GXO Logistics, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS GXO Logistics, Inc. Condensed Consolidated Statements of Operations (Unaudited) Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions, shares in thousands, except per share amounts) 2025 2024 2025 2024 Revenue $ 3,299 $ 2,846 $ 6,276 $ 5,302 Direct operating expense 2,813 2,389 5,371 4,445 Selling, general and administrative expense 272 270 533 519 Depreciation and amortization expense 110 99 219 191 Transaction and integration costs 14 15 36 34 Restructuring costs and other 2 1 19 17 Regulatory matter and litigation expense ( 1 ) ( 3 ) 65 60 Operating income 89 75 33 36 Other income (expense), net ( 10 ) 1 ( 15 ) 7 Interest expense, net ( 36 ) ( 23 ) ( 68 ) ( 36 ) Income (loss) before income taxes 43 53 ( 50 ) 7 Income tax expense ( 15 ) ( 14 ) ( 17 ) ( 4 ) Net income (loss) 28 39 ( 67 ) 3 Net income attributable to noncontrolling interests (“NCI”) ( 2 ) ( 1 ) ( 3 ) ( 2 ) Net income (loss) attributable to GXO $ 26 $ 38 $ ( 70 ) $ 1 Earnings (loss) per share Basic $ 0.23 $ 0.32 $ ( 0.60 ) $ 0.01 Diluted $ 0.23 $ 0.32 $ ( 0.60 ) $ 0.01 Weighted-average shares used in computation of earnings (loss) per share Basic 114,812 119,427 116,890 119,350 Diluted 115,055 119,683 116,890 119,680 See accompanying Notes to Condensed Consolidated Financial Statements. 2 GXO Logistics, Inc. Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, (In millions) 2025 2024 2025 2024 Net income (loss) $ 28 $ 39 $ ( 67 ) $ 3 Other comprehensive income (loss), net of tax Foreign currency translation adjustments 136 ( 14 ) 210 ( 28 ) Cash flow hedges — — ( 1 ) 1 Pension plans ( 8 ) — ( 12 ) 2 Other comprehensive income (loss), net of tax 128 ( 14 ) 197 ( 25 ) Comprehensive income (loss), net of tax 156 25 130 ( 22 ) Less: Comprehensive income attributable to NCI 5 1 7 1 Comprehensive income (loss) attributable to GXO $ 151 $ 24 $ 123 $ ( 23 ) See accompanying Notes to Condensed Consolidated Financial Statements. 3 GXO Logistics, Inc. Condensed Consolidated Balance Sheets (Unaudited) June 30, December 31, (Dollars in millions, shares in thousands, except per share amounts) 2025 2024 ASSETS Current assets Cash and cash equivalents $ 205 $ 413 Accounts receivable, net of allowance of $ 11 and $ 15 1,950 1,799 Other current assets 434 429 Total current assets 2,589 2,641 Long-term assets Property and equipment, net of accumulated depreciation of $ 1,974 and $ 1,732 1,264 1,160 Operating lease assets 2,646 2,329 Goodwill 3,827 3,549 Intangible assets, net of accumulated amortization of $ 724 and $ 618 1,008 986 Other long-term assets 592 601 Total long-term assets 9,337 8,625 Total assets $ 11,926 $ 11,266 LIABILITIES AND EQUITY Current liabilities Accounts payable $ 691 $ 776 Accrued expenses 1,381 1,271 Current debt 90 110 Current operating lease liabilities 732 647 Other current liabilities 516 385 Total current liabilities 3,410 3,189 Long-term liabilities Long-term debt 2,596 2,521 Long-term operating lease liabilities 2,139 1,898 Other long-term liabilities 806 623 Total long-term liabilities 5,541 5,042 Commitments and Contingencies (Note 14) Stockholders’ Equity Common Stock, $ 0.01 par value per share; 300,000 shares authorized, 119,808 and 119,496 shares issued and 114,452 and 119,496 shares outstanding, respectively 1 1 Treasury stock, at cost; 5,356 and 0 shares, respectively ( 202 ) — Preferred Stock, $ 0.01 par value per share; 10,000 shares authorized, 0 issued and outstanding — — Additional Paid-In Capital (“APIC”) 2,645 2,629 Retained earnings 616 686 Accumulated Other Comprehensive Income (Loss) (“AOCIL”) ( 120 ) ( 313 ) Total stockholders’ equity before NCI 2,940 3,003 NCI 35 32 Total equity 2,975 3,035 Total liabilities and equity $ 11,926 $ 11,266 See accompanying Notes to Condensed Consolidated Financial Statements. 4 GXO Logistics, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) Six Months Ended June 30, (In millions) 2025 2024 Cash flows from operating activities: Net income (loss) $ ( 67 ) $ 3 Adjustments to reconcile net income (loss) to net cash provided by operating activities Depreciation and amortization expense 219 191 Stock-based compensation expense 23 19 Deferred tax benefit ( 25 ) ( 16 ) Other 7 10 Changes in operating assets and liabilities Accounts receivable 18 56 Other assets 39 ( 8 ) Accounts payable ( 151 ) ( 82 ) Accrued expenses and other liabilities ( 31 ) ( 8 ) Net cash provided by operating activities 32 165 Cash flows from investing activities: Capital