Gxo Logistics, Inc. · NYSE:GXO
Gxo Logistics — Investor Day (January 2023)
90 slides from Gxo Logistics's investor day presentation, Jan 12, 2023
Slide 1: GXO Investor Day, New York, January 12, 2023
©2023 GXO Logistics, Inc. NEW YORK JANUARY 12, 2023
Slide 2: Legal disclaimer
2©2023 GXO Logistics, Inc. Legal disclaimer 2 Non-GAAP Financial Measures As required by the rules of the Securities and Exchange Commission (“SEC”), we provide reconciliations of the non-GAAP financial measures contained in this presentation to the most directly comparable measure under GAAP, which
Slide 3: Our agenda today
3©2023 GXO Logistics, Inc. Our agenda today Malcolm Wilson Market and GXO revenue growth Mark Manduca The GXO Difference Bill Fraine Business overview & key verticals Richard Cawston Business overview & key verticals Eduardo Pelleissone How GXO wins with ESG Meagan Fitzsimmons Drivers of shareholder
Slide 4: Scale, technology and expertise enable supply chain excellence
4©2023 GXO Logistics, Inc. Our industry-leading combination of scale, technology and expertise enables supply chain excellence for customers all over the world.
Slide 5: GXO at a glance
5©2023 GXO Logistics, Inc. GXO at a glance Countries of operation 27 Warehouse locations 974 Total warehouse space (sq. ft.) ~200M Global customers >1,200 Global team members ~130K 2021 Revenue $8B 2017-2021 Organic revenue CAGR 8%1 2021 Pro forma adjusted EBITDA $633M1 2021 FCF conversion >30%1 202
Slide 6: Full-year 2022 and full-year 2023 outlook
6©2023 GXO Logistics, Inc. Full-year 2022 and full-year 2023 outlook 2022 preliminary results 2023 preliminary outlook Revenue ~$9.0B Organic revenue growth 6-8%1 $720-730M1 Adjusted EBITDA $700-730M1 Adjusted EBITDA 1. Refer to the ‘Non-GAAP Financial Measures’ section on slide 2 and Appendix for r
Slide 7: We solve complex supply chain problems for the world's largest companies
7©2023 GXO Logistics, Inc. We solve complex supply chain problems for the world’s largest companies. ~10x Return on investment through lower costs, higher revenues and faster inventory turnover ~50% Reduction in variable warehousing costs Customer benefits
Slide 8: We're focused on the center of global supply chains
8©2023 GXO Logistics, Inc. We’re focused on the center of global supply chains. Contractual pricing model Warehouse Transport End consumerTransportShipper Supply/demand-driven pricing model Supply/demand-driven pricing model
Slide 9: We design and operate state-of-the-art warehouses
9©2023 GXO Logistics, Inc. We design and operate state-of-the-art warehouses, enabled with the latest technologies. Unload Put away Store Pick Pack Load Automated guided vehicles Scanners and loading robots Product identification scanners Advanced software and automation platform Unmanned aerial veh
Slide 10: Our path to growth
10©2023 GXO Logistics, Inc. Our path to growth 1 2 Capitalizing on a massive and rapidly growing market opportunity Leveraging The GXO difference to gain share and deliver outsized top- and bottom-line growth
Slide 11: A massive and rapidly growing market opportunity
11©2023 GXO Logistics, Inc. A massive and rapidly growing market opportunity 2021 2027 TAM $456 billion1 TAM $660 billion1 $146 billion1 Outsourced market $231 billion1 Outsourced market $8 billion GXO Revenue ~$17 billion Anticipated GXO Revenue +45% +58% +115% 32% outsourced 35% outsourced GXO mar
Slide 12: The GXO Difference
12©2023 GXO Logistics, Inc. “The GXO Difference” Industry-leading automated solutions that use scalable and agile technology to address customer needs at the right return. Leading market positions throughout North America and Europe, with the ability to serve multinational customers across our core
Slide 13: GXO tomorrow: 2027 guidance
