GXO - Earnings call transcript Q1 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to the GXO First Quarter 2024 Earnings Conference Call and Webcast. My name is Camilla 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 the company's 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.

under in are company refer of except to measures applicable statements on of also update any has may forward-looking the to the required SEC forward-looking are during related as certain non-GAAP measures Reconciliations release to financial financial financial earnings website. The this the release, GAAP statements, these such comparable or no this defined obligation non-GAAP call and by in company's made today as to extent measures most of call. tables contained only and its the rules are on company company's earnings made law. The the

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

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

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

begin. Mr. GXOs Chief Wilson, over now will you Officer, Executive to I Malcolm the call Wilson. may turn

Malcolm Wilson

first Officer; new today earnings I joining Cawston, us our quarter With Financial our in Chief Revenue Baris Oran, Chief morning, appreciate Thanks, me Kristine Richard Strategy Camilla, and Kubacki, for good are everyone. Greenwich XXXX Chief Officer; and our call. you our Officer.

our of XXXX results issued resiliency reflect bond our the business for in discuss acquisition the our and seen offering we'll quarter Today, longer-term of the year walk as well XXXX weeks conjunction first the of for ago, results acceleration to growth. remainder the for have first targets. model you of as will quarter you our These we our finance with through this and X outlook preliminary As Wincanton. our of

We was in and GXO quarter bottom presence the business, contracts Boeing, activity had that's these to and quarter $XXX up us EBITDA customers spoke, XX% contract a wins Puma with our new new gain landmark nearly building billion. of we and and Germany, organic automated, This of signed sequential quarter pipeline billion, to we $X highly be our of will partnership operation following a a in Guess, outsourcing half this week, Smith. of outsourced announced Levi's a from with time. have XX-year us or new with WH where Michelin, to including we of value with Earlier the acquisition first lifetime been for partnering continued of We million Clipper. year-over-year, seeing. We More When growth, positive than came newly strong as the year-over-year new as the delivered start in up we fourth that for revenue XXXX. organic sales said we're reflected X% $XXX the improvement the the approximately market $X.X generated growth share. first well million. for and last revenue adjusted

and lends. see wins. deal We're continuing at and larger pipeline is converting the are high. of longer-term of sizes customers growing $X.X address example contract This seeing one longer the XX-month a To that the partnerships end, we're quarter our fulfillment We've needs. trend looking more sales just to $X.XX ended where billion their is than after billion, replenished pipeline for to new

creating accelerating, is pipeline the of turnover the new opportunities. Additionally, more business

And basis announcement the the expands through the including across earnings our per synergies verticals full on was week. in of which of these presence Europe. to synergies. Wincanton XXXX, it growth builds aerospace rate a accretive, strategy. be platforms in Wincanton GXO's will M&A double-digit a synergies. pro of to highlight It newly-acquired strategic and closed the Wincanton, U.K., share GXO of exemplifies record in acquisition excluding to offer cost quarter run drive last accretive and services our track proven we including upon forma Another providing springboard growth with industrials, leveraging revenue

the operating Europe. For in a we've to meaningful acquisition, executed establish example, on our the in Clipper economy since presence largest strategy Germany,

in all is quarter, the the Germany in end PFS set and it global Levi's. converting quarter out the in when the with GXO's combination to of high-quality PFS's we luxury. one fastest leadership XXXX, beauty, leverage growing. fourth like the position and acquired we with footprint pipeline fourth of GXO We're jewelry health largest of of Similarly, of As first deals and the of

major the a And in consumer Richard day. discussions expectation X the the consistent companies of discuss ability Beauty goods as recovery PFS customers legacy customers is REFY especially on and acquire. like multiple strengths our This businesses is and demand. we Glossier Since will of in gradual our our geographies. positive a proof a capitalize upon of M&A across the of thread we've We're global speaking and to strategy moment, expanded integrated every of to execution acquisition our

market future, humanoids and planning a walls of proposition, tenet of building of providing the inside market best-in-class way needs, the value One positioning automated commitment doing their our cutting-edge we're is and take this automation to AI-driven the X and are solutions. we're fulfillment Businesses intensified strategies in and the warehouse. the to a fulfillment. in meet share expected is to by leading AI through like ourselves for integration Automation we're trialing first mover key their our

innovations AI. in exciting some introduced recently We've

speak. sites First, the quarter a approximately across success, we rolling pilot optimization app last increase mentioned as of we're warehouse XX%, a the driving productivity was we and out our

developed management recently a proprietary we've in-house. we piloted Second, tool, which workforce

to decisions no Our tool at about XX this X% per minute replenishment, solution our operations adding starting inventory capacity across be of cost. We'll broadly makes year. more this deploying than additional streamline million

is delighted new the focus of throughout I'm the excellence and and way in the this we with and say, in of take to on sales addressable continued and this acceleration significant business automation performing, $XXX revenue pace accelerating wins, our is over anticipate pipeline XXXX growing total outsourcing our pace business our All to set GXO market beyond. growth With market, share organic and long term. billion

you. Now hearing from to I'll on to you over hand update we're over customers. Richard, Richard you to what our