expenditures ( 125 ) ( 161 ) Proceeds from sale of property and equipment 2 10 Acquisition of businesses, net of cash acquired — ( 863 ) Net cash used in investing activities ( 123 ) ( 1,014 ) Cash flows from financing activities: Common stock repurchased ( 200 ) — Proceeds from debt, net — 1,085 Net borrowings under revolving credit facilities 8 — Repayments of debt, net ( 55 ) ( 196 ) Repayments of finance lease obligations ( 24 ) ( 19 ) Taxes paid related to net share settlement of equity awards ( 7 ) ( 7 ) Net changes in bank overdraft positions 64 3 Other ( 13 ) ( 9 ) Net cash provided by (used in) financing activities ( 227 ) 857 Effect of exchange rates on cash and cash equivalents 40 ( 7 ) Net increase (decrease) in cash, restricted cash and cash equivalents ( 278 ) 1 Cash, restricted cash and cash equivalents, beginning of period 485 470 Cash, restricted cash and cash equivalents, end of period $ 207 $ 471 Reconciliation of cash, restricted cash and cash equivalents Cash and cash equivalents $ 205 $ 469 Restricted Cash (included in Other long-term assets) 2 2 Total cash, restricted cash and cash equivalents $ 207 $ 471 Non-cash financing activities: Excise tax liability related to stock repurchases $ 2 $ — See accompanying Notes to Condensed Consolidated Financial Statements. 5 GXO Logistics, Inc. Condensed Consolidated Statements of Changes in Equity (Unaudited) Common Stock APIC Retained Earnings AOCIL Equity Before NCI NCI Total Equity (Shares in thousands, dollars in millions) Shares Amount Treasury Stock Balance as of March 31, 2025 116,955 $ 1 $ ( 111 ) $ 2,635 $ 590 $ ( 245 ) $ 2,870 $ 34 $ 2,904 Net income — — — — 26 — 26 2 28 Other comprehensive income — — — — — 125 125 3 128 Stock-based compensation — — — 11 — — 11 — 11 Vesting of stock compensation awards 125 — — — — — — — — Tax withholding on vesting of stock-based compensation awards ( 38 ) — — ( 1 ) — — ( 1 ) — ( 1 ) Common stock repurchased ( 2,590 ) — ( 91 ) — — — ( 91 ) — ( 91 ) Dividends to NCI — — — — — — — ( 4 ) ( 4 ) Balance as of June 30, 2025 114,452 $ 1 $ ( 202 ) $ 2,645 $ 616 $ ( 120 ) $ 2,940 $ 35 $ 2,975 Common Stock APIC Retained Earnings AOCIL Equity Before NCI NCI Total Equity (Shares in thousands, dollars in millions) Shares Amount Treasury Stock Balance as of December 31, 2024 119,496 $ 1 $ — $ 2,629 $ 686 $ ( 313 ) $ 3,003 $ 32 $ 3,035 Net income (loss) — — — — ( 70 ) — ( 70 ) 3 ( 67 ) Other comprehensive income — — — — — 193 193 4 197 Stock-based compensation — — — 23 — — 23 — 23 Vesting of stock compensation awards 495 — — — — — — — — Tax withholding on vesting of stock-based compensation awards ( 183 ) — — ( 7 ) — — ( 7 ) — ( 7 ) Common stock repurchased ( 5,356 ) — ( 202 ) — — — ( 202 ) — ( 202 ) Dividends to NCI — — — — — — — ( 4 ) ( 4 ) Balance as of June 30, 2025 114,452 $ 1 $ ( 202 ) $ 2,645 $ 616 $ ( 120 ) $ 2,940 $ 35 $ 2,975 See accompanying Notes to Condensed Consolidated Financial Statements. 6 GXO Logistics, Inc. Condensed Consolidated Statements of Changes in Equity (Unaudited) Common Stock APIC Retained Earnings AOCIL Equity Before NCI NCI Total Equity (Shares in thousands, 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 compensation awards ( 46 ) — ( 3 ) — — ( 3 ) — ( 3 ) Dividends to NCI — — — — — — ( 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 Equity (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 — — — 1 — 1 2 3 Other comprehensive loss — — — — ( 24 ) ( 24 ) ( 1 ) ( 25 ) Stock-based compensation — — 19 — — 19 — 19 Vesting of stock compensation awards 509 — — — — — — — Tax withholding on vesting of stock compensation awards ( 129 ) — ( 7 ) — — ( 7 ) — ( 7 ) Dividends to NCI — — — — — — ( 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. 7 GXO Logistics, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) 1. Basis of Presentation and Significant Accounting Policies Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements of GXO Logistics, Inc. (“GXO” or the “Company”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and pursuant to the rules of the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. The Company’s Condensed Consolidated Financial Statements include the accounts of GXO and its majority-owned subsidiaries and variable interest entities of which the Company is the primary beneficiary. The Company has eliminated intercompany accounts and transactions. The accompanying Condensed Consolidated Financial Statements and Notes thereto should be read in conjunction with the Annual Report on Form 10-K for the year ended December 31, 2024. The Company presents its operations as one reportable segment. Accounting Pronouncements Issued But Not Yet Adopted In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which provides for expanded disclosures primarily related to income taxes paid and the rate reconciliation. The amendments are effective prospectively for annual periods beginning after December 15, 2024, and early adoption and retrospective application are permitted. The Company is currently evaluating the impact of the disclosure requirements about income taxes paid and the rate reconciliation in 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. 