GXO Logistics, Inc.

Welcome to the GXO fourth quarter and full year 2025 earnings conference call and webcast. My name is Daryl, 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. If anyone should require operator assistance during the conference, please press star zero under telephone keypad. Please note that 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 the meaning of applicable securities law, which by their nature involve a number of risks, uncertainties, and other factors that can cause actual results to differ materially from those projected in the forward-looking statements. A discussion of factors that can cause actual results to differ materially is contained in the company's SEC filings. The forward-looking statements in the company's earnings release were 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 information regarding forward-looking statements and non-GAAP financial measures in the investor section on the company's website. I will now turn the call over to GXO's Chief Executive Officer, Patrick Kelleher. Mr. Kelleher, you may begin.

Good morning, and thank you for joining our fourth quarter and full year 2025 results call. Joining me today are Barris Oren, Chief Financial Officer, and Christine Kabaki, Chief Strategy Officer. GXO delivered a strong finish to 2025 setting a solid foundation to accelerate organic growth and profitability in 2026 and beyond. When we spoke last quarter, I shared some of my early observations about GXO, where I see opportunities to improve the business to accelerate organic growth and sharpen operational execution. I'd like to spend most of my time today discussing the recent leadership actions that position us well to grow and expand margins. But first, let me share the highlights from our record quarterly and full year performance. For the fourth quarter, we delivered record revenue of $3.5 billion and record adjusted EBITDA of $255 million. We did the same for the full year. Total revenue was a record of $13.2 billion with every region delivering organic growth. and full-year adjusted EBITDA was a record at $881 million. Even against a dynamic macro backdrop, the strong results we delivered clearly demonstrate the value we create for our customers and the resilience and predictability of our business model. New business wins were $1.1 billion in 2025, providing good visibility to accelerating growth in 2026. During the fourth quarter, we won significant business in both strategic and established verticals, including notable contract wins in the life sciences sector, several aerospace and defense sector wins, as well as a notable win with a global apparel brand. We have $774 million of expected incremental new business revenue already secured for 2026. This is an increase of over 20% compared to this time last year. I'll let Barris and Christine discuss our financial outlook and new business wins in more detail in a few minutes. But I'm pleased to announce that we've released our 2026 financial guidance today, which at the midpoint shows accelerating organic growth, adjusted EBITDA margin expansion, and an increase of 20% adjusted diluted EPS growth at the midpoint. Want to recognize and thank my GXO teammates for these results. Together, we are building a culture anchored in speed, accountability, and customer intensity. And that culture is directly fueling our performance. As I shared last quarter, GXO has very strong fundamentals. We are the industry leader in tech-enabled fulfillment. We have strong regional businesses, deep operational expertise, and a compelling commercial engine. Our scale, global footprint, and expertise sets us apart in both execution and capability breadth. And we are well positioned to lead what's next in the deployment of automation, robotics, and AI versus peers. My focus right now is to bring our strengths together to operate as one global organization, to deliver faster growth, higher margins, and sharper execution. Over the past five months, we've announced new leadership in three key areas, commercial, operations, and our Americas and Asia-Pacific region. These changes are primary accelerators designed to, number one, scale consistent operating standards across the organization to sharpen execution and drive margin expansion. Number two, to sharpen growth priorities and go-to-market disciplines to accelerate organic growth. And three, grow our market share in the U.S. I see opportunity to strengthen our operating model by moving from regional strength to global leverage. Our regions are strong, and there's clear upside from better connecting what already works across the network. Operating in a higher gear will come from deploying consistent operating standards, sharing best practice, and standardizing what is best in class. To be clear, it is not about one standard for customers. We will continue to deliver the customized solutions that set us apart. It is about establishing one way of working as a global team. The new chief operating officer role is a critical step in enhancing our operating model. Bart Beeks joined us in January after more than two decades at Civa Logistics, most recently as COO. He brings decades of industry experience and proven expertise in driving increased productivity, efficiency, and greater value for our customers. Bart's mandate is to scale a single operating methodology across our global network, creating a flywheel effect spanning solutions and seamless implementations. To service delivery, continuous improvement, and renewals. Productivity gains will come from better labor planning, network-wide best practice replication, and operational visibility, all key levers behind margin expansion. Bart will also lead the operationalization of our automation and technology strategy as we accelerate our leadership in this area. We are already at the leading edge of AI in our industry and we plan to move faster in AI and robotics this year, particularly with humanoid robots. A key focus will be the continued rollout of GXOIQ, our AI-powered warehouse operating system. GXOIQ's AI capabilities are already improving labor planning, inventory distribution and movement, forecasting, and workflow management across several of our largest sites. We see the technology amplifying our competitive differentiation as supply chains become more complex and data intensive. This has the potential to be a real game changer for us. As we move through the year and into 2027, we expect to drive clear productivity benefits as we increase proprietary AI applications across our footprint. I'm also very excited about our progress with physical AI and humanoids. I believe humanoid technology will be a game changer for our industry, and we have the pole position. GXO was the first to deploy this tech in a live operating facility. And as we've collaborated with top robotics developers, we are driving significant improvements in the sophistication of warehousing tasks that can be undertaken. Commercially, I also see significant opportunity to operate in a higher gear. Not all growth is equal, and we will be very deliberate about where we lean in. It is about building a clear, unified global approach to customer relationships and pricing with an initial focus on accelerating sales in select B2B verticals and longer-term identifying geographies for expansion. Karen Bomber joined us two weeks ago as Chief Commercial Officer from ABB Industries. She brings expertise in commercial strategy and driving growth across the energy, industrial automation and retail technology sectors. Her mandate is to tighten execution through more consistent global customer engagement, sharpen go-to-market execution and strategy, ensure pricing reflects the value that we deliver and improve the speed and consistency of our commercial processes. As we discussed last quarter, growth opportunity in the contract logistics industry is huge, with a total addressable market exceeding $500 billion. We see meaningful opportunity to increase market share by expanding the pipeline and improving our conversion rates. The good news is that we're already accelerating our momentum in priority B2B growth verticals, aerospace and defense, life sciences, industrial, and technology, specifically data centers. We achieved another sizable win in life sciences in the fourth quarter and won several aerospace and defense contracts with Boeing and BAE Systems, among others, while continuing to see strong demand in omni-channel retail, a core strength. Bridging both elements of growth and operational execution is our North America division. We have a great platform in North America. with leading positions across the consumer, technology, aerospace, and industrial verticals. The U.S. is our largest and most immediate growth lever to accelerate organic growth given market demand, vertical mix, and the scale advantages that we can unlock. I also expect this market to be the epicenter of technological innovation as we look to capitalize on opportunities with AI and humanoids to drive greater warehouse productivity. Michael Jacobs, who I've known for more than 20 years, took the helm of our North America business three months ago. He is intensifying focus on operational performance, increasing labor productivity, and winning new business by reallocating investments to solutioning, sales, and digital marketing to realize the opportunity that we see. These three leadership changes are strategic accelerators. It's about running the playbook with greater alignment, scale, and pace. In closing, in 2026 and beyond, we have a solid foundation to build on, and I'm very excited for the future. Profitable growth is the priority, and over the past five months, we've moved with speed, strengthening the leadership team that will execute on the opportunity ahead, simplifying our structure, and accelerating expansion and priority B2B verticals, and coming together as one team to define the ambition of the company for the future. With that, I will hand the call over to Barris.