Richard Cawston

Malcolm I've GXO's mentioned my European meeting leader my growth past significant is mission as new Chief as of business. the of Thanks, just Revenue years to Malcolm. the some GXO. role for over the outsized pleasure market In morning, had everyone. Good the of into few Officer, convert opportunity you

And we're great of a off doing to that. start just

their chips. serve our both quarter which As wins track the XXXX. support we're efficiencies was XX% what of the an We blue to current $XXX of build outperform their Malcolm from from highlighted, hearing to on million, signed our of increase and bluest year-on-year, customers, we're our And new into operations growth. first the totaled in new sales wins the is and future need billion prospective to $X

result, we're a seeing As demand strengthening.

which our from the the like in highlights I'd quarter, our underline confidence a to sales underpin few trajectory. growth of

pipeline $X alone. quarter than in opportunities We billion the of our first new First, at stands more $X.X billion added quarter-on-quarter.

our their outlook. chains, in their returning are faster to Second, supply outsource decisions reflecting customers confidence making long-term

a and is deals results with larger pipeline getting are longer. delivering sales cycles As and consequence, shortening faster our contracts getting

in turning the London is evident our outsourcing customers. wins And expand logos, than quarter Third, than our or country. finally, revenues customers significantly, in existing We of customers our were with from the more partner the with success also our of for that time. them with first more the X/X half new strategy than to very more to addition one in half XXX come to we're companies support expanding our serve of GXO relationships in we Fortune and of first

seeing these develop across our We're trends regions.

cutting square appliance is foot services combining the fulfillment product in and like manufacturer, value-added sites million their Conair's building coming growth a enabling We're across that on single the consolidates X.X handles direct-to-consumer, all into Conair, Maryland. operation of supporting X warehouse facility. of with high example, a this personal the new and For we'll this be and care largest ribbon in state that This tested. solution brands automated retail Friday,

to apparel design X their them entrusted our us needs. where the Italy, We've guests global also with by across our in to for solution the company, XX-year operations in U.S. and originally fits we examples at their that of chain Netherlands sites and We unlock had a with are outsourcing. Guess, of ocean previously now in-house, now the levels recently highest it leadership turning supply global customers partnership. help into partnership they've North the American to our consultative approach operate These the Europe expanded U.S., value engage their a Guess run in

In site, Europe, super highly Levi's we is I take omnichannel an in Germany was growth as We're newly just operation mentioned, announced our week global which outsourced, supercharge last visit Malcolm delighted automated iconic win. hub, their brand. strategy. a on to to for to landmark the allowing Levi's Levi's

ambition and with exciting features extremely to sides Germany's raised the and the on bar are is kick that the palpable. This in warehouse the partnership. off was sustainability The momentum It partners such exemplifies phenomenal greenest both logistics competitive a drive significant industry. Levi's advantage their because chain. This operations it new win with supply to brand is GXO their especially why transform a through as

chips you. over strong our to with scaled addressable months, and verticals growth This new our mic enormous an focus the quarter, growth strategy new XXXX and with teams our our our partnerships the are we'll excellent to financials, mentioned, and in past few translating on that blue share that, deliver We've Malcolm team, sales we targets. wins I'll why geographies globe. opportunity. our our had beyond, take XXXX and is Baris, to through XXXX pipeline while the guidance you Baris As on already in capitalize pass across up in our investments I'm intensifying in sales to really high-growth and detailed to market. And management taking account processes first and and the of confident

Baris Oran

Good on return see the we and quarter to We we the last morning, footing, are and started organic quarter pleased of growth. to the everyone. year believe noted was We continuation fourth revenue positive bottom. the the strong that trends a

X% XXXX, organic. of revenue we billion, quarter was which first the growing of of generated $X.X year-over-year, For X%

and the growth semiconductor largest led verticals, in Our organic particularly by omnichannel our was retail space. technology,

expense the a acquisitions. line Our costs which which well was associated EBITDA in are recorded litigation costs We loss quarter $XXX million, $XX adjusted driven legacy by of Wincanton, as as earlier for with our first primarily million. one-off a net transaction with onetime was

of optimization call on quarter, the our investments productivity share and our our our EBITDA margins, footprint, capabilities. per growth, noted our earnings customer and our quarter you this in diluted As last initiatives adjusted adjusted reflects

