposure to by So

Mark Manduca

on I'll for And revenue Baris, take year. Mark the its next Hey, question growth Step here.

So revenue remaining for inflationary as Bill this to things few we've next driving we're digits is ability very were year, our alluding high-single confident deliver growth. and clearly a that; persistent. backdrop, about There's got Malcolm to organic which

maturing year. You've the got contracts prior from

come well the got of through, you've which up tech think is more fact new know. the there's those got also you alluding I we've rates already We're scaling XX it services obviously, in coming X%. that as well. You've some from as as then Malcolm mentioned And levels earlier months more And and as about there the to to. in last retention in wins got high as contracts was comments

So break bring our XXXX. all forces if wins, new $XXX in XXXX to won element the in into to roughly million and got quarter of around $XXX of million an you growth, $XX we cyclicality another counter those million that's fall in broadly, going QX, the down we've

you XXXX So on Slide can X that deck. total see slide $XXX of takes that the you million in of some to

that's that, already. X% on that that's then got million And growth through rate roughly $XXX coming So XXXX. you've another top for of

Malcolm So through this towards towards it's and visibility, all about. was growth this been of as cycle saying, the resiliency – all that strong points is of we've talking points it multiyear that

Stephanie Moore

pipeline, as your could Great. in your No, I of of appreciate the break what the North between Europe it. talking you America drivers And well exposure your saw and through organic performance Okay. for just as you out growth? then quarter and kind terms those maybe during – strong growth

Bill Fraine

well. growth growth existing new here. into our grow you quite it's in geographies broad net you geographies, wins balancing into business we so was to down in into expect that operation across it to the seen QX and and We've we balanced as our dispersed. Bill and verticals that try look evenly Then break expect also pretty almost was our and growth quite quarter, that hi growth was balance all Stephanie, our When continue. QX our and verticals, and it to

We expect in operations our in well. QX increase existing as much as as contributions our almost

business So the quite as perspective. verticals it's perspective a as well across from geography's a balanced board, balanced a

Stephanie Moore

Thank you much. so

Malcolm Wilson

Thank you.

Operator

Thank you.

with from is Wells Poliniak with your Please Allison Fargo. question. proceed question next Our

Allison Poliniak

Hi, if kind non-GXO kind consolidating Is infrastructure reset good and next with worried about significant potentially an morning. for year. Could about into the Is there set you GXO? Just shutdown talk decline there? with maybe increased facilities existing a volumes in it of downturn a little bit year? more you to existing an volume thoughts next to capture we impactful? opportunity as any certainly maybe your customers it all Is of they customers? We're Thanks opportunity go the opportunity their and

Malcolm Wilson

to going slightly I no a change of actually Malcolm. Allison. say softer a whether it's GXO. the or driving. think What benefit the that downturn the play There's environment to change is Hi, it's doubt, of we market of environment

we've coming drops able As of that enhancements need the not one to deliver to to. competitors need certain they're we Maybe and maybe who they're They they efficiency. of today GXO own customers But doing do. our actually activity measure start already can kind are That's kind kind we're growth see mentioned, because Then can themselves we that sales we pipeline. us the to initiatives already improve for their doing by by in And today, for reasons making about confident the inquiries to bids. inbound starting one see qualify it of use our can of before the year. grow we very into the next that's business that of pre-pipelines. finally and

next to a well months that's efficiency. company, year, about mean, only as level of cautious Baris XX why window moderated sure a some that's XX old for own I more are to XXXX. we on focus mentioned, us a spin. very as our our reason initiatives And we're old giving out the following improve we're months inwardly and are as through We calling growth

of own is a customers their of there be et we do walking not positive we're ourselves, own can our of signs cetera. will back any next So very for that terms also year internally lot significantly. margins, which overall in things numbers seeing But

new how business to good that process already And more sheer macro, us whenever will top do new is be leases who growth We for it calling and we're with growth it's on from a challenging I is in that's be not signed, than growth. have things think, with being business by implementation, in differently in bit XXXX. softer out of a have to for have the business the environment in right fact pushes past little companies we're our But And on people that are wheelhouse. activity, the the outsource. more compensated maybe planned But of our core to than assigned automation there we'll in very that, cautious for sought but they maybe past. have buildings, done of good going contracts place It'll would environment that into, in the providers. already our a

