What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-18 compared with 2024-02-15 · 318 added, 228 removed, 910 unchanged (38% of the section changed)

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Note 4 - Acquisitions

Note 5 - Segment Information

Note 6 - Goodwill

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Note 1 8 - Commitments and Contingencies

Note 19 - Subsequent Events

Report of Independent Registered Public Accounting Firm

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Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

The Company acquired PFSweb, Inc.

during 2023, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023, PFSweb, Inc.’s internal control over financial reporting associated with approximately 1.8% of total assets, excluding associated goodwill and intangible assets, and approximately 0.8% of total revenues included in the consolidated financial statements of the Company as of and for the year ended December 31, 2023.

Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over the financial reporting of PFSweb, Inc.

The Company acquired Wincanton plc.

during 2024, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024, Wincanton plc.’s internal control over financial reporting associated with approximately 9.9% of total assets, excluding associated goodwill and intangible assets and approximately 11.8% of total revenues included in the consolidated financial statements of the Company as of and for the year ended December 31, 2024.

Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Wincanton plc.

Basis for Opinions

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Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

audits also included performing such other procedures as we considered necessary in the circumstances.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and

testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Acquisition-date fair value of a customer relationship intangible asset

As discussed in Note 4 to the consolidated financial statements, on April 29, 2024, the Company acquired Wincanton plc in a business combination for consideration of approximately $958 million.

As a result of the transaction, the Company acquired a customer relationship intangible asset associated with the generation of future income from the acquiree’s existing customers.

The acquisition-date fair value of intangible assets recorded by the Company was $539 million, which included a customer relationship intangible asset.

We identified the evaluation of the acquisition-date fair value of the customer relationship intangible asset as a critical audit matter.

Subjective auditor judgment was required to evaluate certain assumptions used to estimate the acquisition-date fair value of the customer relationship intangible asset.

Specifically, there was limited observable market information for the forecasted revenue and customer attrition assumptions, and evaluation of the discount rate assumption required specialized skills and knowledge.

Changes in these assumptions could have had a significant impact on the acquisition-date fair value of the customer relationship intangible asset.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s process to estimate the acquisition-date fair value of the customer relationship intangible asset.

This included controls related to the determination of the forecasted revenue, customer attrition, and discount rate assumptions used in the Company’s model.

We evaluated the Company’s forecasted revenue of the acquired company by comparing it to past performance of the acquired company, and actual and forecasted revenue trends of the acquiree’s peers.

We evaluated the Company’s customer attrition assumption by comparing it to historical attrition

experienced by the acquired company.

We involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the Company’s discount rate used by comparing it against a discount rate that was developed using publicly available market data for comparable entities.

Sufficiency of audit evidence over revenue from contracts with customers

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Additionally, for a sample of accrued revenue at year-end, we confirmed with the Company’s customers the amount of revenue billed subsequent to year-end and compared the result to the Company’s accounting records.

We evaluated the sufficiency of audit evidence

obtained by assessing the results of procedures performed, including the appropriateness of the nature and extent of such evidence.

We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed, including the appropriateness of the nature and extent of such evidence.

We have served as the Company’s auditor since 2021.

Stamford, Connecticut

New York, New York

February 18, 2025

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Selling, general and administrative expense

1,061 998 886

Depreciation and amortization expense 415 361 329

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Restructuring costs and other

Litigation expense 59 — —

Operating income 218 318 242

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Income before income taxes 146 266 264

Income tax (expense) benefit

Income tax expense

( 8 ) ( 33 ) ( 64 )

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( 408 ) ( 140 ) ( 82 )

Repayment of finance lease obligations

( 29 ) ( 33 ) ( 25 )

Repayments of finance lease obligations ( 45 ) ( 29 ) ( 33 )

Taxes paid related to net share settlement of equity awards ( 8 ) ( 12 ) ( 16 )

Repayments related to trade securitization program — — ( 26 )

Purchase of NCI — — ( 128 )

Net transfers to XPO — — ( 774 )

Other 7 ( 5 ) 1

Net cash (used in) provided by financing activities

Net cash provided by (used in) financing activities

636 ( 186 ) 787

Effect of exchange rates on cash and cash equivalents ( 13 ) 13 ( 18 )

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

Net increase (decrease) in cash, restricted cash and cash equivalents 15 ( 25 ) 162

Cash, restricted cash and cash equivalents, beginning of year 470 495 333

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$ — $ — $ 204

Settlement of related party debt due to the Separation

See accompanying Notes to the Consolidated Financial Statements.

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Other comprehensive loss

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

Vesting of stock compensation awards 33 — — — — — — — —

Tax withholding related to vesting of stock compensation awards — — — ( 1 ) — — ( 1 ) — ( 1 )

Purchase of NCI — — — — — — — ( 128 ) ( 128 )

Net transfers from (to) 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 — — — — — — — ( 5 ) ( 5 )

December 31, 2021 114,659 $ 1 $ — $ 2,354 $ 126 $ ( 130 ) $ 2,351 $ 39 $ 2,390

Net income — — — — 197 — 197 3 200

Other comprehensive loss

— — — — ( 126 ) ( 126 ) ( 1 ) ( 127 )

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

Net income — — — 134 — 134 4 138

Other comprehensive loss — — — — ( 74 ) ( 74 ) ( 3 ) ( 77 )

Stock-based compensation — — 39 — — 39 — 39

Vesting of stock compensation awards 607 — — — — — — —

Tax withholding on vesting of stock-based compensation awards ( 168 ) — ( 8 ) — — ( 8 ) — ( 8 )

Other — — — — — — ( 3 ) ( 3 )

December 31, 2024 119,496 $ 1 $ 2,629 $ 686 $ ( 313 ) $ 3,003 $ 32 $ 3,035

See accompanying Notes to the Consolidated Financial Statements.

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The Company provides its customers with high-value-added warehousing and distribution, order fulfillment, e-commerce, reverse logistics and other supply chain services differentiated by its ability to deliver technology-enabled, customized solutions at scale.

The Company serves a broad range of customers across a range of industries, such as e-commerce, omnichannel retail, technology and consumer electronics, food and beverage, industrial and manufacturing, and consumer packaged goods, among others.

The Company serves a broad range of customers across various industries, such as e-commerce, omnichannel retail, technology and consumer electronics, food and beverage, industrial and manufacturing, and consumer packaged goods, among others.

The Company presents its operations in the Consolidated Financial Statements as one reportable segment.

