Highlights
- Third quarter revenue grew 8% year over year to $2.5 billion, and organic revenue1 grew 3%
- Net income attributable to GXO grew to $66 million; operating income increased by 25%; operating margins improved by 49 basis points; and adjusted EBITDA1 grew to $200 million
- Cash flow from operations of $243 million in 3Q 2023 compared to $116 million in 3Q 2022; 3Q 2023 free cash flow1 of $191 million compared to $47 million in 3Q 2022
- Updated full-year 2023 guidance2:
- Adjusted diluted earnings per share1 upgraded from $2.45-$2.65 to $2.55-$2.65
- Adjusted EBITDA1 upgraded from $725-$755 million to $730-$755 million
- Organic revenue growth1 revised from 6-8% to 2-4%
- Free cash flow conversion1 of approximately 30% of adjusted EBITDA reiterated
Business Highlights
- Signed new business wins of $841 million year to date; $181 million of new business wins in 3Q 2023, almost half of which came from companies outsourcing their operations
- Secured incremental 2024 revenue from new business wins of $520 million, and incremental 2025 revenue of $187 million, through 3Q 2023
- Sales pipeline remains at approximately $2 billion
- Closed the acquisition of PFSweb on October 23, 2023
GREENWICH, Conn., Nov. 07, 2023(NYSE: GXO) today announced results for the third quarter 2023.
Malcolm Wilson, Chief Executive Officer of GXO, said, "Our third quarter results reflect the resilience of our contractual business model as well as our high-caliber operational and financial execution. We delivered record revenue, year-over-year growth in net income attributable to GXO and adjusted EBITDA, consistent margins, robust cash flow from operations, and outstanding wins. We continue to take market share: through the third quarter, we have secured more than half a billion dollars of new business for 2024. While the macro environment is uncertain, we're driving strong performance in new business wins, profits and cash flow.
"We believe our successful acquisition of PFSweb positions us squarely for growth, particularly in North America, where PFS generates the majority of its revenue. This is a fantastic organization with a unique set of capabilities and a customer base of globally recognized brands that complements our own. We are already working as one team to create commercial opportunities for our customers and our business.
"Reflecting the resilience of our business model, and the acquisition of PFS, we are upgrading our guidance for full-year adjusted EBITDA and EPS, for the third time this year, while revising our full-year organic revenue growth guidance to reflect expectations for a softer peak season.
"Looking ahead to next year, our structural business drivers remain strong and we're seeing an acceleration of the trends that are driving our growth, as customers look to increase productivity, optimize their working capital, and better serve their end consumers. We will continue to grow by capitalizing on our proven track record of transforming supply chains into a competitive advantage, while maintaining a rigorous focus on contract governance, cost discipline and capital allocation to create value for all our stakeholders."
Third Quarter 2023 Results
Revenue increased to $2.5 billion, up 8% year over year, compared with $2.3 billion for the third quarter 2022. Organic revenue1 grew by 3%.
Operating income increased to $90 million, up 25% year over year, compared with $72 million for the third quarter 2022.
Net income attributable to GXO was $66 million, up 5% year over year, compared with $63 million for the third quarter 2022. Diluted earnings per share was $0.55, up 4% year over year, compared with $0.53 for the third quarter 2022.
Adjusted earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA1") increased to $200 million from $192 million in the third quarter 2022.
Adjusted net income attributable to GXO1 was $82 million, compared with $89 million for the third quarter 2022. Adjusted diluted earnings per share1 was $0.69, compared with $0.75 for the third quarter 2022.
GXO generated $243 million of cash flow from operations, compared with $116 million for the third quarter 2022. In the third quarter of 2023, GXO generated $191 million of free cash flow1 compared to $47 million for the third quarter 2022.
Cash Balances and Outstanding Debt
As of September 30, 2023, cash and cash equivalents and debt outstanding were $473 million and $1.6 billion, respectively, as part of GXO's investment grade balance sheet.
2023 Guidance
GXO's current 2023 financial outlook is as follows:
- Organic revenue growth1 of 2% to 4% (revised from 6% to 8%);
- Adjusted EBITDA1 of $730 million to $755 million (upgraded from $725 million to $755 million);
- Free cash flow1 conversion of approximately 30% of adjusted EBITDA1 reiterated; and
- Adjusted diluted earnings per share1 of $2.55 to $2.65 (upgraded from $2.45 to $2.65).
