GXO Logistics(GXO) - 2024 Q2 - Quarterly Report

PART I—FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) Presents GXO's unaudited condensed consolidated financial statements and related notes for periods ended June 30, 2024 and 2023 Condensed Consolidated Statements of Operations | (Dollars in millions, shares in thousands, except per share amounts) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:-------------------------------------------------------------------|:--------------------------------:|:--------------------------------:|:-------------------------------:|:-------------------------------| | Revenue | $2,846 | $2,394 | $5,302 | $4,717 | | Operating income | $75 | $99 | $36 | $141 | | Net income attributable to GXO | $38 | $65 | $1 | $90 | | Basic Earnings per share | $0.32 | $0.55 | $0.01 | $0.76 | | Diluted Earnings per share | $0.32 | $0.54 | $0.01 | $0.75 | Condensed Consolidated Statements of Comprehensive Income (Loss) | (In millions) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:--------------------------------------------|:--------------------------------:|:--------------------------------:|:-------------------------------:|:-------------------------------| | Net income | $39 | $66 | $3 | $92 | | Other comprehensive income (loss), net of tax | $(14) | $22 | $(25) | $32 | | Comprehensive income (loss) attributable to GXO | $24 | $86 | $(23) | $121 | Condensed Consolidated Balance Sheets | (Dollars in millions, shares in thousands, except per share amounts) | June 30, 2024 | December 31, 2023 | |:-------------------------------------------------------------------|:--------------|:------------------| | Total assets | $11,360 | $9,507 | | Total liabilities | $8,427 | $6,561 | | Total equity | $2,933 | $2,946 | - Total assets increased by $1,853 million (19.5%) from December 31, 2023, to June 30, 2024, primarily due to the Wincanton Acquisition[8][104] - Total liabilities increased by $1,866 million (28.4%) from December 31, 2023, to June 30, 2024, mainly driven by the issuance of $1.1 billion in unsecured notes for the Wincanton Acquisition[8][104] Condensed Consolidated Statements of Cash Flows | (In millions) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:--------------------------------------------------------------|:-------------------------------|:-------------------------------| | Net cash provided by operating activities | $165 | $100 | | Net cash used in investing activities | $(1,014) | $(140) | | Net cash provided by (used in) financing activities | $857 | $(155) | | Net increase (decrease) in cash, restricted cash and cash equivalents | $1 | $(190) | - Net cash provided by operating activities increased by $65 million (65%) for the six months ended June 30, 2024, compared to the same period in 2023, primarily due to working capital changes[105][106] - Net cash used in investing activities significantly increased to $1,014 million for the six months ended June 30, 2024, from $140 million in 2023, largely due to the $863 million Wincanton Acquisition[105][107] - Financing activities generated $857 million in cash for the six months ended June 30, 2024, a substantial increase from a $155 million use in 2023, driven by $1,085 million in long-term debt issuance[105][108] Condensed Consolidated Statements of Changes in Equity | (Shares in thousands, dollars in millions) | Balance as of March 31, 2024 | Net income | Other comprehensive loss | Stock-based compensation | Vesting of stock compensation awards | Tax withholding on vesting of stock-based compensation awards | Other | Balance as of June 30, 2024 | |:-------------------------------------------|:-----------------------------|:-----------|:-------------------------|:-------------------------|:-------------------------------------|:--------------------------------------------------------------|:------|:----------------------------| | Common Shares | 119,368 | — | — | — | 115 | (46) | — | 119,437 | | Stock Amount | $1 | — | — | — | — | — | — | $1 | | APIC | $2,602 | — | — | $11 | — | $(3) | — | $2,610 | | Retained Earnings | $515 | 38 | — | — | — | — | — | $553 | | AOCIL | $(249) | — | $(14) | — | — | — | — | $(263) | | Equity Before NCI | $2,869 | 38 | $(14) | 11 | — | $(3) | — | $2,901 | | NCI | $34 | 1 | — | — | — | — | $(3) | $32 | | Total Equity | $2,903 | 39 | $(14) | 11 | — | $(3) | $(3) | $2,933 | Notes to Condensed Consolidated Financial Statements Note 1. Basis of Presentation and Significant Accounting Policies GXO's financial statements follow GAAP and SEC rules, operating as one segment, with new accounting pronouncements under evaluation - The Company presents its operations as one reportable segment[18] - The SEC adopted new rules in March 2024 to enhance climate-related disclosures, with requirements for annual periods ending December 31, 2025; implementation is currently stayed pending judicial review[19] - FASB issued ASU 2023-09 (Income Taxes) and ASU 2023-07 (Segment Reporting) in late 2023, requiring expanded disclosures, with effective dates in 2024 and 2025; the Company is evaluating their impact[20][21] Note 2. Revenue Recognition Revenue disaggregation shows growth in UK and Omnichannel retail, with $4.1 billion in remaining performance obligations, 76% recognized over three years | Revenue disaggregated by geographical area (In millions) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---------------------------------------------------------|:--------------------------------:|:--------------------------------:|:-------------------------------:|:-------------------------------| | United Kingdom | $1,289 | $893 | $2,202 | $1,737 | | United States | $731 | $692 | $1,478 | $1,406 | | Total | $2,846 | $2,394 | $5,302 | $4,717 | | Revenue disaggregated by customer type (In millions) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:-----------------------------------------------------|:--------------------------------:|:--------------------------------:|:-------------------------------:|:-------------------------------| | Omnichannel retail | $1,316 | $1,026 | $2,338 | $1,990 | | Technology and consumer electronics | $363 | $355 | $745 | $721 | | Food and beverage | $326 | $335 | $642 | $642 | | Industrial and manufacturing | $331 | $270 | $597 | $540 | | Consumer packaged goods | $290 | $232 | $585 | $458 | | Other | $220 | $176 | $395 | $366 | | Total | $2,846 | $2,394 | $5,302 | $4,717 | - As of June 30, 2024, the fixed consideration component of remaining performance obligations was approximately $4.1 billion, with 76% expected to be recognized over the next three years[26] Note 3. Leases GXO uses operating and finance leases; assets and liabilities increased due to new obligations and the Wincanton acquisition | (In millions) | June 30, 2024 | December 31, 2023 | |:--------------------------------------------|:--------------|:------------------| | Operating lease assets | $2,344 | $2,201 | | Total operating lease liabilities | $2,653 | $2,439 | | Finance leases: Property and equipment, net | $207 | $107 | | Total finance lease liabilities | $215 | $116 | | (In millions) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---------------------------------------------|:--------------------------------:|:--------------------------------:|:-------------------------------:|:-------------------------------| | Total operating lease cost | $290 | $275 | $563 | $547 | | Total finance lease cost | $8 | $7 | $16 | $15 | | Total operating and finance lease cost | $298 | $282 | $579 | $562 | - Leased assets obtained for new lease obligations for the six months ended June 30, 2024, included $560 million for operating leases (including $244 million from an acquisition) and $120 million for finance leases (including $36 million from an acquisition)[30] Note 4. Acquisitions GXO completed Wincanton (approx. $958 million) and PFSweb (approx. $149 million) acquisitions, contributing to revenue and asset growth - GXO completed the Wincanton Acquisition on April 29, 2024, for approximately £762 million ($958 million), a UK logistics provider, with the CMA currently reviewing the acquisition[31] - Wincanton contributed $333 million in revenue and $3 million in income before income taxes for the three and six months ended June 30, 2024[33] - The PFSweb Acquisition was completed on October 23, 2023, for approximately $149 million, acquiring a global provider of omnichannel commerce solutions[37] Note 5. Goodwill Goodwill increased to $3,664 million as of June 30, 2024, primarily from Wincanton ($798 million) and PFS ($8 million) acquisitions, with no impairment | (In millions) | Amount | |:-----------------------------------|:-------| | Balance as of December 31, 2023 | $2,891 | | Acquisition | $806 | | Impact of foreign exchange translation | $(33) | | Balance as of June 30, 2024 | $3,664 | - Goodwill increased by $773 million for the six months ended June 30, 2024, primarily due to the Wincanton Acquisition ($798 million) and PFS Acquisition ($8 million)[39] - Goodwill acquired in connection with the Wincanton Acquisition ($798 million) and PFS Acquisition ($8 million) was primarily attributed to anticipated synergies[34][38][39] Note 6. Debt and Financing Arrangements Total debt increased to $2,770 million due to $1.1 billion in Unsecured Notes for Wincanton, and new $800 million and assumed revolving credit facilities | (In millions) | June 30, 2024 | December 31, 2023 | |:----------------------------------|:--------------|:------------------| | Unsecured notes due 2026 | $398 | $398 | | Unsecured notes due 2029 | $592 | — | | Unsecured notes due 2031 | $397 | $397 | | Unsecured notes due 2034 | $490 | — | | Three-Year Term Loan due 2025 | $185 | $235 | | Five-Year Term Loan due 2027 | $399 | $499 | | Finance leases and other debt | $309 | $118 | | Total debt | $2,770 | $1,647 | | Less: Current debt | $219 | $27 | | Total Long-term debt | $2,551 | $1,620 | - On May 6, 2024, GXO issued $1.1 billion in Unsecured Notes (6.25% due 2029 and 6.50% due 2034) to fund the Wincanton Acquisition[43] - GXO terminated its previous revolving credit agreement and entered into a new five-year unsecured, multicurrency revolving facility of $800 million, expiring in 2029, with no amounts outstanding as of June 30, 2024[46][47] - The Company assumed Wincanton's revolving credit facility of approximately £175 million ($221 million) with £74 million ($94 million) outstanding as of June 30, 2024[48] Note 7. Fair Value Measurements and Financial Instruments GXO uses derivative instruments (swaps, options) to manage interest rate and foreign currency risks, all classified as Level 2 fair value | (In millions) | June 30, 2024 Fair Value | December 31, 2023 Fair Value | |:---------------------------------|:-------------------------|:-----------------------------| | Unsecured notes due 2026 | $369 | $362 | | Unsecured notes due 2029 | $611 | — | | Unsecured notes due 2031 | $323 | $326 | | Unsecured notes due 2034 | $507 | — | | Three-Year Term Loan due 2025 | $183 | $231 | | Five-Year Term Loan due 2027 | $396 | $493 | - As of June 30, 2024, GXO had $1,037 million notional amount in cross-currency swap agreements designated as net investment hedges, with a fair value of $18 million (asset) and $633 million notional amount with a fair value of $22 million (liability)[57] - For the three months ended June 30, 2024, cross-currency swap agreements recognized $15 million in other comprehensive income and $4 million reclassified to net income[58] Note 8. Earnings per Share Basic and diluted EPS for GXO common shares decreased significantly for both three and six months ended June 30, 2024, reflecting lower net income | (Dollars in millions, shares in thousands, except per share amounts) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:-------------------------------------------------------------------|:--------------------------------:|:--------------------------------:|:-------------------------------:|:-------------------------------| | Net income attributable to common shares | $38 | $65 | $1 | $90 | | Basic earnings per share | $0.32 | $0.55 | $0.01 | $0.76 | | Diluted earnings per share | $0.32 | $0.54 | $0.01 | $0.75 | - Antidilutive shares excluded from diluted weighted-average common shares were 1,087 thousand for the three months ended June 30, 2024, and 1,074 thousand for the six months ended June 30, 2024[62] Note 9. Stockholders' Equity AOCIL attributable to GXO was $(263) million as of June 30, 2024, a decrease from $(239) million due to foreign currency translation | (In millions) | As of March 31, 2024 | Other comprehensive income (loss) before reclassifications | Amounts reclassified to net income (loss) | Tax amounts | Other comprehensive income (loss), net of tax | As of June 30, 2024 | |:-----------------------------------------------------------|:---------------------|:-----------------------------------------------------------|:------------------------------------------|:------------|:----------------------------------------------|:--------------------| | Foreign Currency Translation Adjustments | $(124) | $(22) | — | $1 | $(21) | $(145) | | Net Investment Hedges | $(20) | $14 | $(4) | $(3) | $7 | $(13) | | Cash Flow Hedges | $6 | — | — | — | — | $6 | | Defined Benefit Plans | $(111) | $(1) | $1 | — | — | $(111) | | Less: AOCIL attributable to NCI | — | — | — | — | — | — | | AOCIL attributable to GXO | $(249) | $(9) | $(3) | $(2) | $(14) | $(263) | Note 10. Employee Benefit Plans GXO sponsors UK defined benefit pension schemes, including the assumed Wincanton plan; net periodic pension income increased to $5 million - GXO assumed the Wincanton Retirement Plan in the acquisition, recognizing £109 million ($137 million) of assets[67] | (In millions) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:------------------------------|:--------------------------------:|:--------------------------------:|:-------------------------------:|:-------------------------------| | Net