What changed in this filing

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Item 1. Financial Statements

2024-08-06 compared with 2024-05-08 · 274 added, 115 removed, 382 unchanged (50% of the section changed)

2 unchanged sentences

Condensed Consolidated Statements of Operations

Three Months Ended March 31,

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

(Dollars in millions, shares in thousands, except per share amounts) 2024 2023 2024 2023

6 unchanged sentences

Litigation expense ( 3 ) — 60 —

Operating income (loss) ( 39 ) 42

Operating income 75 99 36 141

Other income, net 1 1 7 1

Interest expense, net ( 23 ) ( 14 ) ( 36 ) ( 27 )

Income (loss) before income taxes ( 46 ) 29

Income tax (expense) benefit 10 ( 3 )

Net income (loss) ( 36 ) 26

Income before income taxes 53 86 7 115

Income tax expense ( 14 ) ( 20 ) ( 4 ) ( 23 )

Net income 39 66 3 92

Net income attributable to Noncontrolling Interests (“NCI”) ( 1 ) ( 1 ) ( 2 ) ( 2 )

Net income (loss) attributable to GXO $ ( 37 ) $ 25

Earnings (loss) per share

Net income attributable to GXO $ 38 $ 65 $ 1 $ 90

Earnings per share

Basic $ 0.32 $ 0.55 $ 0.01 $ 0.76

6 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income (Loss)

Three Months Ended March 31,

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

(In millions) 2024 2023 2024 2023

Net income (loss) $ ( 36 ) $ 26

Net income $ 39 $ 66 $ 3 $ 92

Other comprehensive income (loss), net of tax

9 unchanged sentences

Condensed Consolidated Balance Sheets

March 31, December 31,

June 30, December 31,

(Dollars in millions, shares in thousands, except per share amounts) 2024 2023

40 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Three Months Ended March 31,

Six Months Ended June 30,

(In millions) 2024 2023

Cash flows from operating activities:

Net income (loss) $ ( 36 ) $ 26

Adjustments to reconcile net income (loss) to net cash provided by operating activities

Net income $ 3 $ 92

Adjustments to reconcile net income to net cash provided by operating activities

Depreciation and amortization expense 191 167

1 unchanged sentence

Deferred tax benefit

( 16 ) ( 17 )

Changes in operating assets and liabilities

7 unchanged sentences

Proceeds from sale of property and equipment 10 10

Purchase of Wincanton plc shares ( 15 ) —

Acquisition of businesses, net of cash acquired ( 863 ) —

Net cash used in investing activities ( 1,014 ) ( 140 )

Cash flows from financing activities:

Proceeds from debt, net 1,085 —

Repayments of debt, net ( 196 ) ( 138 )

1 unchanged sentence

Taxes paid related to net share settlement of equity awards ( 7 ) ( 6 )

Net cash used in financing activities ( 8 ) ( 29 )

Other ( 6 ) 5

Net cash provided by (used in) financing activities 857 ( 155 )

Effect of exchange rates on cash and cash equivalents ( 7 ) 5

Net decrease in cash, restricted cash and cash equivalents ( 45 ) ( 69 )

Net increase (decrease) in cash, restricted cash and cash equivalents 1 ( 190 )

Cash, restricted cash and cash equivalents, beginning of period 470 495

12 unchanged sentences

dollars in millions) Shares Amount

Balance as of March 31, 2024 119,368 $ 1 $ 2,602 $ 515 $ ( 249 ) $ 2,869 $ 34 $ 2,903

Net income — — — 38 — 38 1 39

Other comprehensive loss — — — — ( 14 ) ( 14 ) — ( 14 )

Stock-based compensation — — 11 — — 11 — 11

Vesting of stock compensation awards 115 — — — — — — —

Tax withholding on vesting of stock-based compensation awards ( 46 ) — ( 3 ) — — ( 3 ) — ( 3 )

Other — — — — — — ( 3 ) ( 3 )

Balance as of June 30, 2024 119,437 $ 1 $ 2,610 $ 553 $ ( 263 ) $ 2,901 $ 32 $ 2,933

Common Stock APIC Retained

Earnings AOCIL Equity Before

NCI NCI Total

(Shares in thousands,

dollars in millions) Shares Amount

Balance as of December 31, 2023 119,057 $ 1 $ 2,598 $ 552 $ ( 239 ) $ 2,912 $ 34 $ 2,946

Net income (loss) — — — ( 37 ) — ( 37 ) 1 ( 36 )

Net income — — — 1 — 1 2 3

Other comprehensive loss — — — — ( 24 ) ( 24 ) ( 1 ) ( 25 )

1 unchanged sentence

Vesting of stock compensation awards 509 — — — — — — —

Tax withholding on vesting of stock compensation awards ( 83 ) — ( 4 ) — — ( 4 ) — ( 4 )

Tax withholding on vesting of stock-based compensation awards ( 129 ) — ( 7 ) — — ( 7 ) — ( 7 )

Other — — — — — — ( 3 ) ( 3 )

Balance as of June 30, 2024 119,437 $ 1 $ 2,610 $ 553 $ ( 263 ) $ 2,901 $ 32 $ 2,933

See accompanying Notes to Condensed Consolidated Financial Statements.