Our the on laser is wins capabilities going see focus business results these in new off, you'll and paying forward. our

at on demonstrating quarter to invest our invested above Our back XX%, was capital operating return our continue business this our to with returns. high target into ability

surpassed of we underpins flow, our by to generate improved $XX cash free we return million target. expect forward. quarter, in confidence flow maintain free this all We XXXX, expectations cash free our going excellent full which This on to In this level continue cash flow conversion year and year-over-year.

we Our investment-grade remains and solid, rating. are balance sheet our committed rock to

X.Xx leverage and year end year. X.Xx We next of the by this about about of of the are expecting by levels end

in have due coming XXXX. We debt no

completed acquisition to into of expected diluted will of cost once expect to most earnings this was at account the accretion week. earnings we As We with to attractive the fully XXXX double-digit adjusted last you one per accretive acquired valuation, deal share be very know, we taking important integrate. our Wincanton, Wincanton synergies in we The which achievements a deliver. quarter

an realization And also Systems, is to in of Kuehne+Nagel's stable, this business industrial as U.K. exposure before EDF and in which with Europe and of previous of -- cash and Alstom. well like us slightly we out operations. cost our GBP customers exciting level lower predictable synergy well-positioned very Clipper The acquisitions aerospace XX BAE sectors borne returns will Wincanton higher expect carries flow. even resilient Wincanton million and synergies, contracts, contribute margins hospice proportion the a to of high as deliver gives

Now returning to our guidance.

inclusive million is range, of $XXX expect XXXX, full EBITDA adjusted the $XXX guidance at of year the midpoint our now double-digit growth we to million. which of Wincanton, For

of We have guidance growth X% revenue reiterated to previous our X%. organic

balance organic continued quarter of in first and upwards year. has growth acceleration we shown trend, shows anticipate April throughout growth organic the Our the an an acceleration first versus quarter. the

above convert long-term target. free to EBITDA expect XX% of We our to XX% adjusted cash into our XX% flow,

our These guidance for targets. XXXX our XXXX our XXXX. updated and for targets also performance have We reflect

following in transaction new impact expected acquisition of Additionally, the close of our embedded plan. Wincanton, this our the is of

billion which revenue; next reflect include XXXX and billion X revised following of to the $XX to years. billion targets, of the $X.XX EBITDA $X.X billion adjusted $XX.X over Our

organic margin as our we deliver customers' over and XXXX second, double-digit XXXX, grow First, a market and the synergies revenue a reflecting average well as on share, growth our recovery and from in development, we AI period automation, our to volumes on gradual XXXX; XXXX through expansion and technology to focus with on expect significant from focus cost business Wincanton. as through wins

ahead a return accelerating, had long-term adjusted exhausted growth GXO's faster we our cash top invested on share. EBITDA double-digit even delivering compounding and growth path XX% clear per We growth to and capital flow achieve targets. CAGR conversion diluted is in are free with of operating line and earnings

great continue a attractive in of our best capital acquisition an the allocate just completed we We to at valuation, shareholders. will and interest have

I'll hand over Malcolm. to it that, with back And

Malcolm Wilson

Thanks, growing GXO efficiencies customers into We've XXXX. the on to We're take from we're market operations making customers big future moves strong future to as chains. AI. global and a demand support building growth. in they And their share supply as Baris. start focus had We're to of positioning their automation build seeing their blue-chip

Our laser achieving confidence long-term outsized targets shareholder our creating value. growth gives me focus profitable great and on in

that, the Camilla with to transition And we'll mic back to and Q&A. hand

Operator

first Stephanie Jefferies. comes line [Operator with Moore question the Instructions] Our from of

Stephanie Benjamin Moore

just Maybe growth I with organic wanted start performance. to the

and or on those in component. maybe that you're to XXXX environment focusing to in hearing But for maybe the target. full how If the volume on -- importantly, sales you confidence underlying could and -- same-store bridges performance that expectations year the that that just touch XQ what really give operating you in

Malcolm Wilson

already, on X, we sequential Thanks, a continued just we seeing trend go It's volumes, has X quarter what April, is Stephanie. as part here. in Good side, mentioned, quarter can that goods we quarter improvements. while see gone we seen the to compare any of to we're more has material When Baris X. particularly consumer morning. can in trend Malcolm early And forward. X, see change quarter as not we've have customer through positive Stephanie,

in, to past. When It's in it's Continental see that's can't we X regions we've the I but not seen to deteriorating. working very well, that resilient say equally Europe, resilient. very growing, we're compared what be continued the it's

reflects we're a servicing. that's business, U.S. Our it are now range volumes wide of bit stable. that different mixed, industries Consumer and the

interesting U.K., to it slowdown during to the first growth improving. in fact, show fact, that, that's been the and our in strongest first signs really to in be was market of signs of quarter X. show 'XX, And it's it strong seems

that all, all see. picture we in that's So the

consumer can look I very we what territory services. for If see, consumer across than different every demand goods, demand for though,

with that be to to our have dialogue starting continues Companies can from We it customers. goods, that we For sluggish. are see restock. the

order restocking they're is going of to course to we're I to in customers to bottom think environment. through their evidencing And year. the meet the start the we've need what seen destocking the of clearly plans,

good a sign for that's So us.