Conference Call
GXO will hold a conference call on Wednesday, November 8, 2023, at 8:30 a.m. Eastern Time. Participants can call toll-free (from US/Canada) 877-407-8029; international callers dial +1 201-689-8029. Conference ID: 13741225. A live webcast of the conference will be available on the Investor Relations area of the company's website, investors.gxo.com. The conference will be archived until November 22, 2023. To access the replay by phone, call toll-free (from US/Canada) 877-660-6853; international callers dial +1 201-612-7415. Use participant passcode 13741225.
About GXO Logistics
GXO Logistics, Inc.?for more information and connect with GXO on LinkedIn, Twitter, Facebook, Instagramand YouTube.
Non-GAAP Financial Measures
As required by the rules of the U.S. Securities and Exchange Commission ("SEC"), we provide reconciliations of the non-GAAP financial measures contained in this press release to the most directly comparable measure under GAAP, which are set forth in the financial tables below.
GXO's non-GAAP financial measures in this press release include: adjusted earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA"), adjusted EBITDA margin, adjusted earnings before interest, taxes and amortization ("adjusted EBITA"), adjusted EBITA, net of income taxes paid, adjusted EBITA margin, adjusted net income attributable to GXO, adjusted earnings per share (basic and diluted) ("adjusted EPS"), free cash flow, organic revenue, organic revenue growth, net leverage ratio, net debt, and return on invested capital ("ROIC").
We believe that the above adjusted financial measures facilitate analysis of our ongoing business operations because they exclude items that may not be reflective of, or are unrelated to, GXO's core operating performance, and may assist investors with comparisons to prior periods and assessing trends in our underlying businesses. Other companies may calculate these non-GAAP financial measures differently, and therefore our measures may not be comparable to similarly titled measures used by other companies. GXO's non-GAAP financial measures should only be used as supplemental measures of our operating performance.
Adjusted EBITDA, adjusted EBITA, adjusted net income attributable to GXO and adjusted EPS include adjustments for transaction and integration costs, as well as restructuring costs and other adjustments as set forth in the financial tables below. Transaction and integration adjustments are generally incremental costs that result from an actual or planned acquisition or divestiture and may include transaction costs, consulting fees, retention awards, internal salaries and wages (to the extent the individuals are assigned full-time to integration and transformation activities) and certain costs related to integrating and separating IT systems. Restructuring costs primarily relate to severance costs associated with business optimization initiatives.
We believe that free cash flow is an important measure of our ability to repay maturing debt or fund other uses of capital that we believe will enhance stockholder value. We calculate free cash flow as net cash provided by operating activities less payment for purchases of property and equipment plus proceeds from sale of property and equipment.
We believe that adjusted EBITDA, adjusted EBITDA margin, adjusted EBITA, adjusted EBITA, net of income taxes paid, and adjusted EBITA margin, improve comparability from period to period by removing the impact of our capital structure (interest and financing expenses), asset base (depreciation and amortization), tax impacts and other adjustments as set out in the attached tables, which management has determined are not reflective of core operating activities and thereby assist investors with assessing trends in our underlying businesses.
We believe that adjusted net income attributable to GXO and adjusted EPS improve the comparability of our operating results from period to period by removing the impact of certain costs and gains, which management has determined are not reflective of our core operating activities, including amortization of acquisition-related intangible assets.
We believe that organic revenue and organic revenue growth are important measures because they exclude the impact of foreign currency exchange rate fluctuations, revenue from acquired businesses and revenue from deconsolidated operations.
We believe that net leverage ratio and net debt are important measures of our overall liquidity position and are calculated by removing cash and cash equivalents from our total debt and net debt as a ratio of our adjusted EBITDA. We calculate ROIC as our adjusted EBITA, net of income taxes paid divided by invested capital. We believe ROIC provides investors with an important perspective on how effectively GXO deploys capital and use this metric internally as a high-level target to assess overall performance throughout the business cycle.
Management uses these non-GAAP financial measures in making financial, operating and planning decisions and evaluating GXO's ongoing performance.