Thanks, Patrick. GXO has built momentum through 2025, with the four-quarter performance reflecting the power of our resilient business model. With record revenue, adjusted EBITDA ahead of our original full-year guidance, and robust free cash flow, we are delivering on our commitment to drive profitable growth. For the full year of 2025, we generated record revenue of $13.2 billion, growing 12.5%, of which 3.9% was organic. We delivered adjusted EBITDA of $881 million, growing 8%, Our adjusted diluted earnings per share was $2.51, and we delivered adjusted net income of $292 million. In the fourth quarter of 2025, GXO delivered record revenue of $3.5 billion, up 7.9% year-over-year, of which 3.5% was organic. Every region delivered organic revenue growth. highlighting the value of our contractual business model throughout a dynamic trade and macro environment. We delivered record adjusted EBITDA in the fourth quarter of $255 million, ahead of the implied midpoint of our guidance at $249 million. We delivered net income in the fourth quarter of $43 million adjusted net income of $101 million. Our Delivered Earnings Per Share was 37 cents and our Adjusted Delivered Earnings Per Share was 87 cents. Our free cash flow in the fourth quarter was $163 million and we delivered our target adjusted EBITDA to free cash flow conversion for the full year. We remained disciplined in our capital expenditure and worker capital management, which allows us to continue to invest in our business with high returns. Our record operating return on invested capital remained consistently strong, driven by solid operating performance. Our leverage levels improved to 2.5 times net net to adjusted EBITDA, even after executing $200 million in share buyback. in the first half of 2025 at an average price of $37.34. We also successfully completed our first European bond offering, securing 500 million euros on competitive terms and using the proceeds to refinance upcoming maturities. Our balance sheet is strong and positions GXO for long-term growth. The integration of Vincanton is moving at pace. and we are on track to deliver the run rate cost synergies of $60 million by the end of 2026. We also expect to gain significant revenue synergies over the coming years. Given our excellent operating performance in 2025, I'm pleased to share our 2026 guidance, where we expect to deliver organic revenue growth of 4 to 5%, Adjusted EBITDA of $930 million to $970 million, an increase of 8% at the midpoint. Adjusted limited earnings per share of $2.85 to $3.15, an increase of 20% at the midpoint. And adjusted EBITDA to free cash flow conversion of 30% to 40%. With strong operating performance, a solid financial foundation, and a robust sales pipeline, GXO's resilient and predictable business model continues to deliver exceptional value to both our customers and shareholders. With that, over to you, Christy.