Cautionary Statement Regarding Forward-Looking Statements



This Quarterly Report on Form 10-Q and other written reports and oral statements
we make from time to time contain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"),
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). All statements other than statements of historical fact are, or
may be deemed to be, forward-looking statements. In some cases, forward-looking
statements can be identified by the use of forward-looking terms such as
"anticipate," "estimate," "believe," "continue," "could," "intend," "may,"
"plan," "potential," "predict," "should," "will," "expect," "objective,"
"projection," "forecast," "goal," "guidance," "outlook," "effort," "target,"
"trajectory" or the negative of these terms or other comparable terms. However,
the absence of these words does not mean that the statements are not
forward-looking. These forward-looking statements are based on certain
assumptions and analyses made by the Company in light of its experience and its
perception of historical trends, current conditions and expected future
developments, as well as other factors it believes are appropriate in the
circumstances. These forward-looking statements are subject to known and unknown
risks, uncertainties and assumptions that may cause actual results, levels of
activity, performance or achievements to be materially different from any future
results, levels of activity, performance or achievements expressed or implied by
such forward-looking statements. Factors that might cause or contribute to a
material difference include those discussed below and the risks discussed in the
Company's other filings with the Securities and Exchange Commission (the "SEC").
All forward-looking statements set forth in this Quarterly Report are qualified
by these cautionary statements, and there can be no assurance that the results
or developments anticipated by the Company will be realized or, even if