GXO Logistics (GXO) 13 Feb 252024 Q4 Earnings call transcript

Company Profile

Participants

Malcolm Wilson	executive
Baris Oran	executive
Kristine Kubacki	executive
Joseph Lawrence Hafling	analyst
Scott Schneeberger	analyst
Christian Wetherbee	analyst
Bascome Majors	analyst
Christyne McGarvey	analyst
Ariel Rosa	analyst
Kevin Gainey	analyst
Uday Khanapurkar	analyst

Call transcript

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Operator

Welcome to the GXO Fourth Quarter and Full Year 2024 Earnings Conference Call and Webcast. My name is Rob, and I'll be your operator for today's call. [Operator Instructions] Please note, 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.

risks, company of making by results applicable involve number the within forward-looking their to call, factors statements. a meaning other those the securities of the differ this materially will cause projected certain be statements nature, that from During could and in actual forward-looking uncertainties laws, which,

the or SEC results forward-looking extent required is the contained materially on discussion factors by filings. forward-looking are as A The differ made of release of no to that the of to could to company's statements call this today, these law. in the update except any made company cause company's earnings obligation actual only statements, in has and

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

materially factors services, actually and various results and company market and It Unless that the appropriate in demand you therefore, are labor United the spending, today what global predict be SEC. otherwise not The in believes changes call rates, guidance. differ company's demand with are possible The may business remind dollars. constraints, conditions also global many for reported for in inflationary reported results it company will chain consumer exchange including its inherently by fluctuations guidance to could actual is its stated, unpredictable to factors, date States incorporates the to trends pressures materially and this from and economic results supply and be assumptions. its and on filings all affected in foreign detailed

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

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

Malcolm Wilson

today our for XXXX With and Chief everyone. Thank and Oran, Officer. morning, Strategy Rob, year quarter you, me Chief fourth good are call. our you our us in Barish Greenwich Financial Officer; and joining Kubacki, Kristine full I appreciate earnings

had Notably, some and every year. quarter adjusted XX% delivered year-over-year EBITDA XXXX, We acceleration the the record We growth we revenue operational adjusted great drove highlights. our In in fourth quarter. EBITDA. organic throughout grew

for a deal We in a wins relationships year, closed $X in new billion had a grew over with sales landmark health the $X.X billion the sector. year won and stellar customers of row, our second business our

quarter fourth the with For of revenue of XXXX, million, line $XXX expectations. we of $X.X adjusted EBITDA and in generated we billion delivered our

revenue, year full we $XX.X XX%, of which organic. billion growing was XXXX, X% the generated For of

means revenue $XX.X year off XPO. like billion closing highlight at since I'd year that the which nearly to our was XXXX, we the from spun last doubled we've before

million We $XXX entered deliver of EBITDA. adjusted expecting to XXXX million $XXX to

the updated Wincanton. the pleased full acquisition of adjusted year, into very our guidance delivered our that for $XXX take line we to expectations. year, And of EBITDA account During our in with we've million we're

and second the like GXO billion that We've Tchibo. contracts with exciting wins. in year was XXXX LG, new new of a closed business over Levi's, $X won Puma chain, German row brands coffee the

existing our grew year. in with customers enormously also We the

geographies Boeing, our long-term including customers, than partnerships, Our of into our land-and-expand we more strategy Michelin and has been with new and XX a expanded Nespresso. cornerstone of Guess, legacy

year-over-year we Clipper through we've a grown as us I'm of is pleased by major acquisition in end XX% XXXX. legacy market. to long-term a opportunity the contract, new gave Germany, in fourth revenue foothold from quarter, a Logistics fulfillment XXXX. also that This care billion our a sector. lifetime we of won fastest-growing total gained The $X.X in Clipper of the the report now value and relationship there operation Germany in deal our Also health our came

On successful accomplishments proof acquisition about that Wincanton. our note, completed These and strategies. key expertise we of we in industrials growing like This aerospace our that growth. to M&A, verticals commercial bring are in XXXX, positive of our business is where M&A a us and accelerate will plan

outlook our to Turning for this year.

X% adjusted deliver growth, organic full EBITDA $XXX XXXX. of to to to X% million expect year for million with the $XXX We

their netted fit core their capacity long-term adjust strong to of by is realignments needs. footprint Our small where together business growth, guidance customers we range number to a against reflects future worked our which have

prudent the FX from the reflects also of timing the guidance impact expectations current in-year of Wincanton. our Our on benefits environment and integration

on interim update next We in an have expect week. CMA's the the regulatory review to