set. sluggish parcel our environment. size. But want from level a many activity, impacted, carriers the multi-customer of estate to in companies, the have Overall, just of we small In real I as 'XX, you do destocking and it's that's where business the particularly the proportion see

wins the $X.X business growth, QX decision-making in we up, most are a line That's consensus. is line, pipeline with billion million, highlights capacity. But of sales from $XXX So have is perspective, overall, speeding top up. probably aspect. customer up, X% important

price, at that's as a Our Wincanton very automation done AI. attractive increases in mentioned, Baris and deal, a deal

overall, start. a good off to So we're really

comment of expect we the this can on as growth actual year. maybe Baris, evolution you

Baris Oran

Sure.

in negative our bridge first sequentially the in with organic start consolidation X%. including the first minus from coming X% from is QX. around quarter growth business retention roughly averages. about X% The footprint is Let the to inflation still new X.X%. our mainly is around QX, improved Volumes, with contributing me customer of year-over-year, remainder and Pricing long-term line but

has is Number inflation of an lot was we to growth long-term XXXX, place organic be the plus be mentioned, Levi's. in takeover of shown bridge volumes, of see business If projects quarter. primarily and the as bridge a to April entire expected X%, which around impact the and our improvement our -- entire year. contribute the Malcolm already line X.X%, X% around I averages. expect for X% new around look consolidation about our versus such coming of year expected to for That's is As with the we two, retention, at which outsourcing prior pricing remainder continue footprint in minus and to from the

Operator

Scott Our of next comes question from Oppenheimer. line with the Schneeberger

Scott Schneeberger

And focus The that's contribute? that start from just there's win of But of been kind shared going Levi's, also, -- speeding ramp. new new mentioned want the -- you that's to how an to then when wins. anticipating Just idea you some of you. this I Baris, for this of when decision-making. Malcolm, on contribution pretty to exciting up, of discussion will you're business

seen kind could I part seeing then on there, you lastly, long-term of this just we're much And what recently. deals Levi's? in seeing And if new is a trend appreciated. with this we've So you're that contract, other think as XX of work years,

Richard Cawston

a laser following acquisition largest first you economy, into automation mean foundation. gave warehouse. so I in focus absolutely with set proud we know-how be with Cawston. last out to Thanks We're there morning. about Clipper Scott, of Europe's that our our great we and should progression our our the year that agility I'm strong my question. the It's do to conversation. a was meet and this underpins Levi's. It and the us win Delighted Germany forward earnings it's Richard for it this call, super to our looking

we I'm a which into you normally warehouse, opportunities that we come wins opened now, including recall big. aerospace do year, in us And to up if is saw warehouse full we I pleased And announce region. the economy that, speculative Germany, because in don't last this so have that think

to Pivoting Levi's.

entered partnership. high the deal. what it's very That's a iconic This reflects great so process big deep We consultative Germany's brand. is development a warehouse, XX into So a and a greenest investment. a the years. is

normal. So iconic that level as But scale, about that think of Levi's these partnerships the it's reflects an you partnership of and sort automation brand, when entirely XXX-year-old, investment. really lifespan,

very taking XX XX,XXX XX-some it will start around XX, from million start we'll European them live? months to automation. When over welcoming XXX and up XX the people colleagues Levi's, into off the around we June, We go over new up We And slowly. workforce. strong ramp our full units. which is production, ramp

So become will we're partner. to Levi's, super hub a this be and their really for thrilled absolutely

Scott Schneeberger

from The compare -- to probably -- think, follow what's you that. could Baris, what changed target Appreciate prior you. the for update, just you now? have just XXXX kind bridge Richard. Thanks, and on two. financial I your the I'm up, contrast target Just to update financial XXXX I going of

Baris Oran

January a us led is but XXXX guidance, XXXX year of seen -- realities volume sluggish we've rebase which reflected guidance, which No to a lower it's the XXXX. improving, XXXX, This environment year. problem. gradually in XXXX and expectations still Since for our

target EBITDA into there to components So X targets, if of the I current go the the components. are target, our prior from

primarily forecasting this XXXX. seen in rebasing consumer effect behind rebasing X/X lower have and is About it's The the already our we comes of numbers, in levels us. to impact verticals XXXX in from volume in

the out. slightly contribution. in is a to first we outsourcing, one last ramp-up to this still see demand, of a of result given significant customer realization the wins has our has [ X/X product and impacted footprint from also margin led ] given before, simply And Another and pushed bigger offset margin been is expect lower a revenues automation, which

in But and first-time intensity simply of with a automation. XXXX, we outsourcing lot put projects won capital low

