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GXO Logistics, Inc. (GXO)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered record revenue of $3.25B (+25.5% YoY) and adjusted EBITDA of $251M (+30% YoY); adjusted diluted EPS was $1.00 and GAAP diluted EPS $0.83 .
  • Organic revenue growth accelerated sequentially each quarter in 2024; Q4 organic growth was 3.9% .
  • 2025 guidance introduced: organic growth 3–6%, adjusted EBITDA $840–$860M, adjusted diluted EPS $2.40–$2.60, FCF conversion 25–35%; management indicates Q1 2025 adjusted EBITDA ~$155M amid customer capacity realignments before sequential improvement through the year .
  • Strategic momentum: largest-ever $2.5B lifetime value contract in health sciences, pipeline up 15% YoY (Americas +20%), and Germany now fastest-growing market; AI-enabled warehouse pilots scaling with strong productivity outcomes .
  • Post-quarter catalyst: Board authorized up to $500M share repurchase on Feb 18, 2025, adding capital return flexibility .

What Went Well and What Went Wrong

What Went Well

  • Record Q4 and FY revenue and adjusted EBITDA; Q4 adjusted EBITDA margin expanded to 7.7% (+20 bps YoY) .
  • Landmark sales wins: >$1B new business for second straight year, including a $2.5B health sciences contract; pipeline up 15% YoY with strong Americas growth (+20%) .
  • AI-enabled warehouse progress: 22 instances live across replenishment, SKU dimensioning, order routing; reported “3–4x” replenishment productivity and 50% order allocation improvement; quote: “We made rapid progress towards our vision of the AI‑enabled warehouse” .

What Went Wrong

  • Near-term headwind: Q1 2025 adjusted EBITDA guided to $155M due to customer capacity realignments and start-up ramp; FX/pension headwinds ($20M vs 2024) also noted .
  • FY 2024 free cash flow conversion fell to 31% from 41% in 2023, reflecting Wincanton-related costs; management guides 25–35% in 2025 .
  • UK retail softness tied to higher employment tax rates; management highlighted caution among customers into April .

Financial Results

Sequential performance (Q2 → Q3 → Q4 2024)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Billions)$2.846 $3.157 $3.250
GAAP Diluted EPS ($)$0.32 $0.28 $0.83
Adjusted EBITDA ($USD Millions)$187 $223 $251
Adjusted EBITDA Margin (%)6.6% 7.1% 7.7%
Adjusted Diluted EPS ($)$0.55 $0.79 $1.00
Cash from Operations ($USD Millions)$115 $198 $186
Free Cash Flow ($USD Millions)$31 $110 $127

Year-over-year comparison (Q4 2023 → Q4 2024)

MetricQ4 2023Q4 2024
Revenue ($USD Billions)$2.590 $3.250
GAAP Diluted EPS ($)$0.61 $0.83
Adjusted EBITDA ($USD Millions)$193 $251
Adjusted EBITDA Margin (%)7.5% 7.7%
Adjusted Diluted EPS ($)$0.70 $1.00
Cash from Operations ($USD Millions)$215 $186
Free Cash Flow ($USD Millions)$151 $127

Consensus vs. Actual

  • Wall Street consensus (S&P Global) for Q4 2024 could not be retrieved due to access limits during this session; therefore, estimate comparisons are unavailable at this time. We will update when available.

Disaggregation and KPIs

  • Geographic revenue (Q4 2024, $USD Millions): UK $1,521; US $838; Netherlands $242; France $213; Spain $150; Italy $103; Other $183; Total $3,250 .
  • Industry revenue (Q4 2024, $USD Millions): Omnichannel retail $1,543; Tech & consumer electronics $404; Industrial & manufacturing $366; Food & beverage $345; CPG $363; Other $229; Total $3,250 .
  • Net leverage 2.7x (Dec 31, 2024); Net debt $2.218B .
  • Operating ROIC 46% (FY 2024) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Organic Revenue Growth (%)FY 2025N/A3%–6% New
Adjusted EBITDA ($USD Millions)FY 2025N/A$840–$860 New
Adjusted Diluted EPS ($)FY 2025N/A$2.40–$2.60 New
FCF Conversion (%)FY 2025N/A25%–35% New
Adjusted EBITDA ($USD Millions)Q1 2025N/A~$155 (midpoint commentary) New (quarterly detail)
Organic Revenue Growth (%)Q1 2025N/ALow single-digit New (quarterly detail)
FCF Conversion (%)FY 202430%–40% Actual ~31% Delivered lower end
FY 2024 Adjusted EBITDA ($USD Millions)FY 2024$805–$835 Actual $815 In range