With respect to our financial targets for full-year 2023 organic revenue growth, adjusted EBITDA, free cash flow, and adjusted diluted EPS, a reconciliation of these non-GAAP measures to the corresponding GAAP measures is not available without unreasonable effort due to the variability and complexity of the reconciling items described above that we exclude from these non-GAAP target measures. The variability of these items may have a significant impact on our future GAAP financial results and, as a result, we are unable to prepare the forward-looking statements of income and cash flows prepared in accordance with GAAP, that would be required to produce such a reconciliation.
Forward-Looking Statements
This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements, including our full year 2023 financial targets of organic revenue growth, adjusted EBITDA, free cash flow, and adjusted diluted earnings per share; the expected incremental revenue in 2024 and 2025 from new customer wins in 2023; and our continued growth. In some cases, forward-looking statements can be identified by the use of forward-looking terms such as "anticipate," "estimate," "believe," "continue," "could," "intend," "may," "plan," "potential," "predict," "should," "will," "expect," "objective," "projection," "forecast," "goal," "guidance," "outlook," "effort," "target," "trajectory" or the negative of these terms or other comparable terms. However, the absence of these words does not mean that the statements are not forward-looking. These forward-looking statements are based on certain assumptions and analyses made by the company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors the company believes are appropriate in the circumstances.
These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause or contribute to a material difference include, but are not limited to, the risks discussed in our filings with the SEC and the following: the impact of the COVID-19 pandemic; economic conditions generally; supply chain challenges, including labor shortages; our ability to align our investments in capital assets, including equipment, and warehouses, to our customers' demands; our ability to successfully integrate and realize anticipated synergies, cost savings and profit improvement opportunities with respect to acquired companies; unsuccessful acquisitions or other risks or developments that adversely affect our financial condition and results; our ability to develop and implement suitable information technology systems and prevent failures in or breaches of such systems; our indebtedness; our ability to raise debt and equity capital; litigation; labor matters, including our ability to manage our subcontractors, and risks associated with labor disputes at our customers' facilities and efforts by labor organizations to organize our employees; risks associated with defined benefit plans for our current and former employees; our inability to attract or retain necessary talent; the increased costs associated with labor; fluctuations in currency exchange rates; fluctuations in fixed and floating interest rates; seasonal fluctuations; issues related to our intellectual property rights; governmental regulation, including environmental laws, trade compliance laws, as well as changes in international trade policies and tax regimes; governmental or political actions, including the United Kingdom's exit from the European Union; natural disasters, terrorist attacks or similar incidents, including the conflict between Russia and Ukraine; a material disruption of the company's operations; the inability to achieve the level of revenue growth, cash generation, cost savings, improvement in profitability and margins, fiscal discipline, or strengthening of competitiveness and operations anticipated or targeted; the impact of potential cyber-attacks and information technology or data security breaches; the inability to implement technology initiatives successfully; our ability to achieve our Environmental, Social and Governance goals; and a determination by the IRS that the distribution or certain related spin-off transactions should be treated as taxable transactions.
All forward-looking statements set forth in this release are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to or effects on us or our business or operations. Forward-looking statements set forth in this release speak only as of the date hereof, and we do not undertake any obligation to update forward-looking statements to reflect subsequent events or circumstances, changes in expectations or the occurrence of unanticipated events, except to the extent required by law.