periodic pension income | $5 | $2 | $8 | $4 | | (In millions) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:------------------------------|:--------------------------------:|:--------------------------------:|:-------------------------------:|:-------------------------------| | Defined contribution costs | $21 | $15 | $38 | $32 | Note 11. Restructuring Costs and Other Restructuring costs, mainly severance, decreased to $1 million for Q2 2024, with liability increasing to $12 million by June 30, 2024 | (In millions) | Amount | |:----------------------------------|:-------| | Balance as of December 31, 2023 | $7 | | Charges incurred | $17 | | Payments | $(12) | | Balance as of June 30, 2024 | $12 | - Restructuring costs for the three months ended June 30, 2024, were $1 million, down from $3 million in the prior year, primarily related to severance for optimizing corporate functions[88] Note 12. Income Taxes Income tax expense decreased, but the effective tax rate increased significantly due to lower pre-tax income; Pillar Two rules are not expected to materially impact 2024 | (In millions) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:--------------------------|:--------------------------------:|:--------------------------------:|:-------------------------------:|:-------------------------------| | Income tax expense | $14 | $20 | $4 | $23 | | Effective tax rate | 25.4% | 23.0% | 52.3% | 19.9% | - The increase in the effective tax rate for the six months ended June 30, 2024, was primarily driven by a decrease in pre-tax income, partially offset by non-deductible items[71] - The Company does not expect the OECD's Pillar Two global minimum tax rules to materially impact its tax liability in 2024[72] Note 13. Commitments and Contingencies GXO faces legal proceedings, including a $45 million settlement (resulting in $60 million expense) and an Italian VAT investigation alleging €84 million ($90 million) in potential losses, not yet estimable - On June 14, 2024, GXO settled a dispute with a customer related to a warehouse start-up, agreeing to a $45 million payment made in July 2024[76] - GXO recognized a $60 million expense for the six months ended June 30, 2024, for the settlement, associated legal fees, and related expenses[76] - Italian authorities launched an investigation into the deductibility of VAT payments from 2017-2023, alleging €84 million ($90 million) in potential losses, with the possible range of losses not reasonably estimable[77] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management discusses GXO's financial condition and results, analyzing performance for Q2 and H1 2024 vs 2023, including liquidity, capital, and acquisition impacts Cautionary Statement Regarding Forward-Looking Statements This disclaimer advises that the report contains forward-looking statements based on management's assumptions, subject to risks and uncertainties - Forward-looking statements are identified by 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 their negatives[79] - These statements are based on assumptions and analyses made by the Company in light of its experience and perception of historical trends, current conditions, and expected future developments[79] Business Overview GXO is the world's largest pure-play contract logistics provider, offering tech-enabled services with an asset-light model, and recently acquired Wincanton and PFSweb - GXO Logistics, Inc. is the largest pure-play contract logistics provider globally, offering high-value-added warehousing, distribution, order fulfillment, e-commerce, and reverse logistics services[81] - The business model is asset-light, historically resilient, with high returns, strong free cash flow, and revenue visibility, characterized by long-term customer contracts and aligned warehouse lease arrangements[82] - The Company completed the acquisition of Wincanton plc on April 29, 2024, and PFSweb, Inc. on October 23, 2023, expanding its logistics and e-commerce fulfillment capabilities[84] Results of Operations GXO's Q2 and H1 2024 results show significant revenue growth from acquisitions, but net and operating income decreased due to higher expenses, transaction costs, interest, and litigation Three Months Ended June 30, 2024 compared with the Three Months Ended June 30, 2023 Q2 2024 revenue increased 19% to $2.8 billion from acquisitions, but operating income decreased 24% to $75 million, and net income fell 41% to $39 million due to higher expenses | (In millions) | 2024 | 2023 | Change | % Change | |:--------------------------------------------------|:------|:------|:-------|:---------| | Revenue | $2,846| $2,394| $452 | 19% | | Direct operating expense | $2,389| $1,957| $432 | 22% | | Selling, general and administrative expense | $270 | $245 | $25 | 10% | | Depreciation and amortization expense | $99 | $84 | $15 | 18% | | Transaction and integration costs | $15 | $6 | $9 | n/m | | Restructuring costs and other | $1 | $3 | $(2) | (67)% | | Litigation expense | $(3) | — | $(3) | n/m | | Operating income | $75 | $99 | $(24) | (24)% | | Interest expense, net | $(23) | $(14) | $(9) | 64% | | Income before income taxes | $53 | $86 | $(33) | (38)% | | Income tax expense | $(14) | $(20) | $6 | (30)% | | Net income | $39 | $66 | $(27) | (41)% | - Revenue increase of $452 million was primarily driven by $396 million from the Wincanton and PFS acquisitions[85] - Direct operating expense as a percentage of revenue increased to 83.9% in Q2 2024 from 81.7% in Q2 2023, partly due to acquisition costs and higher personnel expenses[86] - Litigation expense included a $3 million expense reduction for a legal settlement in Q2 2024[89] Six Months Ended June 30, 2024 compared with the Six Months Ended June 30, 2023 H1 2024 revenue increased 12% to $5.3 billion from acquisitions, but operating income declined 74% to $36 million, and net income plummeted 97% to $3 million due to litigation and higher costs | (In millions) | 2024 | 2023 | Change | % Change | |:--------------------------------------------------|:------|:------|:-------|:---------| | Revenue | $5,302| $4,717| $585 | 12% | | Direct operating expense | $4,445| $3,863| $582 | 15% | | Selling, general and administrative expense | $519 | $503 | $16 | 3% | | Depreciation and amortization expense | $191 | $167 | $24 | 14% | | Transaction and integration costs | $34 | $19 | $15 | 79% | | Restructuring costs and other | $17 | $24 | $(7) | (29)% | | Litigation expense | $60 | — | $60 | n/m | | Operating income | $36 | $141 | $(105) | (74)% | | Interest expense, net | $(36) | $(27) | $(9) | 33% | | Income before income taxes | $7 | $115 | $(108) | (94)% | | Income tax expense | $(4) | $(23) | $19 | (83)% | | Net income | $3 | $92 | $(89) | (97)% | - Revenue increase of $585 million was primarily due to $459 million from the Wincanton and PFS acquisitions and $50 million from foreign currency movement[94] - A $60 million litigation expense was recognized for the six months ended June 30, 2024, related to a customer dispute settlement[99] - Interest expense, net, increased by 33% to $36 million, primarily due to debt incurred for the Wincanton Acquisition[100] Liquidity and Capital Resources GXO's liquidity is supported by operations, credit facilities, and factoring, with $469 million cash and $926 million borrowing capacity, sufficient for 12 months - As of June 30, 2024, GXO held $469 million in cash and cash equivalents[103] - The Company had $926 million of borrowing capacity, net of letters of credit, under its revolving credit facilities as of June 30, 2024[103] - Management believes current liquidity sources are sufficient to operate the business and fund obligations for at least the next 12 months[103] Financial Condition Total assets increased 19% to $11,360 million and liabilities 28% to $8,427 million due to Wincanton Acquisition and $1.1 billion unsecured notes | (In millions) | June 30, 2024 | December 31, 2023 | Change | % Change | |:--------------------------|:--------------|:------------------|:-------|:---------| | Total current assets | $2,797 | $2,568 | $229 | 9% | | Total long-term assets | $8,563 | $6,939 | $1,624 | 23% | | Total current liabilities | $3,269 | $2,626 | $643 | 24% | | Total long-term liabilities | $5,158 | $3,935 | $1,223 | 31% | - Total assets and liabilities increased primarily due to the Wincanton Acquisition[104] - Total long-term liabilities increased due to the issuance of $1.1 billion of unsecured notes to fund the Wincanton Acquisition[104] Cash Flow Activity Operating cash flows increased $65 million, investing activities used $1,014 million (due to Wincanton), and financing generated $857 million (from debt issuance) Operating Activities Operating cash flows increased by $65 million for H1 2024, primarily due to favorable working capital changes, despite lower net income - Cash flows provided by operating activities increased by $65 million (65%) for the six months ended June 30, 2024, compared to the same period in 2023[105][106] - The increase was primarily due to working capital changes, driven by collection of receivables and timing of payments, partially offset by lower net