GXO Logistics, Inc.

Condensed Consolidated Statements of Changes in Equity

Common Stock APIC Retained

Earnings AOCIL Equity Before

NCI NCI Total

(Shares in thousands,

dollars in millions) Shares Amount

Balance as of March 31, 2023 118,889 $ 1 $ 2,580 $ 348 $ ( 244 ) $ 2,685 $ 34 $ 2,719

Net income — — — 65 — 65 1 66

Other comprehensive income — — — 21 21 1 22

Stock-based compensation — — 9 — — 9 — 9

Vesting of stock compensation awards 71 — — — — — — —

Tax withholding on vesting of stock compensation awards ( 28 ) — ( 2 ) — — ( 2 ) — ( 2 )

Other — — — — — — ( 3 ) ( 3 )

Balance as of June 30, 2023 118,932 $ 1 $ 2,587 $ 413 $ ( 223 ) $ 2,778 $ 33 $ 2,811

Common Stock APIC Retained

9 unchanged sentences

Tax withholding on vesting of stock compensation awards ( 132 ) — ( 6 ) — — ( 6 ) — ( 6 )

Balance as of March 31, 2023 118,889 $ 1 $ 2,580 $ 348 $ ( 244 ) $ 2,685 $ 34 $ 2,719

Other — — — — — — ( 3 ) ( 3 )

Balance as of June 30, 2023 118,932 $ 1 $ 2,587 $ 413 $ ( 223 ) $ 2,778 $ 33 $ 2,811

See accompanying Notes to Condensed Consolidated Financial Statements.

20 unchanged sentences

The disclosures are required for annual periods ending December 31, 2025.

In April 2024, the SEC issued an order staying the implementation of the new climate-related disclosure rules pending completion of judicial review of consolidated changes to the rules by the Court of Appeals for the Eighth Circuit.

In April 2024, the SEC issued an order staying the implementation of the new climate-related disclosure rules pending completion of judicial review of consolidated changes to the rules by the U.S.

Court of Appeals for the Eighth Circuit.

The Company continues to monitor developments and evaluate the potential impact of these rules on its Consolidated Financial Statements.

11 unchanged sentences

Revenue disaggregated by geographical area was as follows:

Three Months Ended March 31,

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

(In millions) 2024 2023 2024 2023

4 unchanged sentences

Spain 145 136 274 263

Italy 97 94 190 182

Other 163 164 319 316

2 unchanged sentences

Revenue disaggregated by industry was as follows:

Three Months Ended March 31,

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

(In millions) 2024 2023 2024 2023

2 unchanged sentences

Food and beverage 326 335 642 642

Consumer packaged goods 295 226

Industrial and manufacturing 331 270 597 540

Consumer packaged goods 290 232 585 458

Other 220 176 395 366

2 unchanged sentences

The contract asset and contract liability balances from contracts with customers were as follows:

March 31, December 31,

June 30, December 31,

(In millions) 2024 2023

8 unchanged sentences

Revenue recognized included the following:

Three Months Ended March 31,

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

(In millions) 2024 2023 2024 2023

Amounts included in the beginning of year contract liability balance

$ 48 $ 16 $ 153 $ 98

Remaining Performance Obligations

1 unchanged sentence

As permitted in determining the remaining performance obligation, the Company omits obligations that have original expected durations of one year or less or contain variable consideration.

As of March 31, 2024, the fixed consideration component of the Company’s remaining performance obligation was approximately $ 3.7 billion, and the Company expects to recognize approximately 75 % of that amount over the next three years and the remainder thereafter.

As of June 30, 2024, the fixed consideration component of the Company’s remaining performance obligation was approximately $ 4.1 billion, and the Company expects to recognize approximately 76 % 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 following amounts were recorded in the Condensed Consolidated Balance Sheets related to leases:

March 31, December 31,

June 30, December 31,

(In millions) 2024 2023

10 unchanged sentences

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

Three Months Ended March 31,

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

(In millions) 2024 2023 2024 2023

4 unchanged sentences

Total operating lease cost (1)

$ 290 $ 275 $ 563 $ 547

Finance leases:

5 unchanged sentences

Supplemental cash flow information was as follows:

Three Months Ended March 31,

Six Months Ended June 30,

(In millions) 2024 2023

Leased assets obtained in exchange for new lease obligations:

Operating leases $ 167 $ 73

Finance leases — 3

Operating leases, including $ 244 from an acquisition in 2024

Finance leases, including $ 36 from an acquisition in 2024

Wincanton Acquisition

On February 29, 2024, the Company and the board of directors of Wincanton plc, a logistics company based in Chippenham, United Kingdom (“Wincanton”), reached an agreement on the terms of a cash offer by the Company for the acquisition of the entire issued ordinary share capital of Wincanton (the “Wincanton Acquisition”).