You that in in of see our XXXX. realization cash can free flow

those from one. prior target -- that's So the to current is bridge X XXXX the the items

Operator

of question Jason TD with Seidl Cowen. comes the line from next Our

Jason Seidl

what's Impressive of amount I on little explore of business sort to marketplace a the new wins. wanted in going bit.

have automated can and helping taking you're market services? Also, Do taking share. technology your that more from a offering including automation? then existing who a think you business? taking you do more you're AI you share mentioned they're think players you You share you how talk offerings, about I And aren't you're win sort of follow-up Wincanton. market from think little on are Or market bit players offering

Richard Cawston

Thank Great, Cawston answer. Jason. Rich It's you, I'll great. again.

WH our focus the on come we a et [ very in massive look, deals to is for So And you've number seen and Puma, is set are them pack customers ] our [ for Caster of in first-time skill we've those And like ], our Smith, of automate. cetera. of outsourcing. our pipeline, have help time the business what first they this that TAM seen into looking

is, more with are efficiency And Automation every that? improving. activity, our the discussion automation we in every of you are the make, XX% every as at and submission shortages. It makes more the on tender, labor ROICs optimized. than is it's strong ever of Well, and know, and it covers levels running it's difficulties like the customer. Why

So this it's from GXO they us, the absolutely bring massive it's want the and set absolutely TAM. thing skill to agility can and

Malcolm Wilson

Jason, here. And Malcolm it's

a I mentioned had you Wincanton. on think you follow-up

that. me Let cover

great Wincanton. deal of super It's a company, The delighted a So made people team, now super agreement It's with to great great this deal closed. customers. clearly, management is have we're and very us. team for

had of all of very And we've I we've the organization really and by feedback to and that comment indeed, want from positive do that management the been teams kind the bowled Wincanton over customers.

big We're shout-out very pleased about for that. that. So big, a

us synergies. business, a of a to bring going As lot revenue is this

former with verticals like of importantly the characteristics. PFS, what to us. clearly see We It's new yet our can big, and past we it, M&As people up work the see and very Clipper can have Kuehne+Nagel going not done detailed open on in for but we same experience

it strength a to our it's strength not U.K. industrials, going area. So in make area the is This

things just sector are our all Aerospace, we across blue-chip Europe-wide the not really as convert U.K. big in public Baris customers, can business. And Continental some but these spending. mentioned,

bringing It's pretty bang very, good in from savings in other PFS, to cost very even have synergy about lot, our savings. sounds been perspective. in be but that million that's in M&A. it's from the Clipper, the with get-go and That in, of of experiences going $XX we're line So much what a it's advance accretive in that

So about we're very very really that confident side. all It's deal that. very, a from attractive of

there's be to say look, some we go -- process us concluded starting will in. the expect end comment Last for regulatory by that is, still now, to That's of the year.

We They have satisfactory on people on as a the experienced Clipper, with CMA, expect lot of we working did that. we that. just work outcome with so a

of And my goods to seeing market last comment our business, seems is, the where earliest recovery earlier, I U.K. spending. we're mentioned the real it be consumer

it's news we're deal that now. great this doing right So

think the very, really good. it very I is of timing

our to for 'XX. in it off, Wincanton mean, worth detail we for out our call have going just to in finish 'XX plan. Baris everyone. plan maybe in Maybe Baris, I It's got out to just

Baris Oran

year billion, And the to of a U.S. $XX a of is will for months that that of in and top the our IFRS this we sizable capturing around in will all around business adjustments. And billion. X $X.X our going $X.X X.X line the Wincanton EBITDA will plan. which about Sure. GBP billion, P&L be is GAAP be contribution from already included IFRS consensus adjusting million -- EBITDA

be will complete taking share funding we That will Wincanton increase the percentages double-digit integration. have we as we to in done, synergies, accretive, the $X.XX And per cost about account accretion Very to acquisition, XXXX. valuation. attractive into expect prior

excited integration potential very on of Wincanton. are and We prospects the

Jason Seidl

follow some geographies? you looking Well, after expanding that's color. Are of into M&A we great could sort at Wincanton, just How different up here. look I some quickly If at should guys? future

Malcolm Wilson

Yes. again. Jason, it's Malcolm here

focus now, on digesting right think is our Wincanton. I

As skillful it's businesses. very Baris teams, our they're mentioned, sizable And business. a at integrating

just delighted I team Wincanton so of mentioned, people, admirable really that. on As very we're a comes with

But be on focus throughout integration our right going really the 'XX, really 'XX, is of that. now, to

our something we've Wincanton, Thereafter, M&A not a can it's are look, as actually to very in example, to to that new we're it now market. new present always verticals appropriate, in business. bring strategy enter present great is the when verticals, when business right being consider without difficult explained, that