Investor Contact
Chris Jordan
+1 (203) 536 8493
chris.jordan@gxo.com
Media Contact
Matthew Schmidt
+1 (203) 307-2809
matt.schmidt@gxo.com
GXO Logistics, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| (Dollars in millions, shares in thousands, except per share amounts) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Revenue | $ | 2,471 | $ | 2,287 | $ | 7,188 | $ | 6,526 | ||||||||
| Direct operating expense | 2,012 | 1,885 | 5,875 | 5,408 | ||||||||||||
| Selling, general and administrative expense | 258 | 227 | 761 | 637 | ||||||||||||
| Depreciation and amortization expense | 101 | 89 | 268 | 242 | ||||||||||||
| Transaction and integration costs | 3 | 14 | 22 | 57 | ||||||||||||
| Restructuring costs and other | 7 | - | 31 | 14 | ||||||||||||
| Operating income | 90 | 72 | 231 | 168 | ||||||||||||
| Other income, net | 7 | 17 | 8 | 56 | ||||||||||||
| Interest expense, net | (14 | ) | (6 | ) | (41 | ) | (19 | ) | ||||||||
| Income before income taxes | 83 | 83 | 198 | 205 | ||||||||||||
| Income tax expense | (15 | ) | (19 | ) | (38 | ) | (51 | ) | ||||||||
| Net income | 68 | 64 | 160 | 154 | ||||||||||||
| Net income attributable to noncontrolling interests | (2 | ) | (1 | ) | (4 | ) | (3 | ) | ||||||||
| Net income attributable to GXO | $ | 66 | $ | 63 | $ | 156 | $ | 151 | ||||||||
| Earnings per share data | ||||||||||||||||
| Basic | $ | 0.55 | $ | 0.53 | $ | 1.31 | $ | 1.30 | ||||||||
| Diluted | $ | 0.55 | $ | 0.53 | $ | 1.31 | $ | 1.29 | ||||||||
| Weighted-average common shares outstanding | ||||||||||||||||
| Basic | 118,941 | 118,621 | 118,883 | 116,508 | ||||||||||||
| Diluted | 119,645 | 119,065 | 119,430 | 117,107 | ||||||||||||
GXO Logistics, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
| September 30, | December 31, | |||||||
| (Dollars in millions, shares in thousands, except per share amounts) | 2023 | 2022 | ||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 473 | $ | 495 | ||||
| Accounts receivable, net of allowance of $18 and $12 | 1,661 | 1,647 | ||||||
| Other current assets | 332 | 286 | ||||||
| Total current assets | 2,466 | 2,428 | ||||||
| Long-term assets | ||||||||
| Property and equipment, net of accumulated depreciation of $1,463 and $1,297 | 923 | 960 | ||||||
| Operating lease assets | 2,133 | 2,227 | ||||||
| Goodwill | 2,734 | 2,728 | ||||||
| Intangible assets, net of accumulated amortization of $507 and $456 | 507 | 570 | ||||||
| Other long-term assets | 328 | 306 | ||||||
| Total long-term assets | 6,625 | 6,791 | ||||||
| Total assets | $ | 9,091 | $ | 9,219 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 597 | $ | 717 | ||||
| Accrued expenses | 975 | 995 | ||||||
| Current debt | 26 | 67 | ||||||
| Current operating lease liabilities | 561 | 560 | ||||||
| Other current liabilities | 275 | 193 | ||||||
| Total current liabilities | 2,434 | 2,532 | ||||||
| Long-term liabilities | ||||||||
| Long-term debt | 1,621 | 1,739 | ||||||
| Long-term operating lease liabilities | 1,800 | 1,853 | ||||||
| Other long-term liabilities | 419 | 417 | ||||||
| Total long-term liabilities | 3,840 | 4,009 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' Equity | ||||||||
| Common Stock, $0.01 par value per share; 300,000 shares authorized, 118,951 and 118,728 issued and outstanding | 1 | 1 | ||||||
| Preferred Stock, $0.01 par value per share; 10,000 shares authorized, none issued and outstanding | - | - | ||||||
| Additional paid-in capital | 2,593 | 2,575 | ||||||
| Retained earnings | 479 | 323 | ||||||
| Accumulated other comprehensive loss | (289 | ) | (254 | ) | ||||
| Total stockholders' equity before noncontrolling interests | 2,784 | 2,645 | ||||||
| Noncontrolling interests | 33 | 33 | ||||||
