What changed in this filing

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Item 1. Financial Statements

2022-11-09 compared with 2022-08-03 · 178 added, 150 removed, 429 unchanged (43% of the section changed)

2 unchanged sentences

Condensed Consolidated Statements of Operations

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(Dollars in millions, shares in thousands, except per share amounts) 2022 2021 2022 2021

4 unchanged sentences

Transaction and integration costs 14 29 57 82

Restructuring costs (credits) and other 1 ( 1 ) 14 3

Restructuring costs and other — 2 14 5

Operating income 72 36 168 88

Other income (expense), net 23 ( 1 ) 39 —

Other income, net 17 11 56 11

Interest expense, net ( 6 ) ( 5 ) ( 19 ) ( 16 )

Income before income taxes 83 42 205 83

Income tax expense ( 21 ) ( 1 ) ( 32 ) ( 10 )

Income tax (expense) benefit ( 19 ) 31 ( 51 ) 21

Net income 64 73 154 104

Net income attributable to noncontrolling interests ( 1 ) ( 3 ) ( 2 ) ( 6 )

Net income attributable to noncontrolling interest ( 1 ) ( 1 ) ( 3 ) ( 7 )

Net income attributable to GXO $ 63 $ 72 $ 151 $ 97

Earnings per share data

Basic earnings per share $ 0.44 $ 0.10 $ 0.76 $ 0.22

Diluted earnings per share $ 0.44 $ 0.10 $ 0.76 $ 0.22

Basic $ 0.53 $ 0.63 $ 1.30 $ 0.84

Diluted $ 0.53 $ 0.62 $ 1.29 $ 0.84

Weighted-average common shares outstanding

Basic weighted-average common shares outstanding 116,131 114,626 115,435 114,626

Diluted weighted-average common shares outstanding 116,646 114,626 116,111 114,626

Basic 118,621 114,629 116,508 114,627

Diluted 119,065 115,529 117,107 115,527

See accompanying notes to Condensed Consolidated Financial Statements.

GXO Logistics, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

Three Months Ended Six Months Ended

June 30, June 30,

Condensed Consolidated Statements of Comprehensive Income

Three Months Ended Nine Months Ended

September 30, September 30,

(In millions) 2022 2021 2022 2021

Net income $ 64 $ 73 $ 154 $ 104

Other comprehensive income (loss), net of tax

Foreign currency translation gain (loss), net of tax (expense) benefit of $( 10 ), $( 1 ), $( 10 ), and $ 2 , respectively

Other comprehensive loss, net of tax

Foreign currency translation loss, net of tax (expense) benefit of $( 22 ), $( 4 ), $( 32 ) and $( 2 ), respectively

$ ( 43 ) $ ( 12 ) $ ( 163 ) $ ( 30 )

Unrealized gain (loss) on hedging instruments, net of tax (expense) benefit of $ — , $ — , $ — , and $( 1 ), respectively

Comprehensive income (loss) $ ( 23 ) $ 33 ( 30 ) 4

Unrealized gain (loss) on cash flow hedges, net of tax (expense) benefit of $( 2 ), $ — , $( 2 ) and $( 1 ), respectively

Other comprehensive loss, net of tax $ ( 34 ) $ ( 12 ) $ ( 154 ) $ ( 31 )

Comprehensive income $ 30 $ 61 $ — $ 73

Comprehensive income (loss) attributable to noncontrolling interest ( 1 ) 1 ( 1 ) 7

Comprehensive income (loss) attributable to GXO $ ( 23 ) $ 34 $ ( 30 ) $ 6

Comprehensive income attributable to GXO $ 31 $ 60 $ 1 $ 66

See accompanying notes to Condensed Consolidated Financial Statements.

1 unchanged sentence

Condensed Consolidated Balance Sheets

(Dollars in millions, shares in thousands, except per share amounts) June 30, 2022 December 31, 2021

(Dollars in millions, shares in thousands, except per share amounts) September 30, 2022 December 31, 2021

Current assets

27 unchanged sentences

Common Stock, $ 0.01 par value per share;

300,000 shares authorized, 118,610 and 114,659 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

300,000 shares authorized, 118,629 and 114,659 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

Preferred Stock, $ 0.01 par value per share;

10,000 shares authorized, 0 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

10,000 shares authorized, 0 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

Additional paid-in capital 2,569 2,354

1 unchanged sentence

Accumulated other comprehensive loss ( 278 ) ( 130 )

Total stockholders’ equity before noncontrolling interests 2,530 2,351

Noncontrolling interests 31 39

Total stockholders’ equity before noncontrolling interest 2,569 2,351

Noncontrolling interest 30 39

Total liabilities and equity $ 8,806 $ 7,271

2 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Six Months Ended June 30,

Nine Months Ended September 30,

(In millions) 2022 2021

15 unchanged sentences

Proceeds from sales of property and equipment 22 8

Purchase and sale of affiliate trade receivables, net — 12

Acquisition of businesses, net of cash acquired ( 874 ) 34

Proceeds from cross-currency swap agreements 26 —

Other 9 ( 2 )

Net cash used in investing activities

4 unchanged sentences

Repayment of debt and finance leases ( 23 ) ( 64 )

Purchase of noncontrolling interests — ( 128 )

Net transfers from XPO Logistics, Inc.