8 2. Revenue Recognition Revenue disaggregated by geographical area was as follows: Three Months Ended June 30, Six Months Ended June 30, (In millions) 2025 2024 2025 2024 United Kingdom $ 1,590 $ 1,289 $ 2,981 $ 2,202 United States 767 731 1,519 1,478 Netherlands 253 220 485 438 France 216 201 402 401 Spain 166 145 309 274 Italy 105 97 200 190 Other 202 163 380 319 Total $ 3,299 $ 2,846 $ 6,276 $ 5,302 The Company’s revenue can also be disaggregated by various verticals, reflecting the customer’s principal industry. Revenue disaggregated by industry was as follows: Three Months Ended June 30, Six Months Ended June 30, (In millions) 2025 2024 2025 2024 Omnichannel retail $ 1,626 $ 1,316 $ 3,048 $ 2,338 Technology and consumer electronics 402 363 795 745 Industrial and manufacturing 403 331 765 597 Food and beverage 359 326 673 642 Consumer packaged goods 290 290 574 585 Other 219 220 421 395 Total $ 3,299 $ 2,846 $ 6,276 $ 5,302 Contract Assets and Liabilities The contract asset and contract liability balances from contracts with customers were as follows: June 30, December 31, (In millions) 2025 2024 Contract assets and contract costs included in: Other current assets $ 47 $ 37 Other long-term assets 213 196 Total contract assets $ 260 $ 233 Contract liabilities included in: Other current liabilities $ 287 $ 272 Other long-term liabilities 110 128 Total contract liabilities $ 397 $ 400 9 Revenue recognized included the following: Three Months Ended June 30, Six Months Ended June 30, (In millions) 2025 2024 2025 2024 Amounts included in the beginning of year contract liability balance $ 24 $ 48 $ 221 $ 153 3. 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”). The CODM uses Adjusted EBITDA to communicate performance targets to the segment managers, allocate resources to the segments, and to monitor segment performance. Additionally, the CODM considers the performance of this measure against planned and forecasted amounts to make investing and resource allocation decisions. The actual results are used in assessing performance of the Company and in establishing management’s compensation. For disclosure purposes, we aggregate these three operating segments into one reportable segment. The Company’s segment results were as follows: Three Months Ended June 30, Six Months Ended June 30, (In millions) 2025 2024 2025 2024 Revenue $ 3,299 $ 2,846 $ 6,276 $ 5,302 Direct operating expense 2,813 2,389 5,371 4,445 Selling, general and administrative expense (1) 257 252 503 488 Other (income) expense (2)(4) 2 — ( 3 ) ( 3 ) Segment Adjusted EBITDA $ 227 $ 205 $ 405 $ 372 Less: Corporate expenses (3) 15 18 30 31 Depreciation expense 80 77 160 150 Amortization of intangible assets acquired 30 22 59 41 Transaction and integration costs 14 15 36 34 Restructuring costs and other 2 1 19 17 Regulatory matter and litigation expense ( 1 ) ( 3 ) 65 60 Unrealized (gain) loss on foreign currency contracts (4) 8 ( 1 ) 18 ( 4 ) Interest expense, net 36 23 68 36 Income (loss) before income taxes 43 53 ( 50 ) 7 Income tax expense ( 15 ) ( 14 ) ( 17 ) ( 4 ) Net income (loss) $ 28 $ 39 $ ( 67 ) $ 3 (1) Excludes unallocated corporate expenses. (2) Other (income) expense, excluding unrealized (gain) loss on foreign currency contracts. (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 Condensed Consolidated Statements of Operations. (4) Included in Other income/expense, net in the Condensed Consolidated Statements of Operations . 