I our the detail to Barish behind targets, I'd financial Before and the pass in drivers of growth touch to cover to key our beyond. like mic upon the XXXX

e-commerce, and their expertise problems. our First, to complexity. of solutions to the are of of drive most unprecedented tech-enabled tailwinds benefit business, around structural them and Brands growth. we're will the facing supply fundamentals chain help our scale, long-term our And outsourcing, world the continue complex automation bringing the solve

in XXXX, towards give more just I'll of a that been the vision leadership you to GXO. technology continues long be made on to AI-enabled a and Second, in for ask the progress we leader differentiator tech-enabled warehouse. in details in moment. key fulfillment, our We've Kristine rapid

omnichannel a and verticals the food health new in of and and like fruit. Third, already defense, verticals beverage but not These $X new we including in have retail. billion geographies. XXXX, wins only business our investments aerospace verticals, areas closed in and more bear strengthened our in to and sales than traditional of in Germany begun We growth strategic range in XXXX, like sector organization

the In North significant America, we data a managing centers. major including in business won technology sector, contract

growth. drive and is pipeline in pipeline continue XX% long-term the quarter, up as is This fourth our of end the XX%. the will year-over-year up Our momentum Americas of our to

walk you. guidance. to over to hand and I'll you you will that, our the With Barish, Barish, who financials over through

Baris Oran

everyone. morning, Good

reviewing the have particularly numbers, would like I to strong had. sales highlight year the Before we

above XXXX, an with average new as target than is massive in contract which more a us. average First, growth billion in we X Malcolm length sector, our mentioned, of a for vertical $X won including health years, the win long-term business of

that a new noted growth. new us we year-over-year. last year year third, the was we e-commerce more confidence And e-commerce quarter note finished we demand growing. in pipeline, about in facilities pleased our for XX% Second, the giving And are we with robust finished that long-term to business won with

growing of For the full revenue generated XX%, which organic. X% we of billion, year was $XX.X of XXXX,

consumer by retail the and throughout our Our omnichannel goods organic business. revenue growth led accelerated sequentially year

$XXX EBITDA delivered of XX%. adjusted We growing million,

EBITDA year. X% adjusted for was Our margin the full

XXXX. $X.XX, diluted adjusted share Our per was year of earnings from the full for $X.XX up

the Our operating $XXX million, income XXXX full and delivered income was net we of $XXX for year million.

delivered million, growing In the year-over-year. of $X.X of We XX% generated adjusted fourth EBITDA $XXX billion, XX% quarter, year-over-year. growing we revenue

per adjusted diluted the was in Our XXXX. fourth from of in $X the earnings share fourth quarter up quarter, $X.XX

income Our million, growing XX% income $XXX and fourth operating growing net year-over-year, XX% year-over-year. was was quarter $XXX million,

invested long-term Our capital targets. XX% our well remains above at operating return on

We and of and that services laser-focused for our flow. greatest more free We In again cash quarter. to remain effectiveness adjusted XX% drive prioritize million return an on the the free to fourth of $XXX outstanding our cash delivered than capital in XXXX, flow technologies customers. continue in converted EBITDA we investments

strengthen. continues sheet Our balance to

X.Xx leverage end of as of net quarter, X.Xx in quarter. Our of the from following down acquisition was the the fourth of second the the peak Wincanton

is on As XXXX, throughout our short-term we agenda. M&A focus on not deleveraging and integration

guidance. our to turning Now

sequential year full we the new seen in the wins anticipate throughout and a deliver customer revenue XXXX, realignment the to For quarter. X% growth growth phasing organic business the expect of XXXX, capacity the to year, we similar acceleration of organic X%. given what impacting first We to of have

billion we underpinned Our than row. strong organic second of sales more where the a performance for growth new year trajectory wins in our is closed business $X by

We the grown have for end same at where higher were of booked last has incremental $XXX year. XXXX. our million we point pipeline XX% at XX% which And year-over-year time, of this than the as of XXXX, is revenue

in our our sales growth. organization investments the are momentum for Our long-term creating

also million We million $XXX of adjusted to $XXX expect to deliver EBITDA.

As a ramp-up the quarter. will impact new in guidance range the maturity of by of offsetting be driven capacity a few primarily first Malcolm adjusted the This increasing year. the throughout progressively sequentially improvement start-ups EBITDA realignments reflects highlighted, our customer

Double-clicking on to with customers the have worked we their realign their post future peak realignments, fit our of season, a large to needs. footprints few

affect to EBITDA maturity year. curve realignments rationalization able You This will will of due to throughout in revenue offset quarter. this new our profitability means improved wins. the start-ups, first impact we guidance almost been the we'll predominantly that our see completely the these adjusted note But have that from through

reflecting diluted cash $X.XX flow, full effective adjusted $X.XX, At our expect of in per about range our in tax the expect the our performance. We XXXX. year to in our guidance EBITDA line into adjusted share we our our and free convert XX% of midpoint historical EBITDA, earnings of in rate on adjusted be to with range, an increase to

We accelerate sequentially expect our XXXX. throughout growth to continue to

level, improvement We profitability, at site faster. to our integration will of including and the measures then accelerate we are working operating continuous when Wincanton, on a the measures results begin improve of our number