Clipper, you're strategy, And now, Germany. Clipper years years I one. said exciting M&A into the ago very of that think, that X a really well, that's coming into we now you this would And give acquired very what strategy seeing X springboard makes when life. remember the us evidence on, we our clearly

M&A Right not really now, to in thinking smooth future. we're we've of a now committed Wincanton the minds integration, on on what So about making for all the delivering deal. very terms

Operator

Our next with comes the David line Barclays. of Zazula question from

David Zazula

has noticing changed had. had cash not from flow you guidance, Just Baris, previously the what

If you could the expectations to expected Wincanton your acquisition converts flow how talk about and on cash the profile side and dollars. for that

Baris Oran

course, David. Of

than year-over-year flow actually better last cash $XX Our year, QX in about was million up.

cash Our guidance. to strong QX flow free puts or on track achieve EBITDA XX% XX% conversion to

year, I increased the you including calculating number, the would convert cash into Wincanton -- contribution expectation the and take for the EBITDA entire you're when then So flow.

has Our favorable. working capital been management

a of discipline a be very enterprise. We heavily throughout very lot in And continue to investing the projects, in have favorable despite XXXX. high we capital

target this flow cash capital. invested our and XXXX, to above XX% write high high of still long-term in we XX%, XX% year, high-quality expected have with to We return generation contracts

David Zazula

automation And then who some on Levi's of in contract, level to automation or Richard, current the don't but what some there the opportunities facility the discuss Can at the opportunity I existing automation be? and automation. know, wants you you might take, hinted

Malcolm Wilson

Yes, absolutely, David.

the attributes with along some end-to-end credentials. fully showcase the is ESG phenomenal in So out processes, its fact, to automation, with state-of-the-art fitted really site, Levi's

of That's tech adaptive around what operations we As you XX% know, and on XX%. about call XX% split automated. are our into around fixed automation

shuttles Now that's absolutely and robots, the the tech AI-driven cobots, that are coming the market. adaptive to is technology These the flying. the

Digit last -- year. our announced or humanoid of this saw part robot the our earlier year, robot You

customers. it many operations. we drive operations, we sort of improve use also can returns we and longer contracts, the long-term our automated existing that to share duration enjoy we pivot manual and do we and operations into So better we generally technology with play into that margin, plug we can When that,

a thing. great it's So

Operator

next Our line Mehrotra Deutsche Amit of Bank. from question comes the with

Benjamin Mohr Mok

is This Mohr Bank. Deutsche for Amit at Ben

target than why EBITDA moved let us margin. EBITDA target XXXX implying down a know revenue Your more happening? you that's your lower has Can

Baris Oran

Baris. Ben, this is

Let buckets look are our XXXX, If go into margin throughout that today question. the primarily how take from from margin. we me new to is X plan improving today's there

First automation. is

deployment. about of basis forward, levels automation we of technology expect incremental XX and higher points from margin Looking adaptive

We are of AI our for particularly encouraged ROI with is improving the automation customers. how

revenues This muscle equivalent Clipper integration. have two, XXXX. XX synergies Number our GBP is GBP great points the XX Wincanton, of million of achieving of improvement to in margin to XX memory given confidence million with we of cost out percentage about basis higher achieving

And component from synergies the and and is central acquisitions. productivity prior efficiencies loss

As these $XX million from to and so XXXX. run we basis rate savings, around of XXXX about out a have expect improvement of million margin we XX a programs, another reminder, $XX in of

automation, and margin components: X and points; basis productivity versus points; point So this efficiencies giving improvement central XX basis XX basis primarily us XX another Wincanton, year.

Benjamin Mohr Mok

a maybe And Great. two-parter.

some In in to in drive in when what the terms less see can can inflation line? direct of the XX% line you creep leverage cost And and that level confidence cost is What we still operating CAGR revenue assuming the item? that? operating do growth,

Baris Oran

that inflation. to impact us wins giving volumes come if entire to is going 'XX environment, the I roughly to expected great increasing and the took from we is potential XX%, gradual we of expect organic $X.X X%; XX% and It's from you have in the improving around and with ramp 'XX up revenue -- remainder as line We into a which hitting pipeline, a single-digit But to coming X% coming come that and pricing of a future. revenue look the to contribution, in 'XX; confidence bridge growth give we have inflation billion consumer and be low to new about business; climb.

model. As contractual going model is central are further That our And putting more as and cost programs, you far support concerned, from us Ben, to out business and more we we is a uplift, margin structure. But is central this we working cost remember, our highlighted last which this year. have are cost in see on year, efficiencies. efficiency business taking financials give

is years. cost cost, been fixed the leverage for site out operating of and working and low on costs, from SG&A we we those, the central other X come business have the The to always model. last taking our limited have and variable cost operating been cost high case going That and has structurally. been level in have primarily items, We the leverage

Operator

from Our next with comes question Bascome the Majors line of Susquehanna.

