What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-05 compared with 2026-05-06 · 108 added, 56 removed, 153 unchanged (52% of the section changed)

24 unchanged sentences

Results of Operations

Three Months Ended March 31, 2026 compared with the Three Months Ended March 31, 2025

Three Months Ended March 31,

Three Months Ended June 30, 2026 compared with the Three Months Ended June 30, 2025

Three Months Ended June 30,

(In millions, except percentages) 2026 2025 $ Change % Change

4 unchanged sentences

Transaction and integration costs 12 14 (2) (14) %

Restructuring costs and other 5 2 3 n/m

Regulatory matter — (1) 1 (100) %

Net loss on divestiture of business 2 — 2 n/m

Operating income 77 89 (12) (13) %

Other income (expense), net 6 (10) 16 n/m

Interest expense, net (35) (36) 1 (3) %

Income before income taxes 48 43 5 12 %

Income tax expense (21) (15) (6) 40 %

Net income $ 27 $ 28 $ (1) (4) %

n/m - not meaningful

Revenue for the three months ended June 30, 2026, increased by 4%, or $142 million, to $3.4 billion compared with $3.3 billion for the same period in 2025.

The increase reflects growth in our business and $29 million of foreign currency movements for the three months ended June 30, 2026.

Direct operating expense for the three months ended June 30, 2026, increased by 4%, or $120 million, to $2.9 billion compared with $2.8 billion for the same period in 2025.

As a percentage of revenue, Direct operating expense for the three months ended June 30, 2026, was 85.2% compared with 85.3% for the same period in 2025.

The increase in Direct operating expense reflects growth in our business and $24 million of foreign currency movements for the three months ended June 30, 2026.

Selling, general and administrative expense for the three months ended June 30, 2026, increased by $23 million, to $295 million compared with $272 million for the same period in 2025.

The increase reflects growth in our business.

Other income (expense), net increased from expense to income, due to higher pension income and foreign currency gain on foreign currency contracts in the current period.

Other income (expense), net was as follows:

Three Months Ended June 30,

(In millions, except percentages) 2026 2025 $ Change % Change

Net periodic pension income

$ 6 $ 4 $ 2 50 %

Foreign currency gain (loss):

Realized gain (loss) on foreign currency contracts

Unrealized loss on foreign currency contracts — (8) 8 (100) %

Foreign currency transaction and remeasurement loss, net of foreign currency contracts on intercompany loans

(1) (2) 1 (50) %

Total foreign currency loss — (14) 14 (100) %

Other income (expense), net $ 6 $ (10) $ 16 n/m

n/m - not meaningful

Interest expense, net was as follows:

Three Months Ended June 30,

(In millions, except percentages) 2026 2025 $ Change % Change

Debt and capital leases

$ 44 $ 45 $ (1) (2) %

Cross-currency swaps

(8) (8) — — %

Interest income

(1) (1) — — %

Interest expense, net $ 35 $ 36 $ (1) (3) %

Six Months Ended June 30, 2026 compared with the Six Months Ended June 30, 2025

Six Months Ended June 30,

(In millions, except percentages) 2026 2025 $ Change % Change

Revenue $ 6,739 $ 6,276 $ 463 7 %

Direct operating expense 5,741 5,371 370 7 %

Selling, general and administrative expense 591 533 58 11 %

Depreciation and amortization expense 232 219 13 6 %

Transaction and integration costs 28 36 (8) (22) %

Restructuring costs and other 8 19 (11) (58) %

1 unchanged sentence

Net loss on divestiture of business 23 — 23 n/m

Operating income (loss) 39 (56) 95 n/m

Operating income 116 33 83 n/m

Other income (expense), net 16 (15) 31 n/m

1 unchanged sentence

Income (loss) before income taxes 65 (50) 115 n/m

Income tax expense (12) (2) (10) n/m

Income tax expense (33) (17) (16) 94 %

Net income (loss) $ 32 $ (67) $ 99 n/m

n/m - not meaningful

Revenue for the three months ended March 31, 2026, increased by 11%, or $321 million, to $3.3 billion compared with $3.0 billion for the same period in 2025.

