UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): January 12, 2023
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(Exact name of registrant as specified in its charter)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act: | ||||||||
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On January 12, 2023, GXO Logistics, Inc. (the “Company”) issued a press release announcing its estimated full year 2022 financial results and preliminary 2023 guidance. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information in this Item 2.02 is unaudited and preliminary and does not present all information necessary for an understanding of the Company’s financial condition as of December 31, 2022 and its results of operations for the three months and year ended December 31, 2022. The audit of the Company’s financial statements for the year ended December 31, 2022 is ongoing and could result in changes to the information in this Item 2.02.
Item 7.01. Regulation FD Disclosure.
On January 12, 2023, the Company released a slide presentation expected to be used by the Company in connection with its Investor Day to be held on January 12, 2023 and certain future investor presentations. A copy of the slide presentation is furnished as Exhibit 99.2 to this Current Report on Form 8-K.
The information furnished pursuant to Items 2.02 and 7.01, including Exhibit 99.1 and Exhibit 99.2 shall not be deemed “filed” for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filings of the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Forward-Looking Statements
This report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements, including our estimated full year 2022 results, preliminary 2023 guidance, and 2027 financial targets. In some cases, forward-looking statements can be identified by the use of forward-looking terms such as “anticipate,” “estimate,” “believe,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “should,” “will,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target,” “trajectory” or the negative of these terms or other comparable terms. However, the absence of these words does not mean that the statements are not forward-looking. These forward-looking statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors the Company believes are appropriate in the circumstances.
These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause or contribute to a material difference include, but are not limited to, the risks discussed in our filings with the SEC and the following: the impact of the COVID-19 pandemic; economic conditions generally; supply chain challenges, including labor shortages; our ability to align our investments in capital assets, including equipment, and warehouses, to our customers’ demands; our ability to successfully integrate and realize anticipated synergies, cost savings and profit improvement opportunities with respect to acquired companies; unsuccessful acquisitions or
other risks or developments that adversely affect our financial condition and results; our ability to develop and implement suitable information technology systems and prevent failures in or breaches of such systems; our ability to raise debt and equity capital; litigation; labor matters, including our ability to manage our subcontractors, and risks associated with labor disputes at our customers’ facilities and efforts by labor organizations to organize our employees; risks associated with defined benefit plans for our current and former employees; our inability to attract or retain necessary talent; the increased costs associated with labor; fluctuations in currency exchange rates; fluctuations in fixed and floating interest rates; issues related to our intellectual property rights; governmental regulation, including trade compliance laws, as well as changes in international trade policies and tax regimes; governmental or political actions, including the United Kingdom’s exit from the European Union; natural disasters, terrorist attacks or similar incidents; a material disruption of the company's operations; the inability to achieve the level of revenue growth, cash generation, cost savings, improvement in profitability and margins, fiscal discipline, or strengthening of competitiveness and operations anticipated or targeted; the impact of potential cyber-attacks and information technology or data security breaches; the inability to implement technology initiatives successfully; the expected benefits of the spin-off, and uncertainties regarding the spin-off, including the risk that the spin-off will not produce the desired benefits; and a determination by the IRS that the distribution or certain related spin-off transactions should be treated as taxable transactions.
All forward-looking statements set forth in this report are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to or effects on us or our business or operations. Forward-looking statements set forth in this report speak only as of the date hereof, and we do not undertake any obligation to update forward-looking statements to reflect subsequent events or circumstances, changes in expectations or the occurrence of unanticipated events, except to the extent required by law.
Item 9.01. Financial Statements and Exhibits.
(d) The following exhibits are being filed herewith:
| Exhibit No. | Description | |||||||
| 99.1 | ||||||||
| 99.2 | ||||||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized on this.
Dated: January 12, 2023 | GXO LOGISTICS, INC. | ||||||||||
By: | /s/ Baris Oran | ||||||||||
Name: | Baris Oran | ||||||||||
Title: | Chief Financial Officer | ||||||||||
Exhibit 99.1
GXO Hosts Investor Day, Outlines 2027 Financial Targets
In connection with the event, GXO announces estimated full year 2022 financial results and preliminary 2023 guidance
GREENWICH, Conn., January 12, 2023 — GXO Logistics, Inc. (NYSE: GXO), the world’s largest pure-play contract logistics provider, will host its first Investor Day today since becoming a publicly traded company on August 2, 2021. The event includes a presentation of the company’s detailed strategic plan to deliver its 2027 financial targets by members of executive management.
Malcolm Wilson, Chief Executive Officer of GXO, said, “In the 18 months since becoming a publicly traded company, we have expanded our roster of the world’s most respected brands and demonstrated the tremendous value a scaled, pure-play contract logistics provider can deliver. Today, we look forward to discussing the critical role we play within global supply chains, the market forces propelling our exceptional revenue growth to $17 billion and our plan to nearly triple adjusted EBITDA between 2021 and 2027. GXO’s key advantages – our technology, global scale and expertise – make us uniquely positioned to continue delivering outstanding performance and value to customers and shareholders.”
GXO’s 2027 Financial Targets
•8-12% organic revenue CAGR1,2 (2021 to 2027) to approximately $17 billion of revenue;
•Approximately 17% Adjusted EBITDA1,3 CAGR to approximately $1.6 billion, nearly tripling Adjusted EBITDA1 from 2021;
•More than 30% free cash flow conversion rate on Adjusted EBITDA1;
•Cumulative free cash flow1 generation of approximately $2 billion between 2021 and 2027; and
•More than 30% operating return on invested capital1.
Estimated Full Year 2022 Results
The company’s results of operations for the year ended December 31, 2022 are preliminary, unaudited and remain subject to change. Based on information available as of January 11, 2023, the company currently estimates that, for the year ended December 31, 2022, it expects to report:
•Total revenue of $9.0 billion, compared to total revenue of $7.9 billion for the year ended December 31, 2021;
•Net income attributable to GXO of $189 million to $199 million, compared to net income attributable to GXO of $153 million and pro forma net income attributable to GXO of $162 million for the year ended December 31, 2021; and
•Adjusted EBITDA1 of $720 million to $730 million, compared to Adjusted EBITDA1 of $611 million and pro forma Adjusted EBITDA1 of $633 million for the year ended December 31, 2021.
1 For definitions of non-GAAP measures see the “Non-GAAP Financial Measures” section in this press release.
2 Compound Annual Growth Rate (“CAGR”).
3 Earnings before interest, taxes, depreciation and amortization (“EBITDA”).
Preliminary 2023 Guidance
The company’s full-year 2023 financial outlook is as follows:
•Organic revenue1 growth of 6% to 8%; and
•Adjusted EBITDA1 of $700 million to $730 million.
GXO Investor Day presentation materials are available on GXO’s Investor Relations website at investors.gxo.com. A replay of the presentation will be posted following the live event at https://gxo.com/investor-day-2023.
About GXO Logistics
GXO Logistics, Inc. (NYSE: GXO) is the world’s largest pure-play contract logistics provider and is benefiting from the rapid growth of ecommerce, automation and outsourcing. GXO is committed to providing a diverse, world-class workplace for more than 130,000 team members across more than 970 facilities totaling approximately 200 million square feet. The company partners with the world’s leading blue-chip companies to solve complex logistics challenges with technologically advanced supply chain and ecommerce solutions, at scale and with speed. GXO corporate headquarters is in Greenwich, Connecticut, USA. Visit GXO.com for more information and connect with GXO on LinkedIn, Twitter, Facebook, Instagram and YouTube.
Non-GAAP Financial Measures
As required by the rules of the Securities and Exchange Commission (“SEC”), we provide reconciliations of the non-GAAP financial measures contained in this press release to the most directly comparable measure under GAAP, which are set forth in the financial table below.
GXO's non-GAAP financial measures in this press release include: organic revenue CAGR, Adjusted EBITDA, pro forma Adjusted EBITDA, Adjusted EBITDA CAGR, free cash flow and operating return on invested capital (“ROIC”).
We believe that the above adjusted financial measures facilitate analysis of our ongoing business operations because they exclude items that may not be reflective of, or are unrelated to, GXO’s core operating performance, and may assist investors with comparisons to prior periods and assessing trends in our underlying businesses. Other companies may calculate the non-GAAP financial measures differently, and therefore our measures may not be comparable to similarly titled measures used by other companies. GXO’s non-GAAP financial measures should only be used as supplemental measures of our operating performance.
We believe that Adjusted EBITDA and pro forma Adjusted EBITDA improve comparability from period to period by removing the impact of our capital structure (interest and financing expenses), asset base (depreciation and amortization), tax impacts and other adjustments as set out in the attached tables, which management has determined are not reflective of core operating activities and thereby assist investors with assessing trends in our underlying businesses.
Adjusted EBITDA and pro forma Adjusted EBITDA include adjustments for transaction and integration costs, as well as restructuring costs and other adjustments as set forth in the financial table below. Transaction and integration adjustments are generally incremental costs that result from an actual or planned acquisition, divestiture or spin-off and may include transaction costs, consulting fees, retention awards, internal salaries and wages (to the extent the individuals are assigned full-time to integration and transformation activities) and certain costs related to integrating and separating IT systems. Restructuring costs are primarily related to severance costs associated with business optimization initiatives. Reconciliations of the midpoint of the company’s estimate of net income attributable to GXO to its estimate of Adjusted EBITDA for the full year 2022, net income attributable to GXO to Adjusted EBITDA
and pro forma net income attributable to GXO to pro forma Adjusted EBITDA for the full year 2021, are provided below.
