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November 1, 2021 6:30 PM, EDT

GXO Releases First Quarterly Earnings Report

GXO A GXO warehouse. (XPO Logistics)

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GXO Logistics on Nov. 1 released its first earnings report as an independent company.

The Greenwich, Conn.-based company launched independent operations Aug. 2 after being spun off from former parent company XPO Logistics.

For the three months ending Sept. 30, GXO reported net income of $72 million, or 62 cents a diluted share, compared with $18 million, 16 cents, during the year-ago period when the business was operating within XPO. Net income was lifted by one-time tax benefits of $42 million during the quarter.

Malcolm Wilson

Wilson

GXO said Q3 revenue rose 24.6% to $2 billion, compared with $1.6 billion last year.

The company’s results surpassed expectations by Wall Street investment analysts, who expected EPS of 53 cents per share and revenue of $1.82 billion, according to Zacks Consensus Estimate.

“We executed extremely well in the third quarter,” GXO President Malcolm Wilson said in a statement. “Our sales pipeline reached a record level, fueled by significant new customer demand. Looking ahead, we expect continued growth driven by the three massive secular tailwinds of automation, e-commerce and outsourcing.”

GXO said it gained new customer contracts during the quarter, with an expected incremental revenue impact of approximately $200 million in 2022.

“We won new customer contracts, positioning us well to deliver on our expected 2022 organic revenue growth of 8% to 12%,” Wilson said. “Our revenue retention rate has improved through 2021 versus the number reported at our investor day, demonstrating our customers’ loyalty to GXO’s value-added solutions.”

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GXO reported e-commerce, omnichannel retail and technology revenue rose 22% year-over-year while reverse logistics revenue increased 21%. Chief Financial Officer Baris Oran told Transport Topics that e-commerce alone posted a 20% gain over last year.

“We have delivered extremely strong results,” he said. “Our growth pipeline has been fantastic.”

XPO spun off its contract logistics operation into GXO to take advantage of tailwinds with e-commerce, automation and outsourcing. The company said that as these trends evolve, a separate company would be well-positioned to meet customer needs. “It’s been playing out beautifully,” Oran said. “We still have a long way to go.”

One of the company’s first new initiatives is GXO Direct, a shared space distribution network that enables businesses to position inventory close to target customers while reducing fixed costs and transit times. “Not only are the key customers benefiting from the platform that we’re offering from a software standpoint, we’ve clearly got a broader, more exciting story there from a GXO Direct standpoint,” GXO Chief Investment Officer Mark Manduca told TT. “There is a U.S.-centric business model so far with GXO Direct. I think there are a lot of stories to tell there as we go into 2022.”

GXO also has been implementing carbon-negative warehouses with automated solutions within its network, and has plans for more.

“We believe our technology and scale will continue to differentiate our business, while delivering significant benefits to our shareholders, customers and team members,” Wilson said.

XPO Logistics ranks No. 2 on the Transport Topics Top 50 list of the largest logistics companies in North America and No. 3 on the TT Top 100 list of the largest for-hire carriers.

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