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March 5, 2025
Baris Oran
Chief Financial Officer
GXO Logistics, Inc.
Two American Lane
Greenwich, Connecticut 06831
Re: GXO Logistics, Inc.
Form 10-K for the Fiscal Year ended December 31, 2024
Filed February 18, 2025
File No. 001-40470
Dear Baris Oran:
We have reviewed your filing and have the following comments.
Please respond to this letter within ten business days by providing the
requested
information or advise us as soon as possible when you will respond. If you do
not believe our
comments apply to your facts and circumstances, please tell us why in your
response.
After reviewing your response to this letter, we may have additional
comments.
Form 10-K for the Fiscal Year ended December 31, 2024
Management s Discussion and Analysis
Results of Operations, page 21
1. We note that you have disclosures on pages 13 and 64 regarding the
potential for a
global minimum tax associated with Pillar 2 of the OECD guidance,
indicating
that enactments of its provisions in certain jurisdictions may have an
adverse effect on
your financial statements. You explain that some related provisions
would take effect
in 2024 and others in 2025. However, your disclosure regarding taxes in
MD&A is
limited to an observation on your effective tax rate, stating that it
decreased from
12.4% to 5.6% due to "...the release of valuation allowances in 2024."
Given the concerns that you have expressed and considering that revenue
from the
United Kingdom was $5.2 billion in 2024, it appears that you should
expand your
disclosures to include both quantitative and qualitative information
regarding the
effects for the period and to discuss any uncertainties associated with
the global
minimum tax initiatives in future periods, as may impact your results of
operations,
financial position or liquidity, to comply with Item 303(a) of
Regulation S-K.
March 5, 2025
Page 2
With regard to enactments, clarify the extent to which you were subject
to such
minimum tax provisions in the various jurisdictions where you conducted
operations
during 2024, and discuss your expectations with respect to provisions
that will
be effective in 2025 and beyond. Please also discuss any associated
developments that
are reasonably likely to effect enactments among participating
jurisdictions and your
expectations regarding the range of reasonably possible outcomes.
Financial Statements
Note 5 - Segment Information, page 47
2. We note your disclosure explaining that although the business is
organized
geographically into three operating segments, these have been aggregated
into one
reportable segment "...due to the similar nature of their operations and
economic
characteristics." However, disclosures on pages 13 and 14 indicate the
regulatory
landscape in which you conduct operations is "constantly evolving and
subject to
significant change" which could require changes to your operating
practices that
would influence demand, or require that you incur significant additional
costs
that could adversely affect your results of operations.
Please explain to us how you considered differences in the regulatory
landscapes of
each geographically differentiated segment, including the liklihood of
change
and susceptibility of operations to significant change in these
regulatory
environments, relative to the aggregation criteria in FASB ASC
280-10-50-11(e), and
explain how you view the aggregation result as being consistent with the
objectives
set forth in FASB ASC 280-10-10-1, if this is your view.
Please also address the disclosure requirements in FASB ASC
280-10-50-21(b) and
29(f), regarding the types of products and services from which reportable
segments
derive revenue, and how the CODM uses the Adjusted EBITDA segment measure
in
assessing segment performance and deciding how to allocate resources.
Note 17 - Income Taxes, page 63
3. We note that your tax expense reconciliation includes a "Return to
Provision"
adjustment of ($12) million for 2024. Please expand your disclosure to
explain how
you determined the amount and to clarify the nature of the adjustment and
whether
it represents a change in estimate or a correction of an error, in your
view.
4. We note that your tax expense reconciliation, which begins with tax based
on the U.S.
federal statutory tax rate of 21%, reflects "Foreign rate differential"
adjustments
having the effect of lowering your income tax expense by $11 million in
2024, $14
million in 2023, and $10 million in 2022.
However, given your disclosures on page 44, indicating that 68% of
revenues for
2024 were generated in the United Kingdom, Netherlands, France, Spain,
and Italy,
March 5, 2025
Page 3
where the corporate tax rates are about 25%, it appears that you should
expand your
disclosures in MD&A to discuss the primary taxing jurisdictions in which
foreign
earnings are derived, the corresponding statutory rates and any tax
holidays, along
with the factors that reduced your effective tax rate over the last
three years.
Please clarify how the adjustments reconcile with the higher corporate
tax
rates, describe any material changes in the corporate tax rates or the
mix of income
among jurisdictions that have impacted your effective tax rate, and your
expectations regarding similar adjustments in future periods.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence
of action by the staff.
Please contact Yolanda Guobadia at 202-551-3562 or Gus Rodriguez at
202-551-3752
if you have questions regarding comments.
Sincerely,
Division of
Corporation Finance
Office of Energy &
Transportation
cc: Karlis Kirsis