Wincanton is a British logistics provider specializing in both warehousing and transportation solutions.

Under the terms of the agreement, Wincanton shareholders received 605 pence ($ 7.64 as of the acquisition date) in cash for each Wincanton share held.

On April 10, 2024, the Wincanton shareholders approved the Wincanton Acquisition and on April 29, 2024, the Company completed the Wincanton Acquisition for total consideration of approximately £ 762 million ($ 958 million).

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

is currently reviewing the Wincanton Acquisition.

The Company estimates that the CMA’s review of the acquisition will be completed during the second half of 2024.

Wincanton is a logistics provider specializing in both warehousing and transportation solutions in the U.K.

Wincanton services industries in grocery, retail and manufacturing, consumer goods, ecommerce, healthcare, defense, industrial, and energy.

Under the terms of the agreement, Wincanton shareholders will be entitled to receive 605 pence ($ 7.64 as of March 31, 2024) in cash for each Wincanton share held.

In connection with the Wincanton Acquisition, (i) the Company entered into a bridge term loan credit agreement, (ii) the Company entered into a three-year term loan credit agreement (“Three-Year Term Loan due 2027”), and (iii) in April 2024, the Company issued $ 1.1 billion aggregate principal amount of its senior notes (the “Unsecured Notes”).

The Company incurred transaction and financing costs related to the Wincanton Acquisition of $ 11 million and $ 26 million for the three and six months ended June 30, 2024, respectively, which are included in Transaction and integration costs in the Condensed Consolidated Statements of Operations.

In connection with the Wincanton Acquisition, (i) the Company entered into a bridge term loan credit agreement (the “Bridge Term Loan”), (ii) the Company entered into a three-year term loan credit agreement (“Three-Year Term

Loan due 2027”), and (iii) in April 2024, the Company issued $ 1.1 billion aggregate principal amount of senior notes (the “Unsecured Notes”).

For additional information regarding the financing agreements entered in connection with the Wincanton Acquisition, see Note 6.

Debt and Financing Arrangements and Note 13.

Subsequent Events.

During March 2024, the Company purchased approximately 2.0 million Wincanton shares for approximately £ 12 million ($ 15 million).

Debt and Financing Arrangements.

Wincanton’s results of operations are included in the Condensed Consolidated Statements of Operations from the date of acquisition.

The Company recorded $ 333 million and $ 3 million of revenue and income before income taxes for both the three and six months ended June 30, 2024, respectively.

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

(In millions)

Current assets

Cash and cash equivalents $ 91

Accounts receivable 259

Other current assets 76

Total current assets 426

Long-term assets

Property and equipment 75

Operating lease assets 175

Intangible assets 437

Other long-term assets 149

Total long-term assets 836

Total assets $ 1,262

Current liabilities

Accounts payable $ 68

Accrued expenses 322

Current debt 7

Current operating lease liabilities 80

Other current liabilities 98

Total current liabilities

Long-term liabilities

Long-term debt 167

Long-term operating lease liabilities 166

Other long-term liabilities 194

Total long-term liabilities

Total liabilities $ 1,102

Net assets purchased $ 160

Purchase price (1)

Goodwill recorded (2)

(1) The Company recorded a realized foreign currency gain of $ 5 million which represents the change in foreign currency rates from the acquisition date through the settlement date.

The gain is included as a component of “Transaction and Integration expense” on the Condensed Consolidated Statements of Operations.

(2) Goodwill represents the excess of the purchase price over the fair value of identifiable assets acquired and liabilities assumed at the acquisition date.

Goodwill acquired was recorded in the U.K.

and Ireland reporting unit and was primarily attributed to anticipated synergies.

The Company does not expect the goodwill recognized in connection with the Wincanton Acquisition to be deductible for income tax purposes.

The fair values of the assets acquired and liabilities assumed are considered preliminary and subject to adjustment as additional information is obtained and reviewed.

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

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

The following unaudited pro forma information presents the Company’s results of operations as if the acquisition of Wincanton occurred on January 1, 2023.

The pro forma results reflect the impact of incremental interest expense to finance the acquisition and amortization expense 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, 2023.