Notes: FX rates assumed current in guidance; management flagged ~$20M FX/pension headwinds in 2025 vs 2024 .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q2 2024; Q-1: Q3 2024)Current Period (Q4 2024)Trend
AI/Technology initiativesPilots of proprietary AI apps; >90% accuracy; “3–4x” replenishment productivity (Q3) 22 AI instances live; 50% order allocation improvement; 22% carton fill rate improvement; roadmap to layer modules in 2025 Scaling across sites; compounding benefits
Sales pipeline & new winsPipeline $2.3B (Q2 high); $270M wins in Q2; Wincanton completed Pipeline +15% YoY; Americas +20%; >$1B wins; $2.5B health sciences contract Elevated pipeline; larger, longer contracts
Geography/regional trendsGermany expansion (Levi’s, Tchibo, Dormagen) Germany fastest-growing; Continental Europe leading; UK retail softening; US consumer mood improving EU strength; UK cautious; US improving
Macro/tariffs/de minimisE-commerce demand returning; multi-tenant utilization improvement (Q3) US inquiries on reorienting supply chains; potential de minimis changes a net positive; tariff impact limited due to domestic focus Potential US reshoring tailwind
Wincanton (CMA)Phase review expected; synergies planned post-integration Awaiting interim CMA update; synergies (~$55M) delayed timing into 2025/2026 Timing uncertainty; synergy intact
Capacity realignmentsMulti-tenant utilization improvements (Q3) Q1 2025 EBITDA headwind (~$155M) from few large customers’ footprint realignments; offsets from new wins through year Short-term drag; sequential improvement

Management Commentary

  • “In 2024, GXO delivered record revenue and adjusted EBITDA… and closed more than $1 billion of new business wins for the second consecutive year.” — Malcolm Wilson, CEO .
  • “We made rapid progress towards our vision of the AI-enabled warehouse… launched 22 instances of our proprietary AI apps… delivering productivity improvements of 3 to 4x.” — Kristine Kubacki, CSO .
  • “Our pipeline is up 15% year over year, and our pipeline in the Americas is up 20%.” — Malcolm Wilson .
  • “We expect low single-digit organic revenue growth in Q1, and… around $155 million of adjusted EBITDA, at the midpoint of our range.” — Baris Oran, CFO .
  • “Germany is now our fastest-growing market.” — Malcolm Wilson .

Q&A Highlights

  • Near-term headwinds: Q1 2025 adjusted EBITDA ~$155M; drivers include capacity realignments at a few mature sites and start-up ramp; management emphasized “one-off” nature and sequential improvement thereafter .
  • Health sciences win: $2.5B lifetime value contract starting in H2 2025; expected to catalyze additional wins in vertical without new M&A; strict confidentiality on customer name .
  • Free cash flow conversion: delivered ~31% in 2024; guiding 25–35% in 2025, reflecting residual Wincanton transaction/integration costs; deleveraging focus maintained .
  • Competitive dynamics: few global-scale tech-enabled competitors; automation-heavy deals support longer terms and better margins; multi-tenant capacity fill and lease discipline aiding margin expansion .
  • Macro/regulatory: minimal expected impact from tariffs given domestic orientation; US de minimis rule change may drive local warehousing demand; UK retail soft due to employment tax changes .

Estimates Context

  • S&P Global consensus (EPS, revenue, EBITDA, target price, recommendation) for Q4 2024 was unavailable during this session due to access limits; as a result, we cannot quantify beats/misses versus Street at this time. We will update comparisons when SPGI data is accessible.
  • Management indicated Q4 adjusted EBITDA was “in line with our expectations,” but did not reference Street consensus on the call or in the release .

Key Takeaways for Investors

  • Setup: Strong Q4 print with sequential and YoY margin expansion; 2025 starts softer (Q1 EBITDA ~$155M) before improving each quarter as start-ups mature and realignments fade .
  • Guidance quality: FY 2025 guide embeds FX/pension headwinds (~$20M) and Wincanton timing prudence; underlying trajectory supported by >$1B wins and pipeline growth (+15% YoY) .
  • Structural growth: AI-enabled warehouse initiatives are delivering tangible productivity uplifts, reinforcing differentiation in tech-enabled fulfillment; Germany and health sciences vertical provide multi-year runway .
  • Capital allocation: Net leverage at 2.7x with deleveraging focus; new $500M repurchase authorization adds optionality and could serve as a near-term stock support .
  • Watch items: UK retail softness; CMA timing for Wincanton integration; absence of estimate comparison pending SPGI access; Q1 trough likely a trading catalyst around sequential inflection .
  • Trading implications (short term): Expect debate on Q1 trough and FY 2025 conversion; any CMA update or repurchase activity could be catalysts .
  • Medium-term thesis: Secular tailwinds (outsourcing, automation, e-commerce) plus AI scaling and new verticals (health sciences, aerospace) support steady organic growth and margin resilience beyond 2025 .

Appendix: Prior Quarter References and Relevant Q4 Press Releases

  • Q3 2024: Revenue $3.157B; adjusted EBITDA $223M; adjusted diluted EPS $0.79; reaffirmed FY 2024 guidance; pipeline $2.4B (+30% YoY) .
  • Q2 2024: Revenue $2.846B; adjusted EBITDA $187M; adjusted diluted EPS $0.55; completed Wincanton acquisition; pipeline $2.3B .
  • Q4 2024 relevant PRs: Dormagen site at full capacity (Germany growth) ; OBI partnership renewal including e-commerce and returns (Central Europe momentum) .