GXO Logistics, Inc. Q4 FY2024 earnings call

• Delivered record revenue and adjusted EBITDA in 2024, with adjusted EBITDA growing 30% year-over-year in the fourth quarter.
• Drove organic growth acceleration every quarter in 2024, closed over $1 billion of new business wins for the second year in a row, including a landmark $2.5 billion deal in the health sector.
• Acquired Wincanton in 2024, which will bring expertise in key verticals like aerospace and industrials.
• Made progress towards an AI-enabled warehouse, with 22 instances of proprietary AI apps launched across three key warehouse functions in 2024.
• Expanded into new geographies with more than 40 legacy customers in 2024.

For the full-year 2024, GXO generated revenue of $11.7 billion, with 3% organic growth. Adjusted EBITDA was $815 million. In the fourth quarter of 2024, revenue was $3.3 billion and adjusted EBITDA was $251 million. The organic revenue growth accelerated sequentially throughout the year, led by the omnichannel retail and consumer goods business. Continental Europe, particularly Germany, saw significant growth with revenue in Germany up 60% year-over-year as of the end of 2024, making it the fastest growing market.

• Expect to deliver 3% to 6% organic growth for full-year 2025.
• Anticipate adjusted EBITDA of $840 million to $860 million for full-year 2025.
• Adjusted diluted earnings per share expected to be in the range of $2.40 to $2.60 in 2025.
• Free cash flow conversion expected to be 25% to 35% in 2025, midpoint around 30%.

• Fluctuations in foreign exchange rates.
• Changes in global economic conditions and consumer demand/spending.
• Labor market and global supply chain constraints.
• Inflationary pressures.
• Uncertainty regarding the timing of CMA's regulatory review of the Wincanton acquisition.

Q: Long-term organic growth expectations?

A: Malcolm Wilson said there are uncertainties like CMA approval timing for Wincanton integration, but they expect to update on clarity later, and the business has potential for growth despite recent environment changes.

Q: Customer pipeline dynamics and customer hesitation?

A: Malcolm Wilson said pipeline is up 15% year-over-year, strong pipeline with new vertical wins, and some U.S. customers reorienting supply chains due to tariff discussions, which could be positive for GXO.

Q: Competitive dynamics and warehousing green shoots?

A: Malcolm Wilson said GXO is in a good position with few global competitors, and they're rolling out AI modules to continue differentiation. Kristine Kubacki added AI modules are being rolled out across warehouses to drive differentiation.

Q: Customer realignments and macro outlook link?

A: Baris Oran said customer realignments were driven by consumer volumes, with some customers realigning due to lower volumes but remaining good customers, and underlying volumes of existing sites expected to be flattish in 2025.

Q: De minimis changes impact?

A: Malcolm Wilson said U.S. customers are reorienting supply chains due to de minimis discussions, which could lead to more warehousing local, positive for GXO.