Three Months Ended Six Months Ended

June 30, June 30,

(In millions) 2024 2023 2024 2023

Revenue $ 2,983 $ 2,825 $ 5,876 $ 5,568

Income (loss) before income taxes (1)

38 74 ( 81 ) 78

(1) Included in the Income (loss) before income taxes on a pro forma basis for the six months ended June 30, 2024 were long-lived asset impairment charges of $ 90 million recorded by Wincanton.

PFSweb Acquisition

1 unchanged sentence

The Company acquired the shares of PFS at a price per share of $ 7.50 in cash, totaling approximately $ 149 million, net of cash acquired.

PFS is a global provider of omnichannel commerce

solutions, including a broad range of technology, infrastructure and professional services, in the United States, Canada and Europe.

PFS is a global provider of omnichannel commerce solutions, including a broad range of technology, infrastructure and professional services, in the United States, Canada and Europe.

PFS’s service offerings include order fulfillment, fulfillment-as-a-service, order management and customer care.

1 unchanged sentence

Goodwill acquired in connection with the acquisition was $ 84 million, recorded in the Americas and Asia-Pacific reporting unit, and was attributed to anticipated synergies.

The Company does not expect the goodwill recognized in connection with the PFS Acquisition to be deductible for income tax purposes.

The Company does not expect the goodwill recognized in connection with the PFS Acquisition to be deductible for U.S.

income tax purposes.

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

The following table presents the changes in Goodwill for the six months ended June 30, 2024:

(In millions)

Balance as of December 31, 2023

Acquisition (1)

Impact of foreign exchange translation (2)

Balance as of June 30, 2024

(1) Includes $ 798 million and $ 8 million for the preliminary purchase price allocation for the Wincanton Acquisition and adjustments to the purchase price allocation for the PFS Acquisition, respectively.

(2) Changes to goodwill amounts resulting from foreign currency translation after the acquisition date are presented as the impact of foreign exchange translation.

As of June 30, 2024 and December 31, 2023, there were no accumulated goodwill impairment losses.

Debt and Financing Arrangements

The following table summarizes the carrying value of the Company’s debt:

March 31, December 31,

June 30, December 31,

(In millions) Rate (1)

2 unchanged sentences

Unsecured notes due 2029 (3)

Unsecured notes due 2031 (4)

2.65 % 397 397

Unsecured notes due 2034 (5)

Three-Year Term Loan due 2025 (6)

6 unchanged sentences

Total Long-term debt $ 2,551 $ 1,620

(1) Interest rate as of March 31, 2024.

(2) Net of unamortized debt issuance costs of $ 2 million as of March 31, 2024 and December 31, 2023.

(3) Net of unamortized debt issuance costs of $ 3 million as of March 31, 2024 and December 31, 2023.

(4) Net of unamortized debt issuance costs of $ 1 million as of March 31, 2024 and December 31, 2023.

Bridge Term Loan

On February 29, 2024, the Company entered into a bridge term loan credit agreement that provided a £ 763 million ($ 963 million as of March 31, 2024) unsecured term loan facility (the “Bridge Term Loan”) to fund the Wincanton Acquisition.

The Bridge Term Loan matures 364 days after an advance.

Loans under the Bridge Term Loan bear interest at the daily simple Sterling Overnight Index Average Rate (“SONIA”) plus an applicable margin calculated based on the Company’s credit ratings.

No amounts were outstanding under the Bridge Term Loan as of March 31, 2024.

Concurrently with the closing of the Three-Year Term Loan due 2027, the Company reduced the commitments under the Bridge Term Loan by the aggregate amount of commitments under the Three-Year Term Loan due 2027.

Concurrently with the closing of the Unsecured Notes, the Company terminated the remaining commitments under the Bridge Term Loan.

(1) Interest rate as of June 30, 2024.

(2) Net of unamortized debt issuance costs of $ 2 million as of June 30, 2024 and December 31, 2023.

(3) Net of unamortized debt issuance costs of $ 8 million as of June 30, 2024.

(4) Net of unamortized debt issuance costs of $ 3 million as of June 30, 2024 and December 31, 2023.

(5) Net of unamortized debt issuance costs of $ 10 million as of June 30, 2024.

(6) On June 27, 2024, the Company repaid $ 50 million of the Three-Year Term Loan due 2025.

(7) Net of unamortized debt issuance costs of $ 1 million as of June 30, 2024 and December 31, 2023.

(8) On May 6, 2024, the Company repaid $ 100 million of the Five-Year Term Loan due 2027.

Unsecured Notes

On April 25, 2024, the Company entered into an underwriting agreement to issue and sell $ 1.1 billion of Unsecured Notes, consisting of $ 600 million in aggregate principal amount of its 6.25 % senior notes due 2029 (the “2029 Notes”) and $ 500 million in aggregate principal amount of its 6.50 % senior notes due 2034 (the “2034 Notes”) in a registered public offering to fund the Wincanton Acquisition.