| Total equity | 2,817 | 2,678 | ||||||
| Total liabilities and equity | $ | 9,091 | $ | 9,219 | ||||
GXO Logistics, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Nine Months Ended September 30, | ||||||||
| (In millions) | 2023 | 2022 | ||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 160 | $ | 154 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities | ||||||||
| Depreciation and amortization expense | 268 | 242 | ||||||
| Stock-based compensation expense | 25 | 24 | ||||||
| Deferred tax expense (benefit) | (29 | ) | - | |||||
| Other | 16 | (4 | ) | |||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | (23 | ) | (22 | ) | ||||
| Other assets | (39 | ) | (28 | ) | ||||
| Accounts payable | (69 | ) | (68 | ) | ||||
| Accrued expenses and other liabilities | 34 | 18 | ||||||
| Net cash provided by operating activities | 343 | 316 | ||||||
| Cash flows from investing activities: | ||||||||
| Capital expenditures | (205 | ) | (239 | ) | ||||
| Proceeds from sales of property and equipment | 13 | 22 | ||||||
| Acquisition of businesses, net of cash acquired | - | (874 | ) | |||||
| Net proceeds from cross-currency swap agreements | - | 26 | ||||||
| Other | - | 9 | ||||||
| Net cash used in investing activities | (192 | ) | (1,056 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of debt, net | - | 898 | ||||||
| Repayments of debt, net | (139 | ) | - | |||||
| Repayments of finance lease obligations | (24 | ) | (23 | ) | ||||
| Taxes paid related to stock-based compensation awards | (7 | ) | (12 | ) | ||||
| Other | - | - | ||||||
| Net cash provided by (used in) financing activities | (170 | ) | 863 | |||||
| Effect of exchange rates on cash, restricted cash and cash equivalents | (2 | ) | (22 | ) | ||||
| Net (decrease) increase in cash, restricted cash and cash equivalents | (21 | ) | 101 | |||||
| Cash, restricted cash and cash equivalents, beginning of period | 495 | 333 | ||||||
| Cash, restricted cash and cash equivalents, end of period | $ | 474 | $ | 434 | ||||
| Cash and cash equivalents | $ | 473 | $ | 434 | ||||
| Restricted Cash (included in Other long-term assets) | 1 | - | ||||||
| Total cash, restricted cash and cash equivalents | $ | 474 | $ | 434 | ||||
| Non-cash investing activities: | ||||||||
| Common stock issued for acquisition | $ | - | $ | 203 | ||||
GXO Logistics, Inc.
Key Data
Disaggregation of Revenue
(Unaudited)
Revenue disaggregated by geographical area was as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| (In millions) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| United Kingdom | $ | 958 | $ | 890 | $ | 2,695 | $ | 2,371 | ||||||||
| United States | 711 | 709 | 2,117 | 2,075 | ||||||||||||
| France | 207 | 171 | 626 | 530 | ||||||||||||
| Netherlands | 216 | 175 | 610 | 508 | ||||||||||||
| Spain | 133 | 117 | 396 | 360 | ||||||||||||
| Italy | 97 | 81 | 279 | 243 | ||||||||||||
| Other | 149 | 144 | 465 | 439 | ||||||||||||
| Total | $ | 2,471 | $ | 2,287 | $ | 7,188 | $ | 6,526 | ||||||||
The Company's revenue can also be disaggregated by the customer's primary industry. Revenue disaggregated by industry was as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| (In millions) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Omnichannel retail | $ | 1,051 | $ | 919 | $ | 3,041 | $ | 2,618 | ||||||||
| Technology and consumer electronics | 360 | 338 | 1,081 | 963 | ||||||||||||
| Food and beverage | 362 | 335 | 1,004 | 1,009 | ||||||||||||
| Industrial and manufacturing | 263 | 275 | 803 | 807 | ||||||||||||
| Consumer packaged goods | 231 | 227 | 689 | 663 | ||||||||||||
| Other | 204 | 193 | 570 | 466 | ||||||||||||
| Total | $ | 2,471 | $ | 2,287 | $ | 7,188 | $ | 6,526 | ||||||||
GXO Logistics, Inc.