10 4. Leases The Company has operating leases for real estate and warehouse equipment. Also, the Company has finance leases for real estate, warehouse equipment and fleet, and technology and automated systems. The following amounts were recorded in the Condensed Consolidated Balance Sheets related to leases: June 30, December 31, (In millions) 2025 2024 Operating leases: Operating lease assets $ 2,646 $ 2,329 Current operating lease liabilities $ 732 $ 647 Long-term operating lease liabilities 2,139 1,898 Total operating lease liabilities $ 2,871 $ 2,545 Finance leases: Property and equipment, net $ 348 $ 239 Current debt $ 53 $ 39 Long-term debt 316 237 Total finance lease liabilities $ 369 $ 276 The components of lease expense recorded in the Condensed Consolidated Statements of Operations were as follows: Three Months Ended June 30, Six Months Ended June 30, (In millions) 2025 2024 2025 2024 Operating leases: Operating lease cost $ 238 $ 193 $ 444 $ 377 Short-term lease cost 49 51 96 100 Variable lease cost 42 46 86 86 Total operating lease cost (1) $ 329 $ 290 $ 626 $ 563 Finance leases: Amortization of leased assets $ 8 $ 7 $ 15 $ 14 Interest expense on lease liabilities 4 1 8 2 Total finance lease cost $ 12 $ 8 $ 23 $ 16 Total operating and finance lease cost $ 341 $ 298 $ 649 $ 579 (1) Operating lease cost is primarily included in Direct operating expense in the Condensed Consolidated Statements of Operations. Supplemental cash flow information was as follows: Six Months Ended June 30, (In millions) 2025 2024 Leased assets obtained in exchange for new lease obligations: Operating leases, including $ 244 from an acquisition in 2024 $ 514 $ 560 Finance leases, including $ 36 from an acquisition in 2024 85 120 11 5. Acquisition Wincanton Acquisition On April 29, 2024, the Company completed the acquisition of Wincanton plc (now Wincanton Limited) for a total consideration of £ 762 million ($ 958 million as of the acquisition date) (the “Wincanton Acquisition”). The Wincanton Acquisition was subject to review by the Competition and Markets Authority (the “CMA”) in the U.K. On June 19, 2025, the CMA approved the Wincanton Acquisition, subject to the divestment of certain grocery contracts in the U.K. In connection with the Wincanton Acquisition, the Company incurred transaction costs of $ 14 million and $ 11 million for the three months ended June 30, 2025 and 2024, respectively, and $ 35 million and $ 26 million for the six months ended June 30, 2025 and 2024, respectively, which were included in Transaction and integration costs in the Condensed Consolidated Statements of Operations. The final fair value of assets acquired and liabilities assumed at the acquisition date was: (In millions) ASSETS Current assets Cash and cash equivalents $ 90 Accounts receivable 238 Other current assets 65 Total current assets 393 Long-term assets Property and equipment 128 Operating lease assets 177 Intangible assets (1) 532 Other long-term assets 152 Total long-term assets 989 Total assets $ 1,382 LIABILITIES Current liabilities Accounts payable $ 67 Accrued expenses 293 Current debt 7 Current operating lease liabilities 41 Other current liabilities 147 Total current liabilities 555 Long-term liabilities Long-term debt 215 Long-term operating lease liabilities 136 Other long-term liabilities 240 Total long-term liabilities 591 Total liabilities $ 1,146 Net assets purchased $ 236 Purchase price $ 958 Goodwill recorded (2) $ 722 (1) The Company acquired $ 532 million of intangible assets, comprised of customer relationships, trade names, and intellectual property with weighted-average useful lives of 12.5 years. 12 (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 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 Wincanton Acquisition to be deductible for income tax purposes. 6. Goodwill The following table presents the changes in Goodwill for the six months ended June 30, 2025: (In millions) Balance as of December 31, 2024 $ 3,549 Acquisition (1) ( 4 ) Impact of foreign exchange translation (2) 282 Balance as of June 30, 2025 $ 3,827 (1) Represents $ 4 million reduction in goodwill for the purchase price allocation of the Wincanton Acquisition. (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, 2025 and December 31, 2024, there were no accumulated goodwill impairment losses. 