The closing of the sale of the Unsecured Notes occurred on May 6, 2024.

The 2029 Notes bear interest at a rate of 6.25 % per annum payable semiannually on May 6 and November 6 of each year, beginning on November 6, 2024, and maturing on May 6, 2029.

The 2034 Notes bear interest at a rate of 6.50 % per annum payable semiannually on May 6 and November 6 of each year, beginning on November 6, 2024, and maturing on May 6, 2034.

Three-Year Term Loan due 2027

On March 29, 2024, the Company entered into a term loan credit agreement with the lenders and other parties from time to time party thereto and Bank of America N.A., as administrative agent.

The Three-Year Term Loan due 2027 provided for a three-year multicurrency £ 250 million ($ 316 million as March 31, 2024) unsecured term facility, that may be borrowed by the Company to fund the Wincanton Acquisition.

Loans under the Three-Year Term Loan due 2027 will bear interest at a fluctuating rate per annum equal to, (a) with respect to borrowings in U.S.

Dollars, at the Company’s option, the alternate base rate or term Secured Overnight Financing Rate (“SOFR”) and (b) with respect to borrowings in Pounds Sterling, daily simple SONIA, in each case, plus an applicable margin calculated based on the Company’s credit ratings.

No amounts were outstanding under the Three-Year Term Loan due 2027 as of March 31, 2024.

On March 29, 2024, the Company entered into a three-year term loan credit agreement with the lenders and other parties from time to time party thereto and Bank of America N.A., as an administrative agent, that provided a three-year multicurrency £ 250 million unsecured term facility to fund the Wincanton Acquisition.

Concurrently with the closing of the Unsecured Notes, the Company terminated the commitments under the Three-Year Term Loan due 2027.

For additional information regarding subsequent financing agreements entered in connection with the Wincanton Acquisition, see Note 13.

Subsequent Events.

Revolving Credit Agreement

No amounts were drawn under the Three-Year Term Loan due 2027.

Bridge Term Loan

On February 29, 2024, the Company entered into a 364-day bridge term loan credit agreement that provided a £ 763 million unsecured Bridge Term Loan facility to fund the Wincanton Acquisition.

Concurrently with the closing of the Unsecured Notes, the Company terminated the commitments under the Bridge Term Loan.

No amounts were drawn under the Bridge Term Loan.

Revolving Credit Facilities

On March 29, 2024, the Company terminated its previous revolving credit agreement expiring in 2026 and entered into a new revolving credit agreement with Bank of America N.A., as administrative agent and an issuing lender (the “Revolving Credit Agreement”).

2 unchanged sentences

Loans under the Revolving Credit Agreement will bear interest at a fluctuating rate per annum equal to (a) with respect to borrowings in U.S.

Dollars, at the Company’s option the alternate base rate or term SOFR, (b) with respect to borrowings in Canadian Dollars, term Canadian Overnight Repo Rate Average (“CORRA”), (c) with respect to borrowings in Pounds Sterling, daily simple SONIA and (d) with respect to borrowings in Euros, Euro Interbank Offered Rate (“EURIBOR”), in each case, plus an applicable margin calculated based on the Company’s credit ratings.

No amounts were outstanding under the new or previous revolving credit agreements as of March 31, 2024 or December 31, 2023.

Dollars, at the Company’s option the alternate base rate or term Secured Overnight Financing Rate (“SOFR”), (b) with respect to borrowings in Canadian Dollars, term Canadian Overnight Repo Rate Average (“CORRA”), (c) with respect to borrowings in Pounds Sterling, daily simple Sterling Overnight Index Average Rate (“SONIA”) and (d) with respect to borrowings in Euros, Euro Interbank Offered Rate (“EURIBOR”), in each case, plus an applicable margin calculated based on the Company’s credit ratings.

No amounts were outstanding under the previous or new revolving credit agreements as of June 30, 2024 or December 31, 2023.

In connection with the Wincanton Acquisition, the Company assumed a revolving credit facility agreement (the “Wincanton Revolving Credit Agreement”) under which it may borrow up to approximately £ 175 million ($ 221 million as of June 30, 2024) in aggregate at any time, expiring in March 2027.

Loans under the Wincanton Revolving Credit Agreement will bear interest at daily simple SONIA plus a fixed margin.

As of June 30, 2024, the Company had £ 74 million ($ 94 million) of borrowings outstanding under this agreement.

Amounts drawn and repaid in 90 days or less under the revolving credit facilities are presented net in the Condensed Consolidated Statements of Cash Flows.

Factoring Programs

1 unchanged sentence

Information related to the trade receivables sold was as follows:

Three Months Ended March 31,

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

(In millions) 2024 2023 2024 2023

5 unchanged sentences

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

As of March 31, 2024, the Company complied with the covenants contained in its debt and financing arrangements.