Pro forma Adjusted EBITDA includes adjustments for allocated corporate expenses and public company standalone costs. Allocated corporate expenses are those expenses that were allocated to the combined financial statements on a carve-out basis in accordance with U.S. GAAP. Public company standalone costs are estimated costs of operating GXO as a public standalone company following its spin-off from XPO, Inc. (“XPO”) effective as of August 2, 2021 and represents the midpoint of our estimated corporate costs.
We believe that free cash flow is an important measure of our ability to repay maturing debt or fund other uses of capital that we believe will enhance stockholder value. We calculate free cash flow as net cash provided by operating activities less payment for purchases of property and equipment plus proceeds from sale of property and equipment. We believe ROIC provides investors with an important perspective on how effectively GXO deploys capital and use this metric internally as a high-level target to assess overall performance throughout the business cycle. We calculate ROIC as our trailing twelve-month Adjusted EBITA, net of income taxes paid divided by invested capital. We believe that organic revenue and organic revenue growth are important measures because they exclude the impact of foreign currency exchange rate fluctuations, revenue from acquired businesses and revenue from deconsolidated operations.
Management uses these non-GAAP financial measures in making financial, operating and planning decisions and evaluating GXO’s ongoing performance.
With respect to our financial preliminary 2023 guidance and 2027 financial targets, a reconciliation of these non-GAAP measures to the corresponding GAAP measures is not available without unreasonable effort due to the variability and complexity of the reconciling items described above that we exclude from these non-GAAP target measures. The variability of these items may have a significant impact on our future GAAP financial results and, as a result, we are unable to prepare the forward-looking statements of income and cash flows prepared in accordance with GAAP, that would be required to produce such a reconciliation.
Forward-Looking Statements
This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements, including our estimated full year 2022 results, preliminary 2023 guidance, and 2027 financial targets. In some cases, forward-looking statements can be identified by the use of forward-looking terms such as “anticipate,” “estimate,” “believe,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “should,” “will,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target,” “trajectory” or the negative of these terms or other comparable terms. However, the absence of these words does not mean that the statements are not forward-looking. These forward-looking statements are based on certain assumptions and analyses made by the company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors the company believes are appropriate in the circumstances.
These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause or contribute to a material difference include, but are not limited to, the risks discussed in our filings with the SEC and the following: the impact of the COVID-19 pandemic; economic conditions generally; supply chain challenges, including labor shortages; our ability to align our investments in capital assets, including equipment, and warehouses, to our customers’ demands; our ability to successfully integrate and realize anticipated
synergies, cost savings and profit improvement opportunities with respect to acquired companies; unsuccessful acquisitions or other risks or developments that adversely affect our financial condition and results; our ability to develop and implement suitable information technology systems and prevent failures in or breaches of such systems; our ability to raise debt and equity capital; litigation; labor matters, including our ability to manage our subcontractors, and risks associated with labor disputes at our customers’ facilities and efforts by labor organizations to organize our employees; risks associated with defined benefit plans for our current and former employees; our inability to attract or retain necessary talent; the increased costs associated with labor; fluctuations in currency exchange rates; fluctuations in fixed and floating interest rates; issues related to our intellectual property rights; governmental regulation, including trade compliance laws, as well as changes in international trade policies and tax regimes; governmental or political actions, including the United Kingdom’s exit from the European Union; natural disasters, terrorist attacks or similar incidents; a material disruption of the company's operations; the inability to achieve the level of revenue growth, cash generation, cost savings, improvement in profitability and margins, fiscal discipline, or strengthening of competitiveness and operations anticipated or targeted; the impact of potential cyber-attacks and information technology or data security breaches; the inability to implement technology initiatives successfully; the expected benefits of the spin-off, and uncertainties regarding the spin-off, including the risk that the spin-off will not produce the desired benefits; and a determination by the IRS that the distribution or certain related spin-off transactions should be treated as taxable transactions.
All forward-looking statements set forth in this report are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to or effects on us or our business or operations. Forward-looking statements set forth in this report speak only as of the date hereof, and we do not undertake any obligation to update forward-looking statements to reflect subsequent events or circumstances, changes in expectations or the occurrence of unanticipated events, except to the extent required by law.
Investor Contact | ||||||||
Chris Jordan | ||||||||
| +1 (203) 536 8493 | ||||||||
chris.jordan@gxo.com | ||||||||
Media Contact | ||||||||
Matthew Schmidt | ||||||||
| +1 (203) 307-2809 | ||||||||
matt.schmidt@gxo.com | ||||||||
GXO Logistics, Inc.
Reconciliation of Net Income to Adjusted EBITDA
(Unaudited)
| Year Ended December 31, | ||||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||
| (In millions) | Midpoint(1) | As Reported | Pro forma(2) | |||||||||||||||||
| Net income attributable to GXO | $ | 194 | $ | 153 | $ | 162 | ||||||||||||||
| Net income attributable to noncontrolling interest | 3 | 8 | 8 | |||||||||||||||||
| Net income | $ | 197 | $ | 161 | $ | 170 | ||||||||||||||
| Interest expense, net | 29 | 21 | 25 | |||||||||||||||||
| Income tax expense (benefit) | 64 | (8) | (5) | |||||||||||||||||
Depreciation and amortization expense(3) | 329 | 335 | 335 | |||||||||||||||||
| Transaction and integration costs | 61 | 99 | 99 | |||||||||||||||||
| Restructuring costs and other | 32 | 4 | 4 | |||||||||||||||||
| Unrealized (gain) loss on foreign currency options and other | 13 | (1) | (1) | |||||||||||||||||
Adjusted EBITDA(4) | $ | 725 | $ | 611 | $ | 627 | ||||||||||||||
Allocated corporate expense(5) | 29 | |||||||||||||||||||
Public company standalone cost(6) | (23) | |||||||||||||||||||
Pro forma Adjusted EBITDA(2)(4) | $ | 633 | ||||||||||||||||||
(1) Reflects the midpoint of the preliminary estimates for the year ended December 31, 2022, derived from our internal records and based on the most current information available to management. Preliminary results may differ materially from actual results.
(2) Pro forma as prepared under combined financial statements for all periods before August 2, 2021, includes allocated expenses from XPO Corporate.
(3) Includes $68 million, $61 million and $61 million of intangible assets amortization, respectively.
(4) See the “Non-GAAP Financial Measures” section above.
(5) Excludes the impact of adjusted items and allocated interest expense, income tax, depreciation and amortization from XPO Corporate.
(6) Estimated costs of operating GXO as a standalone public company.