Purchase of noncontrolling interest — ( 128 )

Net transfers to XPO Logistics, Inc.

Taxes paid related to net share settlement of equity awards ( 12 ) —

Other ( 2 ) 15

Net cash provided by (used in) financing activities

9 unchanged sentences

Common Stock XPO Logistics, Inc.

Investment Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Equity Before Noncontrolling Interests Noncontrolling Interests Total Equity

Investment Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Equity Before Noncontrolling Interest Noncontrolling Interest Total Equity

(Shares in thousands, dollars in millions) Shares Amount

Balance as of March 31, 2022 114,840 $ 1 $ — $ 2,349 $ 163 $ ( 172 ) $ 2,341 $ 34 $ 2,375

Balance as of June 30, 2022 118,610 $ 1 $ — $ 2,561 $ 214 $ ( 246 ) $ 2,530 $ 31 $ 2,561

Net income — — — — 63 — 63 1 64

2 unchanged sentences

Vesting of stock compensation awards 19 — — — — — — — —

Tax withholding on vesting of stock compensation awards — — — ( 1 ) — — ( 1 ) — ( 1 )

Common stock issued for acquisition 3,749 — — 203 — — 203 — 203

Dividends — — — — — — — ( 3 ) ( 3 )

Balance as of June 30, 2022 118,610 $ 1 $ — $ 2,561 $ 214 $ ( 246 ) $ 2,530 $ 31 $ 2,561

Balance as of September 30, 2022 118,629 $ 1 $ — $ 2,569 $ 277 $ ( 278 ) $ 2,569 $ 30 $ 2,599

Common Stock XPO Logistics, Inc.

Investment Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Equity Before Noncontrolling Interests Noncontrolling Interests Total Equity

Investment Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Equity Before Noncontrolling Interest Noncontrolling Interest Total Equity

(Shares in thousands, dollars in millions) Shares Amount

8 unchanged sentences

Dividends — — — — — — — ( 3 ) ( 3 )

Balance as of June 30, 2022 118,610 $ 1 $ — $ 2,561 $ 214 $ ( 246 ) $ 2,530 $ 31 $ 2,561

Balance as of September 30, 2022 118,629 $ 1 $ — $ 2,569 $ 277 $ ( 278 ) $ 2,569 $ 30 $ 2,599

GXO Logistics, Inc.

1 unchanged sentence

Common Stock XPO Logistics, Inc.

Investment Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income Equity Before Noncontrolling Interests Noncontrolling Interests Total Equity

Investment Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Equity Before Noncontrolling Interest Noncontrolling Interest Total Equity

(Shares in thousands, dollars in millions) Shares Amount

Balance as of March 31, 2021 — $ — $ 2,903 $ — $ — $ 16 $ 2,919 $ 124 $ 3,043

Net income — — 11 — — — 11 3 14

Other comprehensive income (loss) — — — — — 23 23 ( 4 ) 19

Purchase of noncontrolling interest — — — — — — — ( 128 ) ( 128 )

Net transfers from (to) XPO Logistics, Inc.

— — ( 79 ) — — — ( 79 ) 40 ( 39 )

Other — — — — — — — 5 5

Balance as of June 30, 2021 — $ — $ 2,835 $ — $ — $ 39 $ 2,874 $ 40 $ 2,914

Net income — — 2 — 70 — 72 1 73

Other comprehensive loss — — — — — ( 12 ) ( 12 ) — ( 12 )

Stock-based compensation — — — 4 — — 4 — 4

Vesting of stock compensation awards 10 — — — — — — — —

Net transfers (to) from XPO, including separation adjustments — — ( 492 ) — — ( 150 ) ( 642 ) — ( 642 )

Issuance of common stock and reclassification of XPO investment 114,626 1 ( 2,345 ) 2,344 — — — — —

Balance as of September 30, 2021 114,636 $ 1 $ — $ 2,348 $ 70 $ ( 123 ) $ 2,296 $ 41 $ 2,337

(Shares in thousands, dollars in millions) Common Stock XPO Logistics, Inc.

Investment Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income Equity Before Noncontrolling Interests Noncontrolling Interests Total Equity

Investment Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Equity Before Noncontrolling Interest Noncontrolling Interest Total Equity

Shares Amount

2 unchanged sentences

Other comprehensive loss — — — — — ( 31 ) ( 31 ) — ( 31 )

Purchase of noncontrolling interests — — — — — — — ( 128 ) ( 128 )

Net transfers from XPO Logistics, Inc.

