GXO Logistics, Inc. Q2 FY2025 earnings call

• New business wins totaled $307 million in the second quarter, up 13% year-over-year, with over $0.5 billion in new business wins for the first half of 2025. - Final regulatory approval was received for the strategic acquisition of Wincanton, unlocking growth opportunities in industrial and aerospace markets in Europe, with integration set to begin in the coming weeks and $60 million of synergies expected by the end of 2026. - Launched GXO IQ, a software platform in partnership with Google Cloud leveraging AI for supply chain operations. - Customer satisfaction scores are at an all-time high, with long-term global partnerships renewed and expanded, including with H&M and a top 15 U.S. retailer. - GXO remains the market leader in automated fulfillment, with over doubled robots deployed and 50% of revenue processed by automation in the past 4 years.

GXO delivered record revenue of $3.3 billion in the second quarter of 2025, with adjusted EBITDA of $212 million, up 13% year-over-year. Organic revenue growth accelerated sequentially in each region, with the strongest growth in omnichannel retail and technology verticals. Revenue contribution from automation processes was about 50%, and the sales pipeline stood at $2.4 billion exclusive of the Wincanton sales pipeline.

• Raised full-year adjusted EBITDA guidance to $865 million to $885 million, up from the initial range of $840 million to $860 million. - Organic revenue growth range revised to 3.5% to 6.5%, up from 3% to 6%. - Adjusted diluted earnings per share range revised to $2.43 to $2.63, up from $2.40 to $2.60. - Adjusted EBITDA to free cash flow conversion expected to be 25% to 35%.

• Fluctuations in foreign exchange rates. - Changes in global economic conditions and consumer demand/spending. - Labor market and global supply chain constraints. - Inflationary pressures. - Various factors detailed in SEC filings, including unpredictability of service demand which could materially affect actual results from guidance.

Q: Could you highlight what has changed from a geographic and end market perspective as organic growth accelerated from 1Q to 2Q?

A: Continental Europe and U.K. saw growth in volumes, North America had strong performance in aerospace, technology infrastructure, and consumer verticals. Inventory levels are normal. Q3 trends remained consistent with strong new business start-ups.

Q: As you think about the pace of organic revenue growth looking out to '26 and beyond, do you think it could reaccelerate into upper single-digit ranges?

A: Wincanton will be a big contributor to revenue and EBITDA growth, with around $60 million of cost synergies, and Wincanton itself grew top line by 10% in Q2. A new CEO is joining and will bring new ideas.

Q: How do you think about the ForEx impact on revenues for the next couple of quarters?

A: GXO doesn't hedge revenue, so spot rates for the quarter will reflect in reported revenue growth. In Q2, about 4% of 16% revenue growth was from foreign exchange.

Q: With the divestiture of a small piece of Wincanton, is it treated as a discontinued operation?

A: It's a small business, not material to the financial statements, and integration can start right away as the relevant perimeter is around $100 million of annual revenue.

Q: Where would you like debt-to-EBITDA to be before reengaging with strategic acquisition?

A: Acquisitions are not in the short-term agenda; ideally, leverage would be lower, around 1.5 to 2x, to have financial flexibility.