GXO Logistics(GXO) - 2025 Q1 - Quarterly Report

Part I—Financial Information Item 1. Financial Statements (Unaudited) GXO reported a 21% revenue increase to $2.98 billion in Q1 2025, primarily due to the Wincanton acquisition, but recorded a net loss of $95 million, impacted by acquisition-related costs and a significant regulatory expense Condensed Consolidated Statements of Operations In Q1 2025, revenue grew to $2.98 billion from $2.46 billion year-over-year, but the operating loss widened to $56 million from $39 million, and the net loss attributable to GXO increased to $96 million, or ($0.81) per share, compared to a net loss of $37 million, or ($0.31) per share, in Q1 2024 Q1 2025 vs Q1 2024 Statement of Operations | (In millions, except per share) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue (in millions) | $2,977 | $2,456 | | Direct Operating Expense (in millions) | $2,558 | $2,056 | | Operating Loss (in millions) | $(56) | $(39) | | Interest Expense, Net (in millions) | $(32) | $(13) | | Loss Before Income Taxes (in millions) | $(93) | $(46) | | Net Loss Attributable to GXO (in millions) | $(96) | $(37) | | Diluted Loss Per Share | $(0.81) | $(0.31) | Condensed Consolidated Balance Sheets As of March 31, 2025, total assets were $11.32 billion, a slight increase from year-end 2024, with cash and cash equivalents decreasing to $288 million, goodwill increasing to $3.62 billion, total debt rising to $2.72 billion, and total equity decreasing to $2.90 billion Balance Sheet Overview | (In millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and Cash Equivalents (in millions) | $288 | $413 | | Goodwill (in millions) | $3,623 | $3,549 | | Total Assets (in millions) | $11,322 | $11,266 | | Total Current Liabilities (in millions) | $3,370 | $3,189 | | Total Long-Term Debt (in millions) | $2,545 | $2,521 | | Total Liabilities (in millions) | $8,418 | $8,231 | | Total Equity (in millions) | $2,904 | $3,035 | Condensed Consolidated Statements of Cash Flows For Q1 2025, net cash provided by operating activities decreased to $29 million from $50 million, while net cash used in investing activities was $77 million, and net cash used in financing activities significantly increased to $66 million due to common stock repurchases Q1 2025 vs Q1 2024 Cash Flow Summary | (In millions) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities (in millions) | $29 | $50 | | Net Cash Used in Investing Activities (in millions) | $(77) | $(82) | | Net Cash Used in Financing Activities (in millions) | $(66) | $(8) | | Net Decrease in Cash (in millions) | $(103) | $(45) | - The primary use of cash in financing activities was $106 million for common stock repurchases, partially offset by $56 million in net borrowings under revolving credit facilities[20] Notes to Condensed Consolidated Financial Statements Key notes detail the Wincanton acquisition for approximately $958 million, adding $707 million in goodwill, with revenue primarily from the United Kingdom and Omnichannel retail, alongside a new $500 million stock repurchase plan and a $66 million expense for an Italian tax investigation Q1 2025 Revenue by Geography | Geography | Revenue (in millions) | | :--- | :--- | | United Kingdom | $1,391 | | United States | $752 | | Netherlands | $232 | | France | $186 | | Other | $416 | | Total | $2,977 | Q1 2025 Revenue by Industry | Industry | Revenue (in millions) | | :--- | :--- | | Omnichannel retail | $1,422 | | Technology and consumer electronics | $393 | | Industrial and manufacturing | $362 | | Food and beverage | $314 | | Consumer packaged goods | $284 | | Other | $202 | | Total | $2,977 | - The company completed the acquisition of Wincanton plc on April 29, 2024, for approximately £762 million ($958 million), resulting in $707 million of goodwill, with transaction costs of $21 million incurred in Q1 2025[44][45][46] - On February 18, 2025, the board authorized a $500 million stock repurchase plan, with 2.8 million shares repurchased for $111 million in Q1 2025[74][75] - The company is under investigation by Italian authorities regarding VAT payments, having deposited €84 million ($91 million) as restricted cash and accrued a €61 million ($66 million) expense for this contingency in Q1 2025[90] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the 21% revenue growth in Q1 2025 primarily to the Wincanton acquisition, which contributed $487 million, while the increased operating loss was driven by higher operating costs, transaction expenses, and a $66 million regulatory charge, maintaining a strong liquidity position with $288 million in cash and $949 million in available borrowing capacity Q1 2025 vs Q1 2024 Results Summary | (In millions) | Q1 2025 | Q1 2024 | $ Change (in millions) | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue (in millions) | $2,977 | $2,456 | $521 | 21% | | Operating Loss (in millions) | $(56) | $(39) | $(17) | 44% | | Net Loss (in millions) | $(95) | $(36) | $(59) | n/m | - The increase in Q1 2025 revenue was primarily driven by $487 million from the Wincanton Acquisition[98] - A regulatory matter in Italy resulted in a $66 million expense in Q1 2025, related to the deductibility of certain VAT payments[104] - As of March 31, 2025, the company had $288 million in cash and cash equivalents and $949 million of available borrowing capacity under its revolving credit facilities[110] - A $500 million stock repurchase plan was authorized in February 2025, with approximately $390 million remaining authorized as of March 31, 2025[112] Quantitative and Qualitative Disclosures About Market Risk The company reports no material changes to its exposure to market risk for the three months ended March 31, 2025, compared to its 2024 Form 10-K, with key risks remaining related to variable rate debt and foreign currency fluctuations managed with derivative instruments - There have been no material changes to the company's exposure to market risk from those previously disclosed in the Form 10-K for the year ended December 31, 2024[124] Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2025, noting the design and implementation of internal controls related to the newly acquired Wincanton plc as a change during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2025[125] - Changes in internal control over financial reporting included the design and implementation of controls related to the acquisition of Wincanton plc[126] Part II—Other Information Legal Proceedings The company refers to Note 14 of the financial statements for a detailed description of its legal proceedings, including information on an ongoing Italian VAT investigation - For a description of legal proceedings, the report refers to Note 14, "Commitments and Contingencies" in Part I, Item 1[128] Risk Factors The company states that there are no material changes to the risk factors previously disclosed in its Form 10-K for the year ended December 31, 2024 - There are no material changes to the risk factors as previously disclosed in the Form 10-K for the year ended December 31, 2024[129] Unregistered Sales of Equity Securities and Use of Proceeds Under its $500 million stock repurchase plan announced in February 2025, the company repurchased approximately 2.77 million shares during the first quarter at an average price of $39.66 per share, with approximately $390 million remaining authorized - On February 18, 2025, the company's board authorized a stock repurchase plan of up to $500 million[130] Q1 2025 Share Repurchase Activity | Period | Total Shares Purchased | Average Price Paid Per Share | Approx. Value Remaining ($M) | | :--- | :--- | :--- | :--- | | Feb 1 - Feb 28 | 481,658 | $40.24 | $480.6 | | Mar 1 - Mar 31 | 2,284,053 | $39.53 | $390.3 | | Total | 2,765,711 | $39.66 | - | Exhibits This section lists the exhibits filed with the Form 10-Q, including a settlement agreement, forms of stock award agreements, CEO and CFO certifications, and Inline XBRL data files - Key exhibits filed include CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1, 32.2) and various compensatory plan agreements[134]