I'll Kristine, you. over pass to mic Kristine. to the

Kristine Kubacki

the Good our We're results Barish. morning, for everyone. Thanks, XXXX. pleased with full year

Today made for we've I'd business an our are to mentioned, warehouse support update the Barish we're how you and great and Malcolm in AI-enabled progress like our future XXXX As will making our driving results. growth. investments on our vision of toward the strategy

select replenishment, apps we XX and AI our U.S. We've proprietary proactive last As of piloting X routing. SKU warehouse key across proprietary first applications warehouses quarter, in now began AI discussed dimensioning last functions: instances order across we launched our year. the

an sporting a of carton a to improvement Our results including Xx in for replenishments allocation e-commerce omnichannel retailer; process order and plus retailer; a over decreased for which for prepared past months, in improvements productivity a improvement we as few costs rate, tools SKUs operation. in inbound fill record-setting and a to efficiency X goods the XX,XXX major launch exciting new drove have stock XX% delivered transportation XX%

warehouse a and of PIK within of slotting including debottlenecking GXO's strategy the productivity of optimization. in improving flow the number prediction, other We have AI on focuses and modules development, X products. the walls volume for

to AI tools. on compound Our these impacts on warehouse household and of XXXX live our focused AI the the run of with already powerful where processes we're over additional parallel. impact We mega-sites the layering all multiple name modules brands roadmap scaling across for world, prioritizes we're site in

results We're launching commercial product this technology driving. as And excited receiving growth. our and customer feedback we our of fulfillment the AI to key their on a is We're about formally to how operations. it's transforming tangible forward this positive supercharge look strategy our part

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

Malcolm Wilson

delivered We've a commercial accelerate advanced Kristine. Thanks, and XXXX growth tech our beyond. built momentum to and strategies our and record-setting year, in

XXXX, received our innovative and Companies, like I'd and for with to pride that America's as innovation. awards in Provider recognition use also appreciate Nestle of Logistics Most receiving for like our #X GXO and numerous AI Whirlpool. share recognized the being the industry's from on Reliable Newsweek's our We List our of performance accolades of awards customers to partnership greatly outstanding

And like before and thank their peak to excellent close, whole performance employees of our the XXXX. throughout I'd for during we

day Our an of our hard to out. members customers team the and end of customer it's of day in and reached work as us the and dedication delight high scores enables satisfaction that our all-time XXXX,

growth trajectory about Q&A. are that, returns best to focus and service With delivering to possible generating Rob We strong we'll for our our customers we the back shareholders. mic for the as our on excited hand

Operator

Moore our with And Stephanie first from the Jefferies. is question Instructions] line [Operator of

Joseph Lawrence Hafling

$XX first It that the EBITDA like million hit. hit? for Moore. it little deck in happening couple This is a remarks. -- on Thanks you more was the about only provided seems heavy slide the just what's all a we Stephanie Can bit about the you unpack Joe and in Hafling quarter pretty informative mentioned, Barish, details as customers. prepared with for of a

profitable capacity just really So Or going their kind could lag customers you're lot exactly more Were the talk between these than when business a bringing maybe cost you're new a realigning that of kind on? there of the sites? what's about backfilling and we is customers these in? are

take footprint, And customers over their already have to tenants to my be some sites? of that or to or leaving that you reducing extent found maybe would the sites you customers new some have follow-up those kind

Baris Oran

here. Barish It's

We in and deliver the expect low expect to of we of adjusted $XXX our single-digit QX, around organic revenue EBITDA, million range. growth midpoint at

and new a have full from customer capacity that we implementations. The difference compared site to bridge larger is year alignments impact

take have mature are and and start-ups QX, a revenue path. time We positive net their wins sites in glide to our reach standpoint realignments from in primarily capacity

we would year. XXXX and impact short-term had recall was quickly in resolved start-ups throughout the that how You from similar a new this

your Now that coming question, one-off handful nature. in part have of back impact. this -- there's driven second your a of to are the These contracts

Let me you give some detail.

First, have large size there we seen mature is that exit. a customer a relative

X We from to business throughout have have and live we'll sites continued XXXX. win this new customer going

customer, of three, Number and automated as site customers their FX volumes. we XXXX. realigned another the pension in those and of underlying two, 'XX site when performance in our contribute remain about have lower quite will half in the highlighted, and healthy. is long-standing operations, of the which second profits already capacity customer consumer we location has versus given held $XX back, one prime so Number secured on another have network, faced realigned or the customer you lease of 'XX. add because million They headwinds, we GXO. a good some network have top, for their mature And And

Joseph Lawrence Hafling

I just would kind continued that being is this could not ask a a maybe a one-off? XXXX? this this what If any is Is question. it. throughout and as issue of there one that I just really just confidence trend more structural guess, be stopping Got

