GXO Logistics Inc. infused an upbeat look in what has been a mostly downbeat earnings season for transportation and logistics companies by reporting record first-quarter revenue of $2.3 billion, a 12% year-over-year gain, and adjusted diluted earnings per share of 49 cents, up 6 cents from analysts’ consensus estimates.
Greenwich, Connecticut-based GXO (NYSE: GXO), the world’s largest pure-play contract logistics provider, late Tuesday raised full-year adjusted diluted earnings guidance by 10 cents per share to between $2.40 and $2.60 a share. It also raised adjusted earnings before interest, taxes, depreciation and amortization by $15 million to a range of $715 million to $745 million.
In the quarter, operating income increased to $42 million, up 14% year over year. Net income fell to $25 million, compared with $37 million in the year-earlier period. The decline reflected the impact of nonoperational items such as foreign exchange rates and interest expense.
Through the first quarter, the company secured $782 million in incremental revenue, meaning that business actually won in prior quarters had hit the top line. The company landed its largest-ever annual contract in the quarter with a deal with U.K. grocery chain Sainsbury’s. The deal is expected to have a lifetime value of nearly $1 billion for GXO.
“We’ve had a great start to the year, with strong top- and bottom-line results showcasing the strength and predictability of our business,” said GXO CEO Malcolm Wilson on a call Thursday with analysts. GXO’s business is considered predictable because it operates on multiyear contracts.
“We have seen Europe being ahead of expectations” after troughing in the second half of 2022, Wilson said.
In the U.S., gains in aerospace and technology are offsetting continued consumer softness, he said, and wage inflation is moderating across GXO’s two-continent network.
GXO currently has a sales pipeline of $2.3 billion, up from fourth-quarter 2022 levels. Pipeline business, which is that being bid on but not yet won, typically turns over twice a year. This means a market opportunity for GXO of about $4.6 billion per year, according to Baris Oran, the company’s CFO.
In addition, about $362 million in revenue is locked in through 2024, the company said.
About one-third of GXO’s sales pipeline is made up of businesses exploring a restructuring of their supply chains through outsourcing.
During the analysts call, company executives heralded the return of the “$100 million deal,” in which businesses approach GXO for one project only to find the company can do so much more in the relationship.