Reconciliation of Net Income to Adjusted EBITDA and Adjusted EBITA
and Adjusted EBITDA and Adjusted EBITA Margins
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | Year Ended | Trailing Twelve Months Ended September 30, 2023 | |||||||||||||||||||||
| (In millions) | 2023 | 2022 | 2023 | 2022 | December 31, 2022 | |||||||||||||||||||
| Net income attributable to GXO | $ | 66 | $ | 63 | $ | 156 | $ | 151 | $ | 197 | $ | 202 | ||||||||||||
| Net income attributable to noncontrolling interest | 2 | 1 | 4 | 3 | 3 | 4 | ||||||||||||||||||
| Net income | $ | 68 | $ | 64 | $ | 160 | $ | 154 | $ | 200 | $ | 206 | ||||||||||||
| Interest expense, net | 14 | 6 | 41 | 19 | 29 | 51 | ||||||||||||||||||
| Income tax expense | 15 | 19 | 38 | 51 | 64 | 51 | ||||||||||||||||||
| Depreciation and amortization expense | 101 | 89 | 268 | 242 | 329 | 355 | ||||||||||||||||||
| Transaction and integration costs | 3 | 14 | 22 | 57 | 61 | 26 | ||||||||||||||||||
| Restructuring costs and other | 7 | - | 31 | 14 | 32 | 49 | ||||||||||||||||||
| Unrealized (gain) loss on foreign currency options and other | (8 | ) | - | (12 | ) | (14 | ) | 13 | 15 | |||||||||||||||
| Adjusted EBITDA(1) | $ | 200 | $ | 192 | $ | 548 | $ | 523 | $ | 728 | $ | 753 | ||||||||||||
| Less: Depreciation | 83 | 68 | 214 | 194 | 261 | 281 | ||||||||||||||||||
| Adjusted EBITA(1) | $ | 117 | $ | 124 | $ | 334 | $ | 329 | $ | 467 | $ | 472 | ||||||||||||
| Revenue | $ | 2,471 | $ | 2,287 | $ | 7,188 | $ | 6,526 | ||||||||||||||||
| Adjusted EBITDA margin(1)(2) | 8.1 | % | 8.4 | % | 7.6 | % | 8.0 | % | ||||||||||||||||
| Adjusted EBITA margin(1)(3) | 4.7 | % | 5.4 | % | 4.6 | % | 5.0 | % | ||||||||||||||||
(1) See the "Non-GAAP Financial Measures" section of this press release.
(2) Adjusted EBITDA margin is calculated as adjusted EBITDA divided by revenue.
(3) Adjusted EBITA margin is calculated as adjusted EBITA divided by revenue.
GXO Logistics, Inc.
Reconciliation of Net Income to Adjusted Net Income
and Adjusted Earnings Per Share
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| (Dollars in millions, shares in thousands, except per share amounts) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Net income attributable to GXO | $ | 66 | $ | 63 | $ | 156 | $ | 151 | ||||||||
| Amortization expense | 18 | 21 | 54 | 48 | ||||||||||||
| Transaction and integration costs | 3 | 14 | 22 | 57 | ||||||||||||
| Restructuring costs and other | 7 | - | 31 | 14 | ||||||||||||
| Unrealized gain on foreign currency options and other | (8 | ) | - | (12 | ) | (14 | ) | |||||||||
| Income tax associated with the adjustments above(1) | (4 | ) | (9 | ) | (21 | ) | (20 | ) | ||||||||
| Discrete tax benefit(2) | - | - | (5 | ) | - | |||||||||||
| Adjusted net income attributable to GXO(3) | $ | 82 | $ | 89 | $ | 225 | $ | 236 | ||||||||
| Adjusted basic earnings per share(3) | $ | 0.69 | $ | 0.75 | $ | 1.89 | $ | 2.03 | ||||||||
| Adjusted diluted earnings per share(3) | $ | 0.69 | $ | 0.75 | $ | 1.88 | $ | 2.02 | ||||||||
| Weighted-average common shares outstanding | ||||||||||||||||
| Basic | 118,941 | 118,621 | 118,883 | 116,508 | ||||||||||||
| Diluted | 119,645 | 119,065 | 119,430 | 117,107 | ||||||||||||
(1) The income tax rate applied to items is based on the GAAP annual effective tax rate.
(2) Discrete tax benefit from the release of valuation allowances.
(3) See the "Non-GAAP Financial Measures" section of this press release.
GXO Logistics, Inc.
Other Reconciliations
(Unaudited)
Reconciliation of Cash Flows from Operating Activities to Free Cash Flow:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| (In millions) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Net cash provided by operating activities | $ | 243 | $ | 116 | $ | 343 | $ | 316 | ||||||||
| Capital expenditures | (55 | ) | (85 | ) | (205 | ) | (239 | ) | ||||||||
| Proceeds from sales of property and equipment | 3 | 16 | 13 | 22 | ||||||||||||
| Free Cash Flow(1) | $ | 191 | $ | 47 | $ | 151 | $ | 99 | ||||||||
(1) See the "Non-GAAP Financial Measures" section of this press release. The Company calculates free cash flow conversion as free cash flow divided by adjusted EBITDA, expressed as a ratio.