©2023 GXO Logistics, Inc. NEW YORK JANUARY 12, 2023
2©2023 GXO Logistics, Inc. Legal disclaimer 2 Non-GAAP Financial Measures As required by the rules of the Securities and Exchange Commission (“SEC”), we provide reconciliations of the non-GAAP financial measures contained in this presentation to the most directly comparable measure under GAAP, which are set forth in the financial tables included in the attached appendix. GXO’s non-GAAP financial measures in this presentation include: adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”), adjusted EBITDA margin, pro forma adjusted EBITDA, pro forma adjusted EBITDA margin, adjusted earnings before interest, taxes and amortization (“adjusted EBITA”), pro forma adjusted EBITA, free cash flow, organic revenue, organic revenue growth, net leverage, net debt and return on invested capital (“ROIC”). We believe that the above adjusted financial measures facilitate analysis of our ongoing business operations because they exclude items that may not be reflective of, or are unrelated to, GXO’s core operating performance, and may assist investors with comparisons to prior periods and assessing trends in our underlying businesses. Other companies may calculate these non-GAAP financial measures differently, and therefore our measures may not be comparable to similarly titled measures used by other companies. GXO’s non-GAAP financial measures should only be used as supplemental measures of our operating performance. Adjusted EBITDA, adjusted EBITDA margin, pro forma adjusted EBITDA, pro forma adjusted EBITDA margin, adjusted EBITA and pro forma adjusted EBITA include adjustments for transaction and integration costs, as well as restructuring costs and other adjustments as set forth in the financial tables included in the attached appendix. Transaction and integration adjustments are generally incremental costs that result from an actual or planned acquisition, divestiture or spin-off and may include transaction costs, consulting fees, retention awards, internal salaries and wages (to the extent the individuals are assigned full-time to integration and transformation activities) and certain costs related to integrating and separating IT systems. Restructuring costs primarily relate to severance costs associated with business optimization initiatives. Pro forma adjusted EBITDA, pro forma adjusted EBITDA margin and pro forma adjusted EBITA include adjustments for allocated corporate expenses and public company standalone costs. Allocated corporate expenses are those expenses that were allocated to our combined financial statements on a carve-out basis in accordance with U.S. GAAP. Public company standalone costs are estimated costs of operating GXO as a public standalone company following its spin-off from XPO, Inc. effective as of August 2, 2021 and represents the midpoint of our estimated corporate costs. We believe that free cash flow is an important measure of our ability to repay maturing debt or fund other uses of capital that we believe will enhance stockholder value. We calculate free cash flow as net cash provided by operating activities less payment for purchases of property and equipment plus proceeds from sale of property and equipment. We believe that adjusted EBITDA, adjusted EBITDA margin, pro forma adjusted EBITDA, pro forma adjusted EBITDA margin, adjusted EBITA and pro forma adjusted EBITA improve comparability from period to period by removing the impact of our capital structure (interest and financing expenses), asset base (depreciation and amortization), tax impacts and other adjustments as set out in the attached tables, which management has determined are not reflective of core operating activities and thereby assist investors with assessing trends in our underlying businesses. We believe that organic revenue and organic revenue growth are important measures because they exclude the impact of foreign currency exchange rate fluctuations, revenue from acquired businesses and revenue from deconsolidated operations. We believe that net leverage and net debt are important measures of our overall liquidity position and are calculated by removing cash and cash equivalents from our total debt and net debt as a ratio of our trailing twelve months adjusted EBITDA. We calculate ROIC as our trailing twelve months adjusted EBITA, net of income taxes paid, divided by invested capital. We believe ROIC provides investors with an important perspective on how effectively GXO deploys capital and use this metric internally as a high-level target to assess overall performance throughout the business cycle. Management uses these non-GAAP financial measures in making financial, operating and planning decisions and evaluating GXO’s ongoing performance. With respect to our financial targets for (i) 2023 for organic revenue growth and adjusted EBITDA and (ii) 2027 for revenue, adjusted EBITDA, adjusted EBITDA margin, adjusted EBITDA CAGR, six-year organic average annual revenue growth, free cash flow and ROIC reconciliation of these non-GAAP measures to the corresponding GAAP measures is not available without unreasonable effort due to the variability and complexity of the reconciling items described above that we exclude from these non-GAAP target measures. The variability of these items may have a significant impact on our future GAAP financial results and, as a result, we are unable to prepare the forward-looking statements of income and cash flows, prepared in accordance with GAAP, that would be required to produce such a reconciliation. Forward-Looking Statements This presentation includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements, including our 2023 financial targets for organic revenue growth and adjusted EBITDA; our 2027 financial targets for revenue, adjusted EBITDA, adjusted EBITDA margin, adjusted EBITDA CAGR, six-year organic average annual revenue growth, free cash flow, ROIC and net cash balance sheet position; global outsourcing growth; outsourced eCommerce warehousing revenue growth; our expected efficiencies and investments by 2027; the anticipated cost synergies from our acquisition of Clipper Logistics; and our goals of (i) 80% global operations using LED lightning by 2025, (ii) 80% global landfill diversion rate by 2025, (iii) 50% renewable energy in global operations by 2030, (iv) reducing greenhouse gas emissions (Scopes 1&2) by 30% by 2030 vs. 2019 baseline, and (v) being 100% carbon neutral (Scopes 1&2) by 2040. In some cases, forward-looking statements can be identified by the use of forward-looking terms such as “anticipate,” “estimate,” “believe,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “should,” “will,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target,” “trajectory” or the negative of these terms or other comparable terms. However, the absence of these words does not mean that the statements are not forward-looking. These forward-looking statements are based on certain assumptions and analyses made by the company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors the company believes are appropriate in the circumstances. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward- looking statements. Factors that might cause or contribute to a material difference include, but are not limited to, the risks discussed in our filings with the SEC and the following: the severity, magnitude, duration and aftereffects of the COVID-19 pandemic and government responses to the COVID-19 pandemic, including vaccine mandates; economic conditions generally; supply chain challenges, including labor shortages; competition and pricing pressures; our ability to align our investments in capital assets, including equipment, and warehouses, to our customers’ demands; our ability to successfully integrate and realize anticipated synergies, cost savings and profit improvement opportunities with respect to acquired companies; acquisitions may be unsuccessful or result in other risks or developments that adversely affect our financial condition and results; our ability to develop and implement suitable information technology systems and prevent failures in or breaches of such systems; our ability to raise debt and equity capital; litigation; labor matters, including our ability to manage our subcontractors, and risks associated with labor disputes at our customers’ facilities and efforts by labor organizations to organize our employees; risks associated with defined benefit plans for our current and former employees; fluctuations in currency exchange rates; fluctuations in fixed and floating interest rates; inflationary pressures; issues related to our intellectual property rights; governmental regulation, including trade compliance laws, as well as changes in international trade policies and tax regimes; governmental or political actions, including the United Kingdom’s exit from the European Union; natural disasters, terrorist attacks or similar incidents; a material disruption of GXO’s operations; the inability to achieve the level of revenue growth, cash generation, cost savings, improvement in profitability and margins, fiscal discipline, or strengthening of competitiveness and operations anticipated or targeted; the impact of potential cyber-attacks and information technology or data security breaches; the inability to implement technology initiatives successfully; the expected benefits of the spin-off and uncertainties regarding the spin-off, including the risk that the spin-off will not produce the desired benefits; and a determination by the IRS that the distribution or certain related spin-off transactions should be treated as taxable transactions. All forward-looking statements set forth in this presentation are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to or effects on us or our business or operations. Forward-looking statements set forth in this presentation speak only as of the date hereof, and we do not undertake any obligation to update forward-looking statements to reflect subsequent events or circumstances, changes in expectations or the occurrence of unanticipated events, except to the extent required by law.
3©2023 GXO Logistics, Inc. Our agenda today Malcolm Wilson Market and GXO revenue growth Mark Manduca The GXO Difference Bill Fraine Business overview & key verticals Richard Cawston Business overview & key verticals Eduardo Pelleissone How GXO wins with ESG Meagan Fitzsimmons Drivers of shareholder value creation Baris Oran Chief Executive Officer Chief Investment Officer Chief Commercial Officer President – Europe President – Americas & Asia Pacific Chief Compliance & ESG Officer Chief Financial Officer GXO’s technology advantage Marv Cunningham Chief Operating Officer – Americas & Asia Pacific GXO investment highlights
4©2023 GXO Logistics, Inc. Our industry-leading combination of scale, technology and expertise enables supply chain excellence for customers all over the world.
5©2023 GXO Logistics, Inc. GXO at a glance Countries of operation 27 Warehouse locations 974 Total warehouse space (sq. ft.) ~200M Global customers >1,200 Global team members ~130K 2021 Revenue $8B 2017-2021 Organic revenue CAGR 8%1 2021 Pro forma adjusted EBITDA $633M1 2021 FCF conversion >30%1 2021 Operating return on invested capital >30%1 1. Refer to the ‘Non-GAAP Financial Measures’ section on slide 2 and Appendix for related information.
6©2023 GXO Logistics, Inc. Full-year 2022 and full-year 2023 outlook 2022 preliminary results 2023 preliminary outlook Revenue ~$9.0B Organic revenue growth 6-8%1 $720-730M1 Adjusted EBITDA $700-730M1 Adjusted EBITDA 1. Refer to the ‘Non-GAAP Financial Measures’ section on slide 2 and Appendix for related information. 2. Reflects GBPUSD $1.22, EURUSD $1.06 and ~$70M headwind from pension income and FX
7©2023 GXO Logistics, Inc. We solve complex supply chain problems for the world’s largest companies. ~10x Return on investment through lower costs, higher revenues and faster inventory turnover ~50% Reduction in variable warehousing costs Customer benefits
8©2023 GXO Logistics, Inc. We’re focused on the center of global supply chains. Contractual pricing model Warehouse Transport End consumerTransportShipper Supply/demand-driven pricing model Supply/demand-driven pricing model
9©2023 GXO Logistics, Inc. We design and operate state-of-the-art warehouses, enabled with the latest technologies. Unload Put away Store Pick Pack Load Automated guided vehicles Scanners and loading robots Product identification scanners Advanced software and automation platform Unmanned aerial vehicles Palletizers and automated vehicles Automated storage and retrieval systems Cobots Item picking robots Vision technology
10©2023 GXO Logistics, Inc. Our path to growth 1 2 Capitalizing on a massive and rapidly growing market opportunity Leveraging The GXO difference to gain share and deliver outsized top- and bottom-line growth
11©2023 GXO Logistics, Inc. A massive and rapidly growing market opportunity 2021 2027 TAM $456 billion1 TAM $660 billion1 $146 billion1 Outsourced market $231 billion1 Outsourced market $8 billion GXO Revenue ~$17 billion Anticipated GXO Revenue +45% +58% +115% 32% outsourced 35% outsourced GXO market share gain of outsourced market ~200bps 1. Based upon third-party research
12©2023 GXO Logistics, Inc. “The GXO Difference” Industry-leading automated solutions that use scalable and agile technology to address customer needs at the right return. Leading market positions throughout North America and Europe, with the ability to serve multinational customers across our core verticals. Long-term relationships with customers, rooted in collaboration and continuous value creation. Our Global scale Our Trusted expertise Our Technology advantage1 2 3
13©2023 GXO Logistics, Inc. GXO tomorrow: 2027 guidance1 at constant 2021 FX 1. 2027 Revenue of ~$17B EBITDA of ~$1.6B is based on FX rates of 1.38 and 1.18, 2027 Revenue would be ~$16B and EBITDA would be ~$1.5B at FX rates of 1.22 and 1.06 Revenue ~$17B1 6-year organic average annual revenue growth range 8-12%2 Adjusted EBITDA ~$1.6B12 FCF conversion 30%+2 Operating ROIC 30%+2 Adjusted EBITDA CAGR ~17%2 2. Refer to the ‘Non-GAAP Financial Measures’ section on slide 2 and Appendix for related information.