7. Debt and Financing Arrangements The following table summarizes the carrying value of the Company’s debt: June 30, December 31, (In millions, except percentages) Rate (1) 2025 2024 Unsecured notes due 2026 (2) 1.65 % $ 400 $ 399 Unsecured notes due 2029 (3) 6.25 % 594 593 Unsecured notes due 2031 (4) 2.65 % 397 397 Unsecured notes due 2034 (5) 6.50 % 491 490 Three-Year Term Loan due 2025 (6) — % — 50 Five-Year Term Loan due 2027 (7) 5.80 % 399 399 Finance leases and other debt Various 405 303 Total Debt 2,686 2,631 Less: Current debt 90 110 Total Long-term debt $ 2,596 $ 2,521 (1) Interest rate as of June 30, 2025. (2) Net of unamortized discount and debt issuance costs of $ 1 million as of December 31, 2024. (3) Net of unamortized discount and debt issuance costs of $ 6 million and $ 7 million as of June 30, 2025 and December 31, 2024, respectively. (4) Net of unamortized discount and debt issuance costs of $ 3 million as of June 30, 2025 and December 31, 2024. (5) Net of unamortized discount and debt issuance costs of $ 9 million and $ 10 million as of June 30, 2025 and December 31, 2024, respectively. (6) On May 16, 2025, the Company repaid the remaining $ 50 million of the Three-Year Term Loan due 2025. (7) Net of unamortized debt issuance costs of $ 1 million as of June 30, 2025 and December 31, 2024. Revolving Credit Facilities The Company has a five-year unsecured, multicurrency revolving credit facility expiring in 2029 (the “Revolving Credit Agreement”). The aggregate commitment of all lenders under the Revolving Credit Agreement is equal to $ 800 million, of which $ 100 million is available for the issuance of letters of credit. As of June 30, 2025, and December 31, 2024, no amounts were outstanding under the Revolving Credit Agreement and letters of credit were $ 1 million under the Revolving Credit Agreement. 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 ($ 240 million as of 13 June 30, 2025) in aggregate at any time, expiring in March 2027. Loans under the Wincanton Revolving Credit Agreement bear interest at daily simple Sterling Overnight Index Average rate plus a margin. As of June 30, 2025, and December 31, 2024, the Company had £ 26 million ($ 36 million) and £ 15 million ($ 19 million) of borrowings outstanding under the Wincanton Revolving Credit Agreement, respectively. Covenants and Compliance The covenants for the Company’s debt securities, which are customary for financings of this type, limit the Company’s ability to incur indebtedness and grant liens, among other restrictions. In addition, the facilities require the Company to maintain a consolidated leverage ratio below a specified maximum. As of June 30, 2025, the Company complied with the covenants contained in its debt and financing arrangements. Bank Overdraft As of June 30, 2025, and December 31, 2024, the Company had $ 64 million and zero bank overdrafts, which were reported within Other current liabilities in the Condensed Consolidated Balance Sheets. Factoring Programs The Company sells certain of its trade receivables on a non-recourse basis to third-party financial institutions under various factoring agreements. Information related to the trade receivables sold was as follows: Three Months Ended June 30, Six Months Ended June 30, (In millions) 2025 2024 2025 2024 Receivables sold in period $ 792 $ 364 $ 1,394 $ 655 Cash consideration 787 360 1,385 649 Net cash provided by operating cash flows 90 15 78 18 8. Fair Value Measurements and Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The levels of inputs used to measure fair value are: • Level 1—Quoted prices for identical instruments in active markets; • Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets; and • Level 3—Valuations based on inputs that are unobservable, generally utilizing pricing models or other valuation techniques that reflect management’s judgment and estimates. Assets and Liabilities The Company bases its fair value estimates on market assumptions and available information. The carrying values of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and current maturities of long-term debt approximated their fair values as of June 30, 2025 and December 31, 2024, due to their short-term nature. 14 Debt The fair value of debt was as follows: June 30, 2025 December 31, 2024 (In millions) Level Fair Value Carrying Value Fair Value Carrying Value Unsecured notes due 2026 2 $ 387 $ 400 $ 380 $ 399 Unsecured notes due 2029 2 627 594 617 593 Unsecured notes due 2031 2 348 397 336 397 Unsecured notes due 2034 2 522 491 514 490 Three-Year Term Loan due 2025 2 — — 49 50 Five-Year Term Loan due 2027 2 392 399 394 399 Financial Instruments The Company directly manages its exposure to risks arising from business operations and economic factors, including fluctuations in interest rates and foreign currencies. The Company uses derivative instruments to manage the volatility related to these exposures. The notional amount and fair value of derivative instruments were as follows: June 30, 2025 December 31, 2024 Balance Sheet Location (In millions) Notional Amount Fair Value Notional Amount Fair Value Derivatives designated as net investment hedges: Cross-currency swap agreements (1) $ — $ — $ 270 $ 12 Other current assets Cross-currency swap agreements — — 1,177 48 Other long-term assets Cross-currency swap agreements (2)(3) 372 45 98 7 Other current liabilities Cross-currency swap agreements (3) 1,652 174 325 2 Other long-term liabilities Derivatives designated as cash flow hedge: Interest rate swaps $ 125 $ 2 $ 125 $ 3 Other long-term assets Derivatives not designated as hedges: Foreign currency option contracts (4) $ 263 $ — $ 300 $ 13 Other current assets Foreign currency option contracts 184 10 26 — Other current liabilities Foreign currency forward contracts 253 2 — — Other current assets Foreign currency forward contracts 18 — 125 1 Other current liabilities (1) In February 2025, the Company terminated a cross-currency swap with a notional amount of $ 100 million scheduled to mature in November 2025. (2) In February 2025, the Company amended one cross-currency swap with a notional amount of $ 98 million to $ 102 million scheduled to mature in December 2025. (3) In February 2025, the Company entered into three cross-currency swap agreements with an aggregate notional amount of $ 250 million, of which $ 100 million is scheduled to mature in November 2025 and $ 150 million is scheduled to mature in November 2030. (4) As of June 30, 2025, five foreign currency option contracts not designated as hedges had an aggregate notional amount of $ 27 million and fair value of zero . As of June 30, 2025 and December 31, 2024, 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. 15 The effect of hedges on AOCIL and in the Condensed Consolidated Statements of Operations was as follows: Three Months Ended June 30, 2025 Six Months Ended June 30, 2025 (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 $ ( 195 ) $ — $ 1 $ ( 271 ) $ ( 3 ) $ 2 Derivatives designated as cash flow hedges Interest rate swaps $ ( 1 ) $ — $ — $ ( 2 ) $ — $ — (1) Amounts reclassified to Net income are reported within Interest expense, net in the Condensed Consolidated Statements of Operations. 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) 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 $ 15 $ 4 $ — $ 47 $ 2 $ 1 Derivatives designated as cash flow hedges Interest rate swaps $ ( 1 ) $ — $ — $ 1 $ — $ — (1) Amounts reclassified to Net income are reported within Interest expense, net in the Condensed Consolidated Statements of Operations. Derivatives Not Designated as Hedges Gains and losses recognized in Other income (expense), net in the Condensed Consolidated Statements of Operations for foreign currency options and forward contracts were as follows: Three Months Ended June 30, Six Months Ended June 30, (In millions) 2025 2024 2025 2024 Foreign currency gain (loss) on foreign currency contracts $ ( 6 ) $ — $ ( 14 ) $ 2 16 9. Earnings per Share 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) 2025 2024 2025 2024 Net income (loss) attributable to common shares $ 26 $ 38 $ ( 70 ) $ 1 Basic weighted-average common shares 114,812 119,427 116,890 119,350 Diluted weighted-average common shares 115,055 119,683 116,890 119,680 Basic earnings (loss) per share $ 0.23 $ 0.32 $ ( 0.60 ) $ 0.01 Diluted earnings (loss) per share $ 0.23 $ 0.32 $ ( 0.60 ) $ 0.01 Shares not included in the computation of diluted earnings per share because the effect would be antidilutive 2,075 1,087 3,396 1,074 10. Stockholders’ Equity Stock Repurchase Plan On February 18, 2025, the Company’s board of directors authorized and announced the repurchase of up to $ 500 million (the “Repurchase Plan”) of its common stock. 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 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. The repurchase of shares of the Company’s common stock is recorded as treasury stock within equity and is accounted for under the cost method inclusive of share repurchase costs and excise tax on share repurchases in excess of issuances. For the three and six months ended June 30, 2025, the Company repurchased approximately 2.6 million and 5.4 million shares of its common stock for an aggregate purchase price of $ 91 million and $ 202 million including share repurchase costs and excise tax, respectively. 17 Accumulated Other Comprehensive Income - Loss The following tables summarize the changes in AOCIL by component: Foreign Currency Adjustment (In millions) Foreign Currency Translation Adjustments Net Investment Hedges Cash Flow Hedges Defined Benefit Plans Less: AOCIL attributable to NCI AOCIL attributable to GXO As of March 31, 2025 $ ( 64 ) $ ( 26 ) $ 3 $ ( 159 ) $ 1 $ ( 245 ) Other comprehensive income (loss) before reclassifications 288 ( 194 ) ( 1 ) ( 12 ) ( 3 ) 78 Amounts reclassified to net income — ( 1 ) — 2 — 1 Tax amounts ( 1 ) 44 1 2 — 46 Other comprehensive income (loss), net of tax 287 ( 151 ) — ( 8 ) ( 3 ) 125 As of June 30, 2025 $ 223 $ ( 177 ) $ 3 $ ( 167 ) $ ( 2 ) $ ( 120 ) Foreign Currency Adjustment (In millions) Foreign Currency Translation Adjustments Net Investment Hedges Cash Flow Hedges Defined Benefit Plans Less: AOCIL attributable to NCI AOCIL attributable to GXO As of December 31, 2024 $ ( 195 ) $ 31 $ 4 $ ( 155 ) $ 2 $ ( 313 ) Other comprehensive income (loss) before reclassifications 419 ( 270 ) ( 2 ) ( 18 ) ( 4 ) 125 Amounts reclassified to net loss — 1 — 3 — 4 Tax amounts ( 1 ) 61 1 3 — 64 Other comprehensive income (loss), net of tax 418 ( 208 ) ( 1 ) ( 12 ) ( 4 ) 193 As of June 30, 2025 $ 223 $ ( 177 ) $ 3 $ ( 167 ) $ ( 2 ) $ ( 120 ) Foreign Currency Adjustment (In millions) Foreign Currency Translation Adjustments Net Investment Hedges Cash Flow Hedges Defined Benefit Plans Less: AOCIL attributable to NCI AOCIL attributable to GXO 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 — ( 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 ) 18 Foreign Currency Adjustment (In millions) Foreign Currency Translation Adjustments Net Investment Hedges Cash Flow Hedges Defined Benefit Plans Less: AOCIL attributable to NCI AOCIL attributable to GXO As of December 31, 2023 $ ( 83 ) $ ( 47 ) $ 5 $ ( 113 ) $ ( 1 ) $ ( 239 ) Other comprehensive income (loss) before reclassifications ( 63 ) 47 1 — 1 ( 14 ) Amounts reclassified to net income — ( 3 ) — 2 — ( 1 ) Tax amounts 1 ( 10 ) — — — ( 9 ) Other comprehensive income (loss), net of tax ( 62 ) 34 1 2 1 ( 24 ) As of June 30, 2024 $ ( 145 ) $ ( 13 ) $ 6 $ ( 111 ) $ — $ ( 263 ) 11. Employee Benefit Plans Defined Benefit Plans The Company offers pension plans in certain jurisdictions, with the most significant in the U.K. In the U.K., the Company sponsors two defined benefit pension schemes (the “U.K. Retirement Plans”). The U.K. Retirement Plans do not allow for new plan participants or additional benefit accruals. The funded status of the U.K. Retirement Plans was recorded in Other long-term assets in the Condensed Consolidated Balance Sheets. The Company considers its other defined benefit pension plans not material to its Consolidated Financial Statements and excludes them from the disclosure below. 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) 2025 2024 2025 2024 Interest cost $ ( 21 ) $ ( 17 ) $ ( 42 ) $ ( 26 ) Expected return on plan assets 27 23 54 36 Amortization of net loss ( 2 ) ( 1 ) ( 3 ) ( 2 ) Net periodic pension income (1) $ 4 $ 5 $ 9 $ 8 (1) Net periodic pension income was recorded in Other income (expense), net in the Condensed Consolidated Statements of Operations. Defined Contribution Plans Also, the Company has defined-contribution retirement plans for its United States employees and employees of certain foreign subsidiaries. In these plans, employees are allowed to contribute a portion of their salaries and bonuses to the plans, and the Company matches a portion of the employee contributions. Defined contribution plan costs were as follows: Three Months Ended June 30, Six Months Ended June 30, (In millions) 2025 2024 2025 2024 Defined contribution costs (1) $ 23 $ 21 $ 54 $ 38 (1) Defined contribution plan costs were primarily recorded in Direct operating expense in the Condensed Consolidated Statements of Operations. 19 12. Restructuring Costs and Other Restructuring costs and other were primarily related to severance in connection with actions taken to optimize certain administrative functions. The following table summarizes changes in the restructuring liability, which is included in Other current liabilities in the Condensed Consolidated Balance Sheets: (In millions) Balance as of December 31, 2024 $ 10 Charges incurred 19 Payments ( 11 ) Other reductions, net ( 2 ) Balance as of June 30, 2025 $ 16 As of June 30, 2025, $ 12 million of the restructuring liability is expected to be paid within the next 12 months. 