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GXO Logistics specializes in offering supply-chain management solutions. Founded in 2021, the company serves a wide range of industries including technology, food and beverage, and e-commerce. GXO operates in over 1,030 facilities and provides warehousing and distribution, order fulfillment, reverse logistics, and other services.

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Q4 2024

GXO Logistics (GXO): Company Profile, Stock Price, News, Rankings

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GXO Logistics

gxo logistics

Welcome to the GXO Fourth Quarter and Full Year twenty twenty four Earnings Conference Call and Webcast. My name is Rob, and I'll be your operator for today's call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session. Please note 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 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 extent required by law. The company also may refer to certain non GAAP financial measures as defined under applicable SEC rules during this call.

Reconciliations of such non GAAP financial measures to the most comparable GAAP measures are contained in the company's earnings release and the 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 its guidance incorporates business trends to date and what it believes today to be appropriate assumptions. 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, labor market and global supply chain constraints, inflationary pressures and the various factors detailed in its filings with the SEC. It is not possible for the company to actually predict demand for its services and therefore actual results could differ materially from guidance.

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'll now turn the call over to GXO's Chief Executive Officer, Malcolm Wilson. Mr. Wilson, you may begin.

Thank you, Rob, and good morning, everyone. I appreciate you joining us today for our fourth quarter and full year twenty twenty four earnings call. With me in Greenwich are Barish Oran, our Chief Financial Officer and Christine Kubecki, our Chief Strategy Officer. In 2024, we had some great operational highlights. We delivered record revenue and adjusted EBITDA.

Notably, our adjusted EBITDA grew 30% year over year in the fourth quarter. We drove organic growth acceleration every quarter throughout the year. We had a stellar sales year, closed over $1,000,000,000 of new business wins for the second year in a row, grew our relationships with our customers and won a landmark 2,500,000,000 deal in the health sector. For the fourth quarter of twenty twenty four, we generated revenue of $3,300,000,000 and we delivered adjusted EBITDA of $251,000,000 in line with our expectations. For the full year 2024, we generated $11,700,000,000 of revenue, growing 20% of which 3% was organic.

I'd like to highlight that closing the year at $11,700,000,000 means we've nearly doubled our revenue since 2020, which was the last year before we spun off from XBO. We entered 2024 expecting to deliver $760,000,000 to $790,000,000 of adjusted EBITDA. During the year, we updated our guidance to take into account our acquisition of Wincanton and we're very pleased that we delivered $815,000,000 of adjusted EBITDA for the full year in line with our expectations. 2024 was the second year in a row that GXO closed over $1,000,000,000 of new business wins. We won exciting contracts with new brands like Levi's, LG, Puma and the German coffee chain, Cibo.

We also grew enormously with our existing customers in the year. Our land and expand strategy has been a cornerstone of our long term partnerships and we expanded into new geographies with more than 40 of our legacy customers, including Boeing, Guess, Michelin and Nespresso. Also in the fourth quarter, we won a major new fulfillment operation in the healthcare sector. This opportunity came through a legacy relationship we gained from our acquisition of Clipper Logistics in 2022. The Clipper deal also gave us a foothold in Germany and I'm pleased to report that we've grown our revenue there by 60% year over year as of the end of twenty twenty four.

Germany is now our fastest growing market. These accomplishments are proof positive of our successful M and A and commercial strategies. On that note about M and A, in 2024, we completed our acquisition of Wincanton. This is a growing business that will bring us expertise in key verticals like aerospace and industrials, where we plan to accelerate our growth. Turning to our outlook for this year, we expect to deliver 3% to 6% organic growth with $840,000,000 to $860,000,000 of adjusted EBITDA for the full year 2025.

Our guidance range reflects our strong core business growth, which is netted against capacity realignment by a small number of long term customers where we have worked together to adjust their footprints to fit their future needs. Our guidance also reflects the impact of the current FX environment and our prudent expectations on the timing of in year integration benefits from Wincanton. We expect to have an interim update on the CMA's regulatory review in the next week. Before I pass the mic to Barish to cover the detail behind our financial targets, I'd like to touch upon the key drivers of our growth in 2025 and beyond. First, the fundamentals of our business, the structural tailwinds of outsourcing, automation and e commerce will continue to drive our long term growth.

Brands around the world are facing unprecedented supply chain complexity. And we're bringing the benefit of our scale, expertise and tech enabled solutions to help them solve their most complex problems. Second, leadership in technology continues to be a key differentiator for GXR. We've long been the leader in tech enabled fulfillment. And in 2024, we made rapid progress towards our vision of the AI enabled warehouse.