Baris Oran

impact. They not short-term a is realignment lost Network customers. are

productivity, these for are as course, other we customer. I fact, the up. opening In And X highlighted, ramp it will we new for to are another sites The of reallocating side, customers. of

have in a new from seen highlighted have how we and the this similar XXXX, throughout had quickly was we -- you have resolved impact we short-term As year. start-ups, the

Our for itself. history speaks

Operator

Next the question of is line coming Schneeberger Oppenheimer. from Scott with

Scott Schneeberger

preceding or a How look that. development with about answer affects this the with volume trending. looked each quarters expect Maybe hear that curious customers was quarter. how year-over-year an versus has to XXXX? of these progressive for that X believe in existing we it should I of And fourth involved improvement been transactional -- I'm the to X how XXXX. if sure curious with XXXX. in not I'm It's without or customers it

Malcolm Wilson

it's Scott, Malcolm.

And bit you regions. overview give I'll across the a volumes different bit then me generally little to there's on. detail, on Let an ask more probably comment of Barish a

And was output carried we the the of that wins When XXXX. about Europe very, showing definitely business, We we into think seeing fastest is quarter, fourth growth sales that earlier, are our Continental markets good in pipeline really growth. like on very mentioned new Germany.

So really Continental Europe going from strength to strength.

In of consequence impact those and little tax the still really what the about half to are the recent last call, are government seen budget. since start a implications go-forward. in softened April. Many working we out customers employment higher of the of rates. They're bit. our bit our cautious probably rates have U.K., And it really quarter little And of environment, retail last a where second that's a is the now, and we will the tax

very sales very, our softened and, bit, in earlier, health new win and business heard strong pipeline very a say still care. obviously, would our but I that you actually big vibrant little vertical, notable So very U.K. a

number, quarter made you Very progress do this forward, where customer customers. some notwithstanding point of Barish us and Here seen we realigning to very our the consumer-focused in in see pipeline. when U.S. X big a mood momentarily point stronger for from to impact in last comes see the We of X. pickup on that and volumes sales volumes, we a just but in did the in it that it's business, definitely, that the quarter reflected our some we've small well our can expect quarter

too our feeding to what our have It's any impact U.S. likelihood But of will business. regard. in tariffs is business business. a that on impacts domestic generally, a gauge there's We really, think early through material don't

activities. also, X, pickup highlighted definitely omnichannel in commercial e-commerce quarter seen we And in as we've and a our

for lot because in news new really big the that's to And of strategy verticals. new terms The definitely just sensitive for to good resilience wins, highlight, consumer these really news of strength a of we've builds working the got that great business. is they're behavior. to And less that of pushing again, verticals, So into great Germany. new growth the in

are year-over-year of all factors on this little that our sure growth pipeline. in we're to sales these Barish, can contributing detail maybe I'm add a XX% more seeing percentages? you bit

Baris Oran

Sure, Malcolm.

Within we We year have in -- XXXX, sequential to And in sequential expect the entire quarter. and positive. XXXX. growth revenue positive we improvement volumes XXXX. volumes That's do growth XXXX, the were in slightly improvement seen in our X% than into flattish entire fourth in our underlying revenue we QX, of underlying customer organic the for that, expect look when less be customer

Scott Schneeberger

I care relationship, Great. looking to Thanks I'll elaborate the business with in be health I'm detail been which said like penetrate guide. follow-up Wincanton's I I regard about for do garner you something you've is share know win. past, you via contract? this you on organically. a you this would with Or win vertical ramp I you a help And this while your occurring. penetrate. incremental appreciate it my sounds you how might just with in and ability believe can hold end-market discussion. to Is on care? new I geographic think know to that and new acquisition, Could curious, rapidly? that helpful the health it from win health can care any that that's now came guess more quickly that It that

Malcolm Wilson

year. the in Yes, a Scott, It's that piece milestone huge this Look, it's we here a second business it's half win. starting again. Malcolm of anticipate of

But partnering very to to with We confidentiality customer. mention think I can't say so this are proud it's very I be agreements, new fair name. strict the under we're

I that that see of a who up Continental come of huge lot range we're Already, already have customers. will in in services sales very coming this win catchment the large interested of that Europe, inquiries a opens the U.K. providing pipeline, in really of can customers in we back on and our very a prestigious for really

positive So having any way And in achieving us, brand-new organic, a homegrown, a opportunity undertake that regard, really It's care. for outlook us. that's we're without vertical health actually M&A. very, for to forward for in that the big huge, very

the it's trading health but Health in achieved is that out I mean really Clipper things we vertical of clear when a business huge existed with us to Clipper also achieve came the relationships very well, plus care. in M&A. proven came what On It in that can was this business we've one that from were the that Wincanton saw Wincanton, doing very, business that we that care success. of for Germany, and we be has deal, embryonic

aerospace, In That's highlights X year, a the same achieve us verticals, new benefits. think the I take see Wincanton, defense, following industrial years normal synergy in line we'll top we that for sector, the successes. it's Might integration.

