GXO Logistics, Inc. Q4 FY2025 earnings call

• GXO delivered strong fourth quarter and full-year performance with record revenue and adjusted EBITDA. New business wins in 2025 were $1.1 billion, with $774 million of expected incremental new business revenue secured for 2026, a 20% increase from the previous year.
• Leadership changes in commercial, operations, and regions to scale operating standards, sharpen growth priorities, and drive margin expansion. Bart Beeks joined as COO to scale operating methodology and lead automation/technology strategy.
• GXO IQ, an AI-powered warehouse operating system, is being rolled out with benefits in labor planning, inventory distribution, etc. Plans to move faster with AI and humanoids in 2026.
• North America Division is a priority for organic growth, with Michael Jacobs focusing on operational performance, labor productivity, and winning new business.
• Integration of Wincanton is on track to deliver $60 million run-rate cost synergies by 2026 and significant revenue synergies in the coming years.

For the fourth quarter, GXO delivered record revenue of $3.5 billion and record adjusted EBITDA of $255 million. For the full year, total revenue was a record $13.2 billion with full year adjusted EBITDA at $881 million. Full year organic revenue growth was 3.9%, and the fourth quarter organic revenue growth was 3.5%. Every region delivered organic growth. The revenue contribution of each segment isn't explicitly broken down by percentage in the provided transcript, but the overall financial performance highlights record quarterly and full-year figures.

• 2026 organic revenue growth expected to be 4% to 5%.
• Adjusted EBITDA expected to be $930 million to $970 million, an 8% increase at the midpoint.
• Adjusted diluted earnings per share expected to be $2.85 to $3.15, a 20% increase at the midpoint.
• Adjusted EBITDA to free cash flow conversion expected to be 30% to 40%.

• Fluctuations in foreign exchange rates.
• Changes in global economic conditions, consumer demand, and spending.
• Labor market and global supply chain constraints.
• Inflationary pressures, which can materially affect results and make actual results differ from guidance.

Q: For Patrick and maybe Karen, speak to overall philosophy on making sure GXO's value is appropriately recognized by customers and its impact on pricing, churn, and organic growth in the future?

A: Patrick Kelleher said vertical focus is critical, client-aligned solutions address customer challenges, and this will bring pricing power and drive organic growth by commercializing the value created for customers in strategic verticals like aerospace, defense, industrial technology, and life sciences.

Q: Baris, walk through how to think about the cadence through 2026 regarding growth and EBITDA flow?

A: Baris Oran said EBITDA phasing reflects timing of specific project start-ups and exits, quarterly swings are immaterial on a full-year basis, and there's high visibility due to new businesses already won with new wins expected throughout the year Q: Ryan asks about fourth quarter organic growth being light, walk through what happened and why cost productivity doesn't fully carry through to 1Q and 2Q EBITDA?

A: Baris Oran said growth was strong in Q4 with net new business wins but milder volume trend in Continental Europe and UK. The delta was driven by volumes, and 2026 guidance implies EBITDA margin expansion around 20 basis points, with targeted investments to drive productivity faster and accelerate organic growth, so margin wouldn't have expanded as fast without these investments Q: Madison asks about timing for Investor Day and macro assumptions in guidance range?

A: Patrick Kelleher said Investor Day is in 2026. Baris Oran said guidance assumes acceleration in organic growth with $774 million of incremental revenue secured, flat volumes in operations, and retention rates and inflation pass-through similar to 2025 Q: Scott Schneeberger asks about timing for seeing margin lift and investments in 2026?

A: Patrick Kelleher said details on margin improvement will be in Investor Day 2026, and Baris Oran said investments in 2026 are in two buckets: improving growth and capabilities in new strategic verticals and structurally increasing cost efficiency by investing in labor management systems, GXO IQ, AI, and simplifying ERPs Q: Richard Harnett asks about margin outlook risk and update on data centers and automation?

A: Patrick Kelleher said detailed margin plans will be in Investor Day 2026, and Kristine Kubacki said data centers are a $28 billion TAM, fitting into GXO's core competencies, and GXO is excited about the tech side with GXO IQ rolling out to more sites and AI driving productivity and cost improvement in operations Q: Patrick Creuset asks about timeline for US business organic growth lift off and margin progress towards European peers, and follow-up on AI cost buckets?

A: Patrick Kelleher said North America is a priority with Michael Jacobs driving operational performance and new business, sales cycle is 6-9 months, and margin opportunity will be outlined in Investor Day 2026. Patrick Kelleher explained that GXO IQ tackles cost buckets in improving overhead efficiency in corporate functions and driving innovation in customer warehouse and transport operations through areas like dynamic route planning, proactive replenishment, etc.

Q: Uday Khanapurkar asks about organic growth guide and margin implications, and US volume trends?

A: Baris Oran said retention rates are assumed steady similar to 2025, and for 2026, flat volumes are assumed in existing operations for prudence, with wins already contributing to growth and more wins expected to uplift numbers Q: Jeff Kaufman asks about macro changes on geographic or industry vertical basis and AI impact?

A: Patrick Kelleher said contract logistics outsourcing is increasing, and the value proposition of GXO strengthens in challenging macro environments as they can invest in robotics, automation, AI, and humanoids to solve complex supply chain challenges. Patrick Kelleher explained that AI is used for both upstream/downstream impacts on processes, improving forecasting, labor planning, etc., and not just discrete activities Q: David Zazula asks about rollout with NHS and outlook?

A: Patrick Kelleher said NHS business is on plan, with a strong pipeline and progress in expanding the relationship, and Kristine Kubacki added that the NHS deal has led to tripling of the life sciences pipeline and successful execution Q: Kevin Gainey asks about North American expansion as organic growth opportunity and cash flow conversion?

A: Patrick Kelleher said North America is a priority for organic growth, with M&A strategy selective and centered on North America and strategic verticals, and Baris Oran said cash flow conversion confidence comes from lower M&A transaction costs in 2026 and improved working capital management