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GXO Sees Highest Organic Growth in 9 Quarters, Boosts Guidance
8 Aug
Summary
- GXO reports 6% organic growth, its highest in 9 quarters
- Net income slows 32% year-over-year to $26 million
- Company expands contracts with top customers, including H&M and a top-15 U.S. retailer
In the latest quarter, GXO, the logistics provider, reported its highest organic growth in 9 quarters, with a 6% increase. This strong performance comes as the company ushers in a new CEO.
Total revenue, accounting for acquisitions and foreign exchange rates, grew 16% year-over-year to $3.3 billion, up from $2.8 million in the same period last year. However, net income slowed to $26 million, down 32% from $38 million the year prior.
Despite the dip in net income, GXO's adjusted earnings per share rose to 57 cents, up from 55 cents in the previous year and exceeding analyst expectations. The company also revised its adjusted EBITDA guidance upwards by $5 million, now expecting it to come in between $865 million and $885 million.
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GXO's outgoing CEO, Malcolm Wilson, highlighted the company's success in renewing and expanding contracts with two top customers, including a multi-year agreement with H&M across multiple geographies. The company is also finalizing a nearly 20-year expansion of its business with a top-15 U.S. retailer.
The shift in GXO's contract wins is noteworthy, with more than half (51%) coming from new activity, compared to just 29% in the previous year. Additionally, the company has seen a decline in the percentage of wins from competitors, down to 26% from 46% in the prior year.
Wilson attributed this shift to strong momentum in the e-commerce sector, with businesses like Levi's, Puma, and Zalando partnering with GXO on automation projects. Reverse logistics, which now accounts for over 10% of the company's pipeline, has also been a significant driver of growth.