14©2023 GXO Logistics, Inc. Our agenda today GXO investment highlights Malcolm Wilson Market and GXO revenue growth Mark Manduca The GXO Difference Bill Fraine Business overview & key verticals Richard Cawston Business overview & key verticals Eduardo Pelleissone How GXO wins with ESG Meagan Fitzsimmons Drivers of shareholder value creation Baris Oran Chief Executive Officer Chief Investment Officer Chief Commercial Officer President – Europe President – Americas & Asia Pacific Chief Compliance & ESG Officer Chief Financial Officer GXO’s technology advantage Marv Cunningham Chief Operating Officer – Americas & Asia Pacific
15©2023 GXO Logistics, Inc. GXO has consistently outperformed the industry 3%2 4%2 6%2 8%1 Physical product revenue Warehousing market revenue Outsourced warehousing market revenue GXO organic revenue growth Growth CAGR 2017-2021 1. Refer to the ‘Non-GAAP Financial Measures’ section on slide 2 and Appendix for related information. 2. Based upon third-party research
16©2023 GXO Logistics, Inc. 2-4% Increased supply chain resilience Economic demand ~2% Outsourcing ~1% eCommerce ~1% 2- 4% Scale, technology and expertise GXO organic revenue growth 8-12%2 Our path to 8-12% annual organic revenue growth by 2027 Key drivers of GXO 2021-2027 organic revenue growth The GXO DifferenceOutsourced warehousing market tailwinds1 1. Based upon third-party forecasts 2. Refer to the ‘Non-GAAP Financial Measures’ section on slide 2 and Appendix for related information.
17©2023 GXO Logistics, Inc. GXO Outsourced Yet to be outsourced Secular tailwind #1: Outsourcing1 Global outsourcing growth 2021-2027 GXO’s 2021 market share: 5.4% ~2.0% Annual incremental revenue growth Significant room for outsourcing to grow 1. Based upon third-party forecasts 56% 18% 39% 13% 39% 0 50 100 150 200 Other Tech & consumer electronics Industrial and manufacturing Food & beverage Omnichannel retail & consumer packaged goods GXO core verticals Outsourced Yet to be outsourced
18©2023 GXO Logistics, Inc. Structural tailwind #2: eCommerce1 0% 5% 10% 15% 20% 25% 30% 2017 2027 ~3X ~6X eCommerce penetration of retail spending1 ~1X Revenue multiplier Outsourced eCommerce warehousing revenue growth 2021-2027 GXO’s 2021 market share: 5.4% ~1.0% Annual incremental revenue growth Wholesale and retail: Pallet in → pallet out eCommerce: Pallet in → single parcel out Reverse logistics: Different parcels in → uniform singles out Revenue multiplier Revenue multiplier 1. Based upon third-party research
19©2023 GXO Logistics, Inc. Structural tailwind #3: Supply chain resilience Higher levels of inventory to ensure product availability and safeguard supply chains and production lines ~$3.5T1 of global trade could move to new countries before 2027 Each 1% of trade that moves to Europe and North America represents a $1B warehousing opportunity1 ~1.0% Annual incremental revenue growth Impact of estimated 3-4% increase1 in just-in-case inventories Global trade rebalancing likely due to nearshoring and re-shoring 1. Based upon third-party forecasts
20©2023 GXO Logistics, Inc. 2-4% Increased supply chain resilience Economic demand ~2% Outsourcing ~1% eCommerce ~1% 2- 4% Scale, technology and expertise GXO organic revenue growth 8-12%2 Our path to 8-12% annual organic revenue growth by 2027 Key drivers of GXO 2021-2027 organic revenue growth The GXO DifferenceOutsourced warehousing market tailwinds1 1. Based upon third-party forecasts 2. Refer to the ‘Non-GAAP Financial Measures’ section on slide 2 and Appendix for related information.
21©2023 GXO Logistics, Inc. Our agenda today GXO investment highlights Malcolm Wilson Market and GXO revenue growth Mark Manduca The GXO Difference Bill Fraine Business overview & key verticals Richard Cawston Business overview & key verticals Eduardo Pelleissone How GXO wins with ESG Meagan Fitzsimmons Drivers of shareholder value creation Baris Oran Chief Executive Officer Chief Investment Officer Chief Commercial Officer President – Europe President – Americas & Asia Pacific Chief Compliance & ESG Officer Chief Financial Officer GXO’s technology advantage Marv Cunningham Chief Operating Officer – Americas & Asia Pacific
22©2023 GXO Logistics, Inc. The GXO Difference: Why customers choose GXO We have a unique understanding of customer challenges and provide tailored solutions to address them. 27 countries of operation 974 sites around the world ~200M total warehouse square footage globally ~130K team members >30% of revenue from tech- enabled warehouses, vs. market at ~8%1 ~7,600 pieces of technology operational in customer sites globally Site-level automation can drive ~80% staff training time reduction 15-year average tenure with top 20 customers Decades of experience partnering with blue-chip customers >95% of revenue retained each year Our Global scale Our Trusted expertise Our Technology advantage 1. Based upon third-party research
23©2023 GXO Logistics, Inc. The GXO Difference: Our technology advantage GXO’s market share increases with automation 0% 10% 20% 30% 40% 50% Industrial & manufacturing Food & beverage Omnichannel retail & CPG Tech & consumer electronics % of revenue automated Market share 1. Based upon third-party research 1
24©2023 GXO Logistics, Inc. • UK • Netherlands #1 in: • US #2 in: • France • Spain • Italy #3 in: 100% 33% 19% 17% 14% GXO Competitor A Competitor B Competitor C Competitor D % of revenues from contract logistics of top-5 market participants2 84%1 of revenue comes from customers working with GXO on more than one site. 52%1 of GXO’s focus is on contract logistics – making us agile, focused and customer centric. The GXO Difference: Our global scale GXO is the only pure-play provider with global scale. 100% of revenue comes from customers working with GXO in more than one country. GXO Competitor 1 Competitor 2 Compeitior 3 Competitor 4 2021 revenue vs. pure-play peers2 1. Excludes Clipper acquisition 2. Peers include: Deutsche Post, Kuehne & Nagel, Ryder, CMA-CGM, ID Logistics, Wincanton, Elanders
25©2023 GXO Logistics, Inc. The GXO Difference: Our trusted expertise Executive-led engagement Unmatched depth of industry knowledge Proven implementation playbook
26©2023 GXO Logistics, Inc. An American multinational client initially came to GXO looking for a DC Optimization project. After a successful initial project, our relationship with the client has expanded through many innovative new projects to optimize their supply chain network. The GXO Difference in action DC Optimization – Becoming the customer 2009 Transportation optimization 2010 Integration of DTC and retail store fulfillment 2011 Improving Customer Experience - OOBE 2012 Retail velocity 2013 Omnichannel multi-DC fulfillment 2014 Increased velocity and optimized parcel 2015 Integration of flagship stores 2016 Infrastructure to enable multi-brand eCommerce 2017 GXO Direct 2018 Goods-to-person automation 2019 Retooled network/ supply chain 2020 Retail/ eCommerce Network Alignment 2021 Customer engagement Revenue
27©2023 GXO Logistics, Inc. Before GXO After GXO Improved revenue performance Improved inventory efficiency Lower warehousing costs Base margins The GXO Difference drives shareholder value Higher customer retention drives higher GXO revenues and margins >10x Customer ROI GXO enables customers to realize higher margins…1 …creating a flywheel effect. 1 Illustrative example based upon sample of GXO contracts.
28©2023 GXO Logistics, Inc. Our agenda today GXO investment highlights Malcolm Wilson Market and GXO revenue growth Mark Manduca The GXO Difference Bill Fraine Business overview & key verticals Richard Cawston Business overview & key verticals Eduardo Pelleissone How GXO wins with ESG Meagan Fitzsimmons Drivers of shareholder value creation Baris Oran Chief Executive Officer Chief Investment Officer Chief Commercial Officer President – Europe President – Americas & Asia Pacific Chief Compliance & ESG Officer Chief Financial Officer Marv Cunningham Chief Operating Officer – Americas & Asia Pacific GXO’s technology advantage
29©2023 GXO Logistics, Inc. Our automation leadership drives new business wins. 1. As at 3Q 2022 2. Based upon third-party research +0 +20 +40 +60 +80 +100 +120 2018 2019 2020 2021 GXO cumulative market share gains (bps)2 Our continuous investment in technology underpins our market share gains. 0% 5% 10% 15% 20% 25% 30% 35% 40% GXO Market GXO leads industry automation levels % revenue automated % revenue from adaptive technology 34%1 ~8%2 29%1
30©2023 GXO Logistics, Inc. We create enormous value for our customers.1 ~50% Reduction in variable costs ~60% Reduction in inventory wastage Better customer outcomes = faster growth and higher margins. ~10% Improved order accuracy 1. Illustrative example based upon sample of GXO contracts.
31©2023 GXO Logistics, Inc. The three components of GXO’s technological advantage 3) Software 1) Large-scale automation Expertise: Industry leader in automated sites Differentiation: Composite solutions based on multiple providers 2) Adaptive technology Expertise: Scalable network effects; greenfield and retro-fit opportunities Differentiation: Purchasing scale provides material cost advantages Expertise: Ability to scale learnings across solutions and verticals provides a superior customer proposition Differentiation: Flexibility of customer integrations ©2023 GXO Logistics, Inc.