a coming But successes same You're right years see of out pretty levels it's of of couple Clipper. deal. the now, we'll that we're confident seeing since the Wincanton

Operator

of Our next the line comes Wells question Wetherbee with from Fargo. Chris

Christian Wetherbee

expectation insulated sort on have customer to conceptually guys would losses I just maybe there's some bit or adjustments. guess a of that more been of guess, this. I these you some

mitigating for in it? maybe or sort factors contract included of earlier question leaving would sort the there or some penalty so allowed that is, And a closing some of aspects the other contract your have are in

quarter the the had normal I higher also, where coming you of this than at a sort unique a of of number for dynamic was as period, the up guess you fourth one contracts think go-forward terms And probably relatively always because end we've should kind risk, guess that high in forward. but I portfolio think we of renewal how thought a So about of rate, going balanced relatively about the curious was about renewals? retention about

Malcolm Wilson

kind it's Nice to you. event. from very hear Chris, Malcolm here. one-off much a a Chris, it's of

clearly a very got It the us, we out multiple something just be strong. much On relationships make greater As or need, did have with for And with when to work we similar things customer very, these in opportunity we happens we we see do can to the that's Barish wouldn't if optimize well, will strategic X back customers the we geographies. that we that bring actually the customers hand, with identify one doing X happen. are our customer. that business run. customers to differently we've mentioned, XXXX. large we always very efficiency, happened customers, and And didn't what's see here. pretty job business that We're to experience an for on that identify long

We kind We able visibility influence those on were things. to good of it. have

way back-to-back. are that you've years. We any damaged as That's That's one make as of consequence are the highly of predictable, earnings seen feature not clearly, in because, company. our contracts financially a a our our over relatively the things

the new that that's lag. generally achieve we QX. levels, mention as an we in starting Generally, And it's relatively to takes months to And incidents us past, really be profitability. Barish the consequence seeing. then new a quarter, as mature those of there primarily heard But mature you're reach it it start When in X instance, what us X in in really don't happens business focused end, and of to and a about this is for business you're seeing of contract business, you've mentioned, up small move very coming number quickly. a

phasing people it's our why look you for year, it's When looks quarter of quite one But than the of expected. impact our And normal of rest X than in our the year the having a lower rest might probably of business, have reasons an the the a clearly, it's numbers. this at little phasing. guide

Christian Wetherbee

I so guidance, think rate that I Okay. the cash XX%. to the I right. All the XX% is then conversion helpful. And it. free on noticed flow, That's appreciate

the think I XX%. been it's to past, in XX%

are of there us considering? of perspective? walk should of other there book what's the we cash today you or different happening some can dynamics factors sort some from be Are So that a have business through you

Baris Oran

it's here. Chris, Barish

XX% $XXX XXXX. similar was for of slightly middle flow a and XXXX, conversion. flow we over million XXXX. a target QX We conversion, outcome for the cash free we XX% delivered XX% similar to $XXX points what Our In range, delivered XX have in to around free at million cash the

to the and payments and the and in on was costs This contemplate generating cash guidance, flow around history. year. of the million final our transaction end we to Wincanton due Prior XXXX not funding integration we range. the delivered free acquisition lower did this this of is our line flow, $XX that, are came underlying in strong we And cash with and the aggregate, for

Christian Wetherbee

Okay.

So think Wincanton costs impacts cash as still is Or different integration these are of a slightly sort profile of we some free 'XX? there about that for XXXX? or financing cash

Baris Oran

through There be been are fully there not that in are CMA so costs. approval, will The transaction some some happening the XXXX. integration has costs transaction gone

flow in XX% So XXXX. guide hence, cash a free range our for midpoint

Operator

Our line next Susquehanna the questions Bascome with from are Majors International. of

Bascome Majors

has we X since understand retail If and organic in meaningful peak And pretty change Is this the that to ended I Just you're it's term? can sort of expectation pandemic a history, really fulfillment up that thoughts has opportunity any on about really of growth and out we that framework the where you've double on back spun long-term with opportunity a in business look range, mid-'XX. maybe lower off? the digits that exceed out that going more your really that feeling But coming or yourself digits. double you've in from long been, been X world corresponded long-term for than the of talk how an common mid-single since the years. pandemic when mid-'XX and been there kind initially built around to the you set digits

Malcolm Wilson

turbulent environments I we've here. right. Malcolm We different can to all it's facing. in. I had our major which lived we've and supply chains various that we've that works the can issues across going global And Since think been fact come that's we end. through in of geographies we've certainly some had had economic of 'XX, we've see that Look, the signs kind in territories you're an company different a Europe, in war, Bascome, think environments terms recall that to hopefully

We have a out guide long-term there.