— — 45 — — — 45 40 85

Stock-based compensation — — — 4 — — 4 — 4

Vesting of stock compensation awards 10 — — — — — — — —

Purchase of noncontrolling interest — — — — — — — ( 128 ) ( 128 )

Net transfers (to) from XPO, including separation adjustments — — ( 447 ) — — ( 150 ) ( 597 ) 40 ( 557 )

Issuance of common stock and reclassification of XPO investment 114,626 1 ( 2,345 ) 2,344 — — — — —

Other — — — — — — — ( 3 ) ( 3 )

Balance as of June 30, 2021 — $ — $ 2,835 $ — $ — $ 39 $ 2,874 $ 40 $ 2,914

Balance as of September 30, 2021 114,636 $ 1 $ — $ 2,348 $ 70 $ ( 123 ) $ 2,296 $ 41 $ 2,337

See accompanying notes to Condensed Consolidated Financial Statements.

8 unchanged sentences

In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included.

Operating results for the three and six months ended June 30, 2022, are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

Operating results for the three and nine months ended September 30, 2022, are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

On August 2, 2021, the Company completed the separation from XPO Logistics, Inc.

11 unchanged sentences

and Transaction and integration costs in the Condensed Consolidated Statements of Operations.

The Company’s consolidated financial statements include the accounts of GXO and its majority-owned subsidiaries and variable interest entities of which the Company is the primary beneficiary.

The Company’s Condensed Consolidated Financial Statements include the accounts of GXO and its majority-owned subsidiaries and variable interest entities of which the Company is the primary beneficiary.

The Company has eliminated intercompany accounts and transactions.

11 unchanged sentences

The amendments are elective and are effective upon issuance through December 31, 2022.

The Company intends to apply this guidance when modifications of contracts that include LIBOR occur, which is not expected to have a material impact on the Company’s consolidated financial statements.

The Company intends to apply this guidance when modifications of contracts that include LIBOR occur, which is not expected to have a material impact on the Company’s Condensed Consolidated Financial Statements.

Revenue Recognition

Revenue disaggregated by geographical area was as follows:

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(In millions) 2022 2021 2022 2021

6 unchanged sentences

Total $ 2,287 $ 1,974 $ 6,526 $ 5,678

The Company’s revenue can also be disaggregated by various verticals, reflecting the customers’ principal industry sector.

Revenue disaggregated by industry sector was as follows:

Three Months Ended Six Months Ended

June 30, June 30,

The Company’s revenue can also be disaggregated by various verticals, reflecting our customers’ principal industry.

Revenue disaggregated by industries was as follows:

Three Months Ended Nine Months Ended

September 30, September 30,

(In millions) 2022 2021 2022 2021

E-commerce, omnichannel retail and consumer technology $ 1,194 $ 999 $ 2,324 $ 1,950

Omnichannel retail $ 919 $ 769 $ 2,618 $ 2,240

Food and beverage 335 361 1,009 972

Technology and consumer electronics 338 270 963 749

Industrial and manufacturing 275 244 807 743

3 unchanged sentences

Contract Balances

(In millions) June 30, 2022 December 31, 2021

(In millions) September 30, 2022 December 31, 2021

Contract assets (1)

3 unchanged sentences

Revenue recognized included the following:

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(In millions) 2022 2021 2022 2021

1 unchanged sentence

Remaining Performance Obligations

As of June 30, 2022, the fixed consideration component of the Company’s remaining performance obligation was approximately $ 2.6 billion, and the Company expects to recognize approximately 71 % of that amount over the next three years and the remainder thereafter.

As of September 30, 2022, the fixed consideration component of the Company’s remaining performance obligations was approximately $ 3.0 billion, and the Company expects to recognize approximately 75 % of that amount over the next three years and the remainder thereafter.

The Company estimates remaining performance obligations at a point in time, and actual amounts may differ from these estimates due to changes in foreign currency exchange rates and contract revisions or terminations.

2 unchanged sentences

The Company acquired Clipper for $ 1,103 million, consisting of $ 900 million in cash and the issuance of 3,749,266 shares of GXO common stock having a value of $ 203 million.

The Competition and Markets Authority (the “CMA”) in the U.K.

is currently reviewing the Clipper Acquisition.

The Company estimates that the CMA’s review of the acquisition will be completed during the second half of 2022.

The Company incurred transaction and financing costs related to the Clipper Acquisition of $ 20 million and $ 34 million for the three and six months ended June 30, 2022, respectively, which are included in Transaction and integration costs in the Condensed Consolidated Statements of Operations.

The Clipper Acquisition was subject to review by the Competition and Markets Authority in the United Kingdom (the “CMA”).

On October 4, 2022, the CMA approved the Clipper Acquisition.