32©2023 GXO Logistics, Inc. Automation: We’re an industry leader in large infrastructure automation Large infrastructure designed and built from day one, with majority of warehouse processes automated Project capex $10M-$50M on automation alone Startup time 12-18 months >50% reduction in cost per unit Goods-to-person results in 4x productivity increase vs. manual processes GXO’s advantages Customer benefits1 By the numbers1 Track record of standing up more automated warehouses than any other 3PL Ability to leverage scale, software expertise and hardware knowledge to provide the best customer benefits in the shortest time period 1 2 3 1. Illustrative example based upon sample of GXO contracts. ~50% improvement in inventory efficiency
33©2023 GXO Logistics, Inc. Adaptive Tech: Our modular technology solutions optimize operations, reduce costs and improve safety Small, flexible technology that can be retroactively fitted and focused on a specific warehouse process Project capex1 $400-$40K Startup time days to weeks ~7,600 pieces of adaptive technology in operation at the end of 4Q 2022 GXO’s advantages Customer benefits1 By the numbers Replicable across sites, driving continuous improvement GXO gains a >50% discount1 vs. retail prices on modular adaptive technology 1 2 3 Cobots drive a >2x increase in productivity vs. manual processes Machine vision tech drives an ~8% increase in processing speed vs. manual processes 1. Illustrative example based upon sample of GXO contracts.
34©2023 GXO Logistics, Inc. Software: Customizable proprietary solutions and third- party integrations make it easy to manage customer data Scaled cloud infrastructure, providing customers a more resilient service Project capex $80K-$10M Startup time 4 weeks- 12 months 6x software complexity level of highly automated facilities GXO’s advantages Customer benefits By the numbers1 Improved speed to market and ability to start up new customers on the GXO platform Expertise across more processes and system/automation integrations than any other player 1 2 3 Scalable across, geographies, verticals and processes 4 More resilient warehouse performance Ability to incorporate a wider range of automation and tech to meet customer needs Implementation of new automation and warehouse startups reduced from months to weeks 1 2 3 Ability to support customer ambitions globally via repeatable system integrations 4 1. Illustrative example based upon sample of GXO contracts.
35©2023 GXO Logistics, Inc.
36©2023 GXO Logistics, Inc. Warehouse transformation drives productivity improvements Storage Inbound staging Picking Packing & sortation Outbound staging 2-3x Productivity benefits achievable by stage 4x 2-3x 2-4x 2x
37©2023 GXO Logistics, Inc. Our agenda today GXO investment highlights Malcolm Wilson Market and GXO revenue growth Mark Manduca Richard Cawston Eduardo Pelleissone Meagan Fitzsimmons Baris Oran Chief Executive Officer Chief Investment Officer President - Europe President – Americas & Asia Pacific Chief Compliance and ESG Officer Chief Financial Officer The GXO Difference Bill Fraine Chief Commercial Officer GXO’s technology advantage Marv Cunningham Chief Operating Officer – Americas & Asia Pacific How GXO wins with ESG Drivers of shareholder value creation Business overview & key verticals Business overview & key verticals
38©2023 GXO Logistics, Inc. GXO Europe overview $221 billion 2021 TAM1 1. Based upon third-party research
39©2023 GXO Logistics, Inc. Our core verticals 0 2 000 4 000 6 000 8 000 10 000 12 000 14 000 16 000 18 000 2021 Omnichannel retail & CPG Food & beverage Industrial & manufacturing Tech & consumer electronics Other 2027 GXO revenue drivers to 2027 $m
40©2023 GXO Logistics, Inc. Our core verticals 0 2 000 4 000 6 000 8 000 10 000 12 000 14 000 16 000 18 000 2021 Omnichannel retail & CPG Food & beverage Industrial & manufacturing Tech & consumer electronics Other 2027 GXO revenue drivers to 2027 $m
41©2023 GXO Logistics, Inc. 2021 2027 Outsourced TAM Vertical overview: Omnichannel retail & CPG ~9%1 GXO 2021 market share ~39%1 % TAM outsourced 2021 By the numbers today Market opportunity ($B)1 46 119 70 1666% CAGR 7% CAGR $3.9B GXO 2021 revenue 7% CAGR1 Outsourced revenue 2021-2027 1. Based upon third-party research
42©2023 GXO Logistics, Inc. ▪ eCommerce penetration rising to 29.2% by 2027, vs. 19.7% in 20211 ▪ eCommerce warehousing revenue multiplier: 3x activity vs. wholesale facilities ▪ Increased adoption of automation to handle high-volume, high-velocity warehouses ▪ Reverse logistics: More eCommerce items are returned, while outsourcing of reverse logistics is less developed than wider contract logistics ~30%1 eCommerce items returned ~25%1 Returned items sent to landfill ~40%1 Inventory discounted by retailers Market challenges Market overview: Omnichannel retail & CPG Key drivers & opportunities 1. Based upon third-party research
43©2023 GXO Logistics, Inc. The GXO Difference: Omnichannel retail & CPG Technology Scale Expertise >50% reduction in variable warehousing costs1 +2-6pts of EBITDA margin1 ~50% reduction in inventory per product line1 Necessary breadth of product offering and speed to market necessitate automation Customer financial performance linked to efficient inventory management 34% of 3Q 2022 revenue automated ~$4B of 2021 revenue 252 sites around the world2 >40 years of experience Leader in reverse logistics capabilities Flexible offering via GXO Direct Strong ESG credentials Ability to share learnings across GXO’s portfolio of sites 1. Illustrative example based upon sample of GXO contracts. 2. Excludes Clipper acquisition
44©2023 GXO Logistics, Inc. GXO in action: eCommerce apparel GXO solution Situation ▪ Large global apparel customer ▪ Existing warehousing solution resulted in orders with long lead times, causing consumers to order from wholesale channels – which, in turn, reduced the customer’s margins. Case Study GXO impact on apparel retailer: 40% reduction in inventory per SKU 34% reduction in variable costs 45% increase in Net Promoter Score ▪ GXO reduced variable costs through cobot implementation and mezzanine extension, allowing for an additional SKU range. ▪ Returns processing time reduction to 48 hours, down from one week, coupled with next-day delivery, drove Net Promoter Score improvement. ▪ As a result of these outcomes, the customer subsequently awarded GXO a site in North America.
45©2023 GXO Logistics, Inc. ▪ The average eCommerce apparel company has approximately 1/3 of products returned. ▪ Processing costs can be prohibitive, resulting in ~25% of returned products ending up in a landfill. 1. Based on an illustrative example assuming all returned product is resold at full price ▪ Accelerate processing to offer products for re-sale as soon as possible. ▪ Reduce the cost of handling, remove errors and drive faster inventory turnover. ▪ Offer repair services. GXO in action: Reverse logistics GXO solution Situation Case Study GXO impact on returns: 96% of returns resold, avoiding landfills 28% increase in revenue from returned product 60% increase in gross profit from returned product 1 1 >
46©2023 GXO Logistics, Inc. By the numbers today Market opportunity ($B)1 Vertical overview: Food & beverage ~10%1 GXO 2021 market share $1.3B GXO 2021 revenue 9% CAGR1 Outsourced revenue 2017-2021 ~13%1 % TAM outsourced 2021 2021 2027 Outsourced TAM 112 157 14 23 6% CAGR 9% CAGR 1. Based upon third-party research
47©2023 GXO Logistics, Inc. ▪ Focus on reducing food waste and inefficiency ▪ Continued customer focus on costs ▪ Rising outsourcing as complexity increases ▪ Historically labor-intensive industry Market challenges Market overview: Food & beverage Key drivers & opportunities ~3%1 of sales spent on warehousing by average food & beverage company ~4%1 product wastage at average food & beverage company 1. Based upon third-party research
48©2023 GXO Logistics, Inc. The GXO Difference: Food & beverage Technology Scale Expertise >50% reduction in variable warehousing costs1 >60% reduction in inventory wastage within the warehouse1 +~2pts of EBITDA margin1 Homogenous product offering enables high degree of automation Technology improves accuracy of processes, reducing variable costs 18% of revenue automated >$1B 2021 revenue 153 sites around the world2 25 years of experience Leader in reverse logistics capabilities Strong ESG credentials Ability to share learnings across GXO’s portfolio of sites 1. Illustrative example based upon sample of GXO contracts. 2. Excludes Clipper acquisition