Allison Poliniak

the then of pipeline, maybe terms little something part of slow of pipeline little that to a And a bit. maybe pipeline, terms a in Is talked revisiting little things? kind expect bit? helpful. tail just in sort Not that of start you kind we or That's conversion softer that longer a period away, a to I of that of Great. of the execute kind goes people know here. the it it's should bit Is conversion about of some lagging of

Just there? any thoughts

Bill Fraine

Bill. happening this run. we pipeline sites in What hi, evolves needing that takeover now is is take us different have talked is place. tell Yes, the And you would this call currently We to earlier about I they markets. over what's customers in

So it GXO. we come the the we through there then operation the and and of that's we improve site, into over benefits there, team a take that's

gaining closed So that. we're and those where And more are already of growing we're more some, dramatically. we've gaining

and out for customers, is the is growth, that the XX% extremely build gains and footprint. into future. So a to same pipeline, to talked right a At of lot they it's deal about moving XXX% continue pipeline volume well improvement added supply want still blue-chip with we time, us in chains the and technology their We so now. growing the of less our forward

coming customers And out? looking about get the So the How thing last those in. the are we're for. finally is in stock do supply cost are all industry, they things hearing

the and would what our we're is pickable, of get that, that a customers say are middle in helping We into all I shipable standpoint.

site sold marketplace. it go have it us, a in into put ready comes So to be now the to into we and it we

have which to also We again, it's million, perform We services. the hundred and value-added lot raises is a grown of a strong, thing the industries. end which it's our revenue. of quarter the across that, pipeline between normal But diversified is couple on a today,

they're So or too, food whether not we're short growing and in down beverage, those slowing automotive and aerospace thinkers. it's not or and term areas they're

Allison Poliniak

Perfect. Thank you.

Operator

Thank you.

your with Please next JPMorgan. with Our it's Brian Ossenbeck proceed question, question. in

Brian Ossenbeck

taking Hey, good Thanks for the morning. question.

on sales. maybe another in can historically, seeing, this diversification the for that of the [indiscernible] pipeline, So Bill we've seen one big trend e-commerce, you're just if you elaborate the e-commerce

differently? typical was intentional been nuances way you just you've you that customers, something is these Maybe an of some just shaping Is the now perhaps to bit within talk a kind it as can is market out through pivot? needing and mentioned So the shift think the with that that this if intentional of or of some pursuing? little

Bill Fraine

I of a bit say it's would both.

especially top really coming of back into business, in pipeline we of base, So last year, that, grow. Right they're our we're and are across balanced up of how to And to now, the that. try we're the of North We're grow producing customer very in They middle America. is aerospace the continuing aerospace intentional airframes. in verticals. market, and obviously providers one ginning think our the the market in

in we're of So the middle that.

So build where we of At time those, the went as through we those ecommerce, accounts the closing go COVID hearing, more with and we're were everybody to forward. to mentioned a from want looking Malcolm bringing a do now approach. on measured that, boom it's but site approach same as still you're People as board last online. measured more in year, was and peak be

with we And we're COVID. working great a those because customers had during such in e-commerce so, presence

We name and now great that. for have recognition a right

when are beverage So does it's and e-com, e-com, e-com. all us. e-commerce, aerospace And does the automotive other and customers not about just coming food does we retail to normal e-com, talk

third the our talk So And reverse. a in we a lot. sales into we're we’ll been reverse finally, Reverse has about third of quarter that. expanding still

we're mean, and some is already services. return we've customer. accounts fantastic. for slick that three like I They very a play just because and have become closely thing. just that, are almost in a really addition a we're adding say are in last reputation one we a we've I'll coming growing for So again, their we about that that's sold working of have Clipper services and And can lot area, reverse great that and people The norm. things very that's of a learning plug talked

about how So now right we teams we and Europe go in across of then through are after expand to and that, meeting we and this work are UK the very some excited the these U.S. through how these