The Company incurred acquisition and integration costs related to the Clipper Acquisition of $ 7 million and $ 41 million for the three and nine months ended September 30, 2022, respectively.

These costs are included in Transaction and integration costs in the Condensed Consolidated Statements of Operations.

In connection with the Clipper Acquisition, (i) the Company and Clipper entered into a Cooperation Agreement;

(ii) the Company entered into a Term Loan;

(ii) the Company entered into a Delayed Draw Term Loan;

(iii) the Company entered into a Five-Year Term Loan;

and (iv) the Company terminated its Bridge Term Loan agreement.

For additional information regarding the financing agreements entered in connection with the Clipper Acquisition, see Note 6—Debt and Financing Arrangements.

Clipper’s results of operations are included in our consolidated financial statements from the date of acquisition.

The Company recorded $ 80 million and $ 1 million of revenue and income before income taxes for both the three and six months ended June 30, 2022, respectively.

The Company accounted for the acquisition as a business combination using the acquisition method of accounting.

and (iv) the Company terminated its Bridge Term Loan.

For additional information regarding the financing agreements entered into in connection with the Clipper Acquisition, see Note 7.

Debt and Financing Arrangements.

The Company included Clipper’s results of operations from the date of acquisition.

For the three and nine months ended September 30, 2022, the Company recorded $ 239 million and $ 319 million of revenue, respectively, and $ — million and $ 1 million of income before income taxes, respectively.

The Company accounted for the Clipper Acquisition as a business combination using the acquisition method of accounting.

The fair value of assets acquired and liabilities assumed was based on management’s estimate of the fair values of the assets acquired and liabilities assumed using valuation techniques including income, cost and market approaches.

The following table summarizes the estimated fair value of assets acquired and liabilities assumed at the acquisition date:

The following table summarizes the estimated fair value of identifiable assets acquired and liabilities assumed at the acquisition date:

(In millions)

29 unchanged sentences

Goodwill recorded (3)

(1) The Company acquired $ 392 million of intangible assets comprised of customer relationships and trade names, with weighted-average useful lives of 15 years.

(2) Represents the fair value of the Company’s common stock on the acquisition date.

3 unchanged sentences

The final allocation of the purchase price may differ from the preliminary allocation based on completion of the valuation.

The Company expects to finalize purchase price allocation within the measurement period, which will not exceed one year from the acquisition date.

The Company expects to finalize the purchase price allocation within the measurement period, which will not exceed one year from the acquisition date.

The primary areas of the purchase price allocation that are not yet finalized relate to lease assets and liabilities, intangible assets and goodwill.

The following unaudited pro forma information presents the Company’s results of operations as if the acquisition of Clipper occurred on January 1, 2021.

The pro forma results reflect the impact of incremental interest expense, net of hedging instruments, to finance the acquisition and amortization expense on acquired intangible assets.

The following unaudited pro forma information presents the Company’s results of operations as if the Clipper Acquisition occurred on January 1, 2021.

The pro forma results reflect the impact of incremental interest expense, net of hedging instruments, to finance the acquisition and amortization expenses on acquired intangible assets.

Adjustments have also been made to remove transaction related costs.

The unaudited pro forma information is not necessarily indicative of what the results of operations of the combined company would have been had the acquisition been completed as of January 1, 2021.

Three Months Ended Six Months Ended

June 30, June 30,

The unaudited pro forma information is not necessarily indicative of what the results of operations of the combined company would have been if the acquisition had been completed as of January 1, 2021.

Three Months Ended Nine Months Ended

September 30, September 30,

(In millions) 2022 2021 2022 2021

10 unchanged sentences

These actions generally include severance and facility-related costs and are intended to improve efficiency and profitability.

The following is a rollforward of the restructuring liability, which is included in Other current liabilities in the Condensed Consolidated Balance Sheets:

The restructuring liability rollforward was as follows:

(In millions)

2 unchanged sentences

Payments ( 7 )

Balance as of June 30, 2022

The remaining restructuring liability at June 30, 2022 is primarily related to severance payments and is expected to be substantially paid within the next twelve months.

Balance as of September 30, 2022

The remaining restructuring liability at September 30, 2022 was primarily related to severance payments and is expected to be substantially paid within the next twelve months.

In the first quarter of 2022, the Company deconsolidated a 50 % owned joint venture.

The deconsolidation resulted in an $ 8 million charge recorded in the first quarter of 2022.

The Company has operating and finance leases primarily for real estate, warehouse equipment, trucks, trailers, containers and material handling equipment.

The Company has operating and finance leases for real estate, warehouse equipment, trucks, trailers, containers and material handling equipment.