As of June 30, 2024, the Company complied 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 March 31, 2024, and December 31, 2023, 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 June 30, 2024 and December 31, 2023, due to their short-term nature.

The fair value of debt was as follows:

March 31, 2024 December 31, 2023

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

June 30, 2024 December 31, 2023

(In millions) Level Fair

Value Carrying Value Fair

Value Carrying Value

Unsecured notes due 2026 2 $ 369 $ 398 $ 362 $ 398

Unsecured notes due 2029 2 611 592 — —

Unsecured notes due 2031 2 323 397 326 397

Unsecured notes due 2034 2 507 490 — —

Three-Year Term Loan due 2025

6 unchanged sentences

The notional amount and fair value of derivative instruments were as follows:

March 31, 2024 December 31, 2023 Balance Sheet Location

June 30, 2024 December 31, 2023 Balance Sheet Location

(In millions) Notional Amount

Notional Amount

Value Notional Amount

Derivatives designated as net investment hedges:

Cross-currency swap agreements $ 487 $ 11 $ 487 $ 3 Other long-term assets

Cross-currency swap agreements (1)

$ 1,037 $ 18 $ 487 $ 3 Other long-term assets

Cross-currency swap agreements 165 2 165 7 Other current liabilities

Cross-currency swap agreements 883 29 883 49 Other long-term liabilities

Cross-currency swap agreements (1)

633 22 883 49 Other long-term liabilities

Derivatives designated as cash flow hedge:

4 unchanged sentences

Foreign currency option contracts $ 337 $ 8 $ 397 $ 8 Other current assets

Foreign currency option contracts 106 3 — — Other current liabilities

Foreign currency forward contracts 107 1 1 — Other current assets

(1) In April 2024, the Company amended four cross-currency swaps with an aggregate notional value of $ 315 million that will mature in 2027 and 2028, and entered into three cross-currency swaps with an aggregate notional value of $ 300 million that will mature in 2029.

(2) In January 2024, the Company entered into an interest rate swap schedule to mature in 2025, with a notional amount of $ 125 million.

As of March 31, 2024 and December 31, 2023, the derivatives were classified as Level 2 within the fair value hierarchy.

As of June 30, 2024 and December 31, 2023, 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.

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

Three Months Ended March 31, 2024 Three Months Ended March 31, 2023

Three Months Ended June 30, 2024 Six Months Ended June 30, 2024

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

6 unchanged sentences

Interest rate swaps $ ( 1 ) $ — $ — $ 1 $ — $ —

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

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

Three Months Ended June 30, 2023 Six Months Ended June 30, 2023

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

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

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

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

Derivatives designated as net investment hedges

Cross-currency swap agreements $ ( 18 ) $ 3 $ — $ ( 34 ) $ — $ 1

Derivatives designated as cash flow hedges

Interest rate swaps $ 4 $ — $ — $ 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

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 March 31,

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

(In millions) 2024 2023 2024 2023

3 unchanged sentences

Earnings per Share

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

Three Months Ended March 31,

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

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

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

Net income (loss) attributable to common shares $ ( 37 ) $ 25

2024 2023 2024 2023

Net income attributable to common shares

$ 38 $ 65 $ 1 $ 90

Basic weighted-average common shares 119,427 118,927 119,350 118,854

1 unchanged sentence

119,683 119,415 119,680 119,323

Basic earnings (loss) per share $ ( 0.31 ) $ 0.21

Diluted earnings (loss) per share

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

(1) For the three months ended March 31, 2024, weighted average shares for basic earnings per share is used for calculating diluted earnings per share because there was a net loss for the period and, as such, all dilutive potential common shares are anti-dilutive and are therefore excluded from the calculation.

1,087 1,604 1,074 1,711

Stockholders’ Equity

5 unchanged sentences

attributable to

As of March 31, 2024 $ ( 124 ) $ ( 20 ) $ 6 $ ( 111 ) $ — $ ( 249 )

Other comprehensive income (loss) before reclassifications ( 22 ) 14 — ( 1 ) — ( 9 )

Amounts reclassified to net income (loss) — ( 4 ) — 1 — ( 3 )

Tax amounts 1 ( 3 ) — — — ( 2 )

Other comprehensive income (loss), net of tax ( 21 ) 7 — — — ( 14 )

As of June 30, 2024 $ ( 145 ) $ ( 13 ) $ 6 $ ( 111 ) $ — $ ( 263 )

Foreign Currency Adjustment

(In millions) Foreign

Adjustments Net Investment Hedges Cash

Hedges Defined

attributable to

As of December 31, 2023 $ ( 83 ) $ ( 47 ) $ 5 $ ( 113 ) $ ( 1 ) $ ( 239 )

3 unchanged sentences

Other comprehensive income (loss), net of tax ( 62 ) 34 1 2 1 ( 24 )

As of June 30, 2024 $ ( 145 ) $ ( 13 ) $ 6 $ ( 111 ) $ — $ ( 263 )

Foreign Currency Adjustment

(In millions) Foreign

Adjustments Net Investment Hedges Cash

Hedges Defined

attributable to

As of March 31, 2023 $ ( 132 ) $ ( 4 ) $ 4 $ ( 112 ) $ — $ ( 244 )

Other comprehensive income (loss) before reclassifications 32 ( 18 ) 5 — ( 1 ) 18

Amounts reclassified to net income (loss) — ( 3 ) — 1 — ( 2 )

Tax amounts 1 5 ( 1 ) — — 5

Other comprehensive income (loss), net of tax 33 ( 16 ) 4 1 ( 1 ) 21

As of June 30, 2023 $ ( 99 ) $ ( 20 ) $ 8 $ ( 111 ) $ ( 1 ) $ ( 223 )

Foreign Currency Adjustment

5 unchanged sentences

Other comprehensive income (loss) before reclassifications 56 ( 34 ) 1 — ( 1 ) 22

Amounts reclassified to net income — 2 — — — 2

Amounts reclassified to net income (loss) — ( 1 ) — 1 — —

Tax amounts 1 8 — — — 9

Other comprehensive income (loss), net of tax 57 ( 27 ) 1 1 ( 1 ) 31

As of March 31, 2023 $ ( 132 ) $ ( 4 ) $ 4 $ ( 112 ) $ — $ ( 244 )

As of June 30, 2023 $ ( 99 ) $ ( 20 ) $ 8 $ ( 111 ) $ ( 1 ) $ ( 223 )

Employee Benefit Plans

Defined Benefit Plans

The Company sponsors a retirement plan in the U.K.

The Company sponsors a defined benefit pension scheme in the U.K.

(the “GXO U.K.

Retirement Plan”).

Components of the net periodic benefit cost recognized under the U.K.

Retirement Plan were as follows:

Three Months Ended March 31,

In connection with the Wincanton Acquisition, the Company assumed multiple pension schemes covering certain employees in the U.K.

and Ireland (the “Wincanton Retirement Plan”).

The Company recognized £ 109 million ($ 137 million) of assets on the acquisition date, reflecting the funded status of the Wincanton Retirement Plan which is recorded in Other long-term assets.

Retirement Plan and the Wincanton Retirement Plan (collectively the “U.K.

Retirement Plans”) do not allow for new plan participants or additional benefit accruals.

The Company deems other international retirement plans to be immaterial to its Condensed Consolidated Financial Statements and are excluded from this disclosure.

Components of the net periodic benefit income recognized under the U.K.

Retirement Plans were as follows:

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

(In millions) 2024 2023 2024 2023

3 unchanged sentences

Net periodic pension income (1)

$ 5 $ 2 $ 8 $ 4

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

Other than the U.K Retirement Plan, the Company deems other retirement plans to be immaterial to its Consolidated Financial Statements and are excluded from this disclosure.

Defined Contribution Plans

1 unchanged sentence

employees and employees of certain foreign subsidiaries.

The Company’s contributions were $ 17 million for each of the three months ended March 31, 2024 and 2023.

Defined contribution costs were as follows:

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

(In millions) 2024 2023 2024 2023

Defined contribution costs (1)

$ 21 $ 15 $ 38 $ 32

(1) Defined contribution costs were primarily recorded in Direct operating expense in the Condensed Consolidated Statements of Operations.

6 unchanged sentences

Payments ( 12 )

Balance as of March 31, 2024

The restructuring liability as of March 31, 2024 is expected to be substantially paid within the next 12 months.

Income taxes for the three months ended March 31, 2024 was a $ 10 million tax benefit compared with a $ 3 million tax expense for the same period in 2023.

The Company’s effective tax rate for the three months ended March 31, 2024 was a benefit on pre-tax loss of 21.1 %, compared to an expense on pre-tax income of 11.0 % for the same period in 2023.

In 2023, the effective tax rate was reduced by discrete tax benefits from the release of valuation allowances.

Balance as of June 30, 2024

The restructuring liability as of June 30, 2024 is expected to be substantially paid within the next 12 months.

Income tax expense for the three months ended June 30, 2024 and 2023, was $ 14 million and $ 20 million, respectively, and the Company’s effective tax rate for the three months ended June 30, 2024 and 2023, was 25.4 % and 23.0 %, respectively.

The increase in the Company’s effective tax rate for the three months ended June 30, 2024 compared with 2023 was driven by non-deductible items partially offset by a return-to-provision benefit in 2024.

