Q4 2023 GXO Logistics Inc Earnings Call
Welcome to the <unk> fourth quarter and full year 2023 earnings conference call and webcast. My name is Darryl and I'll be your operator for today's call.
Welcome to the GXO fourth quarter and full year 2023 earnings conference call. My name is Daryl, and I'll be your operator for today. At this time, all participants are in listen only mode.
At this time all participants are in a listen only mode. Later, we will conduct a question and answer session.
Later, we will conduct a question and answer session. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being held Before the call begins, let me read a brief statement on behalf regarding forward-looking standards, the use of non-GAAP financials, and the company's got. During this call, the company will be making certain forward-looking statements within the meaning of applicable securities law, which, by their nature, involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those projected in the forward-looking statements. A discussion of factors that could cause actual results to differ materially is contained in the company's SEC filings. The forward-looking statements in the company's earnings release or made on this call are made only as of today, and the company has no obligation to update any of these forward-looking statements except to the extent required by law. The company also may refer to certain non-GAAP financial measures, as defined under applicable SEC rules, during this call.
Once you require operator assistance during the conference. Please press star zero on your telephone keypad.
Please note that this conference is being recorded.
Before the call begins let me read a brief statement on behalf of the company regarding forward looking statements the use of non-GAAP financial measures and the company's guidance.
During this call the company will be making certain forward looking statements within the meaning of applicable securities law, which by their nature involve a number of risks uncertainties and other factors that could cause actual results to differ materially from those projected in the forward looking statements.
Discussion of factors that could cause actual results to differ materially is contained in the company's SEC filings.
Forward looking statements in the company's earnings release or made on this call are made only as of today and the company has no obligation to update any of these forward looking statements except to the extent required by law.
The company also may refer to certain non-GAAP financial measures as defined under applicable SEC rules during this call.
Scott Schneeberger, Bascome Majors, Ravi Shanker, Jason Seidl, GXO Logistics, Unless otherwise stated, all results reported on this call are reported in the United States. The company will also remind you that its guidance incorporates business trends to date and what it believes today to be appropriate. The company's results are inherently unpredictable and may be materially affected by many factors, including fluctuations in foreign exchange rates. Changes in global economic conditions and consumer demand and spending, the labor market, and the global supply chain. It is not possible for the company to actually predict demand for its services, and therefore, actual results could differ materially from guidelines.
Conciliations of such non-GAAP financial measures to the most comparable GAAP measures are contained in the company's earnings release and related financial tables are on its website.
Unless otherwise stated all results reported on this call are reported in United States dollars.
The company will also remind you that it's guidance incorporates business trends to date and what it believes today to be appropriate assumptions. The company's results are inherently unpredictable and maybe materially affected by many factors, including fluctuations in foreign exchange rates changes in global economic.
Conditions, and consumer demand and spending labor market and global supply chain constraints inflationary pressures.
Areas factors detailed in its filings with the SEC.
It is not possible for the company to actually predict demand sports surfaces, and therefore actual results could differ materially from guidance.
You can find a copy of the company's earnings, which contains additional important information regarding forward-looking statements and non-GAAP financial measures, and the investors section on the company's website. I would now like to turn the call over to GXO's Chief Executive Officer, Malcolm Wood. Mr. Wilson, you may begin.
You can find a copy of the company's earnings release.
Which contains additional important information regarding forward looking statements and non-GAAP financial measures in the investors section on the company's website.
I would now like to turn the call over to <unk>, Chief Executive Officer Malcolm Wilson.
You may begin.
Malcolm Wood: Thank you, Daryl, and good morning everyone. I appreciate you joining us today for our fourth quarter and full year 2023 earnings call. With me in Greenwich are Barry Shoren, our Chief Financial Officer, and Adrian Stork, our Chief Automation Officer. 2023 was a stellar year for GXO.
Thank you Daryl and good morning, everyone. I appreciate you joining us today for our fourth quarter and full year 2023 earnings call.
With me in Greenwich are bearish, Oren, Chief Financial Officer, and Adrian stock I, Chief Automation Officer.
2023, with a steadily so Jack so we raised our adjusted EBITDA expectations through the delivering $741 million for the full yeah.
Malcolm Wood: We raised our adjusted EBITDA expectations through the year, delivering $741 million for the full year. Additionally, we converted a record 40% of that adjusted EBITDA into free cash flow. We deployed a record amount of automation, helping our customers to operate more efficiently. And we acquired PFS, a premier fulfillment provider in high-growth verticals. For the fourth quarter of 2023, we generated revenue of $2.6 billion, and we delivered adjusted EBITDA of $193 million, in line with our expectations. We benefited this quarter from our balanced portfolio. Over 1,000 companies partner with GXO across 27 countries where we operate. We handled record volumes for some, while managing a softer peak for others. For the full year 2023, we generated $9.8 billion of revenue, growing 9%, of which 2% was organic. As you recall, our initial adjusted EBITDA guidance for the year was a range of $700 to $730 million.
We converted a record 40% of that adjusted EBITDA into free cash flow.
We signed a billion dollars of annualized new business wins positioning G. XO for continued growth we.
We deployed a record amount of automation, helping our customers to operate more efficiently.
We acquired P. F S a premier fulfillment provider in high growth verticals.
For the fourth quarter of 2023, we generated revenue of $2.6 billion and we delivered adjusted EBITDA of $193 million in line with our expectations.
We benefited this quarter from a balanced portfolio.
Over 1000 companies partner with G X so across 27 couldn't trace where we operate we handled record volumes for some while managing a soft to peak federal does.
Yeah.
For the full year 2020, free we generated $9.8 billion of revenue growing 9% of which 2% was organic as you'll recall, our initial adjusted EBITDA guidance, but what's the range of $700 million to $730 million.
Malcolm Wood: We are proud to say we beat the midpoint of that guidance by a healthy $26 million, with our fully-adjusted EBITDA coming in at $741 million. During the year, we closed a tremendous $1 billion of annualized new business wins, signing significant new partnerships and expansions with a diverse group of customers, including Kellogg's. LVMH, Nike, PepsiCo, and Unilever. I can't emphasize this point enough.
Yes.
We are proud to say, we beat the midpoint of that guidance by a healthy $26 million.
With our full year, adjusted EBIT da combing gain at $741 million.
During the are we close to a tremendous $1 billion of annualized new business wins, signing significant new partnerships and expansions with a diverse group of customers, including Kelloggs L V N H, Nike Pepsico and Unilever icon.
The size at this point you know Jack so its ability to win a billion dollars of new business with Blue chip customers speaks volumes about the demand for our superior solutions.
Malcolm Wood: GXO's ability to win billions of new business with blue chip customers speaks volumes about the demand for our superior solutions. At the time of this spin, we talked about a $450 billion total addressable market, of which $300 billion is handled in-house, presenting a huge growth opportunity. Only two short years later, about 40% of our wins in 2023 came from outsourcing, up from about 26% in 2022, as customers looked to GXO to make a strategic change in their business. We deployed a record amount of automation into our operations and set all-time volume records at two of our highly automated sizes. And we're trialing some very exciting cutting-edge technologies, including AI-powered robots and humanoids, which I'll ask Adrian to update you on in a few moments.
At the time of the spin we talked about a 450 billion dollar total addressable market of which $300 billion is handled in house presenting a huge growth opportunity.
Only two short years later about 40% if I wins in 2023 came from sourcing from about 26% in 2022 as customers look to Jack so to make a strategic change in the business.
We deployed a record amount of automation into our operations and set all time volume records at two of our highly automated sites and we're trialing, some very exciting cutting edge technologies, including AI powered raw boats and humanoid.
Which I'll ask Adrian to update you on in a few moments.
Our expertise in automation and robotics continues to set G X so a pot and.
Malcolm Wood: Our expertise in automation and robotics continues to set GXO apart, and our market share is higher in verticals where we've automated for our customers. Our automated solutions enable us to improve service and lower costs for our customers. We are creating the warehouses of the future, and our leadership in this area is a critical part of our long-term growth trajectory. Through our acquisition of PFS, we've gained an amazing portfolio of over 100 of the world's most iconic brands. PFS is a valued partner for brands looking to achieve a differentiated consumer experience in the luxury and beauty markets.
Our market share is higher in verticals, where we automate it for our customers I would also make these solutions enable us to improve service and lower costs for our customers.
We are creating the well how he sees of the future and our leadership in this area is a critical part of our long term growth trajectory.
Through our acquisition of PFS, we've gained an amazing portfolio of over 100 of the world's most iconic brands.
<unk> is a valued partner for brands looking to achieve a differentiated consumer experience in the luxury and beauty markets.
Malcolm Wood: This is a resilient and growing business that had excellent trading results in the fourth quarter. For example, our recent North American expansion with Glossier was the product of a strong PFS relationship in one country and the global scale of GXO. Turning to our Outlook for this year, we've issued guidance of 2-5% organic growth with $760 million to $790 million of adjusted EBITDA for the full year 2024. Barish will cover the detail behind our financial projections, but I'd like to just touch upon a few trends we're seeing that indicate a positive growth trajectory ahead. First, the pace of supply chain outsourcing is accelerating. I noted a moment ago that about 40% of our billion dollars of new sales wins in 2023 were activities that were being outsourced. Customers are increasingly turning to GXO to help them navigate the complexities of their supply chain operations.
This is a resilient and growing business that had excellent trading results in the fourth quarter.
No we're focused on Supercharging P. F S ceased grow.
For example, our recent north American expansion with glass, yet once the product of a strong PFS relationship in one contract and the global scale of Gx soul.
Turning to our outlook for this year, we've issued guidance of 2% to 5% organic growth with 760 million to $792 million adjusted EBIT da for the full year 2024.
Barrish will cover the details behind our financial projections.
I'd like to just chip on a few trends, we're seeing that indicate a positive growth trajectory ahead.
First the pace of supply chain or sourcing is accelerating.
I noted a moment ago that about 40% a billion dollars of new sales wins in 2023 were activities that would be a source.
Customers are increasingly turning to <unk>, so to help them navigate the complexities of the supply chain operations.
Second is the increasing need for return and reverse logistics.
Our reverse logistics grew faster than the group as a whole in 2023 and represents a high single digit percentage of Gx Soc revenues as both new and existing customers are increasingly asking us to help them manage this critical part of their supply chain.
Malcolm Wood: Our reverse logistics grew faster than the group as a whole in 2023 and represents a high single-digit percentage of GXO's revenues, as both new and existing customers are increasingly asking us to help them manage this critical part of their supply chain. And the third, and perhaps the most pronounced trend running through our commercial discussions, is the demand for greater efficiency. In nearly every conversation, our customers are asking for our guidance on how to use automation to improve service and lower costs throughout their supply chain.
I'm, the third and perhaps the most pronounced trend running through our commercial discussions is the demand for greater efficiency.
In nearly every conversation our customers are asking for a guidance on how to use automation to improve service and lower costs for why the supply chains.
Malcolm Wood: As the leader in logistics automation, we're uniquely positioned to deliver on these objectives and capture even more of our total addressable market. We are continuing to sharpen our commercial strategy in order to meet the huge and accelerating demand for our services. On that note, we've appointed Richard Causton, our Head of European Operations, to serve simultaneously in a newly created role of Chief Revenue Officer.
As the leader in logistics automation, we're uniquely positioned to deliver on these objects tapes and capture even more of our total addressable market.
We are continuing to sharpen our commercial strategy in order to meet the huge and accelerating demand for our services.
No what we've appointed Richard cost in our head.
Head of European operations.
Just said simultaneously and the newly created role of Chief revenue Officer.
Malcolm Wood: Our customers are demanding more and more globally networked services, and we're adapting our organization to support them and capitalise on this accelerating trend. We are also doubling down on our automation leadership to improve our site-level productivity, which Adrian will update you on in a moment. GXO is firing on all cylinders, with a sound vision for what's ahead. We're winning incredible new business, growing market share, and delivering best-in-class services to our customers. And with that, I'll hand you over to Barish to walk you through our financials and guidance.
Our customers are demanding more and more globally network services, and we're adapting our organization to support that and capitalize on this accelerating trend.
We're also doubling down on our automation lead to shape to improve our site level productivity, which Adrian with little date, you on in a moment.
Jack So it's firing on all cylinders with a sound fishing for what's ahead, well winning incredible new business growing share and delivering best in class services to our customers.
And with that I'll hand, you over to parish to walk you through our financials and guidance Irish over to you.
Malcolm Wood: Barish, over to you. Revenues grew 9%, operating income grew 31%, and net income grew 16%. We maintained an operating return on invested capital above our target of 30%, delivered strong margin performance in a lower growth environment, and converted more than 40% of our adjusted EBTA through free cash. Turning to details.
Good morning, everyone.
Most of them laid out 2023 was a remarkable year for jigsaw.
Revenues grew 9%.
Operating income grew 31% and net income grew 16%.
We maintained an operating return on invested capital above our target of 30%.
<unk> strong margin performance in a lower growth environment and converted more than 40% of our adjusted EBITDA to free cash flow.
Turning to the details for the full year of 2023 we generated revenue of $9 $8 billion growing 9% did.
Malcolm Wood: For the full year of 2023, we generated revenue of $9.8 billion, growing 9%. We delivered adjusted EBITDA of $741 million, which is adjusted. EBITDA margins were also resilient, overcoming a headwind of approximately 70 basis points due to the net effect of pensions and FX. Our operating income for the full year 2023 was $318 million, up 31% year-over-year. In the fourth quarter, we generated revenue of $2.6 billion, as well as adjusted EBITDA of $193 million. Additionally, the average length of contracts signed in the fourth quarter set a new all-time record of well above 60 days.
We delivered adjusted EBITDA of $741 million.
Our adjusted EBITDA margins were also resilient.
Having a headwind of approximately 70 basis points due to the net effect of patients and effects.
Our operating income for the full year of 23, three was $318 million up 31% year over year.
Did you live with net income of $229 million up from $197 million into into 'twenty two.
In the fourth quarters, we generated revenue of $2 $6 billion.
Adjusted EBITDA of $193 million.
As Malcolm mentioned, you have $1 billion of new business in 2020.
And the average length of contracts signed in the fourth quarter sits at new all time record of that about six years.
Malcolm Wood: Our fourth-quarter operating income was $87 million, growing 18% year-over-year, and Net Income was $73 million, up from $46 million in 2020. Our operating return on invested capital, at 36%, was once again well above our expectations in 2023. We surpassed all expectations on, We have sharpened our focus on capital effects. From a CapEx perspective, we have allocated investments to technologies and services that drive the greatest returns for our customers. On the working capital side, we achieved stellar cash flow, all of which drives high compound returns for GXO. As a result of these actions, we delivered an outstanding $151 million of free cash flow in the, taking the full year to 302 million.
Our fourth quarter operating income was $87 million growing 18% year over year, and net income was $73 million up from $46 million in 'twenty to 'twenty two.
Our operating return on invested capital at 36% was once again they'll have all of our targets.
In 2023.
We surpassed all expectations on free cash flow.
Sharpened our focus on capital effectiveness.
From a capex perspective, do you have all those cases investments in technologies and services that drive greater returns for our customers.
On the working capital side, we achieved stellar cash collection.
All of which drives high compounds of choice for <unk>.
As a result of these actions delivered an outstanding $151 million of free cash flow in the fourth quarter, taking the full year to $302 million.
Malcolm Wood: We converted more than 40% of our Asia business, which was significantly ahead of our target of 30%. We lowered our net leverage levels to 1.6 times, down from 1.8 times at the start of 2020, which included the financing of our $150 million acquisition of PF. Operationally, we are ahead of the net leverage targets that we set at the beginning of 2020. Our balance sheet remains rock-solid and invisible.
We converted more than 40% of our adjusted EBITDA, which was significantly ahead of our target of 30%.
I'm very pleased that in 2024, you also expect to be head of this target.
We lowered our net leverage levels to one six times down from one eight times at the start of 2023.
Which includes the financing of our $150 million acquisition of PFS.
Operationally you are ahead of the net leverage targets that you said at the beginning of 'twenty to 'twenty three.
Our balance sheet remains rock solid and investment grade.
Malcolm Wood: We have no debt coming due in 2024, and we are pleased to have received credit-rating Outlook upgrades from S&P, Moody's, and Fitch in Trinity. This illustrates both the significant need for innovation in the market and GXO's exceptional ability to meet it. Now, turning to our guide. For the full year 2024, we expect to deliver organic growth of 2 to 5%, and we anticipate a sequential acceleration of growth throughout. Our early trading results in January indicate that our first quarter organic growth shows upward sequential growth. Based on the input from our customers, we believe the fourth quarter was the best.
We have no debt coming due in 'twenty to 'twenty four.
And we're pleased to have received credit rating upgrades from S&P, Moody's and Fitch in 'twenty to 'twenty three.
This illustrates both the significant need for innovation in the market and <unk> exceptional ability to meet that demand.
Now turning to our guidance.
For the full year 2024, do you expect to deliver organic growth of two 5%.
We anticipate a sequential acceleration of growth throughout the years.
Our early trading results in January indicate that our first quarter organic growth shows an upward sequential trend.
Yeah.
Based on the inputs from our customers, we believe the fourth quarter was the bottom.
Malcolm Wood: We are basing our full-year growth projections on the following. First, we have several significant new business starts ramping up throughout 2020, including notable wins in the aerospace and industrial world. Some of these are highly automated sites that take slightly longer to fully implement, hence the ramp-up throughout the year. Second.
The amazing our full year growth projections on the following factors.
First.
We had several significant new business starts ramping up throughout 2024.
Including notable wins in the aerospace and industrial verticals as well as with brands such as M H Marsh and Sainsburys.
So these are highly automated sites that take slightly longer to fully implement hence the ramp up throughout the year.
Second.
Malcolm Wood: While many of our verticals are performing very well, several of the consumer customers that saw softer volumes in the second half of 2023 are expecting sequentially higher growth throughout. Our year-on-year comparisons get significantly easier as we progress through the year. We also expect to deliver $760 million to $790 million of adjusted EBIT. And to reiterate, we expect to convert 30% to 40% of our adjusted EBTA into free cash flow, above our 30% long-term target. This cash conversion trajectory points to approximately one time net debt to EBITDA by the end of 2021. Roughly half of our billion-dollar new business won in 2023 will go live in 2024, and they have already booked nearly $230 million of additional incremental revenue for 2020.
Well many of our verticals are performing very strongly.
Several of the consumer customers. It's so softer volumes in the second half of 'twenty to 'twenty three are expecting sequentially higher growth throughout the year.
Third.
Are you on your comparisons get significantly easier as you progress through the years.
We also expect to deliver $760 million to $790 million of adjusted EBITDA.
And to reiterate we expect to convert 30% to 40% of our adjusted EBITDA into free cash flow, if all our 30% long term targets.
This cash conversion trajectory points to approximately one time net debt to EBITDA by the end of 'twenty to 'twenty five.
Roughly half of our billion dollar of new business won in 'twenty to 'twenty three you'll go live in 'twenty to 'twenty four.
And the already booked nearly $230 million of additional incremental revenue for 2025.
Malcolm Wood: All taken, we expect to see revenue exfoliate through the year. With incremental 2025 revenue already 29% higher than at this stage last year, we are very excited about our long-term growth trajectory. GXO continues to drive and compound great returns; our operating return on invested capital is significantly above 30%. We have generated an unprecedented amount of cash flow this year while taking our leverage to 1.6 billion.
All taken we expect to see revenue accelerate through the <unk>.
With the incremental 20 to 25 revenue already at 29% higher than at this stage last year. They are very excited about our long term growth trajectory.
<unk> continues to drive and compound great returns on capital.
Our operating return on invested capital is significantly above 30%.
You have generated an unprecedented amount of cash flow this year, while taking our leverage to one six times.
Malcolm Wood: This provides us with the balance sheet flexibility to continue our disciplined M&A. While our primary focus is on organic growth, we are delighted to be able to allocate capital to more and more automation contracts that are getting longer, proving the value we create for our customers, global brands across the world. Over to you, Edwin. Thanks, Barish. Good morning, everyone.
This provides us with the balance sheet flexibility to continue our disciplined M&A strategy.
While our primary focus is on organic growth, we are delighted to be able to allocate capital into more and more automation contracts are getting longer proving the value we create to our customers global brands across the world.
And with that I'll hand, it over to Adrian to update you on our automation progress and also look.
Would you hedge it.
Edwin: 2023 was a standout year for GXO in automation. We won multiple long-term highly automated contracts. Global Blue Chips, and over half of our billion dollars of new business wins in 2023 are expected to generate revenue from automated operations. We are delivering on our long-term promise of increasing our revenue from automated operations, which has risen from 37% to 42% year-over-year as of the fourth quarter. A major contribution to this was increasing our total units of warehouse automation by about 50% year over year. We further entrenched our technology leadership position and trialed a broad range of new hardware and software solutions, including humanoids, AI-powered robotics, and autonomous vehicles.
Thanks Paresh. Good morning, everyone 2023 was a standout year for <unk> and automation.
We won multiple long term highly automated contracts with global Blue chips and the other half of our $1 billion of new business wins in 2023 are expected to generate revenue from automated operations.
We are delivering on our long term promise of increasing our revenue from automated operations, which has risen from 37% to 42% year over year as of the fourth quarter.
A major contribution to this was increasing our total units of warehouse automation by about 50% year over year.
We further entrenched our technology leadership position and Trialed, a broad range of new hardware and software solutions, including humanoids AI powered robotics and autonomous vehicles as Malcolm noted we are creating the warehouses of the future.
Edwin: As Malcolm noted, we are creating the warehouses of the future. We're talking with customers every day about supply chain efficiency and how to solve their complex problems. Every company with goods to move is looking for ways to make their fulfillment operations more productive today and more resilient tomorrow. Our competitive advantage is helping our customers bring efficiency to life in their site operations. Customers' needs for automation differ based on their experience and business model.
We're talking with customers every day about supply chain efficiency and how to solve their complex problems every company with goods to move is looking for ways to make their fulfillment operations more productive today and more resilient tomorrow.
Our competitive advantage is helping our customers bring efficiency to life in a site operations.
Customers' needs for automation decide based on the experience and business model someone to invest in transformational large scale automation I just need a new partner to take over an existing operation and many are outsourcing their operations for the first time.
Edwin: Some want to invest in transformational large-scale automation. Others need a new partner to take over an existing operation, and many are outsourcing their operations for the first time. We pride ourselves on being able to meet any customer need with tailored solutions for best-in-class results. Of our billion dollars in new wins for 2023, approximately 45% will be automated through the contract. In addition, we typically see annual conversion rates of 5-7% from manual to modular adaptive tech through our own continuous improvement program.
We pride ourselves on being able to meet any customer need with tailored solutions for best in class results.
About $1 billion of new wins for 2023, approximately 45% will be automated through the contract. In addition, we typically see annual conversion rates of 5% to 7% from manual to modular adaptive tick through our own continuous improvement programs. This means we expect of a half of that $1 billion of new wins or is that.
Edwin: This means we expect over half of that billion dollars of new wins will result in automated revenue for GXO. One of the biggest wins is a 15-year contract with a global sports brand where we've selected and designed the appropriate technologies to enable a completely integrated end-to-end flow through the warehouse. This solution is key to the customer's European growth, providing it with capacity for same-day fulfillment of up to 3 million units per week.
And automated revenue for <unk>.
One of the biggest wins is a 15 year contract with a global sports brand, we've selected and design the appropriate technologies to enable a completely integrated into inflow through the warehouse.
This solution is key to the customer's European growth plan is to provide them with capacity for same day fulfillment of up to 3 million units per week.
Edwin: Our deep experience and domain expertise with this level of complex automation was the primary driver for our success in winning this contract and continues to differentiate GXO in the market. Looking forward, the industry as a whole is nearing an inflection point, with more and more global brands pursuing this type of transformation. We have nearly half a billion dollars of large-scale automated sales. On average, these large-scale automations carry a significantly longer contract duration.
Our deep experience and domain expertise with this level of complex automation was the primary driver for our success in winning this contract and continues to differentiate <unk> in the market.
Looking forward the industry as a whole is nearing an inflection point with more and more global brands pursuing this type of transformation.
We have nearly half a billion dollars of large scale automated sales opportunities.
On average these large scale automation is carry a significantly longer contract duration. Our automation portfolio also delivers margins more than 200 basis points above group levels, making our business stickier and our growth more profitable.
Edwin: Our automation portfolio also delivers margins of more than 200 basis points above group levels, making our business stickier and our growth more profitable. In addition to driving momentum in automated sales, our team is heavily involved in retrofitting both mature and new technologies to improve site-level productivity. We regularly pilot new innovations, and if the solution meets our performance thresholds, we then deploy it across our network. In 2023, we increased our total units of warehouse automation by 50%, which included doubling our VisionTech, which optimizes order validation and minimizes errors. It's a highly efficient technology that can be rolled out in operations across numerous verticals without requiring significant capital investment.
In addition to driving momentum and automated sales our team is heavily involved in retrofitting, both mature and new technologies to improve site level productivity we.
We regularly pilot new innovations and if the solution meets our performance thresholds. We then deploy it across our network.
In 2023, we increased our total units of warehouse automation by 50% that included doubling our vision take which optimizes all the validation and minimize as erez.
It's a highly efficient technology that can be rolled out in operations across numerous verticals without requiring significant capital investment.
The operations, where we implemented this tick so on average margin expansion of 300 basis points.
We're also actively identifying practical applications for AI and our existing operations and have successfully child solutions will pick productivity and workforce management we're.
Edwin: The operations where we implemented this TIC achieved an average margin expansion of 300 basis points. We're also actively identifying practical applications for AI in our existing operations and have successfully trialed solutions for PIC productivity and workforce management. Finally, given our rapidly expanding scale and leadership position, we're beginning to achieve meaningful procurement savings. We're already benefiting from significant reductions to list prices in various categories. GXO has built a global technology ecosystem that is unrivaled in our industry, and the need for our solutions continues to grow every day. Our scale and reach have materially shaped the warehouse automation landscape, and we're beyond excited as to what lies ahead and the major impact of GXO's role in building the supply chain of tomorrow. And with that, I'll pause back to you, Malcolm.
We're excited that the fixed solution delivered a productivity increase of approximately 15% and we're now rolling out the application to dozens of sites in 2024.
Finally, given our rapidly expanding scale and leadership position, we're beginning to achieve meaningful procurement savings, we're already benefiting from significant reductions to this price in various categories.
<unk> has built a global technology ecosystem that is unrivaled in our industry and the need for our solutions continues to grow every day.
Our scale and reach have materially shaped the warehouse automation landscape and we're beyond excited as to what lies ahead and the major impact of <unk> role in building a supply chain up tomorrow.
And with that I'll pass back to you and welcome.
Thanks Adrian.
This was the AR that we proved our business model.
With resilient margins strong cash flow and adjusted EBITDA growth that surpassed our expectations, we want $1 billion of great new business and expanded the gap with the competition through our investment in high return automation that meet our customers.
Malcolm Wood: Thanks, Adrian. This was the year that we proved our business model, with resilient margins, strong cash flow, and adjusted EBITDA growth that surpassed our expectations. We won a billion dollars of great new business and expanded the gap with the competition through our investment in high-return automation that meets our customers' increasing demand for outsourcing. Before we close, I want to thank our employees for their tremendous performance during peak and throughout 2023. Their hard work and continued commitment to our values was the engine that delivered a truly great year for GXO.
Increasing demand for outsourcing.
Before we close I want to thank our employees for their tremendous performance during peak and throughout 2023.
Hard work and continued commitment to our values with the engine that delivered a truly great. Yes, so Jack so Luke.
Looking forward to 2024 and beyond with building this momentum.
Our automation leadership is driving stickiness unprofitable growth.
With global customers looking to make their operations more efficient.
We expect our growth to accelerate driven by new wins with incremental one revenue for 2025 tracking nearly 30% ahead of where we were a year ago.
Adrian Stork: Our automation leadership is driving stickiness and profitable growth, with global customers looking to make their operations more efficient. We expect our growth to accelerate, driven by new wins, with incremental revenue of $1 billion for 2025, tracking nearly 30% ahead of where we were a year ago. We are very excited about our growth trajectory as we focus on delivering the best possible solutions to our customers and generating strong returns for our shareholders. With that, we'll hand the mic back to Daryl and transition to Q&A.
Yeah.
We are very excited about our growth trajectory as we focus on delivering the best possible solutions to our customers and generating strong returns for our shareholders.
With that we'll hand, the mic back to Daryl and transition to Q&A.
Yeah.
Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
Start to if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, one moment. Please while we poll for your questions.
Our first questions come from the line of Stephanie more with Jefferies. Please proceed with your questions.
Daryl: Thank you. We will now conduct the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question.
Stephanie can you check if you're muted please.
Okay.
Okay.
Okay.
Secondly are you able to hear us.
Okay.
Okay.
Yeah.
Okay, I'm, sorry about that can you hear.
Can you hear me now alright, we can hear you yeah, great. Okay.
Thank you so much Rob.
But maybe if you could discuss what you're seeing across geographies and vertical and in early 2020.
All that gives me confidence that volume revenue cross connect.
Daryl: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button. One moment, please, while we poll for your question. Our first questions come from the line of Stephanie Moore with Jeffries. Please proceed with your question. Hey Stephanie, can you check if you're muted?
Accelerating parts yeah.
Thank you.
Hi, Stephanie good morning, its Malcolm here, let me cover some points on that so if we look at the broad macro what gx always operating.
Continental Europe basically that's actually continued to do well a recovered for the middle part of last year and we're seeing similar trends are at right now I mean not basis Pleasingly I think we're starting to see some recovery in our North American business and U K business Green shoots.
Daryl: Stephanie, are you able to hear us? www.scottschneeberger.com. Great, okay. Fair. Thank you so much for all of the comments and for 2024. But maybe if you could discuss what you're seeing across geographies and verticals and early 2024 results that give you confidence that volumes and revenue growth can accelerate from 4Q. Thank you. Good morning, it's Malcolm here.
Early days, but definitely we're seeing as we've moved into 'twenty four we're seeing a different.
Scape then as we've left 2023, when we look at the different categories of.
Products that we deal with we can broadly say that our food and beverage related business technology consumer electronics industrial manufacturing, they're all really the highlights I would say so what is our omnichannel retail and consumer packaged goods. So there's no doubt the.
Most still under pressure.
Look at the metrics side, we can see consumer spending money on service as well.
<unk>, it's still a sluggish environment.
Malcolm Wood: Let me cover some points on that. So if we look at the broad macro where GXO is operating, the Continental Europe business, that's actually continued to do well. It recovered through the middle part of last year, and we're seeing similar trends right now in that business. Pleasingly, I think we're starting to see some recovery in our North American business and UK business. Green shoots.
Staying with the macro I think one of the pronounced trends we've seen during the latter parts of last year and it's it's a trend we were starting 'twenty four with is across all of the different geographies. Our customers have been managing carefully inventory levels I think there's been an adjustment to <unk>.
Into account what was generally a sluggish 2023 people have managed.
<unk> levels smartly, we've been super proactive in working with our customers to do that also and customers are valued.
Malcolm Wood: It's early days, but definitely, as we've moved into 2024, we're seeing a different landscape than as we left 2023. When we look at the different categories of products that we deal with, we can broadly say that our food and beverage related business, technology, consumer, electronics, industrial manufacturing, they're all really the highlights. I would say slower in our omni-channel retail and consumer packaged goods. There's no doubt the consumer is still under pressure.
Inputs on that.
Generally I think we've seen organizations prioritizing price more than volume.
That gives you a feel for our last quarter.
Yes.
Italy days, but I would say our trading results, but John you're right the definitely indicating a stronger trajectory for 'twenty for what we were seeing in the in the in the last quarter. So it's a bit early to judge what the what the first half of the year will look like but definitely encouraging signs.
When we talk to customers I always say direct generally speaking.
Malcolm Wood: We look at the metrics; we can see consumers spending money on services, but goods, it's still a sluggish environment. Staying with the macro, I think one of the pronounced trends we've seen during the latter part of last year, and it's a trend we're starting 24 with, is across all of the different geographies, our customers have been carefully managing inventory levels. I think there's been an adjustment to take into account what was generally a sluggish 2023. People have managed inventory levels smartly. We've been super proactive in working with our customers to do that also, and customers have valued our inputs on that. Generally, I think we've seen organizations prioritizing price more than volume, and that gives you a feel for our last quarter's volumes.
They all expect their activity to be increasing sequentially as we're moving through 2024, probably.
A slower first half with a with a fast the second half and I think that's broadly in line with every kind of commentary that we're seeing at the moment.
Pleasing for us is.
We've just finished 23, we are really a great season for new basically is a billion dollars of new business against a slower macro that that should not be underestimated. So we're very pleased with that as Adrian mentioned a lot of big ticket implementations going on this year.
Our pipeline is strong it's held up incredibly strong maybe one of the most pleasing aspects for US is a pre pipeline I won't talk about the pipeline a lot, but a pre pipeline right now is about 20% year over year and there are a lot of.
Malcolm Wood: It's early days, but I would say our trading results for January definitely indicate a stronger trajectory for 2024 than we were seeing in the last quarter. So it's a bit early to judge what the first half of the year will look like, but definitely encouraging signs. When we talk to customers, I would say, directionally speaking... They all expect their activity to be increasing sequentially as we're moving through 2024. Probably a slower first half with a faster second half, and I think that's broadly in line with every kind of commentary that we're seeing at the moment.
Big transformative projects.
Coming into that projects that will require a lot of automation. So all of that gives us a good feeling about 2023.
Let me say from a <unk> perspective as.
As we move progressively fruit.
For.
Our comps.
Become considerably easier as we go through so substantial growth on the pipeline I think is the what we're seeing right now and we're going into the year.
Malcolm Wood: What's pleasing for us is... You know we've just finished 23, we had really a great season for new business, a billion dollars of new business against that slower macro. That should not be underestimated, so we're very pleased with that. As Adrian mentioned, a lot of big ticket implementations going on this year. Our pipeline is strong, it's held up incredibly strong and maybe one of the most pleasing aspects for us is our pre-pipeline, we don't talk about our pre-pipeline a lot, but our pre-pipeline right now is about 20% up year over year and there are a lot of big transformative projects coming into that, projects that will require a lot of automation, so all of that gives us a good feeling about 2023 and obviously from a GXO perspective, as we move progressively through 2024, our comps become considerably easier as we go through, so substantial growth on the pipeline I think is what we're seeing right now and we're going into the year with a degree of confidence about 2024 and how it's going to pan out. Great. No, that was tremendously helpful.
A degree of confidence that by about 24, and how it's going to pan out.
Yes.
Great.
Tremendously helpful. And then just as a follow up to your guidance for thanks Ronny for it does look like it would be cashless expectations. Okay. The higher free cash flow conversion is there a structural change there or we can expect a similar level of conversion on a go forward basis.
Yeah, Let me hand, you over to a bearish Stephanie for that detail.
Hi, Stephanie.
We had excellent collection on capital efficiency, and we had record free cash flow our free cash flow in Q4 was $151 million up year over year, and our strong Q4 helped us deliver over $300 million of free cash flow for the entire year, which was a conversion rate of 41% comfortably ahead of our 30% to 40%.
And with this pace the forecast roughly debt levels to be around one time debt to EBITDA by the end of 2025, creating roughly $2 billion of balance sheet capacity to be allocated.
Either to accretive disciplined M&A in all geographies or E.
Evaluate potential returning capital back to shareholders through a buyback. So we will create incremental cash flow beyond investing in our automation and technology and that's driven by excellent collections and capital efficiency.
Malcolm Wood: And then just as a follow-up to your guidance for 2024, it does look like your free cash flow expectations assume a higher free cash flow conversion. Is there a structural change there that we could expect a similar level of conversion on a go-forward basis? Let me hand you over to Barry, Stephanie, for that detail. Hi Stephanie.
Yeah.
Alright. Thank you guys. So much appreciate it.
Thank you our next questions come from the line of Chris Wetherbee with Citigroup. Please proceed with your questions.
Yeah, Hey, thanks, good morning, guys.
Yes, maybe I wanted to talk a little bit about the organic revenue guide for 2024, I was hoping maybe you could break that down into the parts. What you see in terms of new business wins, what attrition looks like also importantly, how volume plays out fourth quarter volume sort of implied seems fairly weak. So wanted to get a sense of how you see that ramping up over the course of 'twenty four.
Stephanie Moore: We had excellent collection and capital efficiency, and we had record free cash flow. Our free cash flow in Q4 was $151 million, up year over year, and our strong Q4 helped us deliver over $300 million of free cash flow for the entire year, which was a conversion rate of 41%, comfortably ahead of our 30 to 40%. And at this pace, we forecast debt levels to be around one-time debt by the end of 2025, creating roughly $2 billion of balance sheet capacity to be allocated either to equitative, disciplined M&A in all geographies, or we evaluate the potential of returning capital back to shareholders through a buyback. So we will create incremental cash flow beyond investing in our automation and technology, and that's driven by excellent collection and capital efficiency. All right, thank you guys so much. I appreciate it.
Hi, Chris its Paresh you, let me take that we expect higher growth in 2020 for the already signed nearly $600 million result on new business impacting 2024, and Youll continue to sign more business, which we expect to grow given the good all sourcing opportunities in our pipeline throughout this year there has been.
Really a great outsourcing opportunity in all geographies, we see right now our services are in high demand.
We expect to see positive, but lower contribution from pricing.
And look for steady underlying customer turnover.
There will continue to be some impact at least at the start of the year from the lower footprints of our customers.
Given their lower inventory levels, which gives us roughly the 2% to 5% organic growth in 2024.
Our growth will accelerate given the ramp up of customer projects, we have and easier year over year call.
And if you look into our earlier trading results in January and as we talk to our customers that view is confirmed.
Okay, and just so I'm clear, though should we assume sort of still somewhat negative in the first part of the year turning positive as we move forward. So <unk>, maybe you still have a little on the negative side or are you able to turn positive based on what you see through January.
Stephanie Moore: Thank you. Our next questions come from the line of Chris Weatherby with Citigroup. Please proceed with your question. Hey, thanks guys. I guess maybe I wanted to talk a little bit about the Organic Revenue Guide for 2024. I was hoping maybe you could break that down into parts. Scott Schneeberger, Bascome Majors, Ravi Shanker, Jason Seidl, GXO Logistics, Applied, and Barely Weak, so you'll want to get a sense of how you see that ramping up over the next couple of weeks.
In Q1, we definitely expect an improvement over Q4 and the earlier trading results are showing us that.
Okay helpful. And then the follow up would just be sort of translating that to the EBITDA side I guess as we think about the potential for incremental margins is 24 year, where you'll be able to see maybe some degree of expansion. There I guess can maybe talk a little bit about the puts and takes that are going on there I know you have some of the cost efficiencies flowing from 23 to 24.
Stephanie Moore: Hi Chris, it's Baris here. Let me take that. We expect higher growth in 2024. We already signed nearly $600 million of new business impact in 2024, and we will continue to sign more business, which we expect to grow, given the good outsourcing opportunities in our pipeline throughout this year. There has been a really great outsourcing opportunity in all geographies we see right now. Our services are high in demand. We expect to see positive but lower contribution from pricing and look for steady underlying customer turnover.
PFS.
Kind of curious about the moving parts there.
Sure our margins yet again prove how strong this business model is.
EBITDA percentage margin will be steady in 2024, nominally we expect $760 million to $790 million with a midpoint of around $775 million.
Our organic growth supported by deployment of robotics automation and outsourcing will contribute to our margin expansion.
S is trading well and do contribute.
Our central efficiencies program, which we highlighted in detail, we provide an incremental $14 million benefit.
Chris Weatherby: There will continue to be some impact, at least at the start of the year, from the lower footprints of our customers, given their lower inventory levels, which gives us roughly 2% to 5% organic growth in 2024. However, our growth will accelerate, given the ramp-up of customer projects we have and easier year-over-year comps. And as we look at our earlier trading results in January and as we talk to our customers, that view is confirmed. Okay, and just so I'm clear, though, should we assume that things are still somewhat negative in the first part of the year, turning positive as we move forward? So 1Q maybe still is a little on the negative side, or are you able to turn it positive?
And do you have we've gone through the details in the earlier call.
And all these this balanced with our investments in our capabilities as an organization, including our sales and business development teams, where we see phenomenal opportunities.
Our automation focus, which is selling really really well and our investments in our cloud based systems, turning our potential into performance and will fuel our growth in the future.
Okay. Thanks for the time appreciate it.
Thank you.
Thank you our next questions come from the line of Scott Schneeberger with Oppenheimer. Please proceed with your questions.
Thanks, very much good morning.
A couple of questions I guess first one bears for you following up on Christy's question.
Could you speak to maybe a year over year bridge outlining kind of the primary drivers of adjusted EBITDA in 2024 versus 23, what are some of the big.
Speaker Change: In Q1, we definitely expect an improvement over Q4, and the earlier trading results are showing us that. Scott Schneeberger, Bascome Majors, Ravi Shanker, Jason Seidl, GXO Logistics, Flowing from 23 to 24, PFS, I'm just kind of, you know, kind of curious. Sure.
Puts and takes that we're looking at year over year. Thanks.
Sure the largest component is our organic growth and we expect that to accelerate throughout the years as we highlighted these in a lot more outsourcing projects and technology, our automation and robotics is a huge enabler on that one PFS will contribute.
Continue to trade well and contributes to our results.
Speaker Change: Our margins yet again prove how strong this business model is. Our EBITDA percentage margin will be steady in 2024. Nominally, we expect $760 to $790 million, with a midpoint of around $775 million.
Central efficiencies, which we have gone through in detail fourth will contribute $40 million and we will continue to invest in our capabilities and in our organization to give you further highlight on what those investments are you investing in our sales and business development teams.
Automation and robotics implementation teams, we are moving to Claus Claude both our data centers and software.
Speaker Change: Our organic growth, supported by the deployment of robotics, automation, and outsourcing, will contribute to our margin expansion. PFS is trading well and will contribute. Our Central Efficiencies Program, which we highlighted in detail, will provide an incremental $14 million benefit, and we have gone through the details in the earlier call. And all of this is balanced with our investment in our capabilities and organization, including our sales and business development teams, where we see phenomenal opportunities, our automation focus, which is selling really, really well, and our investment in our cloud-based systems, turning our potential into performance and will fuel our growth in the future. Thanks for your time.
This is in progress both financial HR it systems across the board.
And we are actively working on all sourcing.
Third party on some noncore support functions activities. This was all part of the plan and we are moving forward in early part of 2024 on those plants.
All of those as you will recall was what we highlighted in our capital market day and was going to give you a full year effect over $100 million by 2026.
Okay, great. Thanks for that.
I guess.
Malcolm Moore, Andrew our Hadrian's primarily.
You guys have highlighted today I mean, yeah.
Large target addressable market to get significantly larger when.
Customers, who don't yet outsource their warehousing supply chain operations to a third party provider get involved in and clearly your mix of on contract wins increased substantially.
Speaker Change: I appreciate it. Thank you. Thank you. Our next questions come from the line of Scott Schneeberger with Oppenheimer. Please proceed with your question. Thanks very much.
The year over year.
To do so.
So I guess my multi part question here is it sounds like a reverse logistics is a big driver of this.
And.
Scott Schneeberger: Good morning. A couple questions. I guess the first one bears for you following up on Chris's question. Could you speak to maybe a year-over-year bridge outlining kind of the primary drivers of adjusted EBITDA in 2024 versus 23? What are some of the big puts and takes that we're looking at year-over-year? Thanks.
Outsourcing trend.
What type of growth rate are you getting it sounds like its above the average, but what type of growth rate are you getting a reverse logistics and do you anticipate that accelerating and then and then also kind of as a follow on with outsourcing of more meaningful mix.
Type of gross new business win run rate do you anticipate over the coming few years.
Yeah Scott.
Scott It's Malcolm here, let me take the first part of that and I know I'll ask bearish to comment on some of the numbers you are absolutely right. Our reverse logistics, it's a huge growth area for our business right now across our total company, it's starting to represent high single digits combined.
Speaker Change: Sure, the largest components are organic growth, and we expect that to accelerate throughout the year. As we highlighted, we've been doing a lot more outsourcing projects, and technology, our automation and robotics, is a huge enabler on that one. PFS will contribute, continue to trade well, and contribute to our results. Central efficiencies, which we have gone through in detail, will contribute $14 million, and we will continue to invest in our capabilities across our organization. To give you a further highlight on what those investments are, we are investing in our sales and business development teams, as well as our Automation and Robotics Implementation Teams.
Activities and when I look at the sales pint lines, it's very clear to say those huge number of projects are.
Coming through.
High degree of element of reverse logistics, if you remember back right to the beginning of <unk>. So we always talked about those big tailwind as you know more and more companies outsourcing their logistics well.
Speaker Change: We are moving to the cloud, both our data centers and software. This is in progress, both financial, HR, and IT systems across the board. And we are actively working on outsourcing with a third party on some non-core support functions activities. This is all part of the plan, and we are moving forward in the early part of 2024 on those plans.
Absolutely.
Three we can see that in absolute action, you know, 40% of our business wins coming from that category. That's a real growth probably outstripping irone expectations. Even we also talked about automation and Adrian has already touched on that and again.
Sourcing contracts people I saw saying sometimes for the first time.
Speaker Change: All of those, as you recall, were what we highlighted on Capital Market Day and were going to give you a full-year effect of over $100 million by 2026. I guess, probably from Malcolm and or Adrian primarily, you guys have highlighted today GXO is a really large target addressable market; it gets significantly larger when customers who don't yet outsource their warehousing supply chain operations to a third party provider get involved, and clearly, your mix of contracts wouldn't increase substantially. Your question is, It sounds like reverse logistics was a big driver of this outsourcing trend. What type of growth rate are you getting?
Automation plays a huge part of it because people are catching up the recognizing that efficiency is everything and automation is a simple way for us to drive that.
And then lastly E fulfillment, we don't talk so much about it but it's still one of our fastest growing activities and again automation playing a big part of it. So these are the trends, we're seeing as well as we've seen in 2003, we think we're going to continue to see those growth engines across our business.
And really I think we're in a super position to capitalize on that as Jack So.
Bearish, yes reverse revenue is growing faster and we expect that to grow faster yet again in 2024, and then you're looking at our investment strategy. What sells right now really really well is outsourcing automation robotics, and that's where we're putting our humor.
Speaker Change: It sounds like it's above the average, but what type of growth rate are you getting in reverse logistics, and do you anticipate that accelerating? And then also, kind of as a follow-on, with outsourcing a more meaningful mix, what type of growth, new business, win, and run rate do you anticipate over the coming few years? Scott, it's Malcolm here.
Capital and monitor capital.
Think of art.
The team and talent in the business development and also implementation teams on automation. This is a huge cycle and <unk> is winning fluids differentiation in automation.
Scott Schneeberger: Let me take the first part of that, and then I'll ask Baris to come in on some of the numbers. You're absolutely right. Reverse Logistics is a huge growth area for our business. Right now, across our total company, it's starting to represent the high single digits of our combined activities. And when I look at the sales pipelines, it's very clear to see there's a huge number of projects coming through with a high degree of the element of Reverse Logistics. If you remember back right to the beginning of GXO, we always talked about those big tailwinds, you know, more and more companies outsourcing their logistics. Well, absolutely. And at 23, we can see that in absolute action.
Okay.
Yeah.
Thanks.
Thank you. Our next question is coming from the line of Ravi Shanker with Morgan Stanley. Please proceed with your questions.
Thanks morning, everyone, a good job with the progress on the pipeline of new business can you elaborate on that a little bit more I think Malcolm you said there was some transformative projects in there can you expand a little bit and also are you seeing any changes in customer behavior are people like looking to run with less inventory than before because of higher <unk>.
We're saying something.
Yes, Hi, Robert Malcolm here good morning.
Let me cover those.
Those few topics and I'll also ask Adrian to comment on the on the shape of the pipeline and what customers are saying as I mentioned at the beginning of this call one of the very pronounced points.
We've seen in 2023 and no surprise customers are eager to look how we.
Baris: You know, 40% of our business wins come from that category. That's real growth, probably outstripping our own expectations even. We also talked about automation, and Adrian's already touched on that.
We can improve we can bring new efficient say helped them in the task of becoming more efficient in their own organizations and clearly automation plays a huge part of that it's really leaning into our wheelhouse, we've seen in the marketplace and innovate to able to.
Baris: And again, those outsourcing contracts, people outsourcing, sometimes for the first time. Automation plays a huge part in it because people are catching up, and they're recognizing that efficiency is everything, and automation is a simple way for us to drive that. And then lastly, e-fulfillment, you know, we don't talk so much about it, but it's still one of our fastest growing activities, and again, automation plays a big part of it. So these are the trends we're seeing, and as we've seen in 23, we think we're going to continue to see those growth engines across our business, and really, I think we're in a great position to capitalize on that as GXO. Yeah,
Organizations are.
Bring more efficiency and again no surprise, a huge amount of our business wins are companies, who are looking to source looking to partners like Jack So for the very first time, it's been a big source of growth and I think that's a trend that we're going to continue to see so higher interest rates hiring.
Inflation, Oh, driving people to need to look for more efficient set.
<unk> may be useful just to share on some of that metric in the context of automation also yes. Thanks milk them. So this is adrian good morning, everyone whats occurring in the industry is a very exciting flywheel combo effect.
Between outsourcing and automation and the need for enterprise digital transformation is leading organizations to reexamine their entire supply chains, because they understand that they need to go through this this reexamination to stay competitive for today and increase resilience for the long term.
Baris: Reverse revenue is growing faster, and we expect that to grow faster yet again in 2024. And when you look at our investment strategy, what sells right now really, really well is outsourcing, automation, and robotics, and that's where we are putting our human capital and monetary capital. We are beefing up our team and talent in business development and also implementation teams on automation. This is a huge cycle, and GXO is winning through its differentiation and automation. www.globalonenessproject.org. Thanks. Thank you.
And we see this transformational trained in the numbers that both Malcolm and bearish have cited this morning with 40% of our wins comes from outsourcing and over half will lead to revenue from automated operations and we need to keep in mind that this trend. We're really just at the starting point of this what what's occurring and.
Our excitement is not only because of the potential benefits from automation, but because this industry is still predominantly very manual and companies understand that in order to get the resilience that they need for the future they need to elevate how they're viewing supply chains and what they are doing today to be in that position for competitive resilience in the future.
Baris: Our next questions come from the line of Ravi Shanker with Morgan Stanley. Please proceed with your question. Thanks, everyone.
Probably just one last point you asked about inventory levels.
I guess I guess, one is a trend that we saw in the latter part of last year was organizations really adjusting inventory levels to suit the sale of goods people need less inventory if they are selling less product. So that no doubt whatsoever. We saw that trend, we think that will stop.
Ravi Shanker: Good job with the progress on the pipeline of new business. Can you elaborate on that a little bit more? I think Malcolm, you said that there were some transformative projects in there. Can you expand on that a little bit? And also, are you seeing any changes in customer behavior? Are people looking to run with less inventory than before because of higher interest rates on? Yeah, hi Robin, Malcolm here, good morning. Let me cover those few topics, and I'll also ask Adrian to give his opinion on the shape of the pipeline and what customers are saying.
Not to reverse as economies pick up.
No doubt, we missed customer volumes in last year, but really we expect goes we will start to return as a general macro.
To strengthen across all of the geographies that we're seeing so definitely that's something that we're looking for in 'twenty four.
Got it.
Cyclical more than structural and maybe as a follow up here just given the strong free cash flow in 2023, and the guidance for 'twenty four how are you thinking about the balance sheet and the priorities there and kind of any specific targets you're kind of identified on the M&A side.
Malcolm Wood: As I mentioned right at the beginning of this call, one of the very pronounced points that we've seen in 2023, and no surprise, customers are eager to see how we can improve, how we can bring new efficiency, help them in the task of becoming more efficient in their own organizations. And clearly, automation plays a huge part of that. It's really leaning into our wheelhouse.
Yes, Ravi we do have a very sizeable pipeline of M&A targets in all geographies all verticals, we're actively working on a number of projects.
But we are also very very sensitive about shareholder value creation.
Want to extract a lot of.
Malcolm Wood: You know, we're seen in the marketplace as an innovator able to help organizations bring more efficiency. And again, no surprise, a huge amount of our business wins are companies who are looking to outsource, looking to partners like GXO for the very first time. It's been a big source of growth, and I think that's a trend that we're going to continue to see. So higher interest rates, higher inflation, all driving people to need to look for more efficiency.
Top line growth.
Incremental capabilities in additional verticals capture all of the cost savings so that should pay for our shareholders otherwise and you have excess cash.
Buying back our shares or is there another option investing in our company through buyback is another option, we always weigh those and always put shareholder value creation several months.
Okay.
Very helpful. Thank you.
Thank you.
Thank you our next questions come from the line of Brandon <unk> with Barclays. Please proceed with your questions.
Hey, good morning, and thanks for taking the question.
I was wondering if you could talk to the organic growth outlook, because I think if we go back to your Investor day. The long term CAGR was something like 8% to 12%, which is pretty significantly higher than what youre going to get the share and I think we've discussed the volume issue quite a bit on this call, but can you put in the context of the sales pipeline because I think your pipeline was similar at this time.
Malcolm Wood: Adrian, it may be useful just to share some of that metric in the context of automation also. Yeah, thanks Malcolm. So this is Adrian.
Adrian Stork: Good morning everyone. What's occurring in the industry is a very exciting flywheel combo effect between outsourcing and automation. And the need for enterprise digital transformation is leading organizations to re-examine their entire supply chains because they understand that they need to go through this re-examination to stay competitive for today and increase resilience for the long term. And we see this transformational trend in the numbers that both Malcolm and Barish have cited this morning, where 40% of our wins come from outsourcing, and over half will lead to revenue from automated operations. And we need to keep in mind that this trend; we're really just at the starting point of this, what's happening. And our excitement is not only because of the potential benefits from automation but because this industry is still predominantly very manual.
Last year and in fact contracted revenue for next year was actually maybe a little bit higher if we go back just 12 months. So is it also just cyclical and should we expect as volumes come back the contracts come back and you could actually exceed the top end of that range for the next couple of years.
Hey, Brendan this is Matt.
I'll come here.
Yeah, I think in a nutshell, that's how we do see things so effectively <unk>.
<unk> three is it's been a sluggish share we've seen that in customer volumes inventories and that's what we manage it provided the warehouses, so but as we going into 'twenty four we can see signs of a stronger sales pipeline, but also importantly.
It's not just about the size of the actual the number of dollars in the sales pipeline is the kind of a vertical activity that we see coming through it's the speed at which we can take basically some big automated sites tend to carry a longer lead time for starting up then I kind of take over in play some one of the.
Aspects, we've seen throughout last year and again, if we look at our sales pipeline, we can see quite a lot of projects where customers.
Adrian Stork: And companies understand that in order to get the resilience that they need for the future, they need to improve how they view supply chains and what they're doing today to be in that position for competitive resilience in the future. No doubt we missed customer volumes last year, but really, we expect those will start to return as general macro starts to strengthen across all of the geographies that we're seeing. So definitely that's something that we're looking for in 24. Got it.
<unk> to transform their own supply chain, he's eager to transform their own warehousing activities, they're looking for Jack so to step in to an existing operation and then bring automation progressive way.
Through through the life of the contract and that can take several years and there was some large high profile customer examples of that during 2020 free that we're actually still implementing so I think when we look at the future activity all of the building blocks that we talked about.
Speaker Change: It sounds cyclical more than structural. And maybe as a follow-up here, kind of just given the kind of strong free cash flow end to 2023 and the guidance for 2024, how are you thinking about the balance sheets and the priorities there and kind of any specific targets you've identified on the MSN? But we are also very, very sensitive to shareholder value creation. We want to extract a lot of... Popeye & Grove, incremental capabilities in additional verticals, and capture a lot of cost savings, so that should pay for our shareholders. Otherwise, when we have excess cash, buying back our shares is another option; investing in our company through buybacks is another option.
In our Investor day are really the wrong track.
Lots of signing of high quality long term business.
We saw that in 'twenty free even against that.
Macro.
<unk> seen people choosing to outsource a big proportion of the addressable market that really was never really part of our calculation that's accelerating and again, we've seen that for about 23, we see it in our sales pipeline now going forward as Adrian just mentioned so much more.
In the context of automation and robotics is driving it.
Really driving our business towards <unk>.
Even last year, 67% year over year increases all the deployments of these kinds of projects and as Paresh mentioned, all the productivity projects well on track. So we're really we're really feeling good about the future outlook for <unk>.
Speaker Change: We always weigh those and always put shareholder value creation at the top of mind. Very helpful. Thank you. Thank you. Our next questions come from the line of Brandon Glinsky with Barclays. Please proceed with your question. Hey, good morning, and thanks for taking the question.
I appreciate that Matt will come in a quick follow up for Adrian on automation I think you said your automated facilities went up like 50%. This year, that's pretty significant or sorry last year can.
Can you tell us about the margin profile of these contracts and potentially maybe higher capital investments as well.
Brandon Robert Oglenski: I was wondering if you could talk about the organic growth outlook, because I think if we go back to your investor day, the long-term CAGR was something like 8 to 12%, which is pretty significantly higher than what you're going to get this year. And I think we've discussed the volume issue quite a bit on this call, but can you put it in the context of the sales pipeline? Because I think your pipeline was similar at this time last year, and in fact, contracted revenue for the next year was actually, maybe, a little bit higher if we go back just 12 months. So is this also just cyclical, and should we expect as volumes come back, the contracts come back, and you could actually exceed the top end of that range for the next couple of years? Hi Brendan, it's Malcolm here.
Yeah, absolutely so what we typically see with our our automated projects in this this comment goes both to the large scale automation and when we do the more modular retrofits as we see 200 to 300 basis points above the group average coming from those automated operations.
This is really a proof out of the thesis that when we automate we were able to reduce the dependency on other elements of the cost structure.
Dependency on on labor to a certain extent and so the automated.
Opportunities in the efficiencies that we've always expected and suspected would come from those are those opportunities that they are bearing out and what we're seeing in the numbers.
Thank you.
Yeah.
Thank you our next questions come from the line of Allison Pontiac Cusack with Wells Fargo. Please proceed with your questions.
Hey, guys. Good morning, James on for Allison I wanted to follow up on Brandon's question around automation.
Organic revenue growth guidance.
Since you've commented that the ore.
Malcolm Wood: Yeah, I think in a nutshell, that's how we do see things. So effectively, 23, it's been a sluggish year. We've seen that in customer volumes, inventories, that's how we manage it throughout the warehouses. So, but as we go into 24, we can see signs of a stronger sales pipeline. But also importantly, it's not just about the size of the actual number of dollars in the sales pipeline. It's the kind of vertical activity that we see coming through. It's the speed at which we can take business on. Big automated sites tend to carry a longer lead time for starting up than a kind of takeover in place.
Highly automated facilities have these longer lead times to start and it seems like the contract wins at least in this quarter were a bit longer dated.
24 sort of have to work its way through like in organic revenue growth pocket in any way because what you're winning is sort of longer dated out that sort of would fade over time or is it really just all essentially sort of weakness in end market volume, that's sort of driving that organic revenue weakness versus the long term guide.
Hi space here, let me help you ask me that question.
In fact, the reason are.
They are writing longer term contracts, because we are selling more and more automation and technology. These some of these contracts are over 10 years close to 15 years are very very sticky for our customers and in this environment of heightened interest rates the longer the contract the more affordable for our customers.
Malcolm Wood: And one of the aspects we've seen throughout last year, and again if we look at our sales pipeline, we can see quite a lot of projects where customers eager to transform their own supply chain, eager to transform their own warehousing activities, they're looking for GXO to step in to an existing operation and then gradually bring automation progressively through the life of the contract. And that can take several years, and there were some large, high-profile customer examples of that during 2023 that we're actually still implementing. So I think when we look at future activity, all of the building blocks that we talked about on our investor day are really there. They're on track. You know, lots of signing of high-quality, long-term business contracts. We saw that in 2023, even against that tough macro.
And do you expect that trend to continue.
As you highlighted it takes a while it takes more than three quarters to get them up and running it takes up to 15 months, Samsung sometimes to get them at full maturity or margin and capacity. So we will see contribution from these implementations towards the towards the second half of 'twenty.
And in 'twenty five morbidity.
Got it got.
Got it and is there any frontloading of expenses associated with those deals do in the front half and just wondering if you could put a number around what that might be.
Generally the majority of those contracts the margins.
Stocks available and mature over time.
Especially for the automation content.
However, what is impacting our margins as our investments in our core capabilities as well.
Our cloud based systems.
Our sales and business development teams and automation and robotics sees this is we are investing in those because we see huge potential for selling more and helping our customers more why are these projects.
Thank you.
Thank you.
Thank you. Our next question is coming from the line of Amit Mehrotra with Deutsche Bank. Please proceed with your questions.
Malcolm Wood: Outsourcing, people choosing to outsource a big proportion of the addressable market that really was never really part of our calculation. That's accelerating. And again, we've seen that throughout 2023. We see it in our sales pipeline now going forward. As Adrian just mentioned, so much more in the context of automation and robotics is driving, you know, it's really driving business towards GXO. And, you know, even last year, 67% year-over-year increase in the deployment of these kinds of projects.
Thanks, operator, good morning, everybody.
I want to start with I guess, a bigger picture question for Malcolm Malcolm We're seeing you know.
High numbers of U.
U S warehouse capacity that basically available for sublease sublet. The number this morning in the Wall Street Journal was almost a 160 million square feet available for sublease.
I'm wondering how that impacts the business because on one hand.
I think your customers more strategic and obviously the duration of the contract is longer. So I don't know if you know this is more of a cyclical issue but it.
It would be helpful. I know you've been in this business for three or four decades it'd be helpful to get a little bit of historical perspective of cyclicality in the amount of sublease capacity in the U S warehouse or the global warehouse market and how this maybe impacts the business in the near to midterm.
Malcolm Wood: And as Barish mentioned, all the productivity projects are well on track. So we're really feeling good about the future outlook for GXO. Appreciate that, Malcolm. And a quick follow-up for Adrienne, on automation, I think you said your automated facilities went up like 50% this year. That's pretty significant, or sorry, last year.
Hi, its malcolm here.
Your question is really topical I've also seen plenty of news reports about incremental capacity here in North American market.
From from our perspective.
Good way to explain is the core of our business is contracted long term contracts. So customers tend to occupy a where I would say from the warehouse. It is.
Adrienne: Can you tell us about the margin profile of these contracts and potentially, maybe higher capital investments as well? Yeah, absolutely. So what we typically see with our automated projects, and this comment goes both to the large-scale automation and where we do the more modular retrofits, is we see 200 to 300 basis points above the group average coming from those automated operations.
Part of the cost makeup as part of the contract May Coke so.
In regard to our core EBITDA essentially quite a neutral aspect from our point of view and you see that in our 'twenty three our actual EBITDA came in ahead of our original outlook. We were well ahead in terms of the full year.
Adrienne: And this is really a proof of the thesis that when we automate, we're able to reduce the dependency on other elements of the cost structure, reduce the dependency on labor to a certain extent. And so the automated opportunities and the efficiencies that we've always expected and suspected would come from those opportunities are bearing out in what we're seeing in the numbers. Thank you.
What you do see though and this is one of the big benefits that <unk> brings to our customers. This as inventory levels normally we see inventory levels will flex in any year open down what we have seen through 'twenty three is a more pronounced a.
Lowering down of inventory levels, so customers it takes them some time to.
<unk> changed some sometimes.
<unk> manufacturing plans to reflect our new sales outlooks, but gradually they've lowered down inventory levels for us we see that in the environment, where we work with them proactively to consolidate.
Adrienne: Our next questions come from the line of Allison Poloniak-Cusick with Wells Fargo. Please proceed with your question. Thank you. Hey guys, good morning. James on for Allison.
Where have you seen activity so for large customers, we might have several fully contracted warehouses, but we might also operate some transient warehousing for <unk>. So we have relatively short term commitments on at those.
James: Wanted to follow up on Brandon's question around Organic Revenue Growth Guidance. Scott, you've commented that... highly automated, longer lead times to start. It seems like the contract wins, at least in this quarter, were a bit longer dated. Does 2024 sort of have to work its way through like an organic revenue growth pocket in any way, because what you're winning is sort of longer dated out that sort of would fade over time? Or is it really just all essentially?
Those kind of warehouses, you've seen our interests in our customers' interests to contract those volumes back in so our main sensors and that's exactly what we've done that's what being a proactive partner is all about but the end result of that is you're absolutely right. When you look at the real estate market.
Civil you end up with more empty capacity so for US we see we don't see so much in our profitability, we do see it in our top line growth because that volume we're no longer invoicing.
Speaker Change: Market Volume that's sort of driving this. Scott Schneider, Bascome Majors, Ravi Shanker, Jason Seidl, GXO Logistics, Along Hi, it's Ferris here. Let me help you out with that question. In fact, the reasons are: We are writing longer-term contracts because we are selling more and more automation and technology. Some of these contracts are over 10 years, close to 15 years, and are very, very sticky for our customers. And in this environment of high interest rates, the longer the contract, the more affordable it is for our customers, and we expect that trend to continue. As you highlighted, it takes a while. It takes more than three quarters to get them up and running. It takes up to 15 months sometimes to get them at full maturity or margin and capacity.
And we expect to see that our research back.
Pretty much in alignment with as we would expect the macro to start becoming stronger for consumer goods.
Today, its already strong for for services, but we needed to really recover properly all consumer goods. So I hope that gives you gives you a I assume the standing of how we see it as a business, but we are seeing exactly what is widely reported at the moment, but not really impacting us in terms of how we Joe Jai profitability.
Or how do we Joe John Christmann relationships for go for it.
Or is it more an opportunity for us to demonstrate with our customers.
Got it Okay. That's very helpful and I just wanted to follow up on the.
On the M&A question really quickly because if I look at.
The M&A strategy over the last couple of years, it's really been about buying companies that.
Speaker Change: So we will see contribution from these implementations towards the second half of 24, and in 25, more riveting. Got it. Got it. And is there any front-loading of the expense?
Within markets that you already have a pretty strong presence in so I think by clipper or the U K business and the novel.
You know, even PFS and generally you know.
Speaker Change: Those deals, too, in the front half. Generally, the maturity of those contracts, the margins... Scott Schneeberger, Bascome Majors, Ravi Shanker, Jason Seidl, GXO Logistics, Scott Schneeberger, Yeah, thank you. Thank you. Thank you. Our next questions come from the line of Amit Mehrotra with Deutsche Bank. Please proceed with your question. Thanks, Operator. Good morning, everybody.
You're you're you're taking out significant cost synergies from the SG&A side, but then you also have verticals and geographies maybe that you're underrepresented in so as we think about like where your M&A focus is going to be going forward.
If you can just talk about you know are we talking about new verticals and geographies are we talking about the same playbook, which is hey, we already have a great presence in this market. This vertical why don't we just buy this company and kind of consolidated cost structures.
Yeah, Let me let me carry on then Malcolm here so.
Amit Mehrotra: I want to start with, I guess, a bigger picture question for Malcolm. Malcolm, we're seeing, you know, high numbers of U.S. warehouse capacity that's basically available. Sub-Lease or Sub-Lat, I think the number this morning in the Wall Street Journal was almost 100,000.
So we review we review everything on it.
Clearly there are geographically, where we want to be in new verticals and when we enter a new vertical typically.
We are focused on growing that you've vertical. So PFS is a great example is not a play about.
Amit Mehrotra: Founders Group, Scott Schneeberger, Bascome Majors, Ravi Shanker, Jason Seidl, GXO Logistics Got it. Okay, that's very helpful. And I just wanted to follow up on the M&A question really quickly, because if I look at the M&A strategy over the last couple of years, it's really been about buying companies within markets that you already have a pretty strong presence in. So I think about Clipper or the UK business, Unanoggle, PFS, and generally, you know, you're taking out, there's significant costs. Scott Schneeberger, Bascome Majors, Ravi Shanker, Jason Seidl, GXO Logistics, Yeah, Amit, let me carry on with the answer. Malcolm here.
About driving a lot of cost synergies the race of course, when you put two businesses together you gain cost synergies, but it's a play about driving bigger growth and we're off to a great start with PFS it's already.
It's doing very very well, we're very very pleased with the PFS team in that businesses.
Integrated into <unk>, so, but there are other aspects, where we absolutely opportunistically as well.
As a business that rely good quality is in good condition and we can see big synergies of course, we'd be interested also in those so I would say, it's about well what's out there in the market. What we're trying to accomplish at the time and as Paresh mentioned overarching all of that.
It's got to be delivering accretive benefit is going to be in the interests of the companies.
The interests of our shareholders, that's really I will look at the market.
Malcolm Wood: So we review everything on it. Clearly, there are geographies where we want to be in new verticals, and when we enter a new vertical, typically, we're focused on growing that new vertical. So PFS is a great example. It's not a play about driving a lot of cost synergies.
Got it okay very helpful guys. Thank you appreciate it.
Thank you our next questions come from the line of Brian <unk> with Jpmorgan. Please proceed with your questions.
Okay.
Hey, Thanks, good morning.
Maybe a question for.
Malcolm do you think this change we've seen more recently moving to more <unk>.
Contracts that are outsourced for the first time is that is that durable and something we should expect will continue or do you think this is sort of like a lagged impact from several years of supply chain disruptions and now people are starting to really move forward with it with a tranche and there might be an air pocket.
Malcolm Wood: There is, of course, when you put two businesses together, you gain cost synergy. But it's a play about driving bigger growth. And we're off to a great start with PFS. It's already doing very, very well. We're very, very pleased with the PFS team and how that business is integrated into GXO. But there are other aspects where we have to look opportunistically as well.
Next year the year. After so just wanted to see how you thought through that and if there's anything we should expect in the contracts and the structure there more tech more efficiency.
More automation, if those are going to change or if that's more or less stays the same.
Brian I think what we can see right now is a trend that's going to continue remember that we called out this trend all the way back in I think 2020, even pre the spin of <unk>, so that more and more companies were going to outsource logistics. The reason, we said that.
At the time and the reason it really still holds correct. It's been reinforced ethane through 'twenty. Three is the fact that one we've had several years of disruption of the pandemic supply chain disruptions manufacturing disruption and then on top of that we've had.
Malcolm Wood: If there's a business out there that we like, it's in good condition, and we can see big synergies, of course, we'd be interested in those, too. So I would say it's about what's out there in the market and what we're trying to accomplish at the time. And as Barish mentioned, overarching all of that, it's got to be delivering accretive benefits. It's going to be in the interest of the companies, and in the interest of our shareholders. That's really how we look at the market. Got it.
A year and a half of really severe kind of inflationary pressure interest rate pressure that has put a burden on so many organizations, who don't want to pass those incremental burdens onto the consumer so they look at how can they do things differently, how we can do things more efficiently.
And most the most organizations is very daunting when the obvious solution probably involves bringing technology into the warehouse.
Malcolm Wood: Okay. Very helpful, guys. Thank you. Thank you. Our next questions come from the line of Brian Ossenbeck with JPMorgan. Please proceed with your question. Hey, thanks. Good morning, for you, Malcolm. We've seen more recently a move to more contracts that are outsourced for the first time. Is that durable and something we should expect will continue, or do you think this is sort of like a lag? You can move forward with a tranche, and there might be an air pocket next year or the year after.
Not generally equipped to do that so it's a logical step for them to look for an outsource partner and as the largest.
Pure play contract logistics company in the market with a reputation for delivering these big projects on time being a reliable partner for us. It's Super I mean, this is all playing into <unk> wheelhouse. So we're very excited about it that trend set too.
I would say is the very reason I wish just mentioned and Adrian we double down on us.
Brian Ossenbeck: So just wanted to see how you thought through that and if there's anything we should expect in the contracts and the structure, technology, more automation, if those are going to change or if not. A quick follow-up on the... and Regulatory Dynamics, how they've been a bit more volatile than usual, and it sounds like you expect them to sort of normalize over time for the consumer facing side, but how does the GXO direct offering the multi-tenant warehouses, which expanded with Clipper as well, is that something that's sort of picking up some of that?
Expenditure in terms of teens deploying automation on our sales organization I think it's going to be a trend that's going to service, so very very well in the future.
Yeah.
Thanks, Matt.
Just a quick follow up on the inventory dynamics and how they've been a bit more volatile than usual and it sounds like you expect them to sort of normalize over time for the consumer facing side, but how does the.
So direct offering.
Multiyear multi tenant warehouses, which expanded with clippers.
Is that something that's sort of picking up some of that.
Speaker Change: Scott Schneeberger, Bascome Majors, Ravi Shanker, Jason Seidl, GXO Logistics, Single Tenant Facility. Yeah, Brian, for us, it's not a substantial enough amount of our capacity for it to make a real impact. But, you know, our GXO direct customers, just the same as pretty much all of the customers that we can think of, have not been immune to this last 12 months' slower pace of consumer spending. So, you know, clearly, across all of our businesses, we've seen that. As I mentioned earlier, the vast majority of warehouses that we operate are fully back-to-back with our customers. So, the smaller proportion that sits in our GXO direct world, it's really not having any material impact on our outlook. Thanks, Bob. Ladies and gentlemen, that is all the time we have for questions today.
Some of that slack or is that not big enough to really make a dent in sort of these you know.
Single tenant facilities that can move up and down.
Yes.
Brian for us, it's not a substantial enough.
Ah Ah moment tabak capacity for it to make a real impact but.
Our <unk> direct customers just the same as pretty much all of the customers.
That we can think of I have not been immune to this last 12 months' slower pace of of consumer spending so clearly across all of our business we've seen that.
As I mentioned earlier, the vast majority of warehouses that we operate are fully back to back with our customers. So the small smaller proportion that sits in our gx or direct well is really not a there is not any material impact on our outlook.
Okay, great. Thanks, Michael.
Ladies and gentlemen that is all the time, we have for questions today I'd now like to hand, the call back over to Malcolm Wilson for any closing remarks.
Speaker Change: I'd now like to hand the call back over to Malcolm Wilson for any closing remarks. Yes, thanks Daryl. And again, as always, thanks for hosting our call today. We really appreciate it. 23. It's been a great year for GXO.
Yes, Thanks, Daryl and again as always thanks for hosting our call today, we really appreciate it.
23, <unk>, it's been a great year for <unk>. So we've delivered huge free cash flows.
Malcolm Wilson: We've delivered huge free cash flows, that billion dollars of new business wins. And, you know, towards the end, we're super excited about the acquisition of PFS, which is really performing incredibly well. We're driving great service and efficiency benefits for both our new and, of course, our existing customers by deploying game-changing technologies, you know, right across all of our footprint. Looking forward, we're excited by the future growth opportunities that we've been talking about on this call. We're increasingly the partner of choice for the huge in-house portion of our market, which is looking to more and more outsource, and we're growing in a manner that's delivering fantastic returns for our shareholders.
<unk> billion dollars of new business wins.
Towards the end we are super excited about the acquisition of PFS, which is really performing incredibly well.
We're driving great service and efficient see benefits for both.
And of course, our existing customers for deploying game changing technologies.
You know right across all of our footprint.
Looking forward we're.
We're excited by the future growth opportunities that we've been talking about on this call.
We're increasingly the partner of choice for the huge in house portion of our market.
She is looking to more and more I source and we're growing in a manner that deal.
Levering fantastic returns for our shareholders, so with that wed.
Speaker Change: So with that, we'd like to wish everybody a great rest of the day, thanks so much for joining us on this call and your attendance, and we look forward to speaking to you again in the future. Thank you, ladies and gentlemen. This does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time. Have a wonderful day, www.gxomajors.com www.globaloneness
We'd like to wish everybody a great rest of the day.
Thanks, so much for joining us on this call and your attendance and look forward to speaking to you again in the future.
Thank you ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation you may disconnect. Your lines at this time have a wonderful day.
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