Reconciliation of Revenue to Organic Revenue:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| (In millions) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Revenue | $ | 2,471 | $ | 2,287 | $ | 7,188 | $ | 6,526 | ||||||||
| Revenue from acquired business(1) | - | - | (378 | ) | - | |||||||||||
| Revenue from deconsolidation | - | - | - | (20 | ) | |||||||||||
| Foreign exchange rates | (126 | ) | - | (43 | ) | - | ||||||||||
| Organic revenue(2) | $ | 2,345 | $ | 2,287 | $ | 6,767 | $ | 6,506 | ||||||||
| Revenue growth(3) | 8.0 | % | 10.1 | % | ||||||||||||
| Organic revenue growth(2)(4) | 2.5 | % | 4.0 | % | ||||||||||||
(1) The Company excludes revenue from the acquired business in the current period for which there are no comparable revenues in the prior period.
(2) See the "Non-GAAP Financial Measures" section of this press release.
(3) Revenue growth is calculated as the change in the period-over-period revenue divided by the prior period.
(4) Organic revenue growth is calculated as the change in the period-over-period organic revenue divided by the prior period.
GXO Logistics, Inc.
Liquidity Reconciliations
(Unaudited)
Reconciliation of Total Debt and Net Debt:
| (In millions) | September 30, 2023 | |||
| Current debt | $ | 26 | ||
| Long-term debt | 1,621 | |||
| Total debt | $ | 1,647 | ||
| Less: Cash and cash equivalents | (473 | ) | ||
| Net debt(1) | $ | 1,174 | ||
(1) See the "Non-GAAP Financial Measures" section of this press release.
Reconciliation of Total debt to Net income attributable to GXO Ratio:
| (In millions) | September 30, 2023 | |||
| Total debt | $ | 1,647 | ||
| Trailing twelve months net income attributable to GXO | $ | 202 | ||
| Debt to net income attributable to GXO ratio | 8.2x | |||
Reconciliation of Net Leverage Ratio:
| (In millions) | September 30, 2023 | |||
| Net debt | $ | 1,174 | ||
| Trailing twelve months adjusted EBITDA(1) | $ | 753 | ||
| Net leverage ratio(1) | 1.6x | |||
(1) See the "Non-GAAP Financial Measures" section of this press release.
GXO Logistics, Inc.
Return on Invested Capital
(Unaudited)
Adjusted EBITA, net of income taxes paid:
| Nine Months Ended September 30, | Year Ended | Trailing Twelve Months Ended September 30, 2023 | ||||||||||||||
| (In millions) | 2023 | 2022 | December 31, 2022 | |||||||||||||
| Adjusted EBITA(1) | $ | 334 | $ | 329 | $ | 467 | $ | 472 | ||||||||
| Less: Cash paid for income taxes | (57 | ) | (74 | ) | (111 | ) | (94 | ) | ||||||||
| Adjusted EBITA(1), net of income taxes paid | $ | 277 | $ | 255 | $ | 356 | $ | 378 | ||||||||
(1) See the "Non-GAAP Financial Measures" section of this press release.
Operating Return on Invested Capital:
| September 30, | ||||||||||||
| (In millions) | 2023 | 2022 | Average | |||||||||
| Selected Assets: | ||||||||||||
| Accounts receivable, net | $ | 1,661 | $ | 1,507 | $ | 1,584 | ||||||
| Other current assets | 332 | 301 | 317 | |||||||||
| Property and equipment, net | 923 | 914 | 919 | |||||||||
| Selected Liabilities: | ||||||||||||
| Accounts payable | $ | (597 | ) | $ | (568 | ) | $ | (583 | ) | |||
| Accrued expenses | (975 | ) | (952 | ) | (964 | ) | ||||||
| Other current liabilities | (275 | ) | (162 | ) | (219 | ) | ||||||
| Invested Capital | $ | 1,069 | $ | 1,040 | $ | 1,054 | ||||||
| Ratio of Return on Invested Capital(1)(2) | 35.9 | % | ||||||||||
(1) The ratio of return on invested capital is calculated as trailing twelve months adjusted EBITA, net of income taxes paid, divided by invested capital.
(2) See the "Non-GAAP Financial Measures" section of this press release.
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1 For definitions of non-GAAP measures see the "Non-GAAP Financial Measures" section in this press release.
2 Our guidance reflects current FX rates and the acquisition of PFSweb.