I'll ask Christine to give you more details on that in just a moment. Third, we strengthened our sales organization in 2024, not only in our traditional verticals, but in new verticals and geographies. These investments have already begun to bear fruit. We closed more than $1,000,000,000 of new business wins in 2024, including in strategic growth areas like the health sector and a range of verticals in Germany like aerospace and defense, food and beverage and omni channel retail. In North America, we won significant business in the technology sector, including a major contract managing data centers.

Our pipeline is up 15% year over year as of the end of the fourth quarter and our pipeline in The Americas is up 20%. This momentum will continue to drive our long term growth. With that, I'll hand you over to Barish, who will walk you through the financials and our guidance. Barish, over to you.

Good morning, everyone. Before reviewing the numbers, I would like to particularly highlight the strong sales year we have had. First, as Malcolm mentioned, we won more than $1,000,000,000 of new business in 2024 with an average contract length above our long term average of five years, including a massive win in the health sector, which is a target growth vertical for us. Second, we noted last quarter that demand for new e commerce facilities was growing and we are pleased to note that we finished the year with about 60% more new business won in e commerce year over year. And third, we finished the year with a robust pipeline, giving us confidence in our long term growth.

For the full year of 2024, we generated revenue of $11,700,000,000 growing 20%, of which 3% was organic. Our organic revenue growth accelerated sequentially throughout the year, led by our omni channel retail and consumer goods business. We delivered adjusted EBITDA of $815,000,000 growing 10%. Our adjusted EBITDA margin was 7% for the full year. Our adjusted diluted earnings per share was $2.8 up from $2.59 for the full year of 2023.

Our operating income for the full year 2024 was $218,000,000 and we delivered net income of $138,000,000 In the fourth quarter, we generated revenue of $3,300,000,000 growing 25% year over year. We delivered adjusted EBITDA of two fifty one million dollars growing 30% year over year. Our adjusted diluted earnings per share was $1 in the fourth quarter, up from $0.7 in the fourth quarter of twenty twenty three. Our fourth quarter operating income was $101,000,000 growing 16% year over year and net income was $100,000,000 growing 37% year over year. Our operating return on invested capital at 46% remains well above our long term target.

In 2024, we again converted more than 30% of our adjusted EBITDA to free cash flow, with durable and outstanding $127,000,000 of free cash flow in the fourth quarter. We remain laser focused on capital effectiveness and continue to prioritize investments in technologies and services that drive the greatest return for our customers. Our balance sheet continues to strengthen. Our net leverage was 2.7 times as of the end of the fourth quarter, down from the peak of 3.1 times following the acquisition of Vincantin in the second quarter. As we focus on deleveraging and integration throughout 2025, M and A is not on our short term agenda.

Now turning to our guidance. For the full year 2025, we expect to deliver organic revenue growth of 3% to 6%. We anticipate a sequential acceleration of organic growth throughout the year, similar to what we have seen in 2024. Given the phasing of new business wins and the customer capacity realignment impacting the first quarter. Our organic growth trajectory is underpinned by our strong sales performance, where we closed more than $1,000,000,000 of new business wins for the second year in a row.

We have $627,000,000 of incremental revenue booked for 2025, which is 10% higher than where we were at this point last year. And at the same time, our pipeline has grown 15% year over year as of the end of twenty twenty four. Our investments in our sales organization are creating the momentum for our long term growth. We also expect to deliver $840,000,000 to $860,000,000 of adjusted EBITDA. As Malcolm highlighted, our guidance range reflects a sequentially increasing adjusted EBITDA throughout the year.

This improvement will be driven primarily by the maturity ramp up of new startups, progressively offsetting the impact of a few customer capacity realignments in the first quarter. Double clicking on the realignments. Post peak season, we have worked with a few of our large customers to realign their footprints to fit their future needs. You will note from our revenue guidance that we have been able to almost completely offset this rationalization impact through new wins. But due to the maturity curve of start ups, we'll see improved profitability throughout the year.

This means that these realignments will predominantly affect our adjusted EBITDA in the first quarter. We expect our full year adjusted diluted earnings per share to be in the range of $2.4 to $2.6 reflecting our guidance on adjusted EBITDA and an increase in our effective tax rate in 2025. At the midpoint of our range, we expect to convert about 30% of our adjusted EBITDA into free cash flow, in line with our historical performance. We expect our growth to continue to accelerate sequentially throughout 2025. We are working on a number of measures to improve our operating profitability, including continuous improvement measures at the site level and when we begin the integration of Wing Canton, our results will accelerate faster.