income[106] Investing Activities Investing activities used $1,014 million for H1 2024, a significant increase from $140 million in 2023, primarily due to the $863 million Wincanton Acquisition - Investing activities used $1,014 million of cash for the six months ended June 30, 2024, compared to $140 million in the same period in 2023[105][107] - The primary driver was the $863 million cash used for the Wincanton Acquisition, net of cash acquired[107] Financing Activities Financing activities generated $857 million for H1 2024, a substantial increase from a $155 million use in 2023, primarily due to $1,085 million in long-term debt issuance - Financing activities generated $857 million for the six months ended June 30, 2024, compared to a use of $155 million in the prior year[105][108] - This was primarily driven by the issuance of $1,085 million in long-term debt, partially offset by debt repayments and finance lease obligations[108] Off-Balance Sheet Arrangements GXO does not engage in material off-balance sheet financial arrangements that would impact its financial condition, results, or liquidity - The Company does not have any material off-balance sheet financial arrangements[109] Contractual Obligations GXO entered into $1.1 billion of unsecured notes for the Wincanton Acquisition; other contractual obligations are materially unchanged since December 31, 2023 - GXO entered into $1.1 billion of unsecured notes during the six months ended June 30, 2024, to fund the Wincanton Acquisition[110] - No other material changes to contractual obligations occurred compared to December 31, 2023[110] Critical Accounting Policies and Estimates No material changes to critical accounting policies and estimates since the 2023 Form 10-K - No material changes to critical accounting policies and estimates since the 2023 Form 10-K[111] Accounting Pronouncements New accounting standards information is detailed in Note 1. Basis of Presentation and Significant Accounting Policies - New accounting standards information is detailed in Note 1[112] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK GXO manages market risks from variable rate debt and foreign currency using derivatives, with no material changes to exposure since the 2023 Form 10-K - GXO is exposed to market risk from variable rate long-term debt and foreign currency fluctuations[113] - Derivative instruments are used to manage interest rate and foreign currency exchange rate risks[113] - No material changes to market risk exposure for the six months ended June 30, 2024, compared to the 2023 Form 10-K[114] ITEM 4. CONTROLS AND PROCEDURES GXO's disclosure controls were effective as of June 30, 2024; no material changes to internal control over financial reporting, except for PFSweb acquisition Evaluation of Disclosure Controls and Procedures CEO and CFO concluded GXO's disclosure controls and procedures were effective as of June 30, 2024, ensuring timely and accurate SEC reporting - CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2024[115] - Disclosure controls ensure information is recorded, processed, summarized, and reported within SEC specified time periods and communicated to management for timely decisions[115] Changes in Internal Control Over Financial Reporting No material changes to internal control over financial reporting during Q2 2024, except for controls related to the PFSweb, Inc. acquisition - No material changes to internal control over financial reporting during the three months ended June 30, 2024[116] - Exception noted for the design and implementation of internal controls related to the acquisition of PFSweb, Inc.[116] PART II—OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS This section refers to Note 13 for detailed legal proceedings, including a recent settlement and an ongoing tax investigation - Details on legal proceedings are provided in Note 13. Commitments and Contingencies[118] ITEM 1A. RISK FACTORS No material changes to risk factors from GXO's 2023 Form 10-K - No material changes to risk factors from the 2023 Form 10-K[119] ITEM 6. EXHIBITS This section lists all exhibits filed with the Form 10-Q, including corporate documents, agreements, and executive certifications - Exhibits include amendments to the Certificate of Incorporation, Second Supplemental Indenture, offer and service agreements, and certifications (302 and 906) from the Principal Executive and Financial Officers[121] Signatures The report is signed by GXO Logistics, Inc.'s CEO, Malcolm Wilson, and CFO, Baris Oran, on August 6, 2024 - The report was signed by Malcolm Wilson (CEO) and Baris Oran (CFO) on August 6, 2024[124]