The increase reflects growth in our business and $198 million of foreign currency movements for the three months ended March 31, 2026.

Direct operating expense for the three months ended March 31, 2026, increased by 10%, or $250 million, to $2.8 billion compared with $2.6 billion for the same period in 2025.

As a percentage of revenue, Direct operating expense for the three months ended March 31, 2026, decreased to 85.1% compared with 85.9% for the same period in 2025.

The increase reflects growth in our business and $158 million of foreign currency movements for the three months ended March 31, 2026.

For the three months ended March 31, 2026, we recorded a net benefit of $28 million, primarily in rent expense, from a real estate transaction that resulted in an early termination of a lease.

Revenue for the six months ended June 30, 2026, increased by 7%, or $463 million, to $6.7 billion compared with $6.3 billion for the same period in 2025.

The increase reflects growth in our business and $227 million of foreign currency movements for the six months ended June 30, 2026.

Direct operating expense for the six months ended June 30, 2026, increased by 7%, or $370 million, to $5.7 billion compared with $5.4 billion for the same period in 2025.

As a percentage of revenue, Direct operating expense for the six months ended June 30, 2026, was 85.2% compared with 85.6% for the same period in 2025.

The increase in Direct operating expense reflects growth in our business and $191 million of foreign currency movements for the six months ended June 30, 2026.

For the six months ended June 30, 2026, we recorded a net benefit of $30 million, primarily in rent expense, from a real estate transaction that occurred in the fourth quarter of 2025, which resulted in an early termination of a lease.

The increase in Direct operating expense before recognizing the real estate transaction was in line with our business growth.

Selling, general and administrative expense (“SG&A”) for the three months ended March 31, 2026, increased by $35 million, to $296 million compared with $261 million for the same period in 2025.

The increase reflects growth in our business and $19 million of foreign currency movements for the three months ended March 31, 2026.

Depreciation and amortization expense for the three months ended March 31, 2026, increased by $6 million, to $115 million, compared with $109 million for the same period in 2025.

Amortization expense was $29 million for both the three months ended March 31, 2026, and 2025.

Transaction and integration costs for the three months ended March 31, 2026, and 2025, were $16 million and $22 million, respectively, and primarily related to the acquisition and integration of Wincanton plc (now Wincanton Limited).

Restructuring costs and other costs for the three months ended March 31, 2026, and 2025, were $3 million and $17 million, respectively.

Selling, general and administrative expense for the six months ended June 30, 2026, increased by $58 million, to $591 million compared with $533 million for the same period in 2025.

The increase reflects growth in our business and $22 million of foreign currency movements for the six months ended June 30, 2026.

Transaction and integration costs for the six months ended June 30, 2026 and June 30, 2025, were $28 million and $36 million, respectively, and primarily related to the acquisition and integration of Wincanton.

Restructuring costs and other costs for the six months ended June 30, 2026 and June 30, 2025, were $8 million and $19 million, respectively.

Restructuring costs primarily consisted of severance paid to exiting members of the Company’s leadership team and to individuals as part of an initiative to optimize corporate expenses.

Regulatory matter for the three months ended March 31, 2025, was $66 million and related to the deductibility of value-added tax payments we made to certain third-party service providers, which was settled in 2025.

Net loss on divestiture of business for the three months ended March 31, 2026, was $21 million, and related to a further reduction of the estimated fair value of certain grocery contracts.

Regulatory matter for the six months ended June 30, 2025 was $65 million and related to the deductibility of value-added tax payments we made to certain third-party service providers, which was settled in 2025.

Net loss on divestiture of business for the six months ended June 30, 2026, was $23 million and related to a further reduction of the estimated fair value of certain grocery contracts.

