GXO Logistics (GXO) 15 Feb 232022 Q4 Earnings call transcript

Company Profile

Participants

Malcolm Wilson	CEO
Baris Oran	CFO
Bill Fraine	CCO
Mark Manduca	CIO
Stephanie Moore	Jefferies
Amit Mehrotra	Deutsche Bank
Ari Rosa	Credit Suisse
Bascome Majors	Susquehanna
Brian Ossenbeck	JP Morgan
Chris Wetherbee	Citi
Jason Seidl	Cowen
Scott Schneeberger	Oppenheimer
Bruce Chan	Stifel

Call transcript

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Operator

Welcome to the GXO Q4 and Full Year 2022 Earnings Conference Call and Webcast. My name is Kevin, 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 make certain forward-looking statements within the meanings 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 are no this obligation call and required made today, as the of only the company company's made by law.

United rules to such refer to dollars. measures in as are most applicable related otherwise this SEC results Unless measures States non-GAAP GAAP certain defined of stated, financial website. Reconciliations measures financial may reported on during non-GAAP also are are call. company call the in the release The comparable company's tables financial this and all its under contained on earnings the reported

rates, economic its including and be The appropriate chain foreign in affected labor and be inflationary and the what business global in filings you will to trends remind unpredictable SEC. conditions and and demand assumptions. with by the fluctuations to spending, factors, The company pressures the exchange and inherently it may also today constraints, factors are guidance supply incorporates believes consumer detailed materially many market results that in changes various company's date global

It for company actual is from not therefore, to possible for demand services, its materially the guidance. and actually predict results differ could

the release, website. non-GAAP contains which company's of earnings additional regarding company's of a in measures financial and copy the forward-looking information You statements can Investors find the important section

GXO's I'll you Officer, begin. Malcolm now Executive Wilson. Chief Wilson, to may turn call Mr. over the

Malcolm Wilson

our full in Chief our Investment are Officer; Officer. for us I everyone. call. Baris Oran, Manduca, Officer; With Thank Fraine, Chief our me good appreciate Greenwich you, morning, earnings and fourth Bill Commercial Mark and quarter XXXX joining and today year Chief Financial our you Kevin,

our Investor strategy value at was share weeks and to coming years. business, we Day for into our the time pleasure our dedicate a dive It ago add a deeper to some few the a

a more are between our to presentation, Investor during which line We'll organic and these than $X.X expectations we return and XXXX, XXXX. for reiterate, will XXXX deliver billion $XX which on case We'll follows: of we XX%. billion. X% capital above reminder, the triple cash XXXX as adjusted will macroeconomic end nearly EBITDA top by majority generate in reflect and do will our of our than flow of targets the deliver over billion more anticipate the be announced our term environment free annual As operating compounded of the a near our period growth Day $X just XX%. invested the we from And of to to financial of same targets long-term double softer about through

transcripts side. posted XXXX fourth earnings, full of the everyone, outlook. For on today, and focus our are here to our But the year quarter we've XXXX our in investor the benefit we video and on our performance

So let's that. turn to

EBITDA of half second operational quarter, of adjusted expansion financial reflecting of the organic sustained new and $XXX the X.X% of million. business results revenue margin growth, For year. growth through These performance. adjusted billion, robust $X.X strong EBITDA and We delivered the reflected fourth we year-over-year excellent growth and generated

Investor the million at $X For delivered year, and at range our billion, $XXX EBITDA the adjusted provided of Day. we of top full we the growth XX.X% revenue organic of of end

pilots, performance several season, rollouts XX% ramp-ups this year-over-year geographies. increased our during year's our types of all of with by of In we overall addition strong to operational also tech and warehouse our operational different technology about peak across

trialed down, pieces specifically several capacity a to of volume quickly peak, where during scale to approach hundred support Additionally, tech we spikes. to enable new and we customers up deployed

of up during vis-a-vis this surges participated in who was a incredible customers of day, this non-peak the season. For to pilot holiday an success experiencing XXX% volume year's this were enabler who

us kicked time bulk was progress quarter We've busy as on years. and internally fourth of expect cost the business. $XX we first a to made synergies off now realizing the of also X our the already the The million come huge for over the smooth Clipper within integration

quarter, GXO first Kingfisher Importantly, synergies. nearly Sharp years. will relationships contracts, revenue we we the Farfetch, coming achieved wins, cost business clipper stellar of with substantial above closing also and several a signed Barilla, combining Ninja. the including synergies million of They expect $XX also partnerships of will be customer be be In fourth what new million significant new Beer, in level customer contracts, These and GXO and Nike will the beyond Boeing, $XXX the of capability.

take to last you of to the week, named delivered make in to were our to full want top organization diversity. we just our proud who GXO all U.S. peak thank day season a one who of moment a and great and the also I for I'm strong a say strive XX year work. that place companies to colleagues every a

turning of Now and organic reaffirm EBITDA. guidance $XXX to adjusted growth to of X% X% million to We're XXXX. to our revenue pleased $XXX million

idea we've closed of growth. the we're of visibility through Given fourth pipeline, already sales XXXX, starting the with quarter strong year our a to business combined the with high our

fourth have in XXXX. a and delivered closing, we're great quarter, to it's another in stellar So year proud been

long-term our on laser-focused our continuing employees, executing and shareholders. on with delivering value we're to customers, our XXXX, create our our in for guidance plan, and business forward and to ahead, Looking looking

to With our Bill that, add over over on to landscape. I'll more color commercial Bill, hand you. to you