13. Income Taxes Income tax expense for the three months ended June 30, 2025 and 2024, was $ 15 million and $ 14 million, respectively, and the Company’s effective tax rate for the three months ended June 30, 2025 and 2024, was 34.6 %, and 25.4 %, respectively. The increase in the Company’s effective tax rate was primarily driven by a decrease in pre-tax income. Income tax expense for the six months ended June 30, 2025 and 2024, was $ 17 million and $ 4 million, respectively, and the Company’s effective tax rate for the six months ended June 30, 2025 and 2024, was an expense on a pre-tax loss of ( 35.3 )% and an expense on pre-tax income of 52.3 %, respectively. The change in the Company’s effective tax rate was primarily driven by a decrease in pre-tax income, offset by non-deductible regulatory matter and transaction costs. On July 4, 2025, the One Big Beautiful Bill Act (P.L. 119-21) was signed into law. The legislation has multiple effective dates, with certain provisions effective in 2025 and others effective through 2027. The Company is currently assessing its impact on its Consolidated Financial Statements. In 2021, the Organization 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. The Company has incorporated the estimated annual effect of Pillar Two into its income tax provision for the three and six months ended June 30, 2025, and the Company expects to incur additional income tax related to Pillar Two during fiscal 2025. For the three and the six months ended June 30, 2024, Pillar Two did not have a material impact on the Company’s income tax expense. Pillar Two did not have a material impact on the Company’s fiscal 2024 income tax expense. The Company continues to monitor Pillar Two developments, including the impact of the statement issued by the G7 on June 28, 2025 regarding the interplay between the U.S. international tax system and Pillar Two as it relates to U.S.-headquartered companies. 14. Commitments and Contingencies The Company is involved, and will continue to be involved, in numerous legal proceedings arising from the conduct of its business. These proceedings may include personal injury claims arising from the transportation and handling of goods, contractual disputes and employment-related claims, including alleged violations of wage and hour laws. The Company establishes accruals for specific legal proceedings when it is considered probable that a loss has been incurred and the amount of the loss can be reasonably estimated. The Company reviews and adjusts accruals for loss contingencies quarterly and as additional information becomes available. If a loss is not both probable and 20 reasonably estimable, or if an exposure to a loss exists in excess of the amount accrued, the Company assesses whether there is at least a reasonable possibility that a loss, or additional loss, may have been incurred. If there is a reasonable possibility that a loss, or additional loss, may have been incurred, the Company discloses the estimate of the possible loss or range of loss if it is material and an estimate can be made, or discloses that such an estimate cannot be made. The determination as to whether a loss can reasonably be considered to be possible or probable is based on management’s assessment, together with legal counsel, regarding the ultimate outcome of the matter. 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. 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. Legal costs related to these matters are expensed as they are incurred. The Company carries liability and excess umbrella insurance policies that are deemed sufficient to cover potential legal claims arising in the normal course of conducting its operations. 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 July 2, 2024, the Italian authorities initiated an investigation into the deductibility of value-added tax (VAT) payments made by the Company to certain third-party service providers. The challenged amount was € 84 million ($ 91 million as of March 31, 2025), which the Company deposited into a restricted bank account to secure the investigation. In the first quarter of 2025, the Company accrued € 61 million ($ 66 million) of expense, including legal fees, related to this matter. In the second quarter of 2025, the Company agreed and made final payments of € 59 million ($ 68 million) to the Italian authorities and released any remaining restrictions on this cash account. And for the three and six months ended June 30, 2025, the Company released $ 1 million and recorded $ 65 million, respectively, of expenses, including legal fees, related to this matter, which was recorded within the Regulatory matter and litigation expense line in the Condensed Consolidated Statements of Operations. 21