49©2023 GXO Logistics, Inc. ▪ GXO combined all warehousing into one fully automated facility. ▪ Highly automated solution reduced variable costs and improved picking accuracy. ▪ Improved inventory management drove faster turnover of certain product lines, and inventory accuracy in others. ▪ Customer facing rising costs due to an inflationary environment ▪ Multiple small, entirely manual, warehouses ▪ Order inaccuracy and stock shrinkage contributing to margin drag 1. Measured by Daily units handled GXO in action: Global food group GXO solution Situation Case Study GXO impact on global food group: 60% reduction in variable costs 150% increase in productivity1 1.5% improvement in order accuracy 67% reduction in inventory wastage
50©2023 GXO Logistics, Inc. Our agenda today GXO investment highlights Malcolm Wilson Market and GXO revenue growth Mark Manduca Richard Cawston Eduardo Pelleissone Meagan Fitzsimmons Baris Oran Chief Executive Officer Chief Investment Officer President - Europe President – Americas & Asia Pacific Chief Compliance and ESG Officer Chief Financial Officer The GXO Difference Bill Fraine Chief Commercial Officer GXO’s technology advantage Marv Cunningham Chief Operating Officer – Americas & Asia Pacific How GXO wins with ESG Drivers of shareholder value creation Business overview & key verticals Business overview & key verticals
51©2023 GXO Logistics, Inc. GXO Americas and Asia Pacific Overview $235 billion 2021 TAM1 1. Based upon third-party research for North America only
52©2023 GXO Logistics, Inc. 2021 2027 Outsourced TAM By the numbers today Market opportunity ($B)1 Vertical overview: Industrial & manufacturing 174 264 68 108 7% CAGR 8% CAGR ~1%1 GXO 2021 market2 share $1.0B GXO 2021 revenue 8% CAGR1 Outsourced revenue 2017-2021 ~39%1 % TAM outsourced 2021 1. Based upon third-party research 2. Encompasses sub-verticals such as aerospace, energy, construction, automotive and manufacturing
53©2023 GXO Logistics, Inc. ▪ Stringent regulatory requirements ▪ Inflationary pressures ▪ System complexity ▪ Supply chain complexity ▪ Nearshoring Market challenges Market overview: Industrial & manufacturing Key drivers & opportunities ~10%2 inventory inaccuracy 3-24 months1 manufacturing lead times create duration mismatch between fast- moving end-market demand and slower-moving supply chains 1. Based upon the aerospace and automotive industries 2. Illustrative example based upon sample of GXO contracts >10,0001 components parts sourced from supply chain
54©2023 GXO Logistics, Inc. The GXO Difference: Industrial & manufacturing Technology Scale Expertise 50% reduction in variable warehousing costs1 +1-2pts Improves process accuracy Drives real estate efficiency through denser storage and faster inventory turnover 6% of revenue automated ~$1B of 2021 revenue 164 sites around world2 15 years of experience Software capabilities help customers plan and procure more efficiently across complex supply chains Ability to work in a highly regulated environment of EBITDA margin1 1. Illustrative example based upon sample of GXO contracts. 2. Excludes Clipper acquisition
55©2023 GXO Logistics, Inc. ▪ GXO deployed industrial and facility engineers, IT personnel, program management and other resources to develop an inline system of storing, picking and kitting of standards (fasteners) to meet increased demand. ▪ GXO deployed various automation, including Vertical Lift Modules, to reduce the warehousing space. ▪ GXO also deployed cobots, driving higher labor productivity and process accuracy. ▪ Given the success of the GXO solution, we’ve secured further contracts with the customer. ▪ A major aerospace customer asked GXO to help reduce their overall footprint, increase efficiency and improve overall quality while maintaining just- in-time delivery and inventory accuracy. GXO in action: Aerospace manufacturer GXO solution Situation Case Study GXO impact on customer: 3x improvement in picking efficiency 60% reduction in labor needs 70% space requirement
56©2023 GXO Logistics, Inc. 2021 2027 Outsourced TAM By the numbers today Market opportunity ($B)1 ~22%1 GXO 2021 market share $1.1B GXO 2021 revenue 11% CAGR1 Outsourced revenue 2017-2021 ~18%1 % TAM outsourced 2021 Vertical overview: Tech & consumer electronics 27 40 5 9 7% CAGR 11% CAGR 1. Based upon third-party research
57©2023 GXO Logistics, Inc. ▪ Unattractive retail economics of dealing with electronic returns ▪ Rising outsourcing as complexity increases ▪ Nearshoring ▪ Reverse logistics and e-Waste Market challenges Market overview: Tech & consumer electronics Key drivers & opportunities ~$25B1 of capital tied up in ~300M returned cellphones annually in Europe and North America Only 17%1 of electronic waste is formally collected and recycled due to unfavorable economics 1. Based upon third-party research
58©2023 GXO Logistics, Inc. The GXO Difference: Tech & consumer electronics Technology Scale Expertise ~30% reduction in variable warehousing costs1 +1-2pts Highly automated solutions allow more efficient processing, reducing costs and raising sales prices and margins – optimizing the economics of refurbishing 46% of revenue automated >$1B of 2021 revenue 99 sites around world2 19 years of experience Reverse logistics capabilities Certifications from major consumer electronics brands to process new and returned products of EBITDA margin1 1. Illustrative example based upon sample of GXO contracts. 2. Excludes Clipper acquisition
59©2023 GXO Logistics, Inc. GXO in action: Tech & consumer electronics GXO solution Situation Case Study GXO impact on customer: 35% Reduction in variable costs 89%1 Reduction in emissions for each re-used item ▪ By leveraging data and applying consistent testing processes, GXO maximizes the resale value of refurbished electronics by prioritizing the most profitable items first. ▪ GXO’s solution improves the economics of refurbishing handsets by reducing variable costs of handling the items within the warehouse. ▪ Long-term GXO customer was seeing a high return rate on consumer electronics products. ▪ Cost of processing the items was high, and the failure to manage returns was generating e-waste and emissions. ▪ Attractive profit pool if the process could be managed efficiently. 1. Based upon third-party research
60©2023 GXO Logistics, Inc. Our agenda today Malcolm Wilson Market and GXO revenue growth Mark Manduca Richard Cawston Eduardo Pelleissone Meagan Fitzsimmons Baris Oran Chief Executive Officer Chief Investment Officer President - Europe President – Americas & Asia Pacific Chief Compliance and ESG Officer Chief Financial Officer The GXO Difference Bill Fraine Chief Commercial Officer GXO’s technology advantage Marv Cunningham Chief Operating Officer – Americas & Asia Pacific How GXO wins with ESG Drivers of shareholder value creation Business overview & key verticals Business overview & key verticals GXO investment highlights
61©2023 GXO Logistics, Inc. Social Governance Environmental Being an employer of choice and creating a safe workplace is critical to reducing turnover and increasing productivity. ▪ Global Risk Committee enhances Enterprise Risk Management (ERM) ▪ ‘Speak Up’ program ▪ Cybersecurity controls and operating processes align to ISO27001 ▪ Board of Directors is 50% female and 75% independent GHG emissions (Scopes 1&2) reduction by 2030 vs. 2019 baseline 30% Global landfill diversion rate by 2025 80% Carbon neutral (Scopes 1&2) by 2040 100% Global operations using LED lighting by 2025 80% Renewable energy globally by 2030 50% THE USE BY GXO OFANY MSCI ESG RESEARCH LLC OR ITS AFFILIATES (“MSCI”) DATA, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT, RECOMMENDATION, OR PROMOTION OF GXO BY MSCI. MSCI SERVICES AND DATA ARE THE PROPERTY OF MSCI OR ITS INFORMATION PROVIDERS, AND ARE PROVIDED ‘AS-IS’ AND WITHOUT WARRANTY. MSCI NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI.
62©2023 GXO Logistics, Inc. ESG guides our business Investors Employees Customers The majority of our employees are highly satisfied with their jobs as of our Q4 global pulse survey. Industry-leading safety record Grow at GXO participation driving ~10% increase in retention 7 inclusion-based Business Resource Groups launched in 2022 Continued expansion of ESG Ambassador program
63©2023 GXO Logistics, Inc. The GXO Difference: ESG creates more value for customers One site powered by solar also provides over 7,600 MWh of energy back to the grid per year, and total CO2e savings of 5,620 tons annually. Reduction of packaging at one fashion retailer site resulted in annual reductions of: ▪ Transportation cost by 27%, and ▪ CO2e of 2.7 tons. We’re operating multiple zero-waste sites, with our first undergoing certification by Green Buildings Certification International. We’re driving a 58% reduction of net emissions and $12- 13M in savings starting in 2023 by managing distribution for a global technology provider. We’ve reduced the volume of plastic pallet shrink wrap across numerous sites, completely offsetting plastic tax costs and driving additional savings for UK customers. 1 2 3 4 5
64©2023 GXO Logistics, Inc. Enabling the circular economy Our impact: $30K and 440+ tons CO2e costs saved and emissions avoided when helping a customer convert expired medical gowns into grocery bag totes ~30.4 tons materials refurbished by GXO employees since 2019 for a major US home appliance manufacturer 47.7 tons polyethylene waste captured for recycling on behalf of an Italian luxury fashion brand in 2022 >550K electronic items refurbished or recycled in 2022 through legacy Clipper operations alone
65©2023 GXO Logistics, Inc. Our agenda today GXO investment highlights Malcolm Wilson Market and GXO revenue growth Mark Manduca Richard Cawston Eduardo Pelleissone Meagan Fitzsimmons Baris Oran Chief Executive Officer Chief Investment Officer President - Europe President – Americas & Asia Pacific Chief Compliance and ESG Officer Chief Financial Officer The GXO Difference Bill Fraine Chief Commercial Officer GXO’s technology advantage Marv Cunningham Chief Operating Officer – Americas & Asia Pacific Business overview & key verticals Business overview & key verticals How GXO wins with ESG Drivers of shareholder value creation
66©2023 GXO Logistics, Inc. Key drivers of GXO’s organic value creation Adjusted EBITDA1 ~$1.6B 1 High-quality growth through contracts that are resilient and cash-generative, and provide high returns 2027 outlook Pro forma adjusted EBITDA1 $0.6B 2021 results 2 Driving productivity, at the site level and in overall support structure 1. Refer to the ‘Non-GAAP Financial Measures’ section on slide 2 and Appendix for related information. CAGR 17% Revenue ~$17B 6-year organic average annual revenue growth range1 8-12% Revenue $8B 2027 outlook2021 results
67©2023 GXO Logistics, Inc. High-quality growth: Diversified, contracted, blue chip Resilient, duration-matched contractual relationships Pricing driven by contractual relationships, not supply /demand Diversified verticals, customers and geographies Blue-chip, investment-grade customer base ~5-year average remaining lease length1 ~5-year average contract length2 No customer represents more than 4% of revenues2 Vast majority of our top 100 customers with credit ratings are investment grade2 GXO works with ~30 of the Fortune 1002 2 1. Based on FY 2021 2. Based on 3Q 2022
68©2023 GXO Logistics, Inc. Resilient contracts generate predictable cashflows and returns Creating attractive economics for GXO Two Contract types Open-book contracts: ▪ Cost-plus structure where all costs are passed through to customers with a mark-up ▪ Lower initial investment boosts operating return on invested capital, while EBITDA margins stay broadly fixed regardless of macro volatility Hybrid closed-book contracts: ▪ Partly cost-plus and partly fixed price ▪ Revenues matched to costs to protect margins from volume moves, with additional protection via inflation pass-through mechanisms ▪ Generally drive higher EBITDA margins and upside potential than open-book contracts Long-term, predictable revenues with average contract duration of 5 years2 Resilient cashflows as a result of balanced risk-taking Margins protected by inflation pass- through mechanisms >30% return on operating invested capital3 with rigorous investment criteria 1. Based on 3Q 2022 2. Based on FY 2021 3. Refer to the ‘Non-GAAP Financial Measures’ section on slide 2 and Appendix for related information ~45% of revenue1 ~55% of revenue1
69©2023 GXO Logistics, Inc. 69 Example: Open-book contract1 ▪ Open-book margins are resilient to drops in activity, with all costs passed through to the customer with a mark-up. ▪ Margins stay broadly fixed; profitability is protected, regardless of the macro environment. ▪ Lower initial upfront cost boosts return on invested capital, while EBITDA margins are lower than hybrid-closed book contracts due to lower depreciation expense. Mark-up model: Full variable cost base; margins remain constant irrespective of volumes. Fixed-fee model: Slight margin expansion as volumes contract; slight margin contraction as volumes increase. Benefits Variable revenue Mark-up Total = ~100 + Variable costs Fixed2 Costs Total = ~93 + Margin on variable costs Fixed revenue+ Margin on mark- up or fixed fees + Margin on fixed costs+ 0 0 Open-book volume sensitivity EBITDA = ~7 Volumes -5% 0% +5% Revenue -3.7% 0% +3.7% EBITDA margin +0-20bps - -0-20bps 1 Example is based on an illustrative contract and the analysis excludes any impact of seasonality. This is not representative of all contracts 2 Excludes depreciation. Revenue Costs EBITDA
70©2023 GXO Logistics, Inc. 70 ▪ Fixed and variable revenue closely matched to fixed and variable costs to protect margins from volume moves. ▪ Inflation escalators are included to pass through costs to the end customer. ▪ Higher depreciation expense due to higher upfront costs than open- book contracts, but also greater upside potential via contract outperformance. ▪ Continuous, tech-driven operational improvements boost margins throughout the life of the contract. Example: Hybrid closed-book contract1 Benefits Revenue Costs EBITDA Variable revenue Fixed revenue Total = 100 + Variable costs Fixed2 Costs Total = ~90 + Margin on variable costs Margin on fixed costs+ EBITDA = ~10 Volume -5% 0% +5% Revenue -3.8% 0% +3.8% EBITDA Margin -30bps - +30bps Hybrid closed-book contract volume sensitivity 1 Example is based on an illustrative contract and the analysis excludes any impact of seasonality. This is not representative of all contracts 2 Excludes depreciation.
71©2023 GXO Logistics, Inc. 71 ▪ Hybrid-closed book contracts have higher EBITDA margins than open- book contracts, reflecting higher upfront capital expenditure. ▪ Both contract types have similar EBITA margins. ▪ Reflecting the lower capital investment, open-book contracts have a higher return on invested capital. ▪ For both contract types, GXO targets a minimum floor of 30% average return on invested capital. Benefits ILLUSTRATIVE Open-book Hybrid closed-book Revenue Depreciation EBITDA - 1This is based on illustrative contracts assuming five-year contract length, three-year payback on PP&E investment, receivable terms of 60 days and payment terms of 30 days. This is not representative of all contracts. ~100 ~7 Fixed and variable costs - ~1 EBITA ~6 ~1Tax- NoPat ~5 Average PP&E 11Invested Capital Working Capital ~3 ~8 Return on invested capital = ~40% 17 ~9 ~8 Return on invested capital = ~30% + ~10 ~4 ~6 ~5 ~100Revenue Depreciation EBITDA - Fixed and variable costs - EBITA Tax- NoPat Average PP&E Invested Capital Working Capital + ~1 Project-based >30% operating return on invested capital1
72©2023 GXO Logistics, Inc. 2027 Adjusted EBITDA outlook: Growth and efficiency 1. Refer to the ‘Non-GAAP Financial Measures’ section on slide 2 and Appendix for related information. 2. Based on GBPUSD of $1.22 0 200 400 600 800 1 000 1 200 1 400 1 600 1 800 2021 Core growth Automation and value- added services Adaptive technology Central procurement and support function productivity Clipper synergies Pension income 2027 $633M ~$1.6B 8% Pro forma adjusted EBITDA margin1 ~9% adjusted EBITDA margin1 ~$1.5B at $1.22 GBPUSD and $1.06 EURUSD ~$730M ~$140M ~$60M2~$30M ~$45M2
73©2023 GXO Logistics, Inc. Adjusted EBITDA growing faster than revenue1 Adaptive technology ~$30M EBITDA uplift from retro-fit opportunities for ~$60M investment (>30% ROIC). Central efficiencies $60M uplift via optimization of: ▪ HR, finance and IT activities ▪ IT delivery model Combine UK support functions, with major savings in procurement, IT and support functions. Clipper cost synergies Automation & reverse logistics Higher incremental margins on revenue growth (>9%) from 2021-2027, reflecting a higher level of automation and focus on higher-margin value-added services. ~$30M EBITDA uplift by 2027 ~$60M EBITDA uplift by 2027 >9% EBITDA margins on revenue growth ~£36M EBITDA uplift by 2025 1. Refer to the ‘Non-GAAP Financial Measures’ section on slide 2 and Appendix for related information.
74©2023 GXO Logistics, Inc. 2027 Adjusted EBITDA margin outlook: Automation and mix Automated contracts have +200bps margins on average. 2021 2022 2023 2024 2025 2026 2027 GXO % of automated revenue Dilutive effect on automation penetration from Clipper acquisition Majority of new contracts to be automated: GXO to drive margins on revenue growth by focusing on differentiated and higher-value-add segments such as: ▪ Automation ▪ Reverse logistics ▪ Other value-added services (including focus on consumer proximity) 32% ~40%
75©2023 GXO Logistics, Inc. 2027 Adjusted EBITDA margin outlook: Central efficiencies ~$60M of efficiencies expected by 2027 Economies of scale available for a larger pure-play contract logistics player: 1) Centralized approach to IT software, hardware and data center procurement 2) Standardized operating structures across verticals and focus on automating replicable processes Investment required to deliver savings: 1) Investment of ~$80M expected from 2023 2) Exceeding GXO payback target of >30% return on invested capital 3) Streamlining processes in administrative functions such as payments and accounting 4) Global scale advantages across support functions
76©2023 GXO Logistics, Inc. £36M of cost synergies expected within three years, following £30M of investment. 2027 Adjusted EBITDA margin outlook: Clipper synergies GXO also sees revenue synergy opportunities from cross-selling opportunities into new customers, geographies, verticals and services. This is an earnings- and cash-flow-accretive deal, reflecting asset-light business model and low cost of financing. 1) Combining the UK support functions of Clipper and GXO and removing costs such as Clipper public company costs 2) Leveraging the support functions and infrastructure across the combined GXO and Clipper Continental European operations 3) Improving procurement and maintenance practices across the businesses 4) Other cost and procurement savings Source of cost synergies Combining UK support functions Leveraging support functions and infrastructure Procurement and maintenance Other cost and procurement savings
77©2023 GXO Logistics, Inc. 0 25 50 75 100 EBITDA Interest Tax and other Maintenance capex FCF before growth investment Growth capex Working capital FCF Adjusted EBITDA → Free cash flow >$2B1 2021-2027 cumulative free cash flow ~30%1 FCF conversion by 2027 ~30% FCF conversion ~60% FCF conversion (ex-growth investments) 1. Refer to the ‘Non-GAAP Financial Measures’ section on slide 2 and Appendix for related information.
78©2023 GXO Logistics, Inc. -0.5x 0.0x 0.5x 1.0x 1.5x 2.0x 0 500 1000 1500 2000 2500 2021 2022 2023 2024 2025 2026 2027 Cumulative cash balance Net debt/EBITDA Balance sheet financial flexibility: >$2B of balance sheet capacity by 2027 >$2B deployable balance sheet capacity by 2027 Cash generation drives balance sheet optionality 1. Refer to the ‘Non-GAAP Financial Measures’ section on slide 2 and Appendix for related information. Q3 2022: 2.1x net debt/ Adjusted EBITDA1 2027 outlook: net cash balance sheet position 2021: $333M cash Net cash Net debt
79©2023 GXO Logistics, Inc. Capital allocation 1 2 3 Accelerate organic growth Invest in high-return retrofit adaptive technology and productivity Opportunistically pursue accretive bolt-on M&A, and return excess free cash flow to shareholders
80©2023 GXO Logistics, Inc. GXO: Growth, predictability and cash returns
81©2023 GXO Logistics, Inc. A clear path to extraordinary growth 1. 2027 Revenue of ~$17B EBITDA of ~$1.6B is based on FX rates of 1.38 and 1.18, 2027 Revenue would be ~$16B and EBITDA would be ~$1.5B at FX rates of 1.22 and 1.06 Revenue ~$17B1 6-year organic average annual revenue growth range 8-12%2 Adjusted EBITDA ~$1.6B12 FCF conversion 30%+2 Operating ROIC 30%+2 Adjusted EBITDA CAGR ~17%2 1 2 Capitalizing on a massive and rapidly growing market opportunity Leveraging The GXO difference to gain share and deliver outsized top- and bottom-line growth 2. Refer to the ‘Non-GAAP Financial Measures’ section on slide 2 and Appendix for related information.
82©2023 GXO Logistics, Inc. Appendix
83©2023 GXO Logistics, Inc. (In millions) Revenue Year Ended December 31, 2021 $ 7,940 Less: Revenue from acquired business (605) Less: Foreign exchange impact (200) Organic revenue(1) at 2017 Foreign exchange rates $ 7,135 Revenue Year Ended December 31, 2017(2) $ 5,229 Organic revenue Compound Annual Growth Rate (CAGR)(1) 8 % (1) See the “Non-GAAP Financial Measures” section for additional information. (2) Derived from the consolidated financial statements and accounting records of XPO, Inc. (“XPO”). GXO Logistics, Inc. Reconciliation of GAAP Revenue to Organic Revenue (Unaudited)
84©2023 GXO Logistics, Inc. Year Ended December 31, 2022 2021 (In millions) Midpoint(1) As Reported Pro forma(2) Net income attributable to GXO $ 194 $ 153 $ 162 Net income attributable to noncontrolling interest 3 8 8 Net income $ 197 $ 161 $ 170 Interest expense, net 29 21 25 Income tax expense (benefit) 64 (8) (5) Depreciation and amortization expense(3) 329 335 335 Transaction and integration costs 61 99 99 Restructuring costs and other 32 4 4 Unrealized (gain) loss on foreign currency options and other 13 (1) (1) Adjusted EBITDA(4) $ 725 $ 611 $ 627 Allocated corporate expense(5) 29 Public company standalone cost(6) (23) Pro forma Adjusted EBITDA(2)(4) $ 633 Revenue(7) $ 8,990 $ 7,940 $ 7,940 Adjusted EBITDA margin(4)(8) 8.1 % 7.7 % 8.0 % (1) Reflects the midpoint of the preliminary estimates for the year ended December 31, 2022, derived from our internal records and based on the most current information available to management. Preliminary results may differ materially from actual results. (2) Pro forma as prepared under combined financial statements for all periods before August 2, 2021, includes allocated expenses from XPO Corporate. (3) Includes $68 million, $61 million and $61 million of intangible assets amortization, respectively. (4) See the “Non-GAAP Financial Measures” section for additional information. (5) Excludes the impact of adjusted items and allocated interest expense, income tax, depreciation and amortization from XPO Corporate. (6) Estimated costs of operating GXO as a standalone public company. (7) For the year ended December 31, 2022, represents the midpoint of an expected range of $8,980 million to $9,000 million. (8) Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Revenue. GXO Logistics, Inc. Reconciliation of Net Income to Adjusted EBITDA (Unaudited)
85©2023 GXO Logistics, Inc. Year Ended (In millions) December 31, 2021 Net cash provided by operating activities $ 455 Less: Payment for purchases of property and equipment (250) Plus: Proceeds from sale of property and equipment 11 Free Cash Flow(1) $ 216 (1) See the “Non-GAAP Financial Measures” section for additional information. GXO Logistics, Inc. Reconciliation of Cash Flows from Operating Activities to Free Cash Flow (Unaudited)
86©2023 GXO Logistics, Inc. Year Ended (In millions) December 31, 2021 Adjusted EBITA(1)(2) $ 374 Less: Cash paid for income taxes (75) Adjusted EBITA(1)(2), net of income taxes paid $ 299 (1) Pro forma as prepared under combined financial statements for all periods before August 2, 2021, includes allocated expenses from XPO Corporate. (2) See the “Non-GAAP Financial Measures” section for additional information. (In millions) December 31, 2021 Total Equity $ 2,390 Plus: Debt 961 Less: Cash and Cash equivalents (333) Less: Goodwill (2,017) Less: Intangible assets, net (257) Invested Capital $ 744 Ratio of Return on Invested Capital(1)(2) 40% (1) The ratio of return on invested capital is calculated as the trailing twelve months adjusted EBITA, net of income taxes paid, divided by invested capital. (2) See the “Non-GAAP Financial Measures” section for additional information. GXO Logistics, Inc. Return on Invested Capital (Unaudited)
87©2023 GXO Logistics, Inc. Year Ended (In millions) December 31, 2021 Adjusted EBITA(1)(2) $ 374 Less: Cash paid for income taxes (75) Adjusted EBITA(1)(2), net of income taxes paid $ 299 (1) Pro forma as prepared under combined financial statements for all periods before August 2, 2021, includes allocated expenses from XPO Corporate. (2) See the “Non-GAAP Financial Measures” section for additional information. (In millions) December 31, 2021 December 31, 2020 Average Total Assets $ 7,271 $ 6,548 $ 6,910 Less: Cash and equivalents (333) (328) (331) Less: Total long-term assets (5,172) (4,712) (4,942) Plus: Property and equipment, net 863 770 817 Less: Total current liabilities (2,329) (1,738) (2,034) Plus: Short-term borrowings and obligations under finance leases 34 58 46 Plus: Current operating lease liabilities 453 332 393 Invested Capital $ 787 $ 930 $ 859 Ratio of Operating Return on Invested Capital(1)(2) 35% (1) The ratio of operating return on invested capital is calculated as the trailing twelve months adjusted EBITA, net of income taxes paid, divided by the average invested capital. (2) See the “Non-GAAP Financial Measures” section for additional information. GXO Logistics, Inc. Operating Return on Invested Capital (Unaudited)
88©2023 GXO Logistics, Inc. Year Ended December 31, 2021 (In millions) Pro forma(1) Net income attributable to GXO $ 162 Net income attributable to noncontrolling interest 8 Net income $ 170 Interest expense, net 25 Income tax benefit (5) Amortization expense 61 Transaction and integration costs 99 Restructuring costs and other 4 Unrealized gain on foreign currency options and other (1) $ 353 Depreciation expense(2) 15 Allocated corporate expense(3) 29 Public company standalone cost(4) (23) Pro forma Adjusted EBITA(1)(5) $ 374 (1) Pro forma as prepared under combined financial statements for all periods before August 2, 2021, includes allocated expenses from XPO Corporate. (2) Allocated depreciation from XPO Corporate for all periods prior to August 2, 2021. (3) Excludes the impact of adjusted items and allocated interest expense, income tax, depreciation and amortization from XPO Corporate. (4) Estimated costs of operating GXO as a standalone public company. (5) See the “Non-GAAP Financial Measures” section for additional information. GXO Logistics, Inc. Reconciliation of Pro forma Net Income to Trailing Twelve Months Pro forma Adjusted EBITA (Unaudited)
89©2023 GXO Logistics, Inc. GXO Logistics, Inc. Liquidity Reconciliation (Unaudited) Reconciliation of Net Debt: (In millions) September 30, 2022 Shor-term debt $ 94 Long-term debt 1,789 Total Debt $ 1,883 Less: Cash and cash equivalents (434) Net debt $ 1,449 Reconciliation of Net Leverage: (In millions) September 30, 2022 Net debt $ 1,449 Trailing twelve months adjusted EBITDA(1) 690 Net Leverage(1) 2.1 x (1) See the “Non-GAAP Financial Measures” section for additional information.
90©2023 GXO Logistics, Inc. GXO Logistics, Inc. Reconciliation of Net Income to Trailing Twelve Months Adjusted EBITDA (Unaudited) Trailing Twelve Year Ended Months Ended Nine Months Ended September 30, December 31, September 30, (In millions) 2022 2021 2021 2022 Net income attributable to GXO $ 151 $ 97 $ 153 $ 207 Net income attributable to noncontrolling interest 3 7 8 4 Net income $ 154 $ 104 $ 161 $ 211 Interest expense, net 19 16 21 24 Income tax expense (benefit) 51 (21) (8) 64 Depreciation and amortization expense 242 259 335 318 Transaction and integration costs 57 82 99 74 Restructuring costs and other 14 5 4 13 Unrealized gain on foreign currency options and other (14) (1) (1) (14) Adjusted EBITDA(1) $ 523 $ 444 $ 611 $ 690 (1) See the “Non-GAAP Financial Measures” section for additional information.