The following amounts related to leases were recorded in the Condensed Consolidated Balance Sheets:

(In millions) June 30, 2022 December 31, 2021

(In millions) September 30, 2022 December 31, 2021

Operating leases:

5 unchanged sentences

Property and equipment, net $ 123 $ 155

Short-term borrowings and obligations under finance leases $ 37 $ 34

Long-term debt and obligations under finance leases 110 133

Short-term obligations under finance leases $ 35 $ 34

Long-term obligations under finance leases 98 133

Total finance lease liabilities $ 133 $ 167

The components of lease expense recorded in the Condensed Consolidated Statements of Operations were as follows:

Three Months Ended Six Months Ended

June 30, June 30,

The components of lease cost recorded in the Condensed Consolidated Statements of Operations were as follows:

Three Months Ended Nine Months Ended

September 30, September 30,

(In millions) 2022 2021 2022 2021

10 unchanged sentences

Supplemental cash flow information was as follows:

Six Months Ended June 30,

Nine Months Ended September 30,

(In millions) 2022 2021

1 unchanged sentence

Leased assets obtained in exchange for new finance lease liabilities, including $ 16 and $ 23 from an acquisition in 2022 and 2021, respectively

The following table presents the changes in goodwill for the period:

(In millions)

Balance as of December 31, 2021 $ 2,017

Acquisition (1)

Foreign exchange translation ( 198 )

Balance as of September 30, 2022 $ 2,603

(1) Any change in the goodwill amounts resulting from foreign currency translations are presented as “Foreign exchange translation.”

Debt and Financing Arrangements

The following table summarizes the carrying value of debt:

The following table summarizes the carrying value of our debt:

(In millions) Rate (1)

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

1.65 % Unsecured notes due 2026 (2)

9 unchanged sentences

Total long-term debt and obligations under finance leases $ 1,789 $ 927

(1) Interest rate as of June 30, 2022.

(2) Net of unamortized debt issuance costs and discount of $ 3 million as of June 30, 2022 and December 31, 2021.

(3) Net of unamortized debt issuance costs and discount of $ 4 million as of June 30, 2022 and December 31, 2021.

(4) Net of unamortized debt issuance costs of $ 1 million as of June 30, 2022.

(1) Interest rate as of September 30, 2022.

(2) Net of unamortized debt issuance costs and discount of $ 3 million as of September 30, 2022 and December 31, 2021.

(3) Net of unamortized debt issuance costs and discount of $ 4 million as of September 30, 2022 and December 31, 2021.

(4) Net of unamortized debt issuance costs of $ 1 million as of September 30, 2022.

Five-Year Term Loan

On May 25, 2022, the Company entered into a five-year unsecured Term Loan (the “ Five-Year Term Loan due 2027”) that provided a $ 500 million unsecured term loan facility to fund the Clipper Acquisition.

On May 25, 2022, the Company entered into a five-year unsecured Term Loan (the “ Five-Year Term Loan”) that provided a $ 500 million unsecured term loan facility to fund the Clipper Acquisition.

On May 26, 2022, the Company borrowed $ 500 million that will mature on May 26, 2027.

1 unchanged sentence

Delayed Draw Term Loan

On March 22, 2022, the Company entered into an unsecured delayed draw Term Loan (the “Delayed Draw Term Loan”) that provided a £ 375 million ($ 457 million as of June 30, 2022) unsecured term loan facility to fund the Clipper Acquisition.

The loans were available to the Company in U.S.

On March 22, 2022, the Company entered into an unsecured delayed draw Term Loan (the “Delayed Draw Term Loan”) that provided a £ 375 million unsecured term loan facility to fund the Clipper Acquisition.

The loan was available to the Company in U.S.

dollars or British pounds sterling.

On May 26, 2022, the Company borrowed, in U.S.

dollars, a $ 165 million 2 -year term loan tranche (the “ Two-Year Term Loan due 2024”) and a $ 235 million 3 -year term loan tranche (the “ Three-Year Term Loan due 2025”) that will mature on May 26, 2024 and May 26, 2025, respectively.

dollars, a $ 165 million 2 -year term loan tranche (the “ Two-Year Term Loan”) and a $ 235 million 3 -year term loan tranche (the “ Three-Year Term Loan”) that will mature on May 26, 2024 and May 26, 2025, respectively.

Loans bear interest at a fluctuating rate per annum equal to, at the Company’s option, the alternate base rate or the adjusted SOFR, plus an applicable margin based on the Company’s credit ratings.

Bridge Term Loan

On February 28, 2022, the Company entered into an unsecured Bridge Term Loan (the “Bridge Term Loan”) that provided a £ 745 million ($ 907 million as of June 30, 2022) unsecured term loan facility to fund the Clipper Acquisition.

On February 28, 2022, the Company entered into an unsecured Bridge Term Loan (the “Bridge Term Loan”) that provided a £ 745 million unsecured term loan facility to fund the Clipper Acquisition.