On August 2, 2021, the Company completed the separation (the “Separation”) from XPO, Inc.

The Separation was accomplished by the distribution of 100 % of the outstanding common stock of GXO to XPO stockholders as of the close of business on July 23, 2021, the record date for the distribution.

XPO stockholders received one share of GXO common stock for every share of XPO common stock held at the close of business on the record date.

On August 2, 2021, GXO became a standalone publicly-traded company and regular-way trading of GXO’s common stock commenced on the New York Stock Exchange under the ticker symbol “GXO.” GXO was incorporated as a Delaware corporation in February 2021.

The Company became a standalone publicly traded company on August 2, 2021, when XPO, Inc.

(“XPO”) spun off the Company to GXO’s stockholders and GXO’s common stock, par value of $ 0.01 per share, began trading independently on the New York Stock Exchange under the ticker symbol “GXO”.

GXO was incorporated as a Delaware corporation in February 2021.

Basis of Presentation and Significant Accounting Policies

Basis of Presentation

Before the Separation, the Company’s financial statements were prepared on a standalone combined basis and were derived from the Consolidated Financial Statements and accounting records of XPO (the “historical financial statements”).

On August 2, 2021, the Company became a standalone publicly traded company, and its financial statements post-Separation are prepared on a consolidated basis.

The combined Consolidated Financial Statements for all periods presented before the Separation are now also referred to as “Consolidated Financial Statements” and have been prepared under the U.S.

generally accepted accounting principles (“GAAP”).

Before the Separation, the Company’s historical assets and liabilities presented were wholly owned by XPO and were reflected on a historical cost basis.

In connection with the Separation, the Company’s assets and liabilities were transferred to the Company on a carry-over basis.

Before the Separation, the historical results of operations included allocations of XPO costs and expenses including XPO’s corporate function, which incurred a variety of expenses, including, but not limited to, information technology, human resources, accounting, sales and sales operations, procurement, executive services, legal, corporate finance and communications.

An allocation of these expenses is included to burden all business units comprising XPO’s historical results of operations, including GXO.

The charges reflected have been either specifically identified or allocated using drivers including adjusted earnings before interest, taxes, depreciation and amortization, which includes adjustments for transaction and integration costs, as well as restructuring costs and other adjustments, or headcount.

The majority of these allocated costs are recorded within Selling, general and administrative expense;

Depreciation and amortization expense;

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

The Company’s Consolidated Financial Statements include the accounts of GXO Logistics, Inc.

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The Company has eliminated intercompany accounts and transactions.

Certain amounts reported for prior years have been reclassified to conform to the current year’s presentation.

Use of Estimates

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The Company considers all highly liquid investments with an original maturity of three months or less on the date of purchase to be cash equivalents.

Bank overdraft positions occur when total outstanding issued checks exceed available cash balances at a single financial institution.

Restricted cash is included within Other long-term assets on the Consolidated Balance sheets and consists primarily of cash that collateralizes certain operating obligations.

Restricted cash primarily consists of cash deposited in relation to a contingency, and cash collateralizing operating obligations.

Restricted cash is recorded in Other long-term assets on the

Consolidated Balance Sheets.

“Commitments and Contingencies” for additional information regarding the contingency.

Accounts Receivable and Allowance for Credit Losses

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Provisions charged to expense 16 10 5

Write-offs, less recoveries, and other adjustments ( 11 ) ( 6 ) ( 9 )

Write-offs, less recoveries, and foreign exchange translation ( 12 ) ( 11 ) ( 6 )

Ending balance $ 15 $ 11 $ 12

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Leasehold improvements Shorter of useful life or term of lease

Warehouse equipment, fleet and other 3 to 15 years

Technology and automated systems 3 to 15 years

Warehouse equipment and other 3 to 15 years

Computer, software and equipment 1 to 5 years

Computer equipment 1 to 5 years

Internal-use software 1 to 5 years

Lease Obligations

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Amounts received from a landlord are included as a reduction to the lease asset and are included within operating activities on the Consolidated Statement of Cash Flows.

Long-lived assets geographic information

The Company’s long-lived assets for this disclosure is defined as Property and equipment, net of accumulated depreciation, and operating lease assets.

The Company’s long-lived assets by geographic region were as follows:

(In millions) 2023 2022

United States $ 1,545 $ 1,532

United Kingdom 772 834

Other 837 821

Total $ 3,154 $ 3,187

Goodwill and Intangible Assets

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If an impairment indicator is present, the Company evaluates recoverability by comparing the carrying amount of the asset group to the sum of the undiscounted expected future cash flows over the remaining useful life of a long-lived asset group.

If the assets are impaired, an impairment loss is measured as the amount by which the carrying amount of the asset group exceeds the fair value of the asset.

If the assets are impaired, an impairment loss is measured as the amount by which the carrying amount of the asset group

exceeds the fair value of the asset.

The Company estimates fair value using the expected future cash flows discounted at a rate consistent with the risks associated with the recovery of the asset.

Segment Reporting

The Company is comprised of three operating segments based on the operating results regularly reviewed by the chief operating decision-maker (“CODM”), who is the Chief Executive Officer (“CEO”), to make decisions about resource allocation and the performance of the business.

These three operating segments have been aggregated into a single reporting segment.

Revenue Recognition

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In general, the fixed consideration in a contract represents reimbursement for warehouse, technology and equipment costs incurred to satisfy the performance obligation and is recognized on a straight-line basis over the term of the contract.

The variable consideration is comprised of cost reimbursement based on the costs incurred, per-unit pricing is determined based

on units provided and time and materials pricing is based on the hours of services provided.

The variable consideration is comprised of cost reimbursement based on the costs incurred, per-unit pricing is determined based on units provided and time and materials pricing is based on the hours of services provided.

The variable consideration component is recognized over time based on the level of activity.

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Contract assets are recognized consistent with the transfer of the underlying performance obligations to the customer based on the specific contracts to which they relate.

Contract assets are primarily amortized to Direct operating expense in the Consolidated Statements of Operations over the contract term.

Contract assets are amortized to Direct operating expense in the Consolidated Statements of Operations over the contract term.

Contract liabilities represent the Company’s obligation to transfer services to a customer for which the Company has received consideration or the amount that is due from the customer.

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Stock compensation expense is recognized using the straight-line method, based on the grant date fair value, over the requisite service period of the award, which is generally the vesting term.

