GXO Logistics Reports 28% Revenue Growth in Q3 2024, Profitability Declines Due to Increased Expenses

GXO Logistics, Inc. reported significant financial developments in its Q3 2024 10-Q filing, highlighting a robust increase in revenue but a notable decline in profitability compared to the previous fiscal period. For the third quarter of 2024, the company generated revenue of $3,157 million, a 28% increase from $2,471 million in Q3 2023. This growth was primarily driven by acquisitions, specifically the Wincanton plc and PFSweb, which contributed approximately $591 million to revenue, alongside a $35 million positive impact from foreign currency movements.

Despite the revenue growth, GXO's operating income for Q3 2024 decreased to $81 million from $90 million in the same quarter of the previous year. Income before income taxes also fell sharply to $42 million from $83 million, while net income dropped to $35 million from $68 million. The decline in profitability was attributed to increased direct operating expenses, which rose to $2,700 million from $2,000 million, largely due to the costs associated with the acquisitions and foreign currency impacts. The direct operating expense as a percentage of revenue increased to 84.6%, up from 81.4% in Q3 2023.

For the nine months ended September 30, 2024, GXO reported revenue of $8,459 million, an 18% increase from $7,188 million in the same period of 2023. However, net income for this period plummeted to $38 million from $160 million, reflecting a 76% decrease. Operating income for the nine months also fell significantly to $117 million from $231 million.

The company’s total assets increased to $11,900 million as of September 30, 2024, up from $9,507 million at the end of 2023, primarily due to the Wincanton acquisition and the issuance of $1.1 billion in unsecured notes to finance this acquisition. Long-term debt rose to $2,556 million from $1,620 million, reflecting the financial strategy to support growth through acquisitions.

GXO also faced restructuring costs related to severance and optimization projects, amounting to $26 million for the nine months ended September 30, 2024. Additionally, the company incurred litigation expenses of $59 million related to a settlement agreement from a customer dispute.

The Wincanton acquisition, completed on April 29, 2024, is currently under review by the Competition and Markets Authority in the U.K., with a potential Phase 2 investigation announced on November 1, 2024. The company is actively engaging with the CMA regarding this review, which may impact the integration and realization of anticipated synergies from the acquisition.