Bascome Majors

about the some expect of business you year? early to I a of know as synergies we're the down this cyclical give the pay to but or or how you think do year, of visibility year the XXXX, the out of perform bridge debt long this drag the into we late of to any timing you of talk to a way sort Wincanton have part incremental that just for from last saw next contribution items you can

DHL for secondarily, management And just read changes. just some And your to opportunity or guys? thoughts as Chain Supply that made change Do anything that. you a on to you strategic get wanted

Baris Oran

-- beyond numbers our Wincanton's other as and far as part of items mostly initial the on take contribution XXXX, environment. numbers comments to in the our competitive through me Let

of $X.X GBP Wincanton be -- therefore, As I million about going of into billion, should line -- roughly another billion, $X.X year. mentioned, expect top which $X.X X.X is you about to year, $XXX million next had in billion this a

be the and year. $XX $XX the be year the side, On is EBITDA next will remainder full this EBITDA around million, year million will

provide that, which see of targets. an XXXX. our on Of course, of items is as Malcolm? synergy organic we we into accelerated do we into XXXX will growth in guidance And provide top environment, the then our guidance highlighted, guidance, embedded cost we

Malcolm Wilson

Yes. Baris. Thanks,

competitive on DHL great of On great it's company, a I aspect a DHL, it's well. and mean environment, touch team. as I'll the a

we company them. know and a really well, that it's like we So

the solutions. competitive that I getting that regard. well-organized, is customers to a Larger strong really not the of for what In Richard in Customers in terms larger, companies reflecting to automated example These of environment, Wincanton, consolidating. industry has solutions of is mean overall of financially-organized are mentioned, territories. want can see it's I that. kind major companies easy And and you large are doing one that's supported guess, smaller deploy good those be companies. all by

really in what we of revolution the our AI. it's a more So automation. do automation, nature market, and in alongside the AI, very now warehouse more

why businesses. our by All numbers that's of you're these That's seeing and see we you that best large-scale kind mentioned And the such new of that services. things, it's accomplished strong demand of see really these why that business for period double-digit a type we traditionally over been we've working.

it all favors tiny and and from to I GXO. large-scale it fact like companies a think well think do solutions environment, I number more more they're There's like them. this And that the overall, of becoming set is. consolidating complex, market are companies competitive No what ourselves. So is

Operator

with question comes the next line Brian of Our Ossenbeck from JPMorgan.

Brian Ossenbeck

thinking guidance your Are Just one, deciding now? be about FX Is maybe you the on still follow-ups the will quick a big hedging? view? that how right even in first are that you Wincanton. two Baris, impact in

sort up And multiyear like in Is timing. revenue to then you Clipper? here, what faster Germany that something a the before of Or synergies question time side? some seeing on the up maybe, could potentially Bascome's Malcolm, we're come on following this a would show with line of on are synergy -- get there kind

Malcolm Wilson

Brian. Sure,

Let cover the point point. the Baris over other hand to I'll on Wincanton and you me first,

So Wincanton synergies.

Wincanton place business year course experience the much of expect during time of in synergies the is fact, the the 'XX. U.K. to the shouldn't be in the the end but of own in year, we our in take for concluding anticipate way review process probably the of business. We and the before busiest Our we'll

years. I don't We X and Wincanton time, synergy that. during plan. synergies a first say, I probably half 'XX. we than And about talked different 'XX predominantly all X-year plan the remember When actually at acquired environment we I So the really would flow see being in of delivered much Clipper, the around through the

point of XX. of 'XX impact the the synergies areas, half and any of have different see first durable, a until from that So expect view, to about identified we but very really shouldn't of We significant probably high the values. level confidence already

Baris you to for Brian. hand over I'll question, the second part your of

Baris Oran

euro we Brian, for have in you pounds, the pound, X% hedging done have X undertaken GBP about far -- quarters Wincanton to and decent X% we million roughly side, sensitivity know, and numbers is moving on as move our another FX our $X by -- move so hedging in currency. but moving is we And three million have each yet. around not the on done for -- euro XXXX,

that next We weeks. a the will take at couple during of look

based X.XX X.XX. average Our is guidance primarily exchange rates, roughly and GBP today on EUR

locking looking So those for derisk so can our shareholders. P&L we that we'll the be into

Brian Ossenbeck

renewals a All like you're first-time keeps percentage booking question to the on Richard sounds right. just It up. here. And on get that outsourcers, momentum some coming

maybe talk something than if ways context this to happening? you Is build these percentages think turns, more seem momentum? give to as starts to it recently? make it you seen little can why starting can that we've sort then So people are that a that's of once decisions you in to perhaps why be bigger about in And

Richard Cawston

Yes. Absolutely, Brian.