The commitments under the Bridge Term Loan were terminated with the effectiveness of the Five-Year Term Loan and the Delayed Draw Term Loan.

No amounts were drawn under the Bridge Term Loan credit agreement.

No amounts were drawn under the Bridge Term Loan.

Revolving Credit Facility

1 unchanged sentence

The Revolving Credit Facility provides commitments of up to $ 800 million, of which $ 60 million is available for the issuance of letters of credit.

No amounts were outstanding under the Revolving Credit Facility as of June 30, 2022.

No amounts were outstanding under the Revolving Credit Facility as of September 30, 2022 or December 31, 2021.

Sales of Certain Receivables

5 unchanged sentences

Information related to the trade receivables sold was as follows:

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(In millions) 2022 2021 2022 2021

8 unchanged sentences

In addition, the facilities require the Company to maintain a consolidated leverage ratio below a specified maximum.

As of June 30, 2022, the Company was in compliance with the covenants contained in its debt and financing arrangements.

As of September 30, 2022, the Company was in compliance with the covenants contained in its debt and financing arrangements.

Fair Value Measurements and Financial Instruments

8 unchanged sentences

The Company bases its fair value estimates on market assumptions and available information.

The carrying values of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and current maturities of long-term debt approximated their fair values as of June 30, 2022 and December 31, 2021, due to their short-term nature.

The carrying values of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and current maturities of long-term debt approximated their fair values as of September 30, 2022 and December 31, 2021, due to their short-term nature.

The fair value of debt was as follows:

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

(In millions) Level Fair Value Carrying Value Fair Value Carrying Value

21 unchanged sentences

In the second quarter of 2022, the Company extended a fixed-to-fixed cross-currency swap agreement scheduled to mature in 2026 to 2027, with an aggregate notional amount of $ 165 million.

Additionally, in the second quarter of 2022, the Company entered into multiple cross-currency swap agreements with maturity dates ranging from 2023 to 2027, with an aggregate notional amount of $ 900 million, of which $ 250 million was amended during the quarter.

In connection with the extensions and amendments, the Company received cash of $ 2 million and $ 12 million representing the fair value of the swap and interest accrued through the date of termination for the three and the six months ended June 30, 2022, respectively.

In connection with the extensions and amendments, the Company received cash of $ 16 million and $ 28 million representing the fair value of the swap plus interest accrued through the date of termination for the three and nine months ended September 30, 2022, respectively.

In November 2022, the Company amended certain fixed-to-fixed cross-currency swap agreements scheduled to mature in 2027 to 2026, with an

aggregate notional amount of $ 322 million, the amendments were not material to the Condensed Consolidated Financial Statements.

Interest Rate Swap Agreements

1 unchanged sentence

The Company designated these interest rate swap agreements as qualifying hedging instruments and accounts for them as cash flow hedges.

When an interest rate swap agreement qualifies for hedge accounting as a cash flow hedge, the changes in the fair value are recorded in equity as a component of AOCI and are reclassified into Interest expense, net over the life of the underlying debt, as interest on the Company’s floating rate debt is accrued.

When an interest rate swap agreement qualifies for hedge accounting as a cash flow hedge, the changes in the fair value are recorded in equity as a component of Accumulated Other Comprehensive Income (“AOCI”) and are reclassified into Interest expense, net over the life of the underlying debt, as interest on the Company’s floating rate debt is accrued.

In the second quarter of 2022, the Company entered into multiple interest rate swap agreements with an aggregate notional amount of $ 250 million.

5 unchanged sentences

While these derivatives are hedging the fluctuations in foreign currencies, they do not meet the requirements to be accounted for as hedging instruments.

The fair value of derivative instruments and the related notional amounts were as follows:

June 30, 2022 December 31, 2021

The fair values of derivative instruments and the related notional amounts were as follows:

September 30, 2022 December 31, 2021

(In millions) Notional Amount Fair Value Notional Amount Fair Value Balance Sheet Caption

1 unchanged sentence

Cross-currency swap agreements $ 1,387 $ 103 $ — $ — Other long-term assets

Interest rate swaps 250 11 — — Other long-term assets

Cross-currency swap agreements $ — $ — $ 328 $ 4 Other current liabilities

Cross-currency swap agreements — — 165 4 Other long-term liabilities

Interest rate swaps 250 1 — — Other long-term liabilities

Derivatives not designated as hedges

2 unchanged sentences

Foreign currency forward contracts $ 15 $ — $ — $ — Other current liabilities

As of June 30, 2022, and December 31, 2021, the derivatives were classified as Level 2 within the fair value hierarchy.

As of September 30, 2022 and December 31, 2021, the derivatives were classified as Level 2 within the fair value hierarchy.

The derivatives are valued using inputs other than quoted prices such as foreign exchange rates and yield curves.