For grants of stock options, the Company determines the fair value based on the Black-Scholes option-pricing model.

For grants of restricted stock units (“RSU”) subject to service-based or performance-based vesting conditions only, the Company establishes the fair value based on the market price on the date of the grant.

For grants of restricted stock awards (“RSA”) the fair value is equal to the fair market value of the Company’s common stock on the date of grant.

These shares vest and are issued upon grant.

For grants of awards subject to market-based vesting conditions (“PSU”), the Company determines the fair value based on a Monte Carlo simulation model.

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For the years ended December 31, 2024, 2023 and 2022, the number of common shares excluded from diluted shares outstanding was 1.1 million, 1.5 million and 2.0 million, respectively, because the effect of including those common shares in the calculation would have been anti-dilutive.

On August 2, 2021, the date of the Separation, 114.6 million shares of the Company’s common stock were distributed to XPO stockholders.

These 114.6 million shares have been utilized for the calculation of basic and diluted earnings per share for all periods prior to the date of the Separation as no shares of common stock or equity-based awards of the Company were outstanding before that date.

Defined Benefit Plans

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The calculation of the annual effective tax rate relies on several factors including pre-tax earnings, various jurisdiction statutory tax rates, tax credits, uncertain tax positions, valuation allowances and differences between tax laws and accounting laws.

The effective tax rate in any financial statement period may be materially impacted by changes in the blend and/or level of earnings by individual taxing jurisdictions.

The effective tax rate in any financial

statement period may be materially impacted by changes in the blend and/or level of earnings by individual taxing jurisdictions.

If the Company considers that a tax position is more likely than not to be sustained upon audit, based solely on the technical merits of the position, presuming an examination by a taxing authority with full knowledge of all relevant information, the Company recognizes all or a portion of the benefit.

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Adoption of New Accounting Standards

In 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, “Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met.

The ASU applies only to contracts and hedging relationships that reference London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform.

In 2021, the FASB expanded the scope of the guidance to include derivatives.

On March 9, 2023, the Company entered into Amendment No.

1 to its revolving credit facility replacing LIBOR-based benchmark rates with SOFR-based benchmark rates and other conforming changes (the “Revolving Credit Facility”).

The Company has transitioned its existing contracts to a replacement index.

ASU 2020-04 and its amendments did not have a material impact on the Company’s Condensed Consolidated Financial Statements.

Accounting Pronouncements Issued But Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

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This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements.

Early adoption is permitted.

The Company is currently evaluating the impact of this ASU on its Consolidated Financial Statements.

The Company adopted the guidance for the fiscal year ended December 31, 2024.

Adopting this new standard resulted in additional disclosure within the Company’s Consolidated Financial Statements, see Note 5.

“Segment Information.”

Accounting Pronouncements Issued But Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

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The Company is currently evaluating the impact of this ASU on its Consolidated Financial Statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.

This standard requires all public companies to disclose more detailed information about certain costs and expenses in the notes to the financial statements at interim and annual reporting periods.

This standard is effective for annual reporting periods beginning after December 15, 2026, with early adoption permitted.

The Company is currently evaluating the impact of the disclosure requirements about specific expense categories in its Consolidated Financial Statements.

Revenue Recognition

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Technology and consumer electronics 1,541 1,467 1,337

Food and beverage 1,331 1,327 1,328

Industrial and manufacturing 1,339 1,078 1,076

Food and beverage 1,331 1,331 1,327

Consumer packaged goods 1,259 1,027 915

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Contract Balances

Year Ended December 31,

(In millions) 2024 2023

Contract assets included in:

Contract assets and contract costs included in:

Other current assets $ 37 $ 21

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Amounts included in the beginning of year contract liability balance $ 208 $ 122 $ 93

Remaining Performance Obligations

The remaining performance obligations relate to firm customer contracts for which services have not been performed and future revenue recognition is expected.

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 December 31, 2023, the fixed consideration component of the Company’s remaining performance obligations was approximately $ 3.3 billion, and the Company expects to recognize approximately 74 % 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.

PFSweb Acquisition

On September 13, 2023, the Company entered into an Agreement and Plan of Merger to acquire PFSweb, Inc., a Delaware corporation headquartered in Irving, Texas (“PFS”), and on October 23, 2023, the Company completed its acquisition of PFS (the “PFS Acquisition”).

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

The Company recorded the preliminary fair value of assets acquired and liabilities assumed on the date of acquisition, including intangible assets comprising customer relationships, trademarks, trade names and developed technology of $ 56 million with a weighted-average amortization period of 13 years.

Goodwill acquired in connection with the acquisition was $ 76 million, recorded in the Americas and Asia-Pacific reporting unit, and was attributed to anticipated synergies.

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

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

For the year ended December 31, 2023, PFS generated revenues of $ 82 million and income before income taxes was not material.

Pro forma results of operations for this acquisition have not been presented as they are not material to the Consolidated Financial Statements.

Clipper Acquisition

On May 24, 2022, the Company completed the acquisition of Clipper Logistics plc (“Clipper”), an omnichannel retail logistics specialist based in Leeds, England (the “Clipper Acquisition”).

The Company acquired Clipper for $ 1,106 million, consisting of $ 902 million in cash and the issuance of 3,757,657 shares of GXO common stock having a value of $ 204 million.

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.

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”).

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 29, 2024, the Company completed the Wincanton Acquisition for a total consideration of approximately £ 762 million ($ 958 million as of the acquisition date).

The Wincanton Acquisition is subject to a review by the Competition and Markets Authority (the “CMA”) in the U.K.

On November 14, 2024, the CMA referred the completed acquisition by GXO Logistics, Inc.

of Wincanton plc for an in-depth investigation (“Phase 2”) with a statutory deadline of April 30, 2025.

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

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

In connection with the Wincanton Acquisition, the Company incurred transaction costs of $ 61 million for the year ended December 31, 2024, which were included in Transaction and integration costs in the Consolidated Statements of Operations.

Also, 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 10.

“Debt and Financing Arrangements.”

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

The Company recorded $ 1.4 billion and $ 7 million of revenue and loss before income taxes for the year ended December 31, 2024, respectively.

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

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Net assets purchased $ 232

Cash paid $ 902

Common stock issued (2)

Purchase price paid $ 1,106

Purchase price (2)

Goodwill recorded (3)

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

(2) Represents the fair value of the Company’s common stock issued.

(1) The Company acquired $ 539 million of intangible assets, comprised of customer relationships, trade names, and intellectual property with weighted-average useful lives of 12.5 years.

(2) 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 Consolidated Statements of Operations.

(3) 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 United Kingdom and Ireland reporting unit and was primarily attributed to anticipated synergies.

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

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 primary areas of the purchase price allocation that are not yet finalized relate to intangible assets, goodwill, other long-term assets, lease assets and liabilities, accrued expenses, other current and long-term liabilities, and income taxes.

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.

Year Ended December 31

(In millions) 2024 2023

Revenue $ 12,283 $ 11,529

Income before income taxes (1)

(1) Included in the Income before income taxes on a pro forma basis for the year ended December 31, 2024, were long-lived asset impairment charges of $ 90 million recorded by Wincanton before its acquisition by the Company.

PFSweb Acquisition

On September 13, 2023, the Company entered into an Agreement and Plan of Merger to acquire PFSweb, Inc., a Delaware corporation headquartered in Irving, Texas (“PFS”).

On October 23, 2023, the Company completed the acquisition of PFS (the “PFS Acquisition”).

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

The Company recorded the fair value of assets acquired and liabilities assumed on the date of acquisition, including intangible assets comprised of customer relationships, trademarks, trade names and developed technology of $ 55 million with a weighted-average amortization period of 13 years.

Goodwill acquired in connection with the acquisition was $ 80 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 U.S.

income tax purposes.

Segment Information

The Company is organized geographically into three operating segments:

i) Americas and Asia-Pacific, ii) United Kingdom and Ireland, and iii) Continental Europe.

The Company’s reporting unit results are regularly provided to the chief operating decision maker (“CODM”).

The CODM is our Chief Executive Officer, who assesses the Company’s performance and allocates resources.

The CODM evaluates the Company’s performance and allocates resources primarily based on adjusted earnings before interest, taxes, depreciation and amortization, adjusted for transaction and integration costs, restructuring costs, litigation expense, and unrealized gain/loss on foreign currency contracts and other adjustments (“Adjusted EBITDA”).

For disclosure purposes, we aggregate these three operating segments into one reportable segment due to the similar nature of their operations and economic characteristics.

The Company’s segment results were as follows:

Year Ended December 31,

(In millions) 2024 2023 2022

Revenue $ 11,709 $ 9,778 $ 8,993

Direct operating expense 9,853 8,035 7,443

Selling, general and administrative expense (1)

Other income (expense), net (2)

( 20 ) 4 ( 64 )

Segment Adjusted EBITDA $ 880 $ 808 $ 792

Corporate expenses (3)

Depreciation expense 307 290 261

Amortization expense 108 71 68

Transaction and integration costs 76 34 61

Restructuring costs and other 27 32 32

Litigation expense 59 — —

Unrealized (gain) loss on foreign currency contracts and other (4)

( 11 ) ( 5 ) 13

Interest expense, net 103 53 29

Income before income taxes 146 266 264

Income tax expense ( 8 ) ( 33 ) ( 64 )

Net income $ 138 $ 233 $ 200

(1) Excludes unallocated corporate expenses.

(2) Other income, net excluding unrealized (gain) loss on foreign currency contracts and other.

(3) Corporate expenses include unallocated costs related to corporate functions such as salaries and benefits, rent, and professional fees which are recorded in Selling, general and administrative expenses in the Consolidated Statements of Operations.

(4) Included in Other income, net in the Consolidated Statements of Operations.

Long-lived assets geographic information

The Company’s long-lived assets for this disclosure is defined as Property and equipment, net of accumulated depreciation, and operating lease assets.

The Company’s long-lived assets by geographic region were as follows:

(In millions) 2024 2023

United States $ 1,498 $ 1,545

United Kingdom 1,006 772

Europe 939 783

Total $ 3,489 $ 3,154

(1) Includes Asia, Latin America and Canada.

The following tables present the changes in goodwill for the years ended December 31, 2024 and 2023.

2 unchanged sentences

Acquisition 120

Impact of foreign exchange translation (1)

Foreign exchange translation (1)

Balance as of December 31, 2023

Acquisitions (2)

Impact of foreign exchange translation (1)

Foreign exchange translation (1)

Balance as of December 31, 2024

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

(2) Includes $ 44 million adjustment from the finalization of the purchase price allocation for the Clipper Acquisition.

(2) Includes $ 726 million and $ 4 million for the preliminary purchase price allocation for the Wincanton Acquisition and adjustments to the purchase price allocation for the PFS Acquisition, respectively.

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

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Land, buildings and leasehold improvements $ 515 $ 440

Warehouse equipment and other

Computer, software and equipment (1)

Warehouse equipment, fleet and other 1,113 1,025

Technology and automated systems

Computer equipment 335 304

Internal-use software 398 356

Total property and equipment, gross 2,892 2,498

1 unchanged sentence

Total property and equipment, net $ 1,160 $ 953

(1) Includes internally developed software of $ 237 million and $ 223 million as of December 31, 2023 and 2022, respectively.

Depreciation of property and equipment was $ 307 million, $ 290 million and $ 261 million for the years ended December 31, 2024, 2023 and 2022, respectively.

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Total finance lease liabilities $ 276 $ 116

Supplemental weighted-average information for leases was as follows:

Weighted-average remaining lease term

Operating leases 5.6 years 5.9 years

Finance leases 11.7 years 10.4 years

Weighted-average discount rate

Operating leases 4.6 % 4.0 %

Finance leases 4.4 % 3.4 %

The components of lease expense were as follows:

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Finance leases, including $ 83 , $ 1 , and $ 16 from an acquisition in 2024, 2023 and 2022 respectively

Supplemental weighted-average information for leases was as follows:

Weighted-average remaining lease term

Operating leases 5.6 years 5.6 years

Finance leases 24.1 years 11.7 years

Weighted-average discount rate

Operating leases 4.9 % 4.6 %

Finance leases 5.4 % 4.4 %

Maturities of lease liabilities as of December 31, 2024 were as follows:

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Present value of lease liabilities $ 276 $ 2,545

As of December 31, 2023, the Company does not have any material leases that have been signed but have yet to commence.

As of December 31, 2024, the Company had additional operating leases that have not yet commenced with future undiscounted lease payments of approximately $ 98 million.

These operating leases will begin in 2025, with initial lease terms ranging from 4 to 16 years.