Malcolm outsourcing The just first mean is are a tailwind. I we time said, complex. secular challenges -- as more the

a advantage money. got If provide you really inflationary the has automation is and catalog save and of it quickly a And deploy integrated an resources can vast way. And to in our that. GXO need need customers way like organized those at them help continued you to only environment, look us to you deliver competitive

book of of showing the which magnitude because is it's almost making And the business, quickly to think and how of both trailing if and speed feeling refreshes. customers decisions XX it book market velocity doubled from and think about I has that that's confident the business and really months the pipeline, more about in important are the In our are you outlook. pace terms that seeing, we're refreshment of the our potential

we've faster. So great of making got our our in where points takeover-and-play all in decisions to XXXX, help business with outperform expect them that really billion we've we got And can year outsourcing customers where coming a to to really we XXXX. strategy. $X And

Operator

And & our of the line Company. Davis Gainey Kevin question final comes Thompson, from with

Kevin Gainey

-- actually automation. a bookings wanted but it I the think I I And that pipeline did on current in the Baris appetite 'XX. goes make to through earlier, this the you comparison for guys versus mentioned

pipeline bookings how you weren't I that stacked the said up a lot in previously, was wondering the very think 'XX automated, I against for and of that. 'XX

Malcolm Wilson

demonstrated Yes. Absolutely. pipeline, We say, a elevating as growth that continuous is see And feature win off and in turn. our of our automation pipeline -- the we've that. the we

an our we of current XXXX, within our half in $XXX within element So pipeline, wins automated see them. around of had over in automation million And there.

requirement. So it's a continued

like RFQ the -- without ramp-up. example, last We come in. in Levi's. finished year, is to Or just customer a Sainsbury's, a automation the no integrating -- beginning, build there's goes said, announced automation landmark the for at And out if what we the history. the can can I of of we've you largest partnership, take year one company's partnership wins this As

bring We be efficiency several and competitive to market. just sequences, customer over automation their steps more life and have and in continued that more will our to help super

Kevin Gainey

of Wincanton you touch there's change if the and how GXO with -- in addition if with guys. guys And feel good. provide then that customer maybe the Sounds a they opportunity on customers could maybe set you industrials

Malcolm Wilson

What in North can many, existing have say here. deal. at we them been this customers about Malcolm mean think when can for many we here to you us very provide it's our Because Europe. imagine, very early across they've is customers, days. I want Kevin, that services it's all we America delighted of

always of like customers. in in be there's to They territory like and location, hesitation to touch with a able But see feel the and the services. kind

Wincanton So savings. that feel we about showcase good pretty we the And That's now existing why allow of addition that's synergy to talk us many when aspect. I to come will operations. think about

There's fact, we've they consider there's that different services services. very where small the of terms there customers But have positive where actually Wincanton when again, are crossover really services. the fact, little feedback. number of in is, in impact Likewise, a had offer joint customer customers, in we we

regard a business will those will they actually common So process first their decision-making, quite -- customers, even the for time, to they're which kind help to start see of in planning also. to pleased

America. opens is up Wincanton, sit it So and does it's though all public sector, what in the have in it services pan-European of very feedback. industrial all, aerospace for been the door very, in where Many them today positive activities customers, customers on think I also the they North that

time them. support the to one as we'll For first able be organization,

It's come deal going around fire deal. work whilst X opportunities about have very it us think timing. -- take can cost benefits line existing contract from need good But really Germany this top for now. you generally, we done, to this role timings, are saw about Clipper, on does is So Revenue the I and the predictable they -- be years we after feel the changed. was very to synergies, synergies, that the as in

to So on a when lead time down the synergy, opportunity you'll they revenue expect seeing a from be longer we would to that a probably material of X But years impact really lot those. be bit activity. to tend little is start see a line

Operator

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

Malcolm Wilson

it. hosting call and Thanks, for We today. appreciate thanks the really us Camilla, with

we'll the improving recover. as that growth spending XXXX see continue goods in and sequentially, our quarter positively wins in existing on. both and first seen inflect base, sales pipeline Richard's consumer quarter and XX% great our in We've benefits customer service for uplift driving in efficiency throughout X believe commented that to that's and We're growing that that starts for new and reflected

continues and which capture market, to organizations driven of to strengthening technologies, the to greater a deployment AI. a looking expertise our warehouse investing in We're share of by be automation

to shareholder we'll XXXX Wincanton company, a acquisition forward to of and our we of you the great to beyond. continue look the value, deliver showing As during benefits balance and of

for Thank attendance. joining your appreciate I'd of the everybody of wish a to and With Thanks we great all today, day. that, like us you. rest

Operator

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

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

GXO Logistics (GXO) 8 May 242024 Q1 Earnings call transcript