1 unchanged sentence

The effect of hedges on AOCI and in the Condensed Consolidated Statements of Operations was as follows:

Three Months Ended June 30, 2022 Six Months Ended June 30, 2022

(In millions) Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivative Gain or (Loss) Reclassified from AOCI into Net Income (1)

Gain or (Loss) Recognized in Net Income on Derivative (Excluded from effectiveness testing) (1)

Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivative Gain or (Loss) Reclassified from AOCI into Net Income (1)

Gain or (Loss) Recognized in Net Income on Derivative (Excluded from effectiveness testing) (1)

Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022

(In millions) Amount of Gain Recognized in Other Comprehensive Income on Derivatives Gain Reclassified from AOCI into Net Income (1)

Gain Recognized in Net Income on Derivatives (Excluded from effectiveness testing) (1)

Amount of Gain Recognized in Other Comprehensive Income on Derivatives Gain Reclassified from AOCI into Net Income (1)

Gain Recognized in Net Income on Derivatives (Excluded from effectiveness testing) (1)

Derivatives designated as net investment hedges

3 unchanged sentences

(1) Amounts reclassified to Net income are reported within Interest expense, net in the Condensed Consolidated Statements of Operations.

There were no derivative instruments recorded in the consolidated financial statements on or before June 30, 2021.

Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021

(In millions) Amount of Gain Recognized in Other Comprehensive Income on Derivatives Gain Reclassified from AOCI into Net Income (1)

Gain Recognized in Net Income on Derivatives (Excluded from effectiveness testing) (1)

Amount of Gain Recognized in Other Comprehensive Income on Derivatives Gain Reclassified from AOCI into Net Income (1)

Gain Recognized in Net Income on Derivatives (Excluded from effectiveness testing) (1)

Derivatives designated as net investment hedges

Cross-currency swap agreements $ 11 $ 1 $ 1 $ 11 $ 1 $ 1

(1) Amounts reclassified to Net income are reported within Interest expense, net in the Condensed Consolidated Statements of Operations.

Derivatives not designated as hedges

The gains recognized in earnings for foreign currency option and forward contracts were $ 16 million and $ 24 million, of which $ 9 million and $ 15 million were unrealized, for the three and six months ended June 30, 2022, respectively.

These amounts are recorded in Other income (expense), net in the Condensed Consolidated Statements of Operations.

Gains and losses recognized in Other income, net in the Condensed Consolidated Statements of Operations for foreign currency options and forward contracts were as follows:

Three Months Ended Nine Months Ended

September 30, September 30,

(In millions) 2022 2021 2022 2021

Realized gain $ 10 $ — $ 19 $ —

Unrealized gain (loss) ( 1 ) 1 14 1

Total gain recognized in net income $ 9 $ 1 $ 33 $ 1

Employee Benefit Plans

4 unchanged sentences

Retirement Plan were as follows:

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(In millions) 2022 2021 2022 2021

3 unchanged sentences

$ 7 $ 10 $ 25 $ 10

(1) Net periodic benefit income is recorded within Other income (expense), net in the Condensed Consolidated Statements of Operations.

(1) Net periodic benefit income is recorded within Other income, net in the Condensed Consolidated Statements of Operations.

The Company also maintains defined benefit pension plans for other foreign subsidiaries that are excluded from the disclosures due to their immateriality.

Defined Contribution Plans

The Company’s costs for qualified defined contribution plans was $ 4 million for the three months ended June 30, 2022 and 2021, and $ 8 million for the six months ended June 30, 2022 and 2021.

The Company’s costs for qualified defined contribution plans were $ 4 million for both the three months ended September 30, 2022 and 2021, and $ 12 million for both the nine months ended September 30, 2022 and 2021.

Defined contribution costs were primarily recorded within Direct operating expenses in the Condensed Consolidated Statements of Operations.

1 unchanged sentence

The computations of basic and diluted earnings per share were as follows:

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(Dollars in millions, shares in thousands, except per share data) 2022 2021 (1)

6 unchanged sentences

Diluted earnings per share $ 0.53 $ 0.62 $ 1.29 $ 0.84

Antidilutive shares excluded from diluted weighted-average common shares 2,013 — 1,735 —

(1) On August 2, 2021, 114,626,250 shares of common stock of the Company were distributed and began regular-way trading.

This share amount is utilized for the calculation of basic and diluted earnings per share for the three and six months ended June 30, 2021.

For the three and the six months ended June 30, 2022, approximately 1.8 million and 1.6 million shares, respectively, were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive.

This share amount is utilized for the calculation of basic and diluted earnings per share for three and nine months ended September 30, 2021.

