GXO Posts Net Loss, but Revenue Increases to $2.46B in Q1
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GXO Logistics experienced a decline in earnings on an increase in revenue to $2.46 billion during the first quarter of 2024, the company reported May 7.
The Greenwich, Conn.-based contract logistics firm posted a net loss of $36 million, or negative 31 cents a diluted share, for the three months ending March 31. That compared with a gain of $26 million, 21 cents, during the 2023 period. Total revenue increased 6% to $2.46 billion from $2.32 billion.
GXO ranks No. 5 on the Transport Topics Top 100 list of the largest logistics companies in North America.
“GXO had a strong start to 2024,” CEO Malcolm Wilson said during a May 8 call with investors. “We delivered positive organic revenue growth for the quarter and continued to gain market share. When we last spoke, we said that the fourth quarter was the bottom for organic growth, and that’s reflected in the sequential improvement in the first quarter as well as the sales and pipeline activity we’re seeing.”
Wilson said GXO signed about $250 million worth of new business during the quarter, a 55% improvement from the year-ago period. More than half of these new contracts came from customers either outsourcing or partnering with GXO for the first time. He also noted some of these new customers align with a trend whereby businesses are looking for longer-term partnerships.
“To that end, our sales pipeline is growing and ended the quarter at $2.2 billion, a 12-month high,” Wilson said. “We’ve more than replenished the pipeline after converting a quarter of a billion dollars of new wins. We’re continuing to see larger deal sizes and longer contract lengths. Additionally, the turnover of the pipeline is accelerating, creating more new business opportunities.”
GXO announced during the quarter its plans to acquire British transport and logistics services provider Wincanton. The company viewed the acquisition as helping to expand its presence in key strategic growth sectors and materially enhances offerings for the United Kingdom and Ireland.
Here are GXO's financial results for the first quarter, 2024. https://t.co/8YMsVcdH85 — GXO (@GXOLogistics) May 7, 2024
“Another highlight of the quarter was the announcement of the acquisition of Wincanton, which we closed last week,” Wilson said. “Wincanton exemplifies our M&A strategy. It expands GXO’s presence in strategic growth verticals in the U.K., including aerospace and industrials, providing GXO with a springboard to offer these services across Europe. And it will be accretive to earnings per share in 2024, excluding synergies.”
GXO executives said customers are indicating that their confidence is returning and that an inflection point has been reached on services versus products spend.
Check out Transport Topics' updated Top 100 list of the largest logistics companies in North America, and explore how the industry's top players have adapted to a tough freight market and are preparing for the future. Tune in above or by going to RoadSigns.ttnews.com.
“They’re starting to pivot towards inventory buildout, and we’ve seen that come through our pipeline [with] the speed of the decision-making of our customers within that pipeline,” GXO Chief Revenue Officer Richard Cawston told Transport Topics. “That potential book of business has accelerated dramatically. What that tells me is that customers are starting to think, ‘We’re at the bottom.’ We still need to focus on a lot of these headwinds, but we need to transition towards growth again.”
Wilson added, “We’re speaking to major global customers every day. A consistent thread in our discussions is the expectation of a gradual recovery of consumer goods demand. Businesses are building for the future, planning their fulfillment strategies to meet their expected needs. And we’re positioning ourselves to take market share by providing best-in-class solutions.”
Revenue Review
- Omnichannel retail customers: Increased 6% to $1.02 billion from $964 million.
- Technology and consumer electronics: Increased 4.4% to $382 million from $366 million.
- Food and beverage: Increased 2.9% to $316 million from $307 million.
- Consumer packaged goods: Increased 30.5% to $295 million from $226 million.
- Industrial and manufacturing: Decreased 1.5% to $266 million from $270 million.
“Looking forward, our new business wins and our sales pipeline give us confidence that our growth trajectory is accelerating,” Wilson said. “We’re investing in our sales organization, expanding automation and AI across our footprint, and diversifying into new geographies and verticals to best position ourselves to deliver shareholder value through profitable growth.”
Cawston noted that the financial impact of legacy litigation was addressed during the quarter, leaving GXO room for positive gains going forward. Further, he sees tailwinds that will propel future earnings gains, with growth being split evenly between existing and new business contracts.
“That shows to me that people are really looking for the automation we can bring, they’re looking for our know-how, and they’re looking for [what] our expertise and our scale can bring to them,” he said. “I always say, ‘Look, we’ve got a thousand warehouses; we’ve got the answer somewhere in our business.’”
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