to that timing in about management going think the probably have we to setting transition. we've to done. an Wincanton definitely, when much say, we uncertainty now, about I a right we so Because this long-term are year, best comment integration. There's fair have start the recognize, target be of to will not right we now, that

reminder, will as just achieve a start $XX topic, pretty the we million specific we that of once synergies, that integration. one safe. on And That's know around cost-saving we integration much

be right longer recognize January outcome. no, a XXXX. on get-go, the having of the that would from, timing Initially, process prolonged the CMA things from guide starting had have we to to than One have have we has right of believe will We reflect we We've in this an of now that is we right uncertainty that originally the that. expected. favorable year's still that we're firmly would been believe

much prudent them next to the more to of to I of We might to the it's the clearly, week. $XX expect probably during right do like course and thing But from a in for us that timing share be hear to a to approach land we're prudent XXXX, probably think lion's -- prudently, million Where of we that expected 'XX. feeling, now, right it's the 'XX, that. more reflecting have no,

we'll will everyone are say, impacts around there do to all these So be different think updating time I And of for of target us in all a we've remodeling sure, got the of bit think of for I I when some all more play. And clarity little scenarios. as be these these topics. to things of

Operator

Morgan Ravi of from Stanley. the is Shanker question next Our with line

Christyne McGarvey

Christyne This Ravi. for is on

It year. improvement Just the sequential about maybe start-up some wanted there's to through first the ask sound does like costs.

that more love just of a it to how a hockey-stick Would kind like little business does then understand seasonality? XQ gentle as of imply year slope in? some Or bit more So of in and of a improvement is that layers look. the might

Baris Oran

of Christyne, has our seasonality That's consumer activity. been highest always lowest QX numbers. the seasonality. here. always activity, has It is level our There been it's QX been the our that's has fulfillment demand and in basically reflecting Barish the

that, as this every perspective, an growth. XXXX have XXXX, new capacity see organic we've these better see a single-digit ramp-up QX beyond we more -- in And growth a seen of be of to prevalent it new an as compared realignment specifically in site we in revenue of quarter the from, is we from implementations. highlighted every from But And and do primarily quarter being, perspective, the have low the quarter. realignments these an first, difference XXXX. year, improvement coming still But prior revenue And we to QX, the will we expect as capacity impact a facilities. alignment quarter. have EBITDA ramp-up will highlighted, and

Christyne McGarvey

if And follow-up. ask can for Great. my I

management of You impending little know congratulations Certainly, what the referenced on transition. in a love just to more you're looking But maybe would the for a decision making process about bit retirement. the successor, Malcolm? that and

Malcolm Wilson

Board, of on company very yes, the in Christyne, both the has. GXO. that huge outside middle continue look, growth person sure. we're the and a to this of for And we're potential conducting that within find thorough to Well, of right we'll of confident search candidates, very the deliver course,

be in the identified right will point. of individual I But hope that side be summer the the specifics this in should and it then have down we'll the starting possible. the of person just coming of the hopefully, to months, terms actual

our industry the a ensure I passionate, decision. say, to worked long On a my to we'll committed, that I'm to the it's for in I've now help that's everything successful just give I'm absolutely fashion. is least that very an look, in a new team been awful new propel But have to time. its continue CEO retirement, not to the have my do and way seamless working handover we'll spin we side, all in to going CEO And this management personal company stellar in the inherit a XXXX. say, can very since company back

the And year business. did its this has grown look, remind, just to last since spin, a is We've doubled every say EBITDA of lastly, prior size earlier, the we single year. the that XXXX, company to

really for and some to the good in investing customers, huge help in propel into completing really a long So fantastic shareholders, shape for M&A new it's after the term amount a business of benefits for going the strategic future. that's technology that's

So think be smooth very a transition CEO. a It good will we're environment. in a new I into

Operator

of with the line Citi. comes Ari question next Rosa Our from

Ariel Rosa

now be like States more growth seen we've financials. your a headwind and I'm U.K. of represent from So to the the since United Obviously, while the shifting about But and I'm talked have forward a acquisitions Europe shift would that or and to towards mix being away it it mix you you FX about Just maybe in on and thoughts you business it's as what we U.K. the desire operations the feels done X been is out, that Germany years wondering to geographic geographic in as Do U.S.? the from focused look helpful. the do curious XX see some some see on more currently?

Malcolm Wilson

Malcolm here it's Ari, again.

everything down, to focus As focused our I get now, on internally Barish think definitely is business. mentioned right debt attention earlier, the of our

the the short really in off M&A term So is agenda.

there's now But more to in that we completed couple want business. the of having definitely we in Europe doubt, grow our arena, feel North M&A a no American

But Wincanton, are we is our great PFS, in here customer management M&A place, we into just Good proven as did smaller think business in team I that there able we're those new companies verticals. vertical, with with quickly achieve when American new North grow the Clipper, opportunities, to that America, a different new North we've with verticals incredibly so satisfaction. like many doing well.

focus So America. M&A, look definitely North attention will to be of it our at definitely, in geographically, finally further ready here we are when

Ariel Rosa

it. Got

a thoughts terms of is way the for Okay. happen to events often, don't helpful. of insulate seems for time a surprises kind different if XPO yourself there's it better just that, a expecting. downward followed like have prior bit and or us or iteration events its within And of be restructuring caused as who these in a the little I'm GXO relative so around you just from Just to would your of Street do types my a seems surprise where that some helpful. then of Malcolm, nature was just loss it a contract think? of there's that like to it of periodically for what business, follow-up. these wondering customer are Very perhaps those the there these

Malcolm Wilson

been a a X think in the it's small long in Because certainly changing a different so customers. visibility, our Yes. And much we But been of It's regions we -- working surprise all or big be way we less terms think work we It's very renewals. economies years, work, I that that's in to big of has customers the from the of a management well X And have I to a business. a very environment in. number have contracts advance company. perspective. it's last our tend there that with recognize in

job towards the number from go getting together. the efficiency weren't that identified the of of footprint be had customers operational that I doing with a last working and where the end process to that we it, think we working Identifying year move through customers, delivering normal customers, would that we with ready this do we year, right for them. not we that we And small the just could we for not realignment. we as them really working our not had with

and of account at positive a environment it's future. together and they're occasionally, think business ready longer-term a very we course, to multiple are an work you customers, current get some the looking environment. look up But on a much where, It's sometimes find need remembering sure, should economic have customers of trajectory, we're when sometimes it our for and of as hundreds less with with number for millions that's when we -- of of upon every very environments of the years, onetime taking different the to I and less them dollars, -- they're will

Ariel Rosa

Got it.

Okay. And the Malcolm, retirement. pending on congratulations

Operator

Our next Gainey with question Kevin Davis. line Thompson of is from the

Kevin Gainey

to done a Kristine, in there's of get seeing the because there tariff things sense maybe get kind pipeline, rate see the your dynamics and et to could of little I give discussions, maybe customer changed, have of of there's you more whether actually the pipeline? Barish, if of bit want or just whether customers are if what color some on cetera, us Malcolm, like to hesitation higher a urgency the

Malcolm Wilson

again. Kevin, here it's Malcolm Yes. very Look, level. high

is a strong pipeline with I think moment, up very pipeline $X.X -- year-over-year. at We're billion. XX% the about our running

actually, actually very And don't But earlier, broadcast I how do in talk called We're allowed numbers. works. the want to results. -- once of trading. is our say, because strong will that that we're sales our have integration. to actually quarter out I really is to it pleased really technically we have we pipeline sales about of our process something business Wincanton contributed where not very But be the Wincanton knowledge pipeline, that, should when fourth we with we the you very well CMA It very, incorporate don't a should it start

that In activities different start investments region back seeing a lots e-commerce XXXX big that lot customers success. got busy, we've of of are new earlier, all in mentioned at definitely showing territories, resurgence coming activities. seen very of we're in. we definitely, the every the Existing projects. a we're projects, really The of are made e-fulfillment working I

that we we by And resources. of in an our sales where went through some XXXX, what upgraded exercise I really mean is,

see business us verticals. consumer. You verticals is pipeline. that's we're we in business when resources focused that been company is think added more And But lot are the doing the sensitivity running for the new when can right What are And sales well, that the of point can also environment. company in in And ones because consumer give we but now, very that about also, will the were this now at targeting new I was to less we've verticals. And good -- see sales resilient. what's good through a think, that in I consumer the have XX% winning consumers right probably bit less. improvement the really generally, recognize, pleasing it we spin the make flow our sentiment to directly to can we're be a to

to this chains, from taking inquiries looking account because a recent new for topical, particularly are in And activity very tariffs the last reorient North I bring customers we to the process minimis de as We've of consequence guess maybe it's of are discussions back. seeing about I definitely, had would supply the our say, business ending. future comment wanting American U.S. we environments business, coming exception, seeing

utilize that. market. the news will in probably really local will good into It GXO. doesn't warehousing put affect be that that We more now. customers But right us customers drive don't that work for end, the with to And

Kevin Gainey

there maybe higher color seeing coming resurgence heard been we've the I we and of And then all as you shoots from appreciate Has was of competitive competitors venture there of into I kind that. and well, -- then some other a on sense And could wondering, guys that warehousing? growth. whether from even is dynamics. are green

Malcolm Wilson

of X basis companies global different maybe not months global tiny that we about -- a There's think ago number seeing landscape. business they're companies. they're healthy those can I ago, say their us. competitive today very We a GXO companies there than services on like we they Those were which year are in we're XX any on and responsible a of the scale Kevin, the environment when providing as would a very at pricing capable do. there ago, approach and competitors customers years to were in today, strategies. way They're

see good customers. very we that we're to a with are -- we of So that's working people catchment tend when

And kind of our type kind of customers, less to of customers regional there's range players. a the we of sort a local, companies then frankly, the are term, that really focus what local like, would that, small of likewise, heroes, us,

AI, a GXO, have doubt differentiate just reasons helping done think tremendously our in good one driving I in technology, through the very overall, we're now, particular, But really into particular position. that no 'XX to it's really is got more And in and work of winning us. business. teams The business, we're more our I've in

AI I ask that on it. of of because, Kristine have comment I we topic, proud just just Maybe got can Kristine? through. ton new a coming I mean very we're just to such technology mean, and

Kristine Kubacki

development. that in modules few I made a real-world quite certainly We already We're highlighted hit on year. prepared and my this certainly comments. early Thank real-world and on our opportunities seeing proprietary over I very results in of of Malcolm. today, you, we're certainly -- those we've some AI accomplishments

But certainly, of to this is and that continues outcomes of type our to customers. processes. in deliver we're improvement on in really a a specific And Xx And our leap of terms projects, we're improvement productivity seeing certainly fantastic forward results X able types XX% of the really opportunities drive differentiation. everyday continuous the versus parts to in so terms of GXO normal increases, really this your for

going AI as sites. strategy look to we XXXX, already forward out our our across to modules -- roll today. proprietary these live warehouses. to AI many we're in with And AI many we're as possible really continue in to be And it's As layering we're in modules

So we're GXO's with differentiation this Again, harnessing really effect. powerful drive forward our this looking will to continue really to customers.

Operator

Uday of TD with next questions Cowen. are Our Khanapurkar line the from

Uday Khanapurkar

how consideration realignments, framing the was in and volume like if guess evaluation? would Like contract I of from for any I I'm maturity. helpful. reaching kind This clarification prominent renewal be that in is trying following to just in the customers a as contracts to itself XQ understand guess customer linked questions. outcome doing on way? for is the Uday the the perspective near-term the outlook Seidl. outlook understand this maybe macro up one-off nature any I on Jason prior a But on

Baris Oran

Barish. Uday, this is

it I prime on into X consumer the volume, we was that were primarily And looking driven had. if held XXXX was their was we forecast. mentioned, location customer. they It volumes. peak another it a and for already site, have looked in And other to and the site, peak they the after us, I their lease into it into secured X As customer, locations. sites they in X look those other volumes in customers, -- primarily In opened by we

network. is beneficiary they is going mature the very decided for relationship And -- because lower customer but volumes, GXO. be realign this in So good into decided remain a that third the one to go to a very, their customer sites, us. they net And long a have of they we to for a

QX, sites existing as digits XXXX. not I'm positive underlying volumes that overall, single concerned. low our flattish customers So and in we is of in be to The expect in

Uday Khanapurkar

the And my follow-up, of shippers seeing I be something guess you're that given of anticipate guess minimis would volume you take is place freight. kind kind consolidate as might color just changes de if you dynamics? something positive, a the as more I already That's that this Malcolm, helpful. that into flows I Or there? their warehousing mentioned mean, preemptively? is Any

Malcolm Wilson

it's I issue. think we And sales who coming that. we're North in inquiries team. don't, Obviously, seeing our American a to customers today, undertake now work with

that perspective, what instead we the doing we of something presence think So net those that today. have of that We're a benefits I positive it's course as for they here see to definitely expect from chains But confident our pretty a during a are customers supply ultimately see XXXX. impact. to to some of lot existing will need convert

Uday Khanapurkar

retirement, congrats Thanks, the everyone, Malcolm. on and

Operator

hand Ladies the like Sorry. time Malcolm call point gentlemen, time, questions for at have back this of remarks. we all I'd and Wilson the for is to this closing today. to

Malcolm Wilson

it. really We Thanks, today. Rob. for our appreciate thanks again, call And hosting

also sector the growth. now we our our year-over-year showing fastest-growing market. fantastic EBITDA is delighted further growth health some Germany, to in and geography the individual organic EBITDA and improvement revenue ever adjusted sequential In the a improvement delivered fourth quarter, We're leading which absolutely be with in a margins, year-over-year adjusted XX% largest win, in our growth in care to

look opportunities in in huge doubt and Germany, we likewise of verticals exactly opportunity. to new verticals, see defense new and region the The with can Europe helped no to same industrial the really in already our whatsoever. We Wincanton the turbocharge in a has doing aerospace, Clipper forward acquisition particularly where us

them help to we're GXO times successfully to the looking in. are that times, Customers these navigate

from And the differentiator Our benefits GXO. of growing see starting coming they much through it's a we're customers our told to leadership a they using now in just and efficiency, for importance. deployment really how AI, of how that that and automation being value much becoming that we're technology see

a rest call. joining for With great with I'd that, to like wish everybody our and let's thank close on day, So Thank the like you. the us to call. everybody that, I'd of

Operator

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

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

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