Stockholders’ Equity

The following table summarizes the changes in AOCI by component:

(In millions) Foreign Currency Translation Adjustments Derivative Hedges Defined Benefit Plan Less:

(In millions) Foreign Currency Translation Adjustments Cash Flow Hedges Defined Benefit Plan Less:

AOCI attributable to noncontrolling interest AOCI attributable to GXO

As of March 31, 2022 $ ( 94 ) $ — $ ( 76 ) $ ( 2 ) $ ( 172 )

Unrealized gain (loss), net of tax ( 73 ) — — 1 ( 72 )

Balance as of June 30, 2022 $ ( 169 ) $ — $ ( 76 ) $ ( 1 ) $ ( 246 )

Foreign currency translation loss ( 111 ) — — 2 ( 109 )

Unrealized gain on hedges, net of tax 69 9 — — 78

Amounts reclassified from AOCI to net income ( 1 ) — — — ( 1 )

Other comprehensive income (loss), net of tax ( 43 ) 9 — 2 ( 32 )

As of June 30, 2022 $ ( 169 ) $ — $ ( 76 ) $ ( 1 ) $ ( 246 )

(In millions) Foreign Currency Translation Adjustments Derivative Hedges Defined Benefit Plan Less:

Balance as of September 30, 2022 $ ( 212 ) $ 9 $ ( 76 ) $ 1 $ ( 278 )

(In millions) Foreign Currency Translation Adjustments Cash Flow Hedges Defined Benefit Plan Less:

AOCI attributable to noncontrolling interest AOCI attributable to GXO

As of December 31, 2021 $ ( 53 ) $ — $ ( 76 ) $ ( 1 ) $ ( 130 )

Unrealized gain (loss), net of tax ( 116 ) — — 2 ( 114 )

Balance as of December 31, 2021 $ ( 53 ) $ — $ ( 76 ) $ ( 1 ) $ ( 130 )

Foreign currency translation loss ( 260 ) — — 4 ( 256 )

Unrealized gain on hedges, net of tax 102 9 — — 111

Amounts reclassified from AOCI to net income ( 5 ) — — — ( 5 )

1 unchanged sentence

Deconsolidation of variable interest entity 4 — — ( 2 ) 2

As of June 30, 2022 $ ( 169 ) $ — $ ( 76 ) $ ( 1 ) $ ( 246 )

(In millions) Foreign Currency Translation Adjustments Derivative Hedges Defined Benefit Plan Less:

Balance as of September 30, 2022 $ ( 212 ) $ 9 $ ( 76 ) $ 1 $ ( 278 )

(In millions) Foreign Currency Translation Adjustments Cash Flow Hedges Defined Benefit Plan Less:

AOCI attributable to noncontrolling interest AOCI attributable to GXO

As of March 31, 2021 $ 16 $ ( 1 ) $ ( 1 ) $ 2 $ 16

Unrealized gain (loss), net of tax 26 — — ( 3 ) 23

Balance as of June 30, 2021 $ 42 $ ( 1 ) $ ( 1 ) $ ( 1 ) $ 39

Unrealized loss, net of tax ( 10 ) — — — ( 10 )

Amounts reclassified from AOCI to net income ( 2 ) — — — ( 2 )

Other comprehensive income (loss), net of tax 26 — — ( 3 ) 23

As of June 30, 2021 $ 42 $ ( 1 ) $ ( 1 ) $ ( 1 ) $ 39

(In millions) Foreign Currency Translation Adjustments Derivative Hedges Defined Benefit Plan Less:

Other comprehensive loss, net of tax ( 12 ) — — — ( 12 )

Transfers to XPO, net of tax ( 68 ) — ( 82 ) $ — $ ( 150 )

Balance as of September 30, 2021 $ ( 38 ) $ ( 1 ) $ ( 83 ) $ ( 1 ) $ ( 123 )

(In millions) Foreign Currency Translation Adjustments Cash Flow Hedges Defined Benefit Plan Less:

AOCI attributable to noncontrolling interest AOCI attributable to GXO

As of December 31, 2020 $ 61 $ — $ ( 1 ) $ ( 2 ) $ 58

Unrealized gain (loss), net of tax ( 19 ) ( 1 ) — 1 ( 19 )

Balance as of December 31, 2020 $ 61 $ — $ ( 1 ) $ ( 2 ) $ 58

Unrealized loss, net of tax ( 28 ) ( 1 ) — — ( 29 )

Amounts reclassified from AOCI to net income ( 2 ) — — — ( 2 )

Other comprehensive income (loss), net of tax ( 19 ) ( 1 ) — 1 ( 19 )

As of June 30, 2021 $ 42 $ ( 1 ) $ ( 1 ) $ ( 1 ) $ 39

Other comprehensive loss, net of tax ( 30 ) ( 1 ) — — ( 31 )

Transfers to (from) XPO, net of tax ( 69 ) — ( 82 ) 1 $ ( 150 )

Balance as of September 30, 2021 $ ( 38 ) $ ( 1 ) $ ( 83 ) $ ( 1 ) $ ( 123 )

Commitments and Contingencies

13 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements