According to FreightWaves, GXO Logistics reported third-quarter revenue of $3.59 billion, a 5.7% increase from a year earlier, as the global contract logistics provider secured more new business and pushed its sales pipeline to record levels.
The company booked $375 million in new business wins, a 34% year-over-year increase and the second consecutive quarter in which new contract wins grew more than 30%. GXO’s sales pipeline reached a record $3.1 billion, up more than 30% from a year earlier.
“The new strategy we put in motion over the past year is delivering results.” — Patrick Kelleher, CEO of GXO
Kelleher said the company is winning more business across its core markets and strategic growth sectors while improving its ability to convert opportunities into revenue.
Margins and cash flow under pressure
GXO reported net income of $65 million, compared with $60 million during the same period a year earlier. Diluted earnings per share increased to 56 cents from 51 cents, while adjusted diluted earnings per share rose to 89 cents from 79 cents.
Adjusted earnings before interest, taxes, depreciation and amortization remained unchanged at $251 million. Operating income, however, declined to $96 million from $118 million, and the adjusted EBITDA margin narrowed to 7% from 7.4%.
Cash generation weakened during the quarter. Operating cash flow fell to $156 million from $232 million a year earlier, and free cash flow dropped to $85 million from $187 million. Direct operating expenses rose to $3.06 billion from $2.86 billion, outpacing revenue growth and weighing on operating profitability.
New contracts spread across strategic industries
GXO said its year-to-date new business wins exceeded $1 billion, nearly matching the company’s total contract wins for all of the prior year with one quarter remaining. Around 40% of those wins came from strategic growth industries, including aerospace and defense, technology, industrial operations and life sciences.
The company’s technology and consumer electronics business generated $498 million in third-quarter revenue, up 18.6% from $420 million a year earlier. Industrial and manufacturing revenue increased 4.9% to $405 million, while omnichannel retail, GXO’s largest customer segment, generated $1.69 billion, up 2.7%. Food and beverage revenue declined 5.4% to $351 million.
The United Kingdom remained GXO’s largest geographic market, generating $1.75 billion in quarterly revenue, an increase of 7.6%. U.S. revenue rose 5.6% to $846 million, compared with $801 million during the third quarter a year earlier.
Full-year guidance reaffirmed
Despite lower operating margins and cash flow during the quarter, GXO reaffirmed its full-year financial guidance. The company continues to project organic revenue growth of 4% to 5% and adjusted EBITDA of $945 million to $965 million.
GXO also reiterated adjusted diluted earnings per share of $2.95 to $3.15 and free cash flow conversion of 30% to 40%. Through the first nine months of the year, GXO generated $10.33 billion in revenue, up 6.8% from $9.67 billion during the same period last year. Nine-month adjusted EBITDA totaled $670 million, compared with $626 million a year earlier.
The company repurchased $84 million in common stock during the third quarter, bringing year-to-date share repurchases to $100 million. As of Sept. 30, GXO reported $340 million in cash and cash equivalents and approximately $2.8 billion in outstanding debt.
GXO’s accelerating contract wins and record sales pipeline indicate strengthening demand for outsourced logistics services, though declining operating margins and free cash flow highlight the challenge of converting revenue growth into higher profitability.
Source: FreightWaves
Compiled from international media by the SCI.AI editorial team.