Brian Ossenbeck

quite follow-up would quick on It one it be the looks at taking just dynamic the we is bit stepped Maybe if actually new competitive like where Great. up right. that you from. look coming a mentioned All share. business

So expand on maybe that. you can

a the the ago gave examples, you I decent landscape, that size worried a about to just from off some in especially of pressure? think your as you areas health also we right from risk, a seen is customer shifts comes of that or margin watching competition have the big are in size from in fundamentals? their there Anything guess credit of it saw, perspective controls any And change these while one some anything, peers. of then but little I pretty terms

Bill Fraine

market. the have Yes, and customers’ to we and that thank bring hand what start, competitors and I'll try you. is we tell I are, focus right services do products. over is would Baris. I'll make we the we are sure But always needs you it on always we to in our what What

own growing, share, business, place those And when to no question. Again, continuing. the that is able are we're aren't are just internal it's So the we returns customers taking their competitors business I takeover generate that about also not in from we see generating. talk I are taking that

us they let that Baris into more it. bring talk But also. I'll So to

Baris Oran

Sure.

up have majority We quality, blue managed of names receivers we customer are limited the very And around risk recall, you largest total credit X% roughly customers, credit largest with would Our revenue. zero vast of our chip makes our our robustly. really to as high risk.

not in customers. those don't it they future. walking on life of from past basis. away from controls we shying constant away they monitor contracts, are very on fulfill Not do take ask have them and the but we to guarantees, expectations, bank guarantees, we'll these solvency and new the as only done such through have a for if continue rigorous in the And credit metrics, the we we them, We parent these contract, and

strict have we credit we on have application a approach So base. a process customer and very our robust for

Brian Ossenbeck

for the it. Thanks time. Appreciate Okay.

Baris Oran

you. Thank

Operator

you. Thank

with next question. is your Ari Credit Suisse. Please Our question Rosa proceed from with

Ari Rosa

Congratulations quarter strong the morning. good Hey, here. on

a about to more from more little curious strong So gets asking maybe standpoint obviously seeing we're marketplace your bit challenges premium. service customers coming hear you where I'm services, to a macro you're for talking the and valued a pipeline in maybe at the some

the of, terms been pricing So where little an standpoint of the competitors of can or you levels you're you've that how a going bit value strength I'm pipeline a of wondering, a do you pricing the business and we see from on you of service an be seeing demand pricing customers, versus front, you're given add the that your are the of and historically? see step more pricing in maybe your bringing kind kind from a service? yourselves how aggressive up rethink to about opportunity how to Is you there opportunity differentiate approach

Bill Fraine

thank Yes I that. you appreciate Ari.

customers, to long-term our renewal continue after when the contracts, not but in So that of just as for thinking of the what rates first pricing continues rise. nature our five years, our we're write we

market, look promise So the and we time. deliver that we into We all we the that our first us goes a price make site. always sure want gets cost, the of capital to each we the return the covers at develop extent

the less leaps but on us, bounds sound do. for gain they we deal. of customer very money throughput, are is us. deep that what with of think, giving by us any them I the the opportunity it and the outweighs looking is they really and it pricing, gain the So for say focus between them, a a and we amount I we is throughput focus would What are is

let don't not reason the become that. we that why getting we're So

sure price So pricing is the for how all we technology and made also have I at sites for And we we couple last drives in we've what the is price level how finally, really done then in solidified of years develop our these look we've the thing customers. environments. would say implement we our

get, it or goes to And all it's we whether contracts. into we to through make I'll are whether have sure So Baris. we limits set, we sure it's contractually that whatever over turn pass our that make energy cost,

Baris Oran

And we invest balanced perspective, close capital from which And which are returns technology, cost returning the in base for about of burden is have seeing mechanism, business is book we at our into the of keeps investment returns long-term. quite makes Bill, is quite share our what which a well. higher are coming capital. from helps the plus business, we as Yes capital are XX% play hybrid writing all And limited we our and a to book contracts, is a that as which customers contracts level. also willing open our XX%

Ari Rosa

oh, finished understood. Is know you And I there. that… were Got it, mentioned, you if didn't then sorry,

Baris Oran

Yes, go ahead please.

Ari Rosa

Yes.

Okay, great.

has given availability little wanted better. do just, about you on what I So bit grow a ask, your the mentioned XXXX, gotten kind to to How ability limiting factors labor think or you of rate demand for are the the at to which pretty continues of that level limiting you be which ability your robust? or Are you seems on factors are can any it seeing, like there XXXX expand? grow to

Baris Oran

if highlighted, in careful very write is have high business writing as faster well we customers. high quality we we on governance our shareholders. we about this limiting We are our to grow mechanism are quality quality delivering the but certain further a contracts, risk return will we and we not high the writing can it, we That's writing contracts, factor, high as to and but focus differentiating as contracts are expectation continue a seeking with contracts

Ari Rosa

Got it.

That's Okay. guys. the for color. Thanks time great

Bill Fraine

Thank you.

Operator

Thank you.

question. is your proceed question from Stifel. with Please next Deak with Casey Our

Casey Deak

gentleman. Hey, thanks

Malcolm Wilson

Hello.

Casey Deak

questions I to? through about near Is coming that? have XX% those would the we there that Is we to you've want or on really of you that would driving Hey, revenue there know any view like be share for sites talked the revenue. information of would my term percentage are sites on something to automated guys number the a the through

Malcolm Wilson

question. Yes, Malcolm, let Casey, it's me take that

and measure automation I foremost, think we first across So our business.

top just have could XX XX%, hear very that load basically improvement is it highly is operation, where automated. driven putting from around So our goods the teams could network. us be are technology all look, well, sites operate. site. Automation talk mortar, you going to simply it's we It's it's the brick sites by as And way or broadly it's the extensively before measure arm across on could And dispatched to, be site, measure we as parcels a people pallet The that into we're it into that maybe core is XX%. But when what and got of that huge other going are locations rollout can pallet our we the driving witnessing improvement where a fundamental, continuous in. really retrofitting we've the we we're a site. parcel of technology, of a the we onto replace it loading that that, we putting continuous robotic a simple so theme be a could saying, be a just deploying

great Logistics business. That's a the taking that's mean, the of question And was And Clipper time. I so place all earlier about example. there

quiet no flow But to operation that So cost what our in across talk extensively about of our all line about synergies, all things doing are that We fact, talk the top than buying business. lot little but been more smarter, leveraging we it's synergies all of bit says it's a synergies teams. power, of about that doing all going our in we've leveraging on we're it's of support a deal. different

business, no a experts, terms of we've probably will access in fact that's capital. us aspects up superb to to some have because use think be number, the will XX%. get just in will much demonstrations forward of big give easy I mentioned, year January, you'll growing got a And lot be the that about strategies for a seeing But XX% that's that, year. Investor in as Now, know on nowadays, of planned drive automated. super And window we geographies, better future, are is, we've and the something to to share be that XX%, would of after coming and And highly really the and a is process our eventually one that for but our looking about our verticals of us well. you'll visit reality where for as in hear you it eventually brand the will the It appreciation best of a you'll But be it's site some Day evolution doubt invariably different doing. new the gradual we're our our technology as they it's got a sites are we headline tech. Bill There well.

mean, here start showing that factor. to wow So to is the big in site a America, able North And factor implemented I in we for have to a a big going flagship are that's the new and site we're going market similar wow Europe. technology, people in when have fully

of on unique will about time hear are things, what's I they that's our helping driving So things win testimonials needed. pretty that because customers ability market from when you ability share our think in and these these us it's business to kind deliver what's our the organization and and we’re

Casey Deak

sites than now that, very there it. right you like, automation have lot from around to to, customer adoption have actually Thank it you new of because prove of easier there to you economics Any getting comments where Is The I in so from constraints there, you, studies I get the the slowing manufacturers? Malcolm. I that automation you the or relatively fully it have really case anything and customer roll could can putting that great. down adoption the That's Like a would in. it can there technological have appreciate throughout that? Is you are, it is are are where automated, the assume full automated. sourcing follow-up capacity yes, network? the improve

Malcolm Wilson

Sure. Yes.

simpler So is inflation. stronger automation. drive point itself to we fundamental a we big driving we've putting inflation in. justify from cost that I year-to-date, of more for levels a automation labor forward. a type most for high and demand it's will mean a is And of go means back the view, had in automated XXXX stronger point if over It look this demand But as much

much be byproduct a actually, So whammy our it of The do easier putting it's getting. are more more lot also that. automation. they're so to to of that justify benefit it's But driving to is customers are companies for to need the double paybacks simpler means it's It's kind of much a open-minded efficient. customers,

a has benefit. deploy, that our terms huge clearly In of ability do that's is GXO see lot where this I to driven, really a had of equipment lead-time

world. pure the the outstripped actually our deploy. in we're peer number terms largest automation logistics of in player big by one, the company we We’re big, contract We amount groups volume that a of

So the frankly, We're equipment the They them. to. us. kudos organization to to showcased manufacturers to of go want with to work for they pieces facilities. work want of It's that want have big our in kind

those have seen we far acquiring actually with strong relationships so strong very difficulty teams have the in equipment the any our very not So, that amounts right developed, tech relationships of automation. manufacturers of

going is little go through to of feeling chip bit any we a big shortages. as period I forward. the been My that's get so seen far. that worst we've not impact actually we've think easier And So

not seen not forward see impact So, far either. the we're we've impact, to any anticipating go any on

Casey Deak

I will we’re I past the hour. Well, know back. pass Right. it

you Malcolm. the for thank So Thanks there. color

Malcolm Wilson

for Thanks that. you. Thank

Operator

that the all gentlemen, and to to closing for remarks. I'd we back is have today, a call any Malcolm time Ladies questions like Wilson hand for

Malcolm Wilson

numbers. performance. every Okay, questions we've about we've earnings delivered very And environment. probably going just this listen, new well, is we're because want managing we we've had in we And some end for scenario. a up a rock strong I’m very investment our appreciate We're This a fifth changing call But I I delivering and we've strong up delivered, now in the will and if demand skyrocket environment. call as Doug. in I talked into let's morning. it. words macro poignant we hope, downturn you're we're But for don't right that and GXO, few We're say resilient close. for all into that thanks And really This is we our before great thanks we end for that. to in so, call business. ready if solid, seeing no And let's think, situation. do, the is big that super difference grade next year. a service, very company hope any our don't go

the this success. has ahead. more in strong that our about be I You said to I've business. you'll talk happening right of up has each many across seen to well but management continental to no only day. and we're logistics. rolled navigate four looking and team. is focused on have of we're are will as to on being company each really today and call, American Barry own and in strong walls Investor regions. our January North us what you happens And We're its warehouse, business and mentioned Day. well a there to hope part helping difference across able that's forward that the that everybody that see of doing European good what's join. that you prospects vertical in is between real just management on speak in contract the all We're year really very before, sleeves seeing UK it's when we who region to able business, We're a our we'll in you play We in for focus share pure doing with the our

that, your having with we're close to Thank in for to GXO. say the support future. further I with the everybody for thanks just that, we'll you. call. finally, looking contact want And So forward And

Operator

gentlemen, and today's Ladies concludes this conference. you participation. for Thank your

lines at You may disconnect day. time. this a your wonderful Have

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