I'll pass the mic to Christine. Christine, over to you.

Thanks, Barish. Good morning, everyone. We're pleased with our results for the full year 2024. As Malcolm and Barish mentioned, the investments we've made in our business are driving great results. Today, I'd like to update you on the progress we're making toward our vision of an AI enabled warehouse and how our strategy for 2025 will support our future growth.

As we discussed last quarter, we began piloting our first proprietary AI applications in select warehouses across The U. S. Last year. We've now launched 22 instances of our proprietary AI apps across three key warehouse functions proactive replenishment, skew dimensioning and order routing. Our tools have delivered exciting results over the past few months, including productivity improvements of three to four times in stock replenishments for a major sporting goods retailer, a 50% improvement in order allocation plus a 22% improvement in carton fill rate, which drove efficiency and decreased transportation costs for an omni channel retailer.

And a record setting inbound process for 35,000 SKUs as we prepared to launch a new e commerce operation. We have a number of other modules in development, including volume prediction, slotting and pick optimization. DX's strategy for AI within the four walls of the warehouse focuses on improving productivity and debottlenecking the flow of product. Our 2025 roadmap prioritizes layering additional modules on-site where we're already live with AI to compound the impacts of these powerful tools. We run mega sites for household name brands all over the world and we're focused on scaling the impact of our AI across multiple warehouse processes in parallel.

We're excited about this technology and the tangible results it's driving. We're receiving positive customer feedback on how our AI is transforming their fulfillment operations and we look forward to formally launching this product as a key part of our commercial strategy to supercharge our growth. And with that, I'll pass it back to Malcolm.

Thanks, Christine. We've delivered a record setting year, advanced our commercial and tech strategies and built momentum to accelerate our growth in 2025 and beyond. I'd also like to share our pride that GXO received numerous awards in 2024 from being recognized as the number one logistics provider on Newsweek's list of America's Most Reliable Companies to receiving accolades for our innovative use of AI and awards for our partnership with customers like Nestle and Whirlpool. We greatly appreciate the industry's recognition of our outstanding performance and innovation. And before we close, I'd like to thank our employees for their excellent performance during peak and throughout the whole of 2024.

Our customer satisfaction scores reached an all time high as of the end of twenty twenty four and it's the hard work and dedication of our team members that enables us to delight our customers day in and day out. We are excited about our growth trajectory as we focus on delivering the best possible service to our customers and generating strong returns for our shareholders. With that, we'll hand the mic back to Rob for Q and A.

Thank you. At this time, we'll be conducting a question and answer session. Thank you. And our first question is from the line of Stephanie Moore with Jefferies. Please proceed with your question.

Hi, good morning. This is Joe Halfling on for Stephanie Moore. Thank you so much for taking our questions and thanks for the informative slide deck and all the details you provided in the prepared remarks. Can we unpack a little bit about more about what's happening in the first quarter with that $15,000,000 EBITDA hit? It just seems like a pretty heavy hit.

Barish, you mentioned it was only a couple of customers. So could we kind of maybe talk about exactly what's going on? Are these customers just really a lot more profitable than kind of the new business that you're bringing in? Or is there a cost lag between when these customers are realigning their capacity and you're backfilling the sites? And maybe my follow-up to that would be to the extent that you have some customers leaving some sites or reducing their footprint, have you already found customers or tenants to kind of take over those new sites?

Hi, it's Parrish here. Good morning. We expect low single digit organic revenue growth in Q1 and we expect to deliver around $155,000,000 of adjusted EBITDA at the midpoint of our range. The difference compared to full year bridge is that we have a larger impact from customer capacity alignments and new site implementations. We have positive net wins from a revenue standpoint in Q1 and capacity realignments are primarily in mature sites and our start ups take time to reach the glide path.

You would recall that we had a similar short term impact from new start ups in 2022 and how this was resolved quickly throughout the year. Now coming back to your the second part of your question, there is a handful of contracts that have driven this impact. These are one off in nature. Let me give you some detail. First, there is a customer that we have seen a relative large mature site exit.

We have continued to win new business from this customer and we'll have four sites going live throughout 2025. Number two, one of our automated site customers have realigned capacity in their network and given the prime location of operations, we have held the lease and already secured another customer, which will contribute profits in the second half of twenty twenty five. Number three, another long standing mature side customer has realigned their network because of lower consumer volumes. They remain a good customer for GXO. And on top, as we've highlighted, we face some FX and pension headwind about $20,000,000 to $15,000,000 or so in 2025 versus 2024.