Debt and Financing Arrangements

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

(In millions) Rate (1)

(In millions, except percentages) Rate (1)

Unsecured notes due 2026 (2)

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Unsecured notes due 2029 (3)

Unsecured notes due 2031 (4)

2.65 % 397 397

Two-Year Term Loan due 2024

Unsecured notes due 2034 (5)

Three-Year Term Loan due 2025 (6)

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Current debt 110 27

Total Long-term debt $ 1,620 $ 1,739

Long-term debt $ 2,521 $ 1,620

(1) Interest rates as of December 31, 2024.

(2) Net of unamortized debt issuance costs of $ 2 million and $ 3 million, as of December 31, 2023 and 2022, respectively.

(3) Net of unamortized debt issuance costs of $ 3 million as of December 31, 2023 and 2022.

(4) Net of unamortized debt issuance costs of $ 1 million as of December 31, 2022.

(2) Net of unamortized discount and debt issuance costs of $ 1 million and $ 2 million, as of December 31, 2024 and 2023, respectively.

(3) Net of unamortized discount and debt issuance costs of $ 7 million as of December 31, 2024.

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

(5) Net of unamortized discount and debt issuance costs of $ 10 million as of December 31, 2024.

(6) In 2024, the Company repaid $ 185 million of the Three-Year Term Loan due 2025.

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

Five-Year Term Loan

(8) In 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 of notes due 2029 (the “2029 Notes”) and $ 500 million of 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.

In 2021, the Company completed an offering of $ 800 million aggregate principal amount of notes, consisting of $ 400 million of notes due 2026 (the “2026 Notes”) and $ 400 million of notes due 2031 (the “2031 Notes”).

The 2026 Notes bear interest at a rate of 1.65 % per annum payable semiannually in arrears on January 15 and July 15 of each year, and maturing on July 15, 2026.

The 2031 Notes bear interest at a rate of 2.65 % per annum payable semiannually in arrears on January 15 and July 15 of each year and maturing on July 15, 2031.

Five-Year Term Loan due 2027

In 2022, the Company entered into a $ 500 million five-year unsecured term loan (the “ Five-Year Term Loan”) that will mature on May 26, 2027.

The loan bears interest at a fluctuating rate per annum equal to, at the Company’s option, the alternate base rate or the adjusted Secured Overnight Financing Rate (SOFR), plus an applicable margin based on the Company’s credit ratings.

Delayed Draw Term Loan

In 2022, the Company borrowed a $ 165 million two-year term loan tranche (the “ Two-Year Term Loan”) and a $ 235 million three-year term loan tranche (the “ Three-Year Term Loan”).

In 2022, $ 50 million of the Two-Year Term Loan was repaid, with the remaining $ 115 million repaid in the second quarter of 2023.

The Three-Year Term Loan will mature on May 26, 2025.

In 2024, the Company repaid $ 100 million of the Five-Year Term Loan.

Three-Year Term Loan due 2025

In 2022, the Company borrowed a $ 235 million three-year term loan tranche (the “ Three-Year Term Loan”) that will mature on May 26, 2025.

The Delayed Draw Term Loan bears 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.

Unsecured Notes

In 2021, before the Separation, the Company completed an offering of $ 800 million aggregate principal amount of notes, consisting of $ 400 million of notes due 2026 (the “2026 Notes”) and $ 400 million of notes due 2031 (the “2031 Notes”).

The 2026 Notes bear interest at a rate of 1.65 % per annum payable semiannually in arrears on January 15 and July 15 of each year, beginning January 15, 2022, and maturing on July 15, 2026.

The 2031 Notes bear interest at a rate of 2.65 % per annum payable semiannually in arrears on January 15 and July 15 of each year, beginning January 15, 2022, and maturing on July 15, 2031.

In 2024, the Company repaid $ 185 million of the Three-Year Term Loan.

Three-Year Term Loan due 2027

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 (the “Three-Year Term Loan due 2027”) to fund the Wincanton Acquisition.

Concurrently with the closing of the Unsecured Notes in 2024, the Company terminated the commitments under the Three-Year Term Loan due 2027.

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 (the “Bridge Term Loan”) to fund the Wincanton Acquisition.

Concurrently with the closing of the Unsecured Notes in 2024, the Company terminated the commitments under the Bridge Term Loan.

No amounts were drawn under the Bridge Term Loan.

Revolving Credit Facilities

In 2021, before the Separation, the Company entered into a five-year unsecured multi-currency Revolving Credit Facility (the “Revolving Credit Facility”).

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

Loans under the Revolving Credit Facility bear interest at a fluctuating rate equal to (i) with respect to borrowings in dollars, at the Company’s option, the alternate base rate or the adjusted SOFR, (ii) with respect to borrowings in Canadian dollars, the reserve-adjusted Canadian Dollar Offered Rate and (iii) with respect to borrowings in Euros, the reserve-adjusted Euro Interbank Offered Rate, in each case, plus an applicable margin calculated based on the Company’s credit ratings.

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”).

The Revolving Credit Agreement is a five-year unsecured, multicurrency revolving facility expiring in 2029.

The aggregate commitment of all lenders under the Revolving Credit Agreement will be equal to $ 800 million, of which $ 100 million is available for the issuance of letters of credit.

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 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.

In addition, the Company is paying a commitment fee of 0.15 % per annum on the unused portion of the commitments under the Revolving Credit Facility.

No amounts were outstanding under the Revolving Credit Facility as of December 31, 2023, or December 31, 2022.

In 2022, in connection with the Clipper Acquisition, the Company assumed a revolving credit facility agreement under which it may borrow up to approximately £ 45 million ($ 54 million as of December 31, 2022) in aggregate at any time, which expired in November 2023.

As of December 31, 2022, the Company had $ 18 million of borrowings outstanding under this agreement.

No amounts were outstanding under the previous or new revolving credit agreements as of December 31, 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 £ 175 million ($ 219 million as of December 31, 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 margin.

As of December 31, 2024, the Company had £ 15 million ($ 19 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 Consolidated Statement of Cash Flows.

Long-Term Debt Maturities

Set forth below is the aggregate principal amount of the Company’s long-term debt (excluding finance lease obligations, unamortized discount and debt issuance costs) as of December 31, 2024, maturing during the following years.

(In millions) 2025 2026 2027 2028 2029 Thereafter

Long-term debt $ 71 $ 403 $ 402 $ 1 $ 600 $ 900

Factoring Programs

The Company sells certain of its trade receivables on a non-recourse basis to third-party financial institutions under various factoring programs.

The Company also sold certain European trade accounts receivables under a securitization program terminated in the first quarter of 2022.

The Company accounts for these transactions as sales of receivables and presents cash proceeds as cash provided by operating activities in the Consolidated Statements of Cash Flows.

4 unchanged sentences

(In millions) 2024 2023 2022

Factoring program

Receivables sold in period $ 1,856 $ 1,110 $ 992

Cash consideration 1,843 1,103 988

Securitization program

Receivables sold in period $ — $ — $ 1,850

Cash consideration — — 1,850

Net cash provided by (used in) operating cash flows 21 35 ( 5 )

Net cash provided by operating cash flows 200 21 35

Covenants and Compliance

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and model-derived valuations in which all significant inputs are observable in active markets;

• Level 3—Valuations based on inputs that are unobservable, generally utilizing pricing models or other valuation techniques that reflect management’s judgment and estimates.

• Level 3—Valuations based on inputs that are unobservable, utilizing pricing models or other valuation techniques that reflect management’s judgment and estimates.

Assets and liabilities

7 unchanged sentences

Unsecured notes due 2029 2 617 593 — —

Unsecured notes due 2031

2 336 397 326 397

Two-Year Term Loan due 2024

Unsecured notes due 2034

2 514 490 — —

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The Company designated these cross-currency swap agreements as qualifying hedging instruments and accounts for them as net investment hedges.

In October 2023, the Company terminated a hedge with a notional amount of $ 115 million and amended a $ 235 million hedge to extend its maturity from 2024 to 2025.

Also, the Company entered into various hedges for an aggregate notional amount of $ 313 million that will mature from 2025 to 2028.

During 2024, the Company amended four cross-currency swaps with an aggregate notional amount of $ 315 million maturing in 2027 and 2028 and cross-currency swaps with an aggregate notional amount of $ 165 million matured.

The Company entered into five new cross-currency swaps with an aggregate notional amount of $ 500 million, maturing in 2025 and 2029.

Interest Rate Swap Agreements

2 unchanged sentences

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

During 2024, an interest rate swaps agreement with a notional amount of $ 125 million matured.

Foreign Currency Exchange Rate Risk

The Company is exposed to certain risks relating to its ongoing business operations, including foreign currency exchange rate risk.

The Company uses foreign currency option contracts to mitigate the risk of a reduction in the value of earnings from its operations that use the Euro or British pound sterling as their functional currency.

The Company uses foreign currency options and forward contracts to mitigate the risk of a reduction in the value of earnings from its operations that use the Euro or British pound sterling as their functional currency.

Additionally, the Company uses foreign currency forward contracts to mitigate exposure from variability of cash flows related to the forecasted interest and principal payments on intercompany loans.

3 unchanged sentences

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

Derivatives designated as hedges

Interest rate swaps $ 125 $ 2 $ — $ — Other current assets

Interest rate swaps 125 3 250 9 Other long-term assets

Derivatives designated as net investment hedges:

Cross-currency swap agreements $ 270 $ 12 $ — $ — Other current assets

Cross-currency swap agreements 1,177 48 487 3 Other long-term assets

1 unchanged sentence

Cross-currency swap agreements 325 2 883 49 Other long-term liabilities

Derivatives designated as cash flow hedge:

Interest rate swaps $ — $ — $ 125 $ 2 Other current assets

Interest rate swaps 125 3 125 3 Other long-term assets

Derivatives not designated as hedges

Foreign currency option contracts $ 300 $ 13 $ 397 $ 8 Other current assets

Foreign currency forward contracts 1 — — — Other current assets

Foreign currency option contracts 26 — — — Other current liabilities

Foreign currency forward contracts — — 1 — Other current assets

Foreign currency forward contracts 125 1 — — Other current liabilities

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(In millions) 2024 2023 2022

Realized gain (loss)

$ ( 13 ) $ 29

Unrealized gain (loss) 4 ( 11 )

Foreign currency gain (loss) $ ( 9 ) $ 18

Foreign currency gain (loss) on foreign currency contracts $ 4 $ ( 9 ) $ 17

Accrued Expenses

1 unchanged sentence

(In millions) 2024 2023

Salaries and wages $ 362 $ 350

Salaries, benefits and withholding $ 460 $ 362

Facility and transportation charges 422 346

Value-added tax and other taxes 213 136

Interest 20 9

Other 156 113

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Other comprehensive income (loss), net of tax ( 120 ) 22 7 ( 36 ) 1 ( 126 )

Transfers from XPO, net of tax ( 40 ) ( 28 ) — ( 82 ) — ( 150 )

Other 2 — — — — 2

As of December 31, 2022 $ ( 156 ) $ 7 $ 7 $ ( 112 ) $ — $ ( 254 )

3 unchanged sentences

Other comprehensive income (loss), net of tax 73 ( 54 ) ( 2 ) ( 1 ) ( 1 ) 15

Other 2 — — — — 2

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

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Under the 2021 Incentive Plan, directors, officers and employees may be granted various types of stock-based compensation awards.

These awards include stock options, restricted stock awards, RSUs, PSUs and cash incentive awards.

As of December 31, 2023, 7.5 million shares of common stock were available for the grant under the 2021 Incentive Plan.

Before the Separation, the stock-based compensation expense recorded by the Company included the expense associated with the employees historically attributable to the Company’s operations, as well as the expense associated with the allocation of equity-based compensation expense for corporate employees.

The amounts do not necessarily reflect the costs that the Company would have incurred as an independent company in 2021.

These awards include stock options, RSUs, RSAs, PSUs and cash incentive awards.

As of December 31, 2024, approximately 6.9 million shares of common stock were available for the grant under the 2021 Incentive Plan.

The following table summarizes stock-based compensation expense recorded in Selling, general and administrative expense in the Consolidated Statements of Income:

1 unchanged sentence

(In millions) 2024 2023 2022

Restricted stock units $ 22 $ 21 $ 20

Performance-based units 8 7 5

RSUs $ 28 $ 22 $ 21

Stock options 3 5 5

5 unchanged sentences

The Black-Scholes option-pricing model incorporates various subjective assumptions, including expected terms and expected volatility.

Assumptions used in the Black-Scholes option-pricing model for the estimated fair value of options granted in 2021 were as follows:

weighted-average risk-free rate of interest of 1.2 %, expected volatility of 30 %, weighted-average expected award life of 7 years and weighted-average fair value of $ 22.66 .

A summary of stock option award activity for the year ended December 31, 2024, is presented in the following table:

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1,071 $ 64.71 7 years

Forfeited ( 99 ) 64.91

Forfeited or expired ( 176 ) 64.91

Outstanding as of December 31, 2024

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The holders of the RSUs and PSUs do not have the rights of a stockholder and do not have voting rights until the shares are issued and delivered in settlement of the awards.

RSUs generally vest over the service period, typically four years , and PSUs generally vest based on achieving certain predefined performance objectives along with service conditions.

RSUs generally vest over the service period, typically three years , and PSUs generally vest based on achieving certain predefined performance objectives along with a service period.

For PSUs the number of shares may be increased to the maximum or reduced to the minimum threshold based on the results of these performance metrics in accordance with the terms established at the time of the award.

6 unchanged sentences

Expected volatility 30 % 32 % 37 %

(1) There were no PSUs issued by the Company in 2021.

A summary of RSU and PSU award activity for the year ended December 31, 2024, is presented in the following table:

11 unchanged sentences

1,379 $ 52.38 457 $ 58.11

(1) The number of RSUs and PSUs vested includes common stock shares that the Company withheld on behalf of its employees to satisfy the minimum tax withholding.

(1) The number of RSUs and PSUs vested includes common stock shares that the Company withheld on behalf of its employees to satisfy the tax withholding.

The total fair value of RSUs that vested during 2024 and 2023 was $ 31 million and $ 22 million, respectively.

1 unchanged sentence

As of December 31, 2024, unrecognized compensation cost related to RSUs and PSUs of $ 64 million is anticipated to be recognized over a weighted-average period of approximately 2 years.

Restricted Stock Awards

In 2024, the Company granted 12 thousand RSAs at a weighted average price of $ 50.38 , resulting in a fair value of the RSAs of $ 1 million.

These shares vested and were issued upon grant.

Employee Benefit Plans

1 unchanged sentence

Certain eligible employees of the Company participated in various retirement plans in Europe.

In connection with the Separation, the Company also became the sponsor of 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”).

Retirement Plan did not allow for new participants or additional benefit accruals.

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.

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 the disclosure below.

Retirement Plan

Retirement Plans, the Company deems other retirement plans to be immaterial to its Consolidated Financial Statements and are excluded from the disclosure below.

Retirement Plans

A reconciliation of the projected benefit obligation, fair value of the plan and the funded status, the amount recognized in financial statements, the assumptions used, the plan assets and funding requirements are shown below.

2 unchanged sentences

Projected benefit obligation at beginning of year $ 830 $ 788

Liabilities assumed from Wincanton acquisition 895 —

Interest cost 69 40

Actuarial (gain) loss (1)

Settlements ( 2 ) —

Benefits paid ( 86 ) ( 48 )

1 unchanged sentence

Projected benefit obligation at end of year

$ 1,617 $ 830

(1) Actuarial gains or losses are due to changes in the discount and mortality rates.

2 unchanged sentences

Fair value of plan assets at beginning of year $ 883 $ 826

Assets assumed from Wincanton acquisition 1,032 —

Actual return on plan assets ( 44 ) 60

Employer contributions 3 1

Settlements ( 2 ) —

Benefits paid ( 86 ) ( 48 )

3 unchanged sentences

(1) Funded status is recorded within Other long-term assets.

The amounts included in AOCIL that have not yet been recognized in net periodic benefit were as follows:

The amounts included in AOCIL that have not yet been recognized in net periodic benefit cost were as follows:

(In millions) 2024 2023

2 unchanged sentences

Net loss recognized in AOCIL $ ( 198 ) $ ( 142 )

The components of net benefit cost recognized were as follows:

The components of net periodic benefit cost recognized were as follows:

Year Ended December 31,

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Amortization of net loss

Net benefit credit recognized (1)

(1) Net benefit credit is recorded within Other income, net.

( 4 ) ( 3 ) —

Net periodic pension income recognized (1)

$ 21 $ 8 $ 33

(1) Net periodic pension income is recorded within Other income, net.

The amount recognized in other comprehensive income was as follows:

4 unchanged sentences

Other comprehensive income (loss) $ ( 61 ) $ 3 $ ( 51 )

The weighted-average assumptions used to determine the projected benefit obligation and the net periodic costs were as follows:

The weighted-average assumptions used to determine the projected benefit obligation and the net periodic benefit cost were as follows:

Year Ended December 31,

3 unchanged sentences

Rate of compensation increase (1)

Weighted average assumptions used to determine net periodic costs for the year ended December 31:

Weighted average assumptions used to determine net periodic benefit cost for the year ended December 31:

Discount rate

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The Company’s U.K.

Retirement Plan’s assets are invested by a trustee, which include representatives of the Company, to meet the U.K.

Retirement Plan’s projected future pension liabilities.

During 2023, the Company changed the plan’s investment manager and appointed a fiduciary manager.

The day-to-day management of the assets of the U.K.

Retirement Plan has been delegated by the plan trustee to a fiduciary manager who decides the composition of the asset portfolio in line with the objectives of the plan’s trustee.

The trustee’s investment objectives are to meet the performance target set by the trustee in a risk-controlled framework.

Retirement Plans’ assets are invested by its trustees, which include representatives of the Company, to meet each of the U.K.

Retirement Plans’ projected future pension liabilities.

The target asset allocations for our pension plans are based upon analyzing the timing and amount of projected benefit payments, projected company contributions, the expected returns and risk of the asset classes and the correlation of those returns.

The target strategic asset allocation for the U.K.

Retirement Plan consists of approximately 65 % liability-driven investments, intended to minimize market and interest rate risks, and approximately 35 % growth and income assets.

Retirement Plans consists of approximately 75 % liability-driven investments, intended to minimize market and interest rate risks, and approximately 25 % growth and income assets.

The actual asset allocations of the U.K.

Retirement Plan are in line with the target asset allocations.

Retirement Plans are in line with the target asset allocations.

The fair values of investments held in the pension plans by major asset category were as follows:

2 unchanged sentences

Fixed income securities Level 1 2 21

Cash and cash equivalents Level 2 123 —

Money market Level 2 — 18

1 unchanged sentence

Fixed income securities Level 2 1,719 890

Derivatives Level 2 — ( 137 )

Repurchase agreements (1)

Level 2 ( 388 ) ( 266 )

Total assets in fair value hierarchy $ 808 $ 494

Total net assets in fair value hierarchy $ 1,566 $ 808

Private markets (2)

Commingled funds (2)

Investments, at fair value $ 1,770 $ 883

(1) Represents repurchase agreements in the UK.

Represent the plans’ short-term borrowing to hedge against interest rate and inflation risks.

The plans have an obligation to return the cash after the term of the agreements.

Due to the short-term nature of the agreements, the outstanding balance of the obligation approximates fair value.

(1) Repurchase agreements represent short-term borrowings.

The plans have an obligation to return the cash after the agreement's term.

Due to the agreements' short-term nature, the outstanding balance of the obligation approximates fair value.

(2) Investments that are measured using the net asset value per share (or its equivalent) practical expedient are not classified in the fair value hierarchy.

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Restructuring costs and other primarily related to severance, including projects to optimize the Company’s finance, human resources and information technology functions, and closing certain corporate and administrative offices, which were not associated with customer attrition.

For the year ended December 31, 2023, Restructuring costs and other totaled $ 32 million, including $ 21 million

related to severance and $ 11 million primarily related to closing certain corporate and administrative offices.

The following table summarizes changes in the restructuring liability, which is included within Other current liabilities in the Consolidated Balance Sheets.

(In millions) Severance Other Total

(In millions)

Balance as of December 31, 2023

1 unchanged sentence

Payments ( 24 )

Non-cash reductions — ( 11 ) ( 11 )

Balance as of December 31, 2024

The remaining severance liability at December 31, 2024, is expected to be substantially paid within 12 months.

For the periods ended before the Separation, the Company was a member of XPO, and its U.S.

taxable income was included in XPO’s consolidated U.S.

federal income tax return as well as certain state and local taxing jurisdictions tax returns.

For the periods ended after the Separation, the Company has filed a consolidated U.S.

federal income tax return as well as state and local income tax returns.

The Company’s foreign income tax returns are filed on a full-year basis.

Income (loss) before taxes related to the Company’s domestic and foreign operations was as follows:

15 unchanged sentences

Total deferred income tax benefit $ ( 38 ) $ ( 41 ) $ ( 7 )

Total income tax expense (benefit) $ 33 $ 64 $ ( 8 )

Total income tax expense $ 8 $ 33 $ 64

Income tax expense (benefit) for 2024, 2023 and 2022 varied from the amount computed by applying the statutory income tax rate to income (loss) before income taxes.

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Intangible assets (2)

( 17 ) — ( 42 )

Transaction costs 8 — 5

Other ( 1 ) 3 1

Total income tax expense (benefit) $ 33 $ 64 $ ( 8 )

(1) Foreign operations include the net impact of changes to valuation allowances, the cost of inclusion of foreign income in the U.S.

Return to Provision ( 12 ) ( 3 ) ( 4 )

Total income tax expense $ 8 $ 33 $ 64

(1) Foreign operations include the cost of inclusion of foreign income in the U.S.

net of foreign taxes and permanent items related to foreign operations.

(2) In 2023 and 2021, the Company recorded an income tax benefit related to the rights to use trade names, trademarks and other intellectual property.

(2) In 2023, the Company recorded an income tax benefit related to the rights to use trade names, trademarks and other intellectual property.

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

Many Pillar Two rules are effective for fiscal years beginning on January 1, 2024, with other aspects to be effective from 2025.

The Company continues to monitor legislative developments as the enactments in certain jurisdictions may have an adverse effect on its financial statements.

Components of the Net Deferred Tax Asset or Liability

29 unchanged sentences

Federal tax credit carryforwards

Various times starting in 2032 4 5

State tax credit carryforwards

11 unchanged sentences

2022 $ 45 3 ( 4 ) $ 44

(1) In 2024, the Company released $ 22 million of valuation allowances in France.

(2) In 2023, due to the PFS Acquisition, the Company acquired $ 8 million of valuation allowances.

(2) In 2021, due to the Separation, the Company released $ 29 million of valuation allowances as the corresponding tax attributes reported by the Company on a combined basis were not transferred to the Company.

Unrecognized Tax Benefits

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Reduction due to expiration of statutes of limitations

— ( 1 ) ( 1 )

Settlements with tax authorities ( 1 ) — —

Gross unrecognized tax benefits

3 unchanged sentences

and foreign jurisdictions.

As of December 31, 2023, the Company is under examination for its income tax filings in the states of North Carolina and Wisconsin.

As of December 31, 2024, there is no ongoing examinations in the United States.

Various foreign tax returns for years after 2009 are open under relevant statutes of limitations and are subject to audit.

13 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.

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 Federal District Court for the Western District of Missouri (the “Court”), was dismissed with prejudice with each side to bear their own costs and fees, and the Court retained jurisdiction to enforce the terms of the 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 $ 59 million expense for the year ended December 31, 2024, for the settlement, associated legal fees, and other related expenses.

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

The alleged amount is approximately € 84 million ($ 87 million as of December 31, 2024).

It is probable that a loss may be incurred;

however, the possible range of losses is not reasonably estimable given the status of the ongoing investigation.

The Company is cooperating in this matter and believes that it has a number of credible defenses.

During 2024, the Company deposited a total of € 68 million ($ 70 million as of December 31, 2024) into a designated bank account in connection with the ongoing investigation.

This amount is classified as restricted cash under “Other

Long-Term Assets” on the Consolidated Balance Sheets.

In January 2025, the Company deposited the additional restricted cash amount of approximately € 16 million ($ 17 million).

Subsequent Events

Share Repurchase Program

On February 18, 2025, the GXO board of directors authorized the repurchase by the Company of up to $ 500 million (the “Repurchase Plan”) of its common stock, effective immediately.

The Repurchase Plan permits shares of common stock to be repurchased from time to time in management’s discretion, through a variety of methods, including a 10b5-1 trading plan, open market purchases, privately negotiated transactions or otherwise.

The timing and number of shares of common stock repurchased will depend on a variety of factors, including price, general business and market conditions, alternative investment opportunities and funding considerations.

The Company intends to fund the repurchases from existing cash, borrowings on the Company’s revolving credit facility and/or other financing sources.

The Repurchase Plan does not obligate the Company to repurchase any specific number of shares of common stock and may be suspended or discontinued at any time.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosures.

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-K

Item 8. Financial Statements and Supplementary Data