13©2023 GXO Logistics, Inc. GXO tomorrow: 2027 guidance1 at constant 2021 FX 1. 2027 Revenue of ~$17B EBITDA of ~$1.6B is based on FX rates of 1.38 and 1.18, 2027 Revenue would be ~$16B and EBITDA would be ~$1.5B at FX rates of 1.22 and 1.06 Revenue ~$17B1 6-year organic average annual revenue growt
Slide 14: Our agenda today
14©2023 GXO Logistics, Inc. Our agenda today GXO investment highlights Malcolm Wilson Market and GXO revenue growth Mark Manduca The GXO Difference Bill Fraine Business overview & key verticals Richard Cawston Business overview & key verticals Eduardo Pelleissone How GXO wins with ESG Meagan Fitzsim
Slide 15: GXO has consistently outperformed the industry
15©2023 GXO Logistics, Inc. GXO has consistently outperformed the industry 3%2 4%2 6%2 8%1 Physical product revenue Warehousing market revenue Outsourced warehousing market revenue GXO organic revenue growth Growth CAGR 2017-2021 1. Refer to the ‘Non-GAAP Financial Measures’ section on slide 2 and A
Slide 16: Our path to 8-12% annual organic revenue growth by 2027
16©2023 GXO Logistics, Inc. 2-4% Increased supply chain resilience Economic demand ~2% Outsourcing ~1% eCommerce ~1% 2- 4% Scale, technology and expertise GXO organic revenue growth 8-12%2 Our path to 8-12% annual organic revenue growth by 2027 Key drivers of GXO 2021-2027 organic revenue growth The
Slide 17: Secular tailwind #1: Outsourcing
17©2023 GXO Logistics, Inc. GXO Outsourced Yet to be outsourced Secular tailwind #1: Outsourcing1 Global outsourcing growth 2021-2027 GXO’s 2021 market share: 5.4% ~2.0% Annual incremental revenue growth Significant room for outsourcing to grow 1. Based upon third-party forecasts 56% 18% 39% 13% 39%
Slide 18: Structural tailwind #2: eCommerce
18©2023 GXO Logistics, Inc. Structural tailwind #2: eCommerce1 0% 5% 10% 15% 20% 25% 30% 2017 2027 ~3X ~6X eCommerce penetration of retail spending1 ~1X Revenue multiplier Outsourced eCommerce warehousing revenue growth 2021-2027 GXO’s 2021 market share: 5.4% ~1.0% Annual incremental revenue growth
Slide 19: Structural tailwind #3: Supply chain resilience
19©2023 GXO Logistics, Inc. Structural tailwind #3: Supply chain resilience Higher levels of inventory to ensure product availability and safeguard supply chains and production lines ~$3.5T1 of global trade could move to new countries before 2027 Each 1% of trade that moves to Europe and North Ameri
Slide 20: Our path to 8-12% annual organic revenue growth by 2027
20©2023 GXO Logistics, Inc. 2-4% Increased supply chain resilience Economic demand ~2% Outsourcing ~1% eCommerce ~1% 2- 4% Scale, technology and expertise GXO organic revenue growth 8-12%2 Our path to 8-12% annual organic revenue growth by 2027 Key drivers of GXO 2021-2027 organic revenue growth The
Slide 21: Our agenda today
21©2023 GXO Logistics, Inc. Our agenda today GXO investment highlights Malcolm Wilson Market and GXO revenue growth Mark Manduca The GXO Difference Bill Fraine Business overview & key verticals Richard Cawston Business overview & key verticals Eduardo Pelleissone How GXO wins with ESG Meagan Fitzsim
Slide 22: The GXO Difference: Why customers choose GXO
22©2023 GXO Logistics, Inc. The GXO Difference: Why customers choose GXO We have a unique understanding of customer challenges and provide tailored solutions to address them. 27 countries of operation 974 sites around the world ~200M total warehouse square footage globally ~130K team members >30% of
Slide 23: The GXO Difference: Our technology advantage
23©2023 GXO Logistics, Inc. The GXO Difference: Our technology advantage GXO’s market share increases with automation 0% 10% 20% 30% 40% 50% Industrial & manufacturing Food & beverage Omnichannel retail & CPG Tech & consumer electronics % of revenue automated Market share 1. Based upon third-party r
Slide 24: The GXO Difference: Our global scale
24©2023 GXO Logistics, Inc. • UK • Netherlands #1 in: • US #2 in: • France • Spain • Italy #3 in: 100% 33% 19% 17% 14% GXO Competitor A Competitor B Competitor C Competitor D % of revenues from contract logistics of top-5 market participants2 84%1 of revenue comes from customers working with GXO on
Slide 25: The GXO Difference: Our trusted expertise
25©2023 GXO Logistics, Inc. The GXO Difference: Our trusted expertise Executive-led engagement Unmatched depth of industry knowledge Proven implementation playbook
Slide 26: The GXO Difference in action
26©2023 GXO Logistics, Inc. An American multinational client initially came to GXO looking for a DC Optimization project. After a successful initial project, our relationship with the client has expanded through many innovative new projects to optimize their supply chain network. The GXO Difference
Slide 27: The GXO Difference drives shareholder value
27©2023 GXO Logistics, Inc. Before GXO After GXO Improved revenue performance Improved inventory efficiency Lower warehousing costs Base margins The GXO Difference drives shareholder value Higher customer retention drives higher GXO revenues and margins >10x Customer ROI GXO enables customers to rea
Slide 28: Our agenda today
28©2023 GXO Logistics, Inc. Our agenda today GXO investment highlights Malcolm Wilson Market and GXO revenue growth Mark Manduca The GXO Difference Bill Fraine Business overview & key verticals Richard Cawston Business overview & key verticals Eduardo Pelleissone How GXO wins with ESG Meagan Fitzsim
Slide 29: Our automation leadership drives new business wins
29©2023 GXO Logistics, Inc. Our automation leadership drives new business wins. 1. As at 3Q 2022 2. Based upon third-party research +0 +20 +40 +60 +80 +100 +120 2018 2019 2020 2021 GXO cumulative market share gains (bps)2 Our continuous investment in technology underpins our market share gains. 0% 5
Slide 30: We create enormous value for our customers
30©2023 GXO Logistics, Inc. We create enormous value for our customers.1 ~50% Reduction in variable costs ~60% Reduction in inventory wastage Better customer outcomes = faster growth and higher margins. ~10% Improved order accuracy 1. Illustrative example based upon sample of GXO contracts.
Slide 31: The three components of GXO's technological advantage
31©2023 GXO Logistics, Inc. The three components of GXO’s technological advantage 3) Software 1) Large-scale automation Expertise: Industry leader in automated sites Differentiation: Composite solutions based on multiple providers 2) Adaptive technology Expertise: Scalable network effects; greenfiel
Slide 32: Automation: industry leader in large infrastructure automation
32©2023 GXO Logistics, Inc. Automation: We’re an industry leader in large infrastructure automation Large infrastructure designed and built from day one, with majority of warehouse processes automated Project capex $10M-$50M on automation alone Startup time 12-18 months >50% reduction in cost per un
Slide 33: Adaptive Tech: modular technology solutions
33©2023 GXO Logistics, Inc. Adaptive Tech: Our modular technology solutions optimize operations, reduce costs and improve safety Small, flexible technology that can be retroactively fitted and focused on a specific warehouse process Project capex1 $400-$40K Startup time days to weeks ~7,600 pieces o
Slide 34: Software: customizable proprietary solutions
34©2023 GXO Logistics, Inc. Software: Customizable proprietary solutions and third- party integrations make it easy to manage customer data Scaled cloud infrastructure, providing customers a more resilient service Project capex $80K-$10M Startup time 4 weeks- 12 months 6x software complexity level o
Slide 35: 35©2023
35©2023 GXO Logistics, Inc.
Slide 36: Warehouse transformation drives productivity improvements
36©2023 GXO Logistics, Inc. Warehouse transformation drives productivity improvements Storage Inbound staging Picking Packing & sortation Outbound staging 2-3x Productivity benefits achievable by stage 4x 2-3x 2-4x 2x
Slide 37: Our agenda today
37©2023 GXO Logistics, Inc. Our agenda today GXO investment highlights Malcolm Wilson Market and GXO revenue growth Mark Manduca Richard Cawston Eduardo Pelleissone Meagan Fitzsimmons Baris Oran Chief Executive Officer Chief Investment Officer President - Europe President – Americas & Asia Pacific C
Slide 38: GXO Europe overview
38©2023 GXO Logistics, Inc. GXO Europe overview $221 billion 2021 TAM1 1. Based upon third-party research
Slide 39: Our core verticals
39©2023 GXO Logistics, Inc. Our core verticals 0 2 000 4 000 6 000 8 000 10 000 12 000 14 000 16 000 18 000 2021 Omnichannel retail & CPG Food & beverage Industrial & manufacturing Tech & consumer electronics Other 2027 GXO revenue drivers to 2027 $m
Slide 40: Our core verticals
40©2023 GXO Logistics, Inc. Our core verticals 0 2 000 4 000 6 000 8 000 10 000 12 000 14 000 16 000 18 000 2021 Omnichannel retail & CPG Food & beverage Industrial & manufacturing Tech & consumer electronics Other 2027 GXO revenue drivers to 2027 $m
Slide 41: Vertical overview: Omnichannel retail & CPG
41©2023 GXO Logistics, Inc. 2021 2027 Outsourced TAM Vertical overview: Omnichannel retail & CPG ~9%1 GXO 2021 market share ~39%1 % TAM outsourced 2021 By the numbers today Market opportunity ($B)1 46 119 70 1666% CAGR 7% CAGR $3.9B GXO 2021 revenue 7% CAGR1 Outsourced revenue 2021-2027 1. Based upo
Slide 42: Market overview: Omnichannel retail & CPG
42©2023 GXO Logistics, Inc. ▪ eCommerce penetration rising to 29.2% by 2027, vs. 19.7% in 20211 ▪ eCommerce warehousing revenue multiplier: 3x activity vs. wholesale facilities ▪ Increased adoption of automation to handle high-volume, high-velocity warehouses ▪ Reverse logistics: More eCommerce item
Slide 43: The GXO Difference: Omnichannel retail & CPG
43©2023 GXO Logistics, Inc. The GXO Difference: Omnichannel retail & CPG Technology Scale Expertise >50% reduction in variable warehousing costs1 +2-6pts of EBITDA margin1 ~50% reduction in inventory per product line1 Necessary breadth of product offering and speed to market necessitate automation C
Slide 44: GXO in action: eCommerce apparel
44©2023 GXO Logistics, Inc. GXO in action: eCommerce apparel GXO solution Situation ▪ Large global apparel customer ▪ Existing warehousing solution resulted in orders with long lead times, causing consumers to order from wholesale channels – which, in turn, reduced the customer’s margins. Case Study
Slide 45: GXO in action: Reverse logistics
45©2023 GXO Logistics, Inc. ▪ The average eCommerce apparel company has approximately 1/3 of products returned. ▪ Processing costs can be prohibitive, resulting in ~25% of returned products ending up in a landfill. 1. Based on an illustrative example assuming all returned product is resold at full p
Slide 46: Vertical overview: Food & beverage
46©2023 GXO Logistics, Inc. By the numbers today Market opportunity ($B)1 Vertical overview: Food & beverage ~10%1 GXO 2021 market share $1.3B GXO 2021 revenue 9% CAGR1 Outsourced revenue 2017-2021 ~13%1 % TAM outsourced 2021 2021 2027 Outsourced TAM 112 157 14 23 6% CAGR 9% CAGR 1. Based upon third
Slide 47: Market overview: Food & beverage
47©2023 GXO Logistics, Inc. ▪ Focus on reducing food waste and inefficiency ▪ Continued customer focus on costs ▪ Rising outsourcing as complexity increases ▪ Historically labor-intensive industry Market challenges Market overview: Food & beverage Key drivers & opportunities ~3%1 of sales spent on w
Slide 48: The GXO Difference: Food & beverage
48©2023 GXO Logistics, Inc. The GXO Difference: Food & beverage Technology Scale Expertise >50% reduction in variable warehousing costs1 >60% reduction in inventory wastage within the warehouse1 +~2pts of EBITDA margin1 Homogenous product offering enables high degree of automation Technology improve
Slide 49: GXO in action: Global food group
49©2023 GXO Logistics, Inc. ▪ GXO combined all warehousing into one fully automated facility. ▪ Highly automated solution reduced variable costs and improved picking accuracy. ▪ Improved inventory management drove faster turnover of certain product lines, and inventory accuracy in others. ▪ Customer
Slide 50: Our agenda today
50©2023 GXO Logistics, Inc. Our agenda today GXO investment highlights Malcolm Wilson Market and GXO revenue growth Mark Manduca Richard Cawston Eduardo Pelleissone Meagan Fitzsimmons Baris Oran Chief Executive Officer Chief Investment Officer President - Europe President – Americas & Asia Pacific C
Slide 51: GXO Americas and Asia Pacific Overview
51©2023 GXO Logistics, Inc. GXO Americas and Asia Pacific Overview $235 billion 2021 TAM1 1. Based upon third-party research for North America only
Slide 52: Vertical overview: Industrial & manufacturing
52©2023 GXO Logistics, Inc. 2021 2027 Outsourced TAM By the numbers today Market opportunity ($B)1 Vertical overview: Industrial & manufacturing 174 264 68 108 7% CAGR 8% CAGR ~1%1 GXO 2021 market2 share $1.0B GXO 2021 revenue 8% CAGR1 Outsourced revenue 2017-2021 ~39%1 % TAM outsourced 2021 1. Base
Slide 53: Market overview: Industrial & manufacturing
53©2023 GXO Logistics, Inc. ▪ Stringent regulatory requirements ▪ Inflationary pressures ▪ System complexity ▪ Supply chain complexity ▪ Nearshoring Market challenges Market overview: Industrial & manufacturing Key drivers & opportunities ~10%2 inventory inaccuracy 3-24 months1 manufacturing lead ti
Slide 54: The GXO Difference: Industrial & manufacturing
54©2023 GXO Logistics, Inc. The GXO Difference: Industrial & manufacturing Technology Scale Expertise 50% reduction in variable warehousing costs1 +1-2pts Improves process accuracy Drives real estate efficiency through denser storage and faster inventory turnover 6% of revenue automated ~$1B of 2021
Slide 55: GXO in action: Aerospace manufacturer
55©2023 GXO Logistics, Inc. ▪ GXO deployed industrial and facility engineers, IT personnel, program management and other resources to develop an inline system of storing, picking and kitting of standards (fasteners) to meet increased demand. ▪ GXO deployed various automation, including Vertical Lift
Slide 56: Vertical overview: Tech & consumer electronics
56©2023 GXO Logistics, Inc. 2021 2027 Outsourced TAM By the numbers today Market opportunity ($B)1 ~22%1 GXO 2021 market share $1.1B GXO 2021 revenue 11% CAGR1 Outsourced revenue 2017-2021 ~18%1 % TAM outsourced 2021 Vertical overview: Tech & consumer electronics 27 40 5 9 7% CAGR 11% CAGR 1. Based
Slide 57: Market overview: Tech & consumer electronics
57©2023 GXO Logistics, Inc. ▪ Unattractive retail economics of dealing with electronic returns ▪ Rising outsourcing as complexity increases ▪ Nearshoring ▪ Reverse logistics and e-Waste Market challenges Market overview: Tech & consumer electronics Key drivers & opportunities ~$25B1 of capital tied
Slide 58: The GXO Difference: Tech & consumer electronics
58©2023 GXO Logistics, Inc. The GXO Difference: Tech & consumer electronics Technology Scale Expertise ~30% reduction in variable warehousing costs1 +1-2pts Highly automated solutions allow more efficient processing, reducing costs and raising sales prices and margins – optimizing the economics of r
Slide 59: GXO in action: Tech & consumer electronics
59©2023 GXO Logistics, Inc. GXO in action: Tech & consumer electronics GXO solution Situation Case Study GXO impact on customer: 35% Reduction in variable costs 89%1 Reduction in emissions for each re-used item ▪ By leveraging data and applying consistent testing processes, GXO maximizes the resale
Slide 60: Our agenda today
60©2023 GXO Logistics, Inc. Our agenda today Malcolm Wilson Market and GXO revenue growth Mark Manduca Richard Cawston Eduardo Pelleissone Meagan Fitzsimmons Baris Oran Chief Executive Officer Chief Investment Officer President - Europe President – Americas & Asia Pacific Chief Compliance and ESG Of
Slide 61: Social, Governance and Environmental
61©2023 GXO Logistics, Inc. Social Governance Environmental Being an employer of choice and creating a safe workplace is critical to reducing turnover and increasing productivity. ▪ Global Risk Committee enhances Enterprise Risk Management (ERM) ▪ ‘Speak Up’ program ▪ Cybersecurity controls and oper
Slide 62: ESG guides our business
62©2023 GXO Logistics, Inc. ESG guides our business Investors Employees Customers The majority of our employees are highly satisfied with their jobs as of our Q4 global pulse survey. Industry-leading safety record Grow at GXO participation driving ~10% increase in retention 7 inclusion-based Busines
Slide 63: The GXO Difference: ESG creates more value for customers
63©2023 GXO Logistics, Inc. The GXO Difference: ESG creates more value for customers One site powered by solar also provides over 7,600 MWh of energy back to the grid per year, and total CO2e savings of 5,620 tons annually. Reduction of packaging at one fashion retailer site resulted in annual reduc
Slide 64: Enabling the circular economy
64©2023 GXO Logistics, Inc. Enabling the circular economy Our impact: $30K and 440+ tons CO2e costs saved and emissions avoided when helping a customer convert expired medical gowns into grocery bag totes ~30.4 tons materials refurbished by GXO employees since 2019 for a major US home appliance manu
Slide 65: Our agenda today
65©2023 GXO Logistics, Inc. Our agenda today GXO investment highlights Malcolm Wilson Market and GXO revenue growth Mark Manduca Richard Cawston Eduardo Pelleissone Meagan Fitzsimmons Baris Oran Chief Executive Officer Chief Investment Officer President - Europe President – Americas & Asia Pacific C
Slide 66: Key drivers of GXO's organic value creation
66©2023 GXO Logistics, Inc. Key drivers of GXO’s organic value creation Adjusted EBITDA1 ~$1.6B 1 High-quality growth through contracts that are resilient and cash-generative, and provide high returns 2027 outlook Pro forma adjusted EBITDA1 $0.6B 2021 results 2 Driving productivity, at the site leve
Slide 67: High-quality growth: Diversified, contracted, blue chip
67©2023 GXO Logistics, Inc. High-quality growth: Diversified, contracted, blue chip Resilient, duration-matched contractual relationships Pricing driven by contractual relationships, not supply /demand Diversified verticals, customers and geographies Blue-chip, investment-grade customer base ~5-year
Slide 68: Resilient contracts generate predictable cashflows and returns
68©2023 GXO Logistics, Inc. Resilient contracts generate predictable cashflows and returns Creating attractive economics for GXO Two Contract types Open-book contracts: ▪ Cost-plus structure where all costs are passed through to customers with a mark-up ▪ Lower initial investment boosts operating re
Slide 69: Example: Open-book contract
69©2023 GXO Logistics, Inc. 69 Example: Open-book contract1 ▪ Open-book margins are resilient to drops in activity, with all costs passed through to the customer with a mark-up. ▪ Margins stay broadly fixed; profitability is protected, regardless of the macro environment. ▪ Lower initial upfront cos
Slide 70: Example: Hybrid closed-book contract
70©2023 GXO Logistics, Inc. 70 ▪ Fixed and variable revenue closely matched to fixed and variable costs to protect margins from volume moves. ▪ Inflation escalators are included to pass through costs to the end customer. ▪ Higher depreciation expense due to higher upfront costs than open- book contr
Slide 71: Contract economics and return on invested capital
71©2023 GXO Logistics, Inc. 71 ▪ Hybrid-closed book contracts have higher EBITDA margins than open- book contracts, reflecting higher upfront capital expenditure. ▪ Both contract types have similar EBITA margins. ▪ Reflecting the lower capital investment, open-book contracts have a higher return on
Slide 72: 2027 Adjusted EBITDA outlook: Growth and efficiency
72©2023 GXO Logistics, Inc. 2027 Adjusted EBITDA outlook: Growth and efficiency 1. Refer to the ‘Non-GAAP Financial Measures’ section on slide 2 and Appendix for related information. 2. Based on GBPUSD of $1.22 0 200 400 600 800 1 000 1 200 1 400 1 600 1 800 2021 Core growth Automation and value- ad
Slide 73: Adjusted EBITDA growing faster than revenue
73©2023 GXO Logistics, Inc. Adjusted EBITDA growing faster than revenue1 Adaptive technology ~$30M EBITDA uplift from retro-fit opportunities for ~$60M investment (>30% ROIC). Central efficiencies $60M uplift via optimization of: ▪ HR, finance and IT activities ▪ IT delivery model Combine UK support
Slide 74: 2027 Adjusted EBITDA margin outlook: Automation and mix
74©2023 GXO Logistics, Inc. 2027 Adjusted EBITDA margin outlook: Automation and mix Automated contracts have +200bps margins on average. 2021 2022 2023 2024 2025 2026 2027 GXO % of automated revenue Dilutive effect on automation penetration from Clipper acquisition Majority of new contracts to be au
Slide 75: 2027 Adjusted EBITDA margin outlook: Central efficiencies
75©2023 GXO Logistics, Inc. 2027 Adjusted EBITDA margin outlook: Central efficiencies ~$60M of efficiencies expected by 2027 Economies of scale available for a larger pure-play contract logistics player: 1) Centralized approach to IT software, hardware and data center procurement 2) Standardized ope
Slide 76: 2027 Adjusted EBITDA margin outlook: Clipper synergies
76©2023 GXO Logistics, Inc. £36M of cost synergies expected within three years, following £30M of investment. 2027 Adjusted EBITDA margin outlook: Clipper synergies GXO also sees revenue synergy opportunities from cross-selling opportunities into new customers, geographies, verticals and services. T
Slide 77: Adjusted EBITDA to free cash flow
77©2023 GXO Logistics, Inc. 0 25 50 75 100 EBITDA Interest Tax and other Maintenance capex FCF before growth investment Growth capex Working capital FCF Adjusted EBITDA → Free cash flow >$2B1 2021-2027 cumulative free cash flow ~30%1 FCF conversion by 2027 ~30% FCF conversion ~60% FCF conversion (ex
Slide 78: Balance sheet financial flexibility
78©2023 GXO Logistics, Inc. -0.5x 0.0x 0.5x 1.0x 1.5x 2.0x 0 500 1000 1500 2000 2500 2021 2022 2023 2024 2025 2026 2027 Cumulative cash balance Net debt/EBITDA Balance sheet financial flexibility: >$2B of balance sheet capacity by 2027 >$2B deployable balance sheet capacity by 2027 Cash generation d
Slide 79: Capital allocation
79©2023 GXO Logistics, Inc. Capital allocation 1 2 3 Accelerate organic growth Invest in high-return retrofit adaptive technology and productivity Opportunistically pursue accretive bolt-on M&A, and return excess free cash flow to shareholders
Slide 80: GXO: Growth, predictability and cash returns
80©2023 GXO Logistics, Inc. GXO: Growth, predictability and cash returns
Slide 81: A clear path to extraordinary growth
81©2023 GXO Logistics, Inc. A clear path to extraordinary growth 1. 2027 Revenue of ~$17B EBITDA of ~$1.6B is based on FX rates of 1.38 and 1.18, 2027 Revenue would be ~$16B and EBITDA would be ~$1.5B at FX rates of 1.22 and 1.06 Revenue ~$17B1 6-year organic average annual revenue growth range 8-12
Slide 82: Appendix
82©2023 GXO Logistics, Inc. Appendix
Slide 83: Reconciliation of GAAP Revenue to Organic Revenue
83©2023 GXO Logistics, Inc. (In millions) Revenue Year Ended December 31, 2021 $ 7,940 Less: Revenue from acquired business (605) Less: Foreign exchange impact (200) Organic revenue(1) at 2017 Foreign exchange rates $ 7,135 Revenue Year Ended December 31, 2017(2) $ 5,229 Organic revenue Compound Ann
Slide 84: Reconciliation of net income to Adjusted EBITDA
84©2023 GXO Logistics, Inc. Year Ended December 31, 2022 2021 (In millions) Midpoint(1) As Reported Pro forma(2) Net income attributable to GXO $ 194 $ 153 $ 162 Net income attributable to noncontrolling interest 3 8 8 Net income $ 197 $ 161 $ 170 Interest expense, net 29 21 25 Income tax expense (b
Slide 85: Reconciliation of operating cash flow to free cash flow
85©2023 GXO Logistics, Inc. Year Ended (In millions) December 31, 2021 Net cash provided by operating activities $ 455 Less: Payment for purchases of property and equipment (250) Plus: Proceeds from sale of property and equipment 11 Free Cash Flow(1) $ 216 (1) See the “Non-GAAP Financial Measures” s
Slide 86: Return on Invested Capital
86©2023 GXO Logistics, Inc. Year Ended (In millions) December 31, 2021 Adjusted EBITA(1)(2) $ 374 Less: Cash paid for income taxes (75) Adjusted EBITA(1)(2), net of income taxes paid $ 299 (1) Pro forma as prepared under combined financial statements for all periods before August 2, 2021, includes a
Slide 87: Operating Return on Invested Capital
87©2023 GXO Logistics, Inc. Year Ended (In millions) December 31, 2021 Adjusted EBITA(1)(2) $ 374 Less: Cash paid for income taxes (75) Adjusted EBITA(1)(2), net of income taxes paid $ 299 (1) Pro forma as prepared under combined financial statements for all periods before August 2, 2021, includes a
Slide 88: Reconciliation to pro forma Adjusted EBITA
88©2023 GXO Logistics, Inc. Year Ended December 31, 2021 (In millions) Pro forma(1) Net income attributable to GXO $ 162 Net income attributable to noncontrolling interest 8 Net income $ 170 Interest expense, net 25 Income tax benefit (5) Amortization expense 61 Transaction and integration costs 99
Slide 89: Liquidity Reconciliation
89©2023 GXO Logistics, Inc. GXO Logistics, Inc. Liquidity Reconciliation (Unaudited) Reconciliation of Net Debt: (In millions) September 30, 2022 Shor-term debt $ 94 Long-term debt 1,789 Total Debt $ 1,883 Less: Cash and cash equivalents (434) Net debt $ 1,449 Reconciliation of Net Leverage: (In mil
Slide 90: Trailing Twelve Months Adjusted EBITDA
90©2023 GXO Logistics, Inc. GXO Logistics, Inc. Reconciliation of Net Income to Trailing Twelve Months Adjusted EBITDA (Unaudited) Trailing Twelve Year Ended Months Ended Nine Months Ended September 30, December 31, September 30, (In millions) 2022 2021 2021 2022 Net income attributable to GXO $ 151