And when you add those back, the underlying performance is quite helpful.

Got it. Thanks so much. And if I could just maybe ask one more question. Is there any confidence that this is not a structural issue and that this really is just kind of a one off? I guess, what would be stopping this as being just a continued trend throughout 2024?

Network realignment is a short term impact. They are not lost customers. In fact, as I highlighted, we are opening new sites for one of these customers. And for the other sites, we are reallocating it to another customer. The productivity of course will ramp up.

As we have highlighted in 2022, we had a similar short term impact from the new start ups and you have seen how this was resolved quickly throughout the year. Our history speaks for itself.

from the line of Scott Schneeberger with Oppenheimer.

I'm curious to hear about how transactional volume with existing customers has been trending. It's curious how it looked in fourth quarter. I believe it was a progressive improvement year over year versus each of the preceding quarters of 2024. How should we expect that to look in 2025? And I'm not sure if this development with these two or three customers affects that, maybe an answer with or without that involved for 2025.

Hey, Scott. Hi, it's Malcolm. Let me give you a bit of an overview on volumes generally across the different regions. And then probably there's a little bit more detail I'll ask Paresh to comment on. When we think about the fourth quarter, definitely our Continental Europe business that was showing the fastest growth and that growth has really carried on into 2025.

We mentioned earlier, we are seeing very, very good output of sales pipeline wins in new markets like Germany. So really Continental Europe going from strength to strength. In The UK, since our last call and probably really second half of the last quarter and where we are now, what we have seen is retail environment is softened a little bit and that's really a consequence of the recent government budget. Many of our customers are still working out the implications of the higher employment tax rates. They're a little bit cautious about the go forward and those tax rates will start to impact in April.

So I would say our UK business softened a little bit, but actually still very vibrant. And obviously, you heard earlier, our sales pipeline very strong and that notable very, very big win in a new vertical healthcare. Here in The U. S, definitely we've seen a pickup in mood from the consumer focused business and we can see that reflected in our stronger sales pipelines. We did very well in the last quarter when it comes to volumes and we expect that to progress forward.

Notwithstanding the point that Barish has just made where momentarily in quarter one, you do see this impact of us realigning some customer volumes on some of our big customers, very small number, but it's a point for our quarter one. It's too early to gauge what impact tariffs will have on our U. S. Business, but really generally our business is a domestic business. We don't think there's a likelihood of any material impacts feeding through in that regard.

And also, as we highlighted in quarter three, we've definitely seen a pickup in our e commerce and omni channel commercial activities. So again, just to highlight, great news for big new wins, great news for growth in Germany. The strategy that we've got is really definitely working in terms of pushing into new verticals. And that's good because a lot of these new verticals, they're less sensitive to consumer behavior. And that's really builds to the strength of the resilience of the business.

I'm sure all of these factors are contributing to this 15% year over year growth that we're seeing in our sales pipeline. Paresh, maybe you can add a little bit more detail on percentages?

Sure, Malcolm. We have seen sequential improvement in our revenue growth organic revenue growth in 2024, and we do expect sequential improvement in 2025. Within that, in Q4, our underlying customer volumes were slightly positive in the fourth quarter. That's less than 1% positive. And when we look into the entire year of 2025, we expect underlying customer volumes to be flattish for the entire 2020

Great. Thanks for that guys. Appreciate the geographic and end market discussion. I guess I'll do my follow-up with regard to that healthcare win. It sounds like it came from a relationship and I know that's a vertical you've been looking to penetrate.

Could you elaborate on how quickly now with that win that might help you garner more business in healthcare? Is this something that you think you can penetrate rapidly? Or I believe you said in the past it would be helpful via acquisition, which I know is on hold while win can is occurring. Just curious, your ability to ramp healthcare with this new win organically and any incremental detail you can share about this new contract? Thanks.

Yes, Scott, it's Malcolm here again. Look, it's a milestone win. It's a huge piece of business that we anticipate starting in the second half of this year. We are under very strict confidentiality agreement, so I can't mention the name, but I think it's fair to say we're very proud to be partnering with this new customer. Already, I can see that in our UK sales pipeline and a lot of inquiries already coming in in Continental Europe, we have a very large catchment of interested customers who will come in really on the back of this very prestigious win that really opens up a huge range of services that we're providing for the customers.

