A GXO worker operates a robotic arm in a warehouse. GXO said second-quarter net income increased year-over-year to $65 million, up 27% year-over-year, compared with $51 million a year ago. (GXO)
GXO Logistics, the contract logistics provider that was spun off two years ago from its parent company XPO, reported stronger-than-expected second-quarter results on Aug. 2.
The Greenwich, Conn.-based company said that for the rest of the year, it signed in the second quarter a record $500 million in new business, and it expanded its year-to-year sales pipeline to $2.1 billion.
“We’re pleased to have delivered an exceptional performance in the second quarter, including double-digit top and bottom line growth,” CEO Malcolm Wilson said. “We increased our market share in the quarter, and we raised our 2023 profit guidance. We’re one of the few companies in our industry expecting to grow this year. Demand for GXO’s transformative solutions continues to accelerate: Our record sales wins this quarter, together with our robust sales pipeline, position us for a strong 2024 and underpin our confidence in our long-term growth targets.”
In its earnings report, the company said second-quarter net income increased year-over-year to $65 million, up 27% year-over-year, or 54 cents per share, compared with $51 million, or 44 cents, for the second quarter of 2022.
Revenue increased to just below $2.4 billion, up 11% year-over-year, compared with $2.15 billion for the year-ago period.
The company’s earnings easily surpassed Wall Street expectations. The average estimate of analysts surveyed by Seeking Alpha were expecting a price of 49 cents per share. Income also beat expectations by $13.8 million.
“We’re extremely proud that, in the two years since becoming a publicly traded company, we’ve delivered eight consecutive quarters of stellar operating results, signed hundreds of new partnerships with blue-chip customers, accelerated tech deployment and established ourselves as the global brand for logistics excellence,” Wilson said.
The company said that organic revenue also grew by 3%. Organic revenue is money generated from within a company.
As more evidence that GXO is adding business to its portfolio, just before the earnings call, the company announced a new partnership with the global energy drink maker Red Bull to manage its Italian subsidiary’s warehousing and distribution from its facility in Trezzo sull’Adda, Italy.
GXO also provides logistics services to Red Bull in France.
“We’re delighted to expand our partnership with Red Bull in Europe to optimize their warehousing and distribution,” said Paul Mohan, GXO’s managing director for continental Europe. “We designed a site that has the ability to scale quickly to support Red Bull’s growth and began operations in near record time. We’re looking forward to helping this great global brand optimize its logistics.”
GXO said it will provide end-to-end logistics support — including reverse logistics, value-added services and local distribution — to Red Bull for both beverages and promotional items from a 107,000-square-foot warehouse.
Throughout Europe, GXO is managing food and beverage product logistics for more than 50 customers in temperature-controlled and ambient warehouses — operating temperatures from ambient to minus 20 degrees Celsius — out of nearly 125 sites in Europe.
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Just days before the Red Bull announcement, GXO also said it was beginning a business partnership with a United Kingdom
fashion retailer. GXO says it will work with New Look clothing to manage its network across 400 mainland U.K. stores.
GXO said it will use its Clicklink program to manage the relationship, which will also include faster, one-day returns on clothing that consumers do not want, which will speed up returns and allow inventory to be back on store shelves at a much quicker rate.
GXO says Clicklink is a program that combines fast, integrated solutions to achieve easy product returns management.
The company said revenue in all the nations in which it does business improved year-over-year.
- Revenue in the U.K. increased to $893 million from $777 million in the second quarter of 2022.
- U.S. revenue notched up to $692 million from $685 million.
- France business improved to $217 million from $183 million.
- Netherlands revenue moved up to $198 million from $163 million.
- Business in Spain increased to $136 million from $123 million.
- Italy increased to $94 million from $80 million.
Across the company’s various business sectors, all the divisions saw a year-over-year increase with the exception of one, which remained essentially flat.
- Omnichannel retail improved to $1.02 billion from $879 million last year.
- Technology and consumer electronics also notched up to $355 million from $315 million.
- Food and beverage revenue moved downward slightly to $335 million from $336 million.
- Industrial and manufacturing increased slightly to $270 million from $269 million.
- Consumer packaged goods improved to $232 million from $223 million.
- And other services increased to $176 million from $134 million.