Bill Fraine

and Malcolm, Thanks, good morning, everyone.

the about Day, During GXO our Investor we difference. talked

brands expertise our amazing of which market with technology, combination Our scale share. grows and drives and our partnerships unique

from to of XXXX, to gross Therefore, million all date fourth revenue wins our quarter revenue. have nearly new future $XXX XXXX growth. in-year for to the around business of contributed million Our wins $XXX of accumulated

is launch a shortly logistics customer as and customer to served and Europe. the sales Looking networked flexibility, live beyond strong. early omnichannel of breadth, and efficiency GXO of first expertise volumes across This momentum Farfetch and mentioned, They This few quarter scale our is with, global a Reebok completing one to continued a by in automation the also within the great was Malcolm the contracts Europe. first go contract being brand previously in the in We've to that partner is throughout needed XXXX, signed win cross-sell fourth a transaction. drive Clipper quarter, solution support to multi-site our the of which, operation then major weeks after this and needed of could deploy future. higher coming

reflecting the in of gains. future to our turning and $X.X our quarter, Now a third customers confidence environment in share number billion, we're underscoring up to versus GXO market growing pipeline. this At coming

Importantly, is over the turning pipeline rapidly.

lots and geographies, have all of of with of our number outsourcing We projects verticals exciting and a customers. existing sizable expansions growth in opportunities including

and time, chains reposition emerge rebuilding need customers for an came stronger. conversations like with XXXX, the our there in same to comment world to of chains today, as a the we're to The of their growth. I'd how was of clear chain take on at importance looking the seeing positively our having we're reflect what the impacts optimized end-to-end strategically ground solution while they're to pandemic, supply order In supply Now a reassessing on moment the this out supply future. and that the realization they

accuracy, of global speed blue-chip and drive partner leveraging for GXO our customers. the efficiency As best-in-class is choice, our technology optimal to

X you give me examples. Let

the of their all First, turning over signing within we one GXO large fourth with KPIs. the customer the over contract. solutions. And were work the past expanded advanced we our transformational exceeding by partnership companies to days, of XX U.S. months. are XX our technology for world's operations meeting X Last In most year, tech leveraging hours we within XX took or quarter,

Over we've and the staff a a in turnover. XX% reduction reduction transformed trend second, pace. nearshoring operations XX% their stock XX% is improvement outs past in delivered And year, the accuracy, gathering towards a and in

global trillion trade coming onshore. the come forecast is back years, roughly Over to $X.X of worth

industry, a For our multibillion-dollar to management. opportunity, in we're represents some and this already pipeline form of conversations inventory seeing in this many the related our with warehousing

this warehouse to number in that emerging or And semiconductor area of just in perfectly in in theme just case industry critical the global partner is strongly is example, of this For we their leaders One given benefit the to versus we're a footprint. time, positioned space. a seeing GXO are diversification sector.

us Overall, expertise. more share. and leading the This usual world's as customers of no they're help business to technology, chains, GXO brands stand environment GXO. gaining outsourcing many look companies to current to like of redesign world are we all as to is they becoming that to difference is ready leading supply their taking over The is more our to and turning clear We longer why solution. it's market scale look experts an advantage And a to the support option. as

Baris. to over it turn I'll that, with And

Baris Oran

you, morning, Thank Bill, good and everyone.

of Malcolm billion, $XXX generated mentioned, revenue full income for the of EBITDA million net we and $XXX of $X As year, million. adjusted

share $X.XX, and Clipper by the year finished terms in performing will sizable in form of from $X.XX the underway by growth. bolt-on EBITDA for integration full We is Logistics more XXXX our in the years, well. a at growth top Our We driven with acquisition undertook also our of range prior XXXX of EPS adjusted the and accretive diluted addition earnings which aided is up per was Clipper, be the so XX% guidance year XXXX. in the XX.X% extremely in revenue of organic which and well

drove of level high maintained revenue operations. our of while from customer the impressively, to automated retention highly contract executing always, growth, drive mid- levels and As high resilient mix, high at we increased the XXs this

by capital XX% Moreover, our prior operating year, driven of surge return on to from EBITDA. in our XX% increased invested the the

cash This above sizable free producing cash free while that was acquisition. a integrating returns Additionally, flow XX% a at guidance. our is growth, business our flow conversion XX% is

of trailing end to from the our schedule cash to X.Xx leverage at adjusted of $XX levels of rapidly third pay XX-month quarter. reduce enabled debt the down has strong conversion X.Xx, million Our ahead and EBITDA, to us down

of billion, EBITDA In generated and we revenue income $XX million million. of of XXXX, the $XXX fourth net of $X.X adjusted quarter

nature organic our in business. And pricing in the grew the growth quarter, Our despite our context this our growth, this adjusted revenue revenue EBITDA XX% Xx revenue year-over-year reflecting was comps, contractual of strong tougher quarter, rate growth. by of the in X.X%

to XXXX. turning Now

this our X%, softer macroeconomic are organic growth of to revenue guidance We reiterating year. of reflects which environment X% a

coming pension We from $XXX weeks headwind of our on mentioned $XXX of million and Day we guidance EBITDA our of $XX are as adjusted and to that's Investor an including income, foreign ago. reiterating assumption reduced million, exactly exchange approximately million X also