So in that regard, very, very positive outlook for the way forward in healthcare And that's a really brand new vertical for us that we're achieving without actually having to undertake any M and A. It's a homegrown organic huge big opportunity for us. On Wincanton, I mean, Wincanton business is trading very, very well, but it's clear for us that we can achieve with that what we've achieved in healthcare. Healthcare really came from embryonic business relationships that came out of the Clipper M and A. It was one of the things we saw in Clipper when we were doing that deal.

This vertical plus the business that existed in Germany and that also has proven to be a huge success. In Wincanton, the highlights that we see in new verticals, it's the industrial sector, defense, aerospace, I think will achieve the same successes, might take us a year, two years following integration. That's normal for top line synergy benefits. You're seeing that right now. It's a couple of years since CLIPA, IRR, but we're pretty confident we'll see the same levels of successes coming out of the Wincanton deal.

Our next question comes from the line of Chris Wetherbee with Wells Fargo. Please proceed with your question.

Good morning, guys. I guess just sort of conceptually on some of these customer losses or adjustments, I guess, there's maybe some expectation that you guys would have been a bit more insulated to this. And so maybe the question is, are there aspects in the contract that would have allowed some sort of either penalty for closing or leaving a contract earlier or some other sort of mitigating factors included in it. And I guess also as you think about sort of the go forward period, was this one a unique dynamic where at the end of the fourth quarter you had a higher number than normal contracts coming up for renewal.

So I guess we've always thought about a relatively high retention rate probably because the portfolio was relatively balanced in terms of renewal risk, but kind of curious about how we think should think about that going forward.

Chris, hi, it's Malcolm here. Nice to hear from you. Chris, it's very much a kind of one off event. As Barish mentioned, we did experience something similar way back in 2022. It just happens that we've got two or three large customers, very strategic customers for us.

We have business with these customers on multiple geographies. Relationships very, very strong. On one hand, we see a need we identify

to optimize the business that long run. And when we can see clearly an opportunity to do things differently that will bring greater efficiency, But we wouldn't be doing our job if we didn't identify that and work with the customer to actually make that happen. And that's pretty much what's happened here. We have good visibility on those kind of things. We were able to influence it.

We are not in any way financially damaged as a consequence because clearly our contracts are back to back. That's a feature of our company. That's one of the things that make our earnings relatively highly predictable as you've seen over the years. And in this instance, as Barish mentioned, it's really a consequence of the move of relatively mature business coming to an end, happens to be a number of incidents in one quarter and then new business starting up very quickly. But as you've heard us mentioned in the past, there is generally a small lag when we start new business.

We don't achieve mature contract profitability. Generally, it takes about six months for us to reach those levels. And that's really what you're seeing. And you're seeing that primarily focused in Q1. When you look at the phasing of the rest of our business, the rest of this year is quite a normal phasing.

But clearly, it's having an impact in our quarter one numbers and it's one of the reasons why our guide for the year looks a little lower than probably people might have expected.

Okay. All right. That's helpful. I appreciate it. And then on the free cash flow, so I noticed that the guidance, I think the conversion rate is 25 to 35.

I think in the past, it's been 30 to 40. So can you walk us through sort of what's happening from a cash perspective? Are there some different dynamics of the book of business that you have today? Or are there some other factors we should be considering?

Hi, Chris. It's Varish here. Our free cash flow for Q4 was $127,000,000 and $251,000,000 for 2024. We delivered around slightly over 30% free cash flow conversion. In 2025, we targeted similar 25% to 35% conversion, 30 points at the mid to mid load range, a similar outcome to what we have delivered in 2024.

Prior to our 2024 free cash flow guidance, we did not contemplate the Vincantin acquisition and we delivered on the lower end of this range. This was due to the funding and integration and final payments of the transaction costs that in aggregate came around $70,000,000 for the year. And we are generating strong underlying cash flow and this is in line with our history.

Okay. So it's Wyndhamton as a slightly different cash profile as

or there's still some of these integration or sort of financing costs that impacts free cash for 2025?

There will be some integration costs. The transaction has not been fully gone through the CMA approval. So there are some transaction costs that are happening in 2025. So hence, our guide for midpoint 30% free cash flow range in 2025.

Okay. Thank you very much. Appreciate the time.

Our next questions are from the line of Bascome Majors with Susquehanna International. Please proceed with your question.