Income tax expense for the six months ended June 30, 2024 and 2023, was $ 4 million and $ 23 million, respectively, and the Company’s effective tax rate for the six months ended June 30, 2024 and 2023, was 52.3 % and 19.9 %, respectively.

The increase in the Company’s 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.

The Organization for Economic Co-operation and Development (“OECD”) issued administrative guidance for the Pillar Two Global Anti-Base Erosion rules (“Pillar Two”), which imposes a 15% global minimum tax on multinational companies.

10 unchanged sentences

Management of the Company believes that it has adequately accrued for the potential impact of loss contingencies that are probable and reasonably estimable.

Management of the Company does not believe that the ultimate resolution of any matters to which the Company is presently a party will have a material adverse effect on its results of operations, financial condition or cash flows.

Management of the Company does not believe that the ultimate resolution of any matters to which the Company is presently a party will have a material adverse effect on its results

of operations, financial condition or cash flows.

However, the results of these matters cannot be predicted with certainty, and an unfavorable resolution of one or more of these matters could have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

2 unchanged sentences

In the event the Company is required to satisfy a legal claim outside the scope of the coverage provided by insurance, its financial condition, results of operations or cash flows could be negatively impacted.

During the first quarter of 2024, a trial was held in the United States District Court for the Western District of Missouri in connection with a dispute between the Company and one of its customers related to the start-up of the customer’s warehouse that occurred in 2018 (Lindt et al v.

On June 14, 2024, the Company’s subsidiary GXO Warehouse Company, Inc.

entered into a Confidential Settlement Agreement (the “Settlement Agreement”) to settle all claims in connection with a dispute between the Company and one of its customers related to the start-up of the customer’s warehouse that occurred in 2018 (the “Dispute”).

A payment under the Settlement Agreement was made by the Company on July 5, 2024.

As of July 10, 2024, the Dispute, which was litigated under the caption Lindt et al.

GXO Warehouse Company, Inc., docket no.

4:22-cv-00384-BP).

In March 2024, the jury returned verdicts in favor of the customer.

The Company recognized a $ 63 million expense in the three months ended March 31, 2024 for the jury verdicts, potential post-trial awards of interest, associated legal fees, costs and other related expenses.

The Company believes that this case was incorrectly decided and intends to pursue post-verdict remedies as necessary, including an appeal, and will pursue reimbursement under its existing insurance policies.

Subsequent Events

Wincanton Acquisition

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

is currently reviewing the Wincanton Acquisition.

The Company estimates that the CMA’s review of the acquisition will be completed during the second half of 2024.

Debt and Financing Transactions

The closing of the sale of the Unsecured Notes occurred on May 6, 2024.

The 2029 Notes bear interest at a rate of 6.25 % per annum payable semiannually on May 6 and November 6 of each year, beginning on November 6, 2024, and maturing on May 6, 2029.

The 2034 Notes bear interest at a rate of 6.50 % per annum payable semiannually on May 6 and November 6 of each year, beginning on November 6, 2024, and maturing on May 6, 2034.

Concurrently with the closing of the Unsecured Notes, the Company terminated the commitments under the Bridge Term Loan and the commitments under the Three-Year Term Loan due 2027.

Also, on May 6, 2024, the Company repaid $ 100 million of the Five-Year Term Loan due 2027 from proceeds received from the Unsecured Notes.

Financial Instruments

In April 2024, the Company amended four cross-currency swaps with an aggregate notional value of $ 315 million that will mature in 2027 and 2028, and entered into three cross-currency swaps with an aggregate notional value of $ 300 million that will mature in 2029.

4:22-cv-00384-BP, in Federal District Court for the Western District of Missouri, was dismissed with prejudice, each side to bear their own costs and fees, and the Court retains jurisdiction to enforce the terms of the Confidential Settlement Agreement.

Among other things in the Settlement Agreement, the parties each denied the allegations and counterclaims asserted in the Dispute, and agreed to a mutual release of claims arising from, under or otherwise in connection with their prior business relationship and the Dispute, in exchange for a payment by the Company of $ 45 million.

The Company intends to pursue reimbursement in connection with this Dispute under its existing insurance policies.

The Company recognized $ 60 million expense for the six months ended June 30, 2024, for the settlement, associated legal fees, costs and other related expenses.

On July 2, 2024, the Italian authorities launched an investigation into the deductibility of value-added tax payments by GXO to certain third-party cooperative labor providers for their services provided from 2017 through 2023 .

The alleged amount is € 84 million ($ 90 million as of June 30, 2024).

It is reasonably po ssible that a loss may be incurred;

however, the possible range of losses is not reasonably estimable given the status of the on-going investigation.

We are cooperating in this matter and believe that we have a number of credible defenses.

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