To factors, top XXXX digits. be that Excluding EBITDA we enjoys, growing XX% have stability our high at visibility year. above line would these for this single further emphasize well the non-operational business this

by seen have since and we to of the the of quarter terms what to expect be adjusted EBITDA revenue seasonality percentage step. phasing, In our very similar we

drive will initiatives addition, EBITDA In our These Clipper the you that we XXXX. during a from value-added intelligence, services, Day Investor growth, presentation of our number have gains and and to artificial synergies. [adapted and period included our updated growth on productivity core over automation initiatives tech] planning

with shareholder the In less $XX first the XXXX. project value actions in than million We fourth Investor payback. contribute a restructuring These launched mind, in the quarter, will Day, will which in cash-on-cash discussed costs. have the we booked through we X-year efficiencies

balance to sheet. Turning our

that year, our by the of around into guidance will This long-term business entering degree like quarters as conversion our After infrastructure XX%. trades. expect leverage We be visibility, high X.Xx ongoing driven our and reflects traded contractual which predictable publicly end the and a our and great company, growth, with of cash our roughly strong XXXX. results, that's gives X resiliency a confidence us of is secular by

pass to over Mark. you now And I'll

Mark Manduca

predictability GXO to Thanks, at the through share its growth we taking tech bedrock. and our customers. through and that delivered deliver quarter, has This another tremendous value combines business strong Baris. leadership

Firstly, on model, by pricing and transactional predictability. Unlike a supply is demand. driven where business short-term

continue by driven pipeline long-term with them. hear come say diversified year. as is it no convert XX% this a that, inflation revenue should that visibility with embedded we upon, large protection for and Baris over to to pricing Our we Combine have surprise and within contracts that well

by, $X is growth. of wins promises. further revenue quarters environment, and versus this X X% in year are We've wins why won see that X% confident without for will so plan. a inflationary organic beat. to wins, We pipeline to about That This worth anything share these to there were management delivers rate and an go this already we we've missing revenues you a X% successfully of million strategic year. acquisition in our And XXXX's inevitably of in is attrition its gross for can contracts growth, undertaken our gross if both And with will delivering billion. XXXX's on team on significant January, that revenue be equates to a pleased revenue likely gross $XXX X-year QX contribute accretion. Secondly, growth our done to we Combine QX further XXXX. low even

With that, the to call up open we'll Q&A.

Operator

is Our first Moore from question coming Stephanie Jefferies. today from

Stephanie Moore

it first just you of color you bit think the I beyond your could Europe? might assumptions U.S. have what year? this between us seeing give off, just for I in into that, of macro landscape, be think specifically then particularly if guidance kind little a macro And the helpful of baked what you're and

Malcolm Wilson

Stephanie. Thanks

The of markets. Let we're time, America, in good the that. particular regions pockets certain of also me What in strongest seeing environment America real ground our across mixed But a take is North bag. the we've got really our Continental at It's softness got of all is It's Malcolm. condition. same the the U.K. in on strength. North Europe, growth we've

Europe, look we more impacting consumers' regions, when by verticals we mortgage look higher been macro, see on a affected all bit the Interestingly, differences. in work at of While markets our we incomes. the U.K., higher little the that different costs these when across softer have we at disposable energy, Continental can is

our technology our strong. in they've verticals, particularly been space, industrials, our typically, So or

a of happy are doing are all them. good And space. of very Overall, with for we're any in our empty what We our importantly, utilization. don't customers have warehouses state

of to worst been In through members we're attract of not we to season, into to inflation, with the it. point think to pay our terms peak This quarter we've the our cope wage levels can I team business where And traditionally, season. holiday last supplements I have last the of that.

to think very seeing end course, good very I of pipeline by I the though, together, of million January. just alignment year. things very, strong our $XXX a of remained put signed of the through call saying, contracts. ahead. start. definitely I'll confidence has these we've Business When expectations. inflation. organic That's And want for that our customer ask really I'll a when think out, about for we're is just absolutely with to growth finish X% But we're in of that build-out So the worst the very, a through X% we're Mark January I 'XX, really new number. give good I level our new all to strong. has of us given that's just business really of the given year us And on in already

we're think prudent a say, management I for cautiously as ahead. team, can we optimistic year we're about XXXX, but also the

just could you maybe Mark, bit a more detail. --

Mark Manduca

it's Malcolm. Thanks, Yes. Stef, Happy here. Wednesday. Mark

just of Malcolm to what in a great made I'm reiterate terms let's points. So exactly just confidence. hit of Baris going a couple our said point.

visibility this XXXX. And We like when infrastructure that have revenue say for that's we as over what contractual XX% business is business model. based mean a we

retailer, business. a not we're transactional not So and a certainly we're

when it different love I ask a So asset. of question macro you because read the we're

[indiscernible] consider: organic revenue new to customer the of one. bucket net X% easy to growth the is wins X% X for There relatively first are existing in growth. and in buckets terms a So business XXXX, the

for new gross wins year worth net which our the gives million you gross revenue $X That of got growth. when in wins, So of XXXX business compare XXXX is last X.X% we've from it $XXX billion a the you with in bag. number, already

low number, in this about equally, of you Malcolm digits then the as obviously, need we it, what should Now attrition, calculation penetration new distance take the to and something, in of single you of to achieve off, considered let's terms to essentially call on rates. terms of said add will roughly already said, X% the X% existing get in you And take base you've that growth. those year, even before touching QX wins numbers both from operations to able within to this being allow and QX and

So business side second net turn new we've the if of done you to wins. it,

Turning got you've X the to base things, volume. price and business,

for XXXX recent with think I that's well. good a our digits, roughly the as single combine run line rates low in X, you gauge If and is

X% So and and comfortably X%, use prudent. see gets said, a you existing This to is to the sensible as can Malcolm customer new Malcolm wins, you Net prudent business growth prudent forecast duration it's we of $XXX worth million this noting sensible and team. of in for also signed from have And idea also visibility, this business a terms XXXX. and in already word

your and got you've resiliency growth, staff. you've you've got So your got predictability

Stephanie Moore

That's No. Got follow-up it. helpful. And here. a just quick

outperformance you has of new business do opportunity the -- stands As today? one takes, as those think Where look it maybe upside? sounds think well for I do -- at customer as and puts where the the you you you side, like where do existing X, and on which wins greatest it

Bill Fraine

Bill. and it probably this I we that you some down -- of the seen I'll growing. customers tell this They've me X let been see they're to automation have break that are than to proven think existing talk more happening. more once -- automation. and wins, already would a Stephanie, is business but growing seen I already the X is us points new today, about it's and with us doing with point benefits today of them. doing Number

talking and move to and us they they company looking sites, March I'm with the at has in So want sites. and have to Canada, business a and want that U.S. automated to they're to in Europe,

America back So happening one, to in the same that's from the that's that's and Europe way North region happening. and

gotten of future. supply part change one people and into as automated chains the to understand they for have that's their the have bugs growth So they

realize And is have have what they're logos. not that but are the outsourced, brand the of done we've they're the our automation times. levels business that. good team the outsourced is [indiscernible] X/X change behind these that They seeing ability are new coming don't around Almost a pipeline. They It to Number they becoming wherewithal have part to haven't yet. of that doesn't the not existing not growing pre-pipeline, They chain. their doesn't world. our the mean they're have in do see the just us teams. new two, companies supply people done and that's And the

in of they're already what big sites January over we're the coming do place. of that where So that, asking a period way ones to in we're automate and their reduce to we're We're the it. and time. Two were and takeover we us cost. closes in we the call get us have then look run and and at to site But taking of it existing going going to transform going for a an site, value to December

and that's will where And like to -- an So knows grow. do they automation us expert how our that. again, that partner want

And seen would Day, Markets seeing customers seeing automating, but they've those your yet, us automate. labor improvement haven't been in they're go turnover them press. help the are the have sites what want where more it what are They've then take able all who benefit already has outsourced they're for companies with proof now us that all say of Again, and working seen what as on XX They the is more we labor are the of them to other the with to where sticky to to about make points. value can mentioned needs rates down. We those efficient times to do, finally, I it that and automated read automation. we

are happening. all things those So

we new very in about go opportunity with us forward. very, excited we're So continue that and as business, the will

Operator

from coming from Oppenheimer. is Schneeberger question next Scott Your

Scott Schneeberger

modeling curious, for us from Congratulations I a on Day. with XXXX, think as first first takes curious then, But question, follow-up guess we for with XXXX stand-alone entity. And that I please EBITDA, EBITDA should your on Investor kind in XXXX for similar you I say you revenue of could The from bridge the be cadence year in say major consistent -- you EBITDA? would consistent puts that. for a heard to and 'XX, -- there. Just my Baris,

Baris Oran

by by, incremental synergies central $XX we year roughly Clipper in mentioned, our revenues the I those FX we nature, results for compensated be from coming highlighted And the our EBITDA project and and Clippers, will pension headwinds, were tailwinds started. are from from as the from our which million driven that legacy legacy growth income. and organic the integration Scott, nonoperational efficiencies

guidance, has the of worse. slightly there pension On slightly for is FX, impact our the improved income but XXXX

quarter, headwinds, high million. So is third net the it phasing $XX first this This a the quarter, and into digits If the by XX% in of the would fulfillment year, XX% was quarter, of reflects for roughly we're and EBITDA to XX% year-over-year. and about have our this our quarter And XX% fourth going loss about business, is about effect still nonoperational increased in single phasing not be same. looking second in was our seasonality. these EBITDA in

Scott Schneeberger

Great. on for allocation maybe I could capital then perspective a if little pipeline. appreciate the provide XXXX. in that M&A priorities curious follow-up, color. And on And you a just

Baris Oran

Of cours.

value always, creation. priority As our is shareholder on

We and project. in enterprise return has XX%, Bill have X-year a a operating investment we pipeline we growth X-year and on that are cash-on-cash for mentioned, payback excess that's have a strong of

So generate strong. -- sheet is our a is important customers. such integral balance to of our business, us are They we their be maintain very part flow, strong they for free short-term priority cash because which want financially an to investment-grade

the end XXXX. of year of the down of leverage around levels about third at the by stand the We X.Xx, from X.Xx of end to X.Xx At to expect quarter. return we end XXXX,

bolt-on this, which through our stock North room allocation. back capital Beyond is accretive capital potential of for priority we the them buyback. of shareholders opportunities will the both to a investing our continue value and specifically in short to America returning they in sizable are term, other We the evaluate we paying M&A, a the down buyback. do shareholders. long in through alongside M&A will targets, through have Europe, in but all term, But for debt a against opportunities further weighing our pipeline to create evaluate create to potential

Operator

Wetherbee Our coming next is question Citigroup. from Chris from

Chris Wetherbee

XXXX targets at that outlined bit little the Day. about Maybe term Investor you and thinking picking a guys up longer

EBITDA seeing of and to in XXXX the meaningful that of or reacceleration how relative 'XX pretty 'XX, XXXX targets headwinds imply So mute and impact sort in The business that beyond. may a XXXX. you're understand the

can you building us terms out in I don't book. have, know adding to And you're a is just XXXX, Bill reacceleration? about this pipeline a how driving it? what's So particularly you of give the sort your like business for to if now, or question you're the of Baris do we sense. know I as XXXX And but think that visibility

Baris Oran

Yes.

our our Clipper and give pipeline, with on that. are comments That services. will value-added XX% recall, to up Capital the $X.X line think And and making you bridge of such how followed bridge. by roughly from adaptive how bridge most the execute you and we then about Markets was the when making progress is our million in in our And of about mix EBITDA to building As including EBITDA XXXX? way efficiencies you growth $XXX on part billion Day, to was an that on would up to our and our synergy. a That end was core changes, basically XXXX. remainder further that of like going plan very at central component the of technologies, coming the sizable around of that. we automation pipeline And was is our important growth from

Bill Fraine

Baris. you, Thank Yes.

start. expertise much to a with customers one, sticky So that that we've things developed just our place means that's is, But happening with that the more in that across the we're market. automation around today, few are the meaning

industry in thing way. cost making we People of of to they're we are in All a away else we our is time, complicated break somebody here. to anywhere At So December. are a with that's looking expand us, have the about don't But big have automation because renew have looking get the the us. looking last to there's same to also this the renew customers and closes drives our go the because decisions. talked large already automation the them fact to the with competitor to Two do customers from that they move.

and from see As came they about were didn't they -- a they in the value And I same mentioned, prowess. It's X the experience we're reason competitor. because not where That's after takeover but a with takeover was automation the they were competitor. term was the was -- place competitor. other our places, X about a XX-year the

but on. again then churn, meaning finally, close value And to to to Both ability grow show pipeline, up our things to rate also because and of happening We're customers. because solutioning. those percentage automation tremendous our our of able our turn are our our turn of

grow those pipeline. the So accelerate will bringing things they're pipeline They will more and into the people pipeline. also the

confidence give me that all So those things together get great in XXXX we can there.

Chris Wetherbee

Okay.

Okay. That's term. bit on near then helpful. maybe a And little

do happen think You materially I because Clipper to difficult things season to mentioned, before synergies were peak expected post it's that.

to a the done synergies XXXX? and cadence on quickly? maybe expect should we realized So upside about how you in talk little little When numbers. of from -- I those things the be getting what Can earlier and think you a even sound bit Clipper more the about bit will optimistic

Baris Oran

Sure.

pipeline EBITDA to going Bill, our for the perspective. be Let you is seeing We project kicked revenue me the take $XX million, will come but on the cost and the the year impact off and and wins side, from higher. what we're run already in side about this be rate on

to We we set way our are an opportunity that and beat out, expectation. we meet the to the have well on expectations

Bill? our cost in EBITDA you year. XX EBITDA million As GBP will would be Clipper million this synergies recall, from about uplift and was realized XX GBP the

Bill Fraine

a that's and that to Farfetch same of GXO, capabilities have opportunity. Germany team legacy I new my Netherlands just was relationship what thing transaction. visit was And they're first in a the fetched there, talking a made got the great with showed we And why we've a the site we Yes. Farfetch. seeing yesterday. back to Thank you. When gained saw first Clipper They when we in opportunities we the the customers in we're And can because a repair bringing this already doing Europe way our that as -- are expanding Clipper kind have And we're out of have growing product and a that platform relationship. we and we was service catapult all of that Germany to it where doing people across them. of the technology that's what the using to is then finally, a it not and to use.

benefit you're you and have that back the process, we're return in you. If a that's you a come and electronics and in for coming in growth. can any ESG market, a retailer ones and both huge repair the revenue in that to for

legacy So us the are all things from GXO company. those tremendous for

Operator

Mehrotra Amit Next question coming from from Bank. is Deutsche

Q –Amit Mehrotra

which piggyback on XX% I EBITDA wanted EBITDA appreciate on you're doubling to the XX% more not , number, the would of XX% to XX%. just business, earlier opportunity XX% is question Chris' to the ramp that Basically, from ask there's trajectory assume you're that that in than the compounded of I forecasting. of to question. kind annual also from in forecasting I operating revenue like over given lot leverage growth that's a

-- understand of we that you in a is revenue start to to just the step-up and should huge expect on of step little guess that target? If trajectory. color be more bit the I fairly 'XX So EBITDA XX% kind you you -- sort bit and 'XX can a it Like because up, in linear would give in can your easier path mind? a to little that just of a plus slope it's

Baris Oran

Sure.

environment, X% Let softer approach it's lines When me kick growth a based so it's it in trajectory, of And it prudent here, Amit. off X% growth. organic reflecting we and trading revenue January, for year. X% to in XXXX, think And organic far. our macro those this are is on about X% a in it to you

start XXXX a plan to expansion have that's customers' onwards the target. get built. us economy the our of forecast. accelerating, plan. all and see in to we top-down our That's an not It's and As that in growth XXXX going -- we on a is our the it part global and will bottom-up It's based plan,

out. our discussions As also cost in that's investing a Bill? a Bill accelerate of mentioned, and of of going direct lot take lot automation they to There's still to happening at growth. are but outsourcing, consumer the a the lot

Bill Fraine

X going maybe are to talk change their people to change are and add past, might supply sites. Yes. place in what they open is future, site, chain structural had in that entire is want they is what about of an the a isn't through, the the it. Amit, for and we company This I'd supply That's operational on chain. us to that customers come really to have seeing that change when the

else So we're they existing they may across those or to have to sites, whether sites in X do do reset something change. need it whether X They may need another that U.S. companies talking those close across about outsource the location XX have the but and they or and Europe.

do not just do where is to that's is and one. starts X as quarter because these plan we one. The plan closed to have. really the this quarter, the growth and we to accelerate not just do close fourth So sites first customers XX the the customers the other we site. it's The in that go that

other and one. So go that, we'll the that do it. will the we'll first one And it is accelerate after build

comes So that's from. part another the of growth big where

Amit Mehrotra

Got it.

So a just just I want Baris, clarification. if

you're just plus the Is XX% to right to what trends said growth and of you savings of is Baris. you gets basically and bridges what EBITDA low So the maybe interpretation double-digit then efficiency. the the back kind that saying cost

Bill Fraine

right. Exactly we're forecasting trajectory that That's right now. Exactly. the

Amit Mehrotra

to M&A just question I think. if piggyback Okay. Scott, I a as from And I follow-up, on then could. wanted also the

your I I vertical? guys and a like any you. have because historically, verticals today, like watch wanted a that? and Clipper well, any see see for like underrepresented to may and been a I and think you where you that real there's this been have you opportunities you market, I in I those asset And pharma know in Canada in today, but do few Malcolm, was opportunities knew fragmented So for list. know verticals a the it's opportunity but the know assets available And it where overlap directly or ask you've geographies Do of now. the you in like don't geographies something or on lot great and knew health be that particularly Germany, not business like care in decades you clipper

just could talk you about that. If

Malcolm Wilson

the into on new better brought We whichever new look was is right always able M&A as brought we're investment into Clipper shareholders. on is buyback, a when thanks our do at health we're better we shape, care. focused question. GXO. across our mean, for tech a logic we Absolutely. be we got something to we When focus there When time deleveraging grade. look in or M&A, our We mentioned, verticals Amit, now, Baris bringing are the I example. great Yes. But our tech Germany. for a like will business, and renovation, innovation,

look in right hidden the how with need that buying interested really we're good I in the rest in sooner. it's that could us. of for be across approach gems 'XX think longer something right right So play M&A. typically cultivating on new the are we ton probably about between volume. It's our in landscape If of a logistics looks up What that's contract about now, GXO that's we a interested the about these relationship approach interesting interest for Baris volume pure And it's now, North it. talk arena, the But want and and right little We're a the for success we company and us, the think super myself, with term. we at for largest the or maybe is us sets for how radar. environment, these advance. I in in when bringing it of far the example currently America the we not do don't things There relationships wide And economic world, of team businesses business a now. is companies. building sure, with about don't

Amit Mehrotra

not do XXXX. GXO kind that the you be to would did be Or surprising another focus? middle that if deleveraging deal line be before you? of your Would Would surprised of with in

Baris Oran

When is. on M&A be to them our in buyback. accretive invest scale them have what you give going a Well, capabilities? against look the more our Can all is to set we an the we them in at faster? of to the additional and we the share hands. the can weighed M&A where profitable up make We'll Can is what opportunity, opportunity look opportunities reinvest in stock we take opportunities it at depends

what we XXXX, that's end to the have of But we're So going have. room. by will

Operator

from Ossenbeck coming Brian JPMorgan. Next from question is

Brian Ossenbeck

the Clipper synergies. to to Just go back and

in are put the think the It some first quantified size little be there sounds now side? future [gate]. to how like thinking ones those and But seems maybe you maybe that. bit You've the of cost behind about tracking do now number you to be be sounds a more be It momentum revenue one you'll might at context can reasonable around the a should obviously. Farfetch like expected. It faster those was or some when but than able a around that put we that synergies

Malcolm Wilson

it's Malcolm. Brian, Yes,

question. cover me Let that

So obviously, to because cost to we the those on right year, are for separate easy have that up And get were from the remember still to last of order. the October focused synergies get-go, us we were to. whole under we

but assign a a brand, of, the to just point, Netherlands. quite the referred of delighted, base. strong with GXO, the were And deal that example that though, luxury we had Netherlands for really in expand sales of prohibited all course, Bill customer from absolutely U.K. right, to we're we've great kind Clipper classical that delighted the And a Farfetch of outside With no-brainer. detail really So with relationship is a difficult to into you're Since blue much chip merged in the the arrangement. them of too organization. new that they it's getting

combined Our accepting very is welcoming the scale of sales GXO. Pipeline customers I together capabilities, they're verticals. business. new we're mean now working focused number diligently, are different are on Pipeline is strong. readily good. the teams really a our of

yet. but it. a the make I to had view not if an details have exact It's on precise don't we So science,

going it's cake of hundreds sales M&A. has of synergy-type think of dollars couple what I going of or the piece over icing be that from, on a the years to number we're incremental of the super really been of see it's coming a already to next millions the of

Bill Fraine

bringing to if that North is Clipper the the America. going We're begin legacy the Brian, can I add that. expertise have it market. locations multisite starting that, thing really network And that to in where I'd the to developed U.K., well to use that to add And GXO-Direct in. they're in European we we're The

up market. that lot Brian, Bill's be it customers and And will pedigree us. strong, there, says, add of the business mean, million ability to and the got that very as on are point, for revenue, will very XX% Direct, was that last to that roughly of year good we $XXX a the GXO XX.X%. be showcase the So at margins and grow so I on did A lot big about did that another we've opportunities, he or year-over-year, of well on in

said. lots there's of Malcolm ahead growth So both as Bill and

Brian Ossenbeck

top margin you Okay. Follow-up some you of productivity But from us you of there, the contracts, picture EBITDA, seasonality clipper which maturing for for mix you've the modeling. within and got on a Baris, bigger can got give perspective, got is just helpful just automation. more

you're that it baked how 'XX. which the is that of of on kind benefits be going of get about So you've you we like some line, broader to those a a of to year rate where bigger as to seems into more big of XXXX. uplift going through thinking still feel get this be the the run you Like be part Is year? in theme should guidance margin going a

Baris Oran

part you provided happened the maturing over you drag and each earlier, The in Yes. the half productivity we the the of second as providing contract were implementation end to we XXXX, quarter. much are the around see think the that guidance million $XX and gains EBITDA. up pretty be contribution of synergies, when the And at copper fourth they of will QX, about of XXXX our clearly communicated is they margins

to going higher. Of course, a be is is rate run

the are and those We about payback X is implementing years.

to So going how and is into a the prevalent by benefit we're we more onwards. XXXX we will these and in that's to get highlighted. XXXX margin as higher And XXXX, to efforts going be accelerate

Operator

coming is question from Next Suisse. from Ari Rosa Credit

Ari Rosa

the perhaps quarter? extent a from kind in wondering, saw of that's business, of given fourth there's post-holiday and of and shift terms I your season progressing business to kind know how that's resources. that labor what causing muted typically, more drawdown to just peak we So I'm year, the first in quarter a this in

Bill Fraine

volume a we We of very had would peak, after sight any to drawdown and as after world. peak. around We take out we a the we off of that Ari. from did the -- came job a had had good

the very very very, So specific, very teams. by well planned and clean

we new went that coming sales about. the into obviously, within we're the and plan, The So well. excited very see, volumes month this very

well. all gone So those together things have

Ari Rosa

it. Got

Okay. of the pieces this to of EBITDA as you kind hoping risk to moving whether there's that out the of some could be swing biggest favorably could are to target million or well speak million I outperform target was to just And that that for would other helpful terms year, should of target. potentially that it's high should concerned below-the-line we cause guys what sounds $XXX on things that cause we be looking terms factors for for pension or from the FX. really there then Is target? to that of $XXX what that are upside Or kind in It revenue variance of downside given hear. in of some That's about outlook level those that if items, you visibility? like underperform and the

Baris Oran

We revenue lot visibility. of have a

much on expect the variability I So too wouldn't side. revenue

about and take the visible side, It's EBITDA But also is the it's or from you million, pretty every FX, mean, from Pension us. $X coming year. of move if couple much here minus. if the percent On entire millions closing for there, very I is fixed plus actuaries.

place And out compared quite some environment of are Europe, highlighting different and pushing is it's not for in we and exact are productivity a frankly. to is taking out taking projects material, those science. not that it's that cost which beyond So then an U.S.

cadence we then range. and determine EBITDA growth our of XXXX. within slower, the or confident the will faster go may it in So are pretty But

Operator

Your coming is next question Poliniak Wells Fargo. from from Allison

Unidentified Analyst

for on James Allison.

new or to is side sort wanted of X% drag driven wanted margin of mix on what the business margin understand new the been where leverage to X% kind on investment? are but 'XX, some should sort to driven expansion sort of realm the the expansion accounts of range Just like expansion margin of organic you operating wanted come for Or you kind headwinds operating cost-driven back might what has a understand of of touch of and Just of of and operating sort kind some outlook in of to to accounts? ongoing be the address, we for from is understand additional getting sort growth get still expect through? sort

Baris Oran

The in are drag margin is these done outsourcing contracts. expecting solid our QX, we pretty from start-ups much as and from new Bill highlighted

will outsourcing new any scaling that. at getting but up have contract course, are Of we a even process, better

We are getting margins than much faster of last couple years.

our So that the growth from uptick -- come leverage. this in is to Day, we The Capital from mainly as and And highlighted going we should operating mild be has Markets demanded. business helpful. EBITDA

Bill Fraine

are area, we've And the you've kind hit of you our of contracts And go though, the that that for inflationary that and got we that saying making new telling in, ability put see that's the we in of things And why all is, been had quite which And put a contracts contracts the seen to numbers here is we've conversations lot all to come are a you've while And and in the forward that high ability a ROIC you my capture strong. also, thing backs, cost all as in. one in for we how solid. the so have and 'XX that we XXXX, around we done. recall, I'd those of manage into add 'XX, out we've we contracts. sure is our go is point so to if that

and hit such strong drives very that's as for accelerator. cost having So on that's be we a that we'll our you feel our customers, then strong why a increases very margins and know, big technology, And target.

Operator

Majors from coming is question Bascome from Susquehanna. Next

Bascome Majors

contracts Have may XX% another consistent how has received latter how quarter. those notices the or that dip much provider? get high to And up Just with believe through stays XX% cyclically understanding You've over customers or like be your dodged this talked year? about how you that, that we've tack a midyear? kind before little in on I or Can the of of that any as coming about think XX% rate talk we been over would mid-to-high maybe you early go bit year your go with this you exiting that, have and next conviction customers be fourth retention far rate? the you mid-to-high you part is to that may that through into

Malcolm Wilson

have for look to relationship not with of It of Yes, I GXO. mean the in customers. kind initiatives When any with us. that at it's the highly bringing service, our Malcolm terms no wanting here. happy customer a Bascome, we're the visibility we we business of being number it's no, reflects work very very into important and retention, the

So a the we're any we'll long contracted see And we're long-term, see length clearly, don't look about those change it's something is on level business we've we forward, throughout 'XX percentages. worked at our about think business. now. 'XX. the think reason why and any And I I right whatsoever when

the now really big our all projects project visibility that on bill 'XX. 'XX of activate runway board typically, about blue customers long into they're on drawing business. 'XX, This is even with a strategy chips to only organizations got instances, in sales talking some the So in of will our teams, and we've very

we -- outlook softer think the a we rest can we're what XXXX. against feeling I of relatively even confident I slightly for think agree macro is all what

mentioned as the all we're think feeling, about I earlier, I year ahead. cautiously confident

Operator

Seidl is Next coming from today question Jason from Cowen.

Jason Seidl

about Wanted to that over seeing and trillion and changing see acquisitions. over to you over into really a necessary will come we're X Do $X.X of to questions trend your on acquisitions that years? geographic the it's you all onshore. sort exposure comments X Do here, think time X back the that it, time, sort you call the made you be let's back piggybacking tap think to of going on are go said over I Obviously, nearshoring. next,

Bill Fraine

I change I and of that makeup customers much America and What U.K. Most mainly because simple. think Europe North the to is very Bill. you is and where in tell This it Yes. and would geographical are consumers the won't going be

when they onshore, to they're near areas So to buyers. those onshore going or

like But this chains. people and you've that That they're into what That around those of leverage seeing it's going we've for heard -- talking the trend accelerating coming in they're in the some about the need the work be for And see manage in talked get the going obviously the back is to the to news, what goes Intel You'll is has all of been causes supply to able And we're to to to suppliers market North in terms trend going American Mexico. to about. do markets. be support what sites. disperse that marketplace. need in companies

why And great opportunity -- So that's going happen the a such that see for believe X we is to kind of the process and we happening. that's there's in

Mark Manduca

about back onshore. of a That's coming goods of trade. worth trillion $X.X look, global seventh said, Bill as And

those If a are TAM opportunity that TAM road is the a imagine that's don't if you costs typical multibillion-dollar numbers, that billion to towards in a in for get And around going done this terms can ahead you industry growth business the billion context business. as warehousing we a this just long in of a of of typical lost $X a in of customer, think, revenue to clearly X% that, $XXX gravitation see is scale X%. billion $XXX be is within there

Jason Seidl

going go color. my reverse the great to And That's to is follow-up actually logistics.

reverse to you You the on us business? it? called some Can terms is for the it out how business, meat important in rate your in some compared of piece growth your bone logistics base put

Bill Fraine

huge manage we're has able the the analytical to of that can approach to to all they networks supply I are and knowing time. working returns the The working the we've on benefit you by the used been example been chains of the before we're a their all generate tell what customers to and best of XXx process. optimized is on best returns return had have a with what taking What some focus all more we've a

companies to return companies all bottom improve that So looking process improve are All they their have to know line. their at.

Jason Seidl

outperforming So it without business safe numbers? reverse is to is your putting say logistics base that

Bill Fraine

Yes.

Operator

Stifel. from coming Bruce is question Chan next Your from

Bruce Chan

Bill, maybe X for you.

how your between single about that looks you Clipper, the relative changes setups, what then margin there I'm multi-tenant. setups your the versus in think when model business X over just mix X those any talked meaningful in multi-tenant XXXX wondering You today? any is differences and those if targets, to about are does And like incorporate

Bill Fraine

address I'm -- I'll I'll point. sorry, margin part the address Yes. the multiuse

they site where get as the cost. but in So what is their any across customers like they about streamline processes a GXO they do it sharing to would ability that the get they're site to

to So it's and And let benefit a of the on very a big And flexible, great growth Mark opportunity. I'll benefit, have margins talk Baris about great as that mentioned, big we us. that.

Baris Oran

to billion. the When bridge, would Bill. $XXX million we $X.X Sure, you Day, in Capital the have given recall Market

in would warehouse GXO the and that shared we we're that do GXO Within well. we as million Direct U.S., of into higher has we of get services within to the margin You In rest of this of geographies XXXX. second at services, have and bucket in. U.K. higher striving GXO value-added value-added U.K. Direct from operate margin in $XXX from elsewhere the the automation model, Direct, and recall largest and have highlighted Bill launch which EBITDA was incremental component

Operator

gentlemen, questions any closing that's like management now to for remarks. to the for Ladies and hand all I'd back call today. time the

Malcolm Wilson

call listen, our for And Kevin. hosting appreciate today. Thanks, I thanks that.

a full I a and today, traded for been marks another have it and it's us. quarter, call year sixth our good great say publicly to has company, been So earnings as XXXX

the this was executing to the course, good. support our Investor We're take to value event. strategic very XXXX. showcase I team, and will thank us our both for were really and employees today value longer-term for a and giving forward GXO financial to really proposition dive everyone our Before differentiated we really to customers, were think targets on I the the do plan looking as deeper we close, of that that more shareholders. able during our It recent to We Day and thinking management through and, a that you're creating just want pleased to

of many the So great I day. with thanks. for your attendance. rest that, everybody a Thanks wish

Operator

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

time, your at and day. You this wonderful may disconnect line a have

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