If we look back on your organic growth history, it's been since mid twenty twenty two since you've been in that long term range of double digits. And I understand this has corresponded with a pretty meaningful change in the fulfillment and retail framework from the kind of pandemic peak that ended mid twenty twenty two. But can we talk long term? Is there an opportunity to maybe lower that expectation and set yourself up for the opportunity to really exceed in a world where mid single digits has really been more common than the double digits that you've really sort of initially built the business around coming out of the pandemic when you spun off? Just any long term thoughts on that and how you're feeling about that going out two or three years?

Yes, Malcolm, hi, it's Malcolm here. Luke, I think you're right. Since 2022, I think we've certainly lived through some turbulent environments across all the different geographies that our company works in. In. We can recall kind of the fact that we've had in major territories in Europe, we've had a war, which hopefully we can see signs that that's going to come to an end.

And we've had various different issues in terms of global supply chains and economic environments that we've been facing. We have a long term guide out there. I think right now, fair to say, probably best not to so much comment about that long term target setting that we've done because we have to recognize this year, we are going to be in a management transition. There's definitely right now, we have an uncertainty about the timing of when we will start the Wincanton integration. And just as a reminder, on that one specific topic, we know that we will achieve around $55,000,000 of integration cost saving synergies.

Once we start the integration, that's pretty much safe. One of the things we're having to reflect in this year's guide is right now we have an uncertainty of the timing of that. Initially, we believe that we would have been starting that right from the get go, right from now, January 2025. We have to recognize that the CMA process has prolonged on longer than we would have originally expected. We still firmly believe that will be a favorable outcome.

We expect to hear from them during the course of next week. But clearly, I think it's the right thing for us to do to be prudent and to reflect in it a much more prudent approach to the timing of that. Where we might have expected that the lion's share of that $55,000,000 to land in 2025, probably right now prudently we're feeling no, it's probably more like a 25%, twenty six %. So I think all of these things are in play. And as I say, I think there'll be time for us to do some remodeling of all of the impacts of these different scenarios.

And for sure, we'll target to be updating everyone when we've got a little bit more clarity around all of these topics.

Thank you. Our next question is from the line of Ravi Shankar with Morgan Stanley. Please proceed with your questions.

Hey, great. This is Christine on for Ravi. Just wanted to maybe first ask about the sequential improvement through the year. It does sound like there's some startup costs. So does that imply more of like a hockey stick improvement in 2Q and then seasonality?

Or is it more of a gentle slope as some of that business kind of layers in? Would just love to understand a little bit how the year might look.

Hi, Christine, it's Barish here. There is seasonality in our numbers. It has always been our Q1 has always been the lowest and our Q4 Q4 has been the highest level of activity. That's basically fulfillment activity, consumer demand that's reflecting the seasonality. But beyond that, as we have highlighted this year, specifically more prevalent in Q1, we see a low single digit organic revenue growth and the difference is primarily coming from first, capacity realignments and the ramp up of new site implementation.

And we do expect every quarter to be better compared to the prior quarter. Q1 being from a revenue perspective still a growth quarter, but from an EBITDA perspective, we will have an impact of this capacity alignment, realignments and the ramp up of these new facilities. And as we have highlighted, as we've seen in 2024, '20 '20 '2, we will see an improvement every quarter in 2025.

Great. Thanks. And if I can ask for my follow-up, you referenced the management transition. Certainly, congratulations on the impending retirement, but would just love to know a little bit more about the process of making that decision and maybe what you're looking for in a successor at Malcolm?

Hi, Christine. Yes, for sure. Well, Luke, the Board, we're in the middle of conducting a very thorough search of candidates, both within and of course outside of the GXR. And we're very confident that we'll find the right person to continue to deliver on the huge growth potential that this company has. I hope that we'll have identified the right person in the coming months, and then it will be just down to the specifics of the individual in terms of the actual starting point.

But hopefully, this side of the summer should be possible. On my side, Luke, my retirement, it's a personal decision. I've worked in the industry for an awful long time, but I have to say I'm absolutely committed, I'm passionate to ensure that we'll have a very seamless handover and we'll give the new CEO everything that we can do to help continue to propel this company in a very successful fashion. And not least to say, new CEO is going to inherit just a stellar management team that has been working in the company now since its spin all the way back in 2021. And lastly, Luke, just to remind, we did say earlier, since 2021, the last year prior to the spin, this is a company that has doubled the size of its business.

We've grown EBITDA every single year. So it's a business that's in good shape after completing some fantastic strategic M and A and really investing in a huge amount of new technology that's really going to help propel the benefits for customers, for shareholders for the long term into the future. So I think we're in a good environment. It will be a very smooth transition into a new CEO.

GXO Logistics (GXO) Q4 2024 Earnings Call Transcript

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