“Divestiture,” to the Condensed Consolidated Financial Statements.

Other income (expense), net increased from expense to income, primarily due to foreign currency gain on foreign currency contracts.

Other income (expense), net increased from expense to income, due to higher pension income and foreign currency gain on foreign currency contracts in the current period.

Other income (expense), net was as follows:

Three Months Ended March 31,

Six Months Ended June 30,

(In millions, except percentages) 2026 2025 $ Change % Change

3 unchanged sentences

Realized loss on foreign currency contracts

(1) — (1) n/m

— (4) 4 (100) %

Unrealized gain (loss) on foreign currency contracts 4 (18) 22 n/m

Foreign currency transaction and remeasurement gain, net of foreign currency contracts on intercompany loans

Foreign currency transaction and remeasurement loss, net of foreign currency contracts on intercompany loans

— (2) 2 (100) %

Total foreign currency gain (loss) 4 (24) 28 n/m

3 unchanged sentences

Interest expense, net was as follows:

Three Months Ended March 31,

Six Months Ended June 30,

(In millions, except percentages) 2026 2025 $ Change % Change

6 unchanged sentences

Interest expense, net $ 67 $ 68 $ (1) (1) %

Income (loss) before income taxes for the three months ended March 31, 2026, was income of $17 million compared with a loss of $93 million for the same period in 2025.

The increase from loss to income reflects higher operating income, primarily due to growth in our business and a net benefit of $28 million from a real estate transaction, lower regulatory matters, and unrealized gain on foreign currency contracts.

Income tax expense for the three months ended March 31, 2026, was $12 million compared with $2 million for the same period in 2025.

Our effective tax rate for the three months ended March 31, 2026, was an expense on a pre-tax income of 68.9%, compared to an expense on a pre-tax loss of (2.7)% for the same period in 2025.

The change to our effective tax rate was primarily driven by an increase in pre-tax income, as well as an increase in unrecognized tax benefits, and a non-deductible fair value adjustment related to the Wincanton Divestment in the current period, and the regulatory matter in the prior period.

Income (loss) before income taxes for the six months ended June 30, 2026, was income of $65 million compared with a loss of $50 million for the same period in 2025.

The increase from loss to income reflects higher operating income, primarily due to growth in our business, including a net benefit of $30 million from a real estate transaction, and the non-recurrence of a regulatory matter in 2025, offset by a net loss related to the Wincanton Divestment and other income from higher pension income and foreign currency gains on foreign currency contracts.

Income tax expense for the six months ended June 30, 2026, was $33 million compared with $17 million for the same period in 2025.

Our effective tax rate for the six months ended June 30, 2026, was an expense on pre-tax income of 50.6%, compared to an expense on pre-tax loss of (35.3)% for the same period in 2025.

The change to our effective tax rate was primarily driven by an increase in pre-tax income, an increase in unrecognized tax benefits for the six months ended June 30, 2026, and a regulatory matter during the six months ended June 30, 2025.

Liquidity and Capital Resources

3 unchanged sentences

We continually evaluate our liquidity requirements and capital structure in light of our operating needs, growth initiatives and capital resources.

As of March 31, 2026, we held cash and cash equivalents of $794 million and restricted cash of $3 million, and we had $793 million of borrowing capacity, net of letters of credit under our revolving credit facility .

In February 2025, our board of directors authorized and announced the repurchase of up to $500 million of our common stock (the “Repurchase Plan”).

As of June 30, 2026, we held cash and cash equivalents of $769 million and restricted cash of $4 million, and we had $793 million of borrowing capacity, net of letters of credit under our revolving credit facility .

Upon maturity in July 2026, we repaid $400 million of unsecured notes using cash on hand.

In 2025, our board of directors authorized and announced a repurchase plan for up to $500 million of our common stock (the “Repurchase Plan”).

The Repurchase Plan permits shares of common stock to be repurchased from time to time in management’s discretion.

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.

We expect to fund any remaining repurchases with existing cash on hand, borrowings on our revolving credit facility, and/or other financing sources.

No shares were repurchased during the first quarter of 2026.

As of March 31, 2026, the remaining authorization under the Repurchase Plan was $300 million.

We expect to fund any remaining repurchases with existing cash on hand, borrowings under our revolving credit facility, and/or other financing sources.

In the second quarter of 2026, we repurchased $16 million of shares.

As of June 30, 2026, $284 million remained authorized under the Repurchase Plan.

During July 2026, we repurchased an additional $5 million of shares.

We believe that our cas h and cash equivalents on hand, our cash flows generated by our operations, amounts available under the revolving credit facility, the use of our factoring programs, and refinancing options available to us in the capital markets will provide sufficient liquidity to operate our business, including the repayment of the current portion of our debt, for at least the next 12 months and for the foreseeable future thereafter.

5 unchanged sentences

The following table summarizes our asset and liability balances:

March 31, December 31,

June 30, December 31,

(In millions, except percentages) 2026 2025 $ Change % Change

7 unchanged sentences

5,228 5,372 (144) (3) %

There were no material changes in our total assets and total liabilities from December 31, 2025, to March 31, 2026.

There were no material changes in our total assets and total liabilities from December 31, 2025 to June 30, 2026, other than the reclassification of $275 million of debt from long-term to current.

Cash Flow Activity

Our cash flows from operating, investing and financing activities, as reflected on our Condensed Consolidated Statements of Cash Flows, are summarized as follows:

Three Months Ended March 31,

Six Months Ended June 30,

(In millions, except percentages)

2026 2025 $ Change

Net cash provided by operating activities $ 31 $ 29 $ 2 7 %

Net cash provided by operating activities $ 107 $ 32 $ 75 n/m

Net cash used in investing activities (126) (123) (3) 2 %

4 unchanged sentences

Operating Activities

Cash flows provided by operating activities for the three months ended March 31, 2026, increased by $2 million compared with the same period in 2025.

The increase was due to higher net income adjusted for the net effect of non-cash items, offset by working capital consumption in 2026.

Cash flows provided by operating activities for the six months ended June 30, 2026, increased by $75 million compared with the same period in 2025.

The increase was due to higher net income adjusted for the net effect of non-cash items and lower accounts payable cash outflow, partially offset by higher cash usage from accounts receivable and other assets.

For the six months ended June 30, 2026 and June 30, 2025, net cash provided by our factoring programs was $14 million and $78 million, respectively.

Investing Activities

Investing activities used $62 million and $77 million of cash for the three months ended March 31, 2026, and March 31, 2025, respectively.

During the three months ended March 31, 2026, we utilized $65 million of cash to purchase property and equipment and received $3 million from the sale of property and equipment.

During the three months ended March 31, 2025, we utilized $78 million of cash to purchase property and equipment and received $1 million from the sale of property and equipment.

Investing activities used $126 million and $123 million of cash for the six months ended June 30, 2026 and June 30, 2025, respectively.

During the six months ended June 30, 2026, we utilized $130 million of cash to purchase property and equipment and received $4 million from the sale of property and equipment.

During the six months ended June 30, 2025, we utilized $125 million of cash to purchase property and equipment and received $2 million from the sale of property and equipment.

Financing Activities

Financing activities used $26 million and $66 million of cash for the three months ended March 31, 2026, and March 31, 2025, respectively.

The primary use of cash from financing activities during the three months ended March 31, 2026, was $15 million in payments for employee taxes on net settlement of equity awards and $14 million to repay finance lease obligations, partially offset by $7 million in proceeds from the exercise of stock options.

The primary use of cash from financing activities during the three months ended March 31, 2025, was $106 million used to repurchase shares of our common stock pursuant to the Repurchase Plan, $11 million to repay finance lease obligations and $6 million in payments for employee taxes on net settlement of equity awards, partially offset by $56 million of net borrowings under revolving credit facilities.

Financing activities used $62 million and $227 million of cash for the six months ended June 30, 2026 and June 30, 2025, respectively.

The primary use of cash from financing activities during the six months ended June 30, 2026, was $25 million to repay finance lease obligations, $18 million to repurchase shares of our common stock pursuant to the Repurchase Plan and to pay excise tax, $17 million in payments for employee taxes on net settlement of equity awards and $10 million net obligations under factoring arrangements, partially offset by $7 million in proceeds from the exercise of stock options and $1 million increase in bank overdraft.

The primary use of cash from financing activities during the six months ended June 30, 2025, was $200 million used to repurchase shares of our common stock pursuant to the Repurchase Plan, $55 million to repay debt, $24 million to repay finance lease obligations, $12 million net obligations under factoring arrangements and $7 million in payments for employee taxes on net settlement of equity awards, partially offset by $64 million increase in bank overdraft and $8 million of net borrowings under revolving credit facilities.

Guaranteed Securities:

Summarized Financial Information

The following information is provided to comply with Rule 13-01 of Regulation S-X under the Securities Exchange Act of 1934, as amended, for the €500 million 3.750% notes due 2030 issued by GXO Logistics Capital B.V.

The following information is provided to comply with Rule 13-01 of Regulation S-X under the Exchange Act of 1934 for the €500 million 3.750% notes due 2030 issued by GXO Logistics Capital B.V.

(“GXO Capital”), a subsidiary of the Company incorporated under the laws of the Netherlands.

3 unchanged sentences

Holders of the €500 million 3.750% notes due 2030 will have a direct claim only against GXO Capital, as issuer, and GXO, as guarantor.

The following tables set forth the summarized financial information for the three months ended March 31, 2026, and as of March 31, 2026, and December 31, 2025, of GXO and GXO Capital, on a standalone basis, which does not include the consolidated impact of the assets, liabilities, and financial results of their subsidiaries except as noted in the tables below, nor does it include any impact of intercompany eliminations as there were no intercompany transactions between GXO and GXO Capital.

The following tables set forth the summarized financial information for the six months ended June 30, 2026, and as of June 30, 2026 and December 31, 2025, of GXO and GXO Capital, on a standalone basis, which does not include the consolidated impact of the assets, liabilities, and financial results of their subsidiaries except as noted in the tables below, nor does it include any impact of intercompany eliminations as there were no intercompany transactions between GXO and GXO Capital.

This summarized financial information is not intended to present the financial position or results of operations of GXO or GXO Capital in accordance with U.S.

2 unchanged sentences

Standalone and Unconsolidated (Unaudited)

Three Months Ended

(In millions) March 31, 2026

Six Months Ended

(In millions) June 30, 2026

Costs and expenses 11

Operating loss $ (11)

Other income from non-guarantor subsidiaries 10

Dividend income and other income from non-guarantor subsidiaries 50

Other income, net 3

Interest income from non-guarantor subsidiaries 11

Interest income, net from non-guarantor subsidiaries 23

Interest expense, net (34)

Income tax benefit 1

Net income attributable to GXO standalone $ 32

1 unchanged sentence

Standalone and Unconsolidated (Unaudited)

March 31, December 31,

June 30, December 31,

(In millions) 2026 2025

13 unchanged sentences

Standalone and Unconsolidated (Unaudited)

Three Months Ended

(In millions) March 31, 2026

Six Months Ended

(In millions) June 30, 2026

Costs and expenses —

5 unchanged sentences

Standalone and Unconsolidated (Unaudited)

March 31, December 31,

June 30, December 31,

(In millions) 2026 2025

9 unchanged sentences

Contractual Obligations

As of March 31, 2026, the Company’s contractual obligations had not materially changed compared with December 31, 2025.

As of June 30, 2026, the Company’s contractual obligations had not materially changed compared with December 31, 2025.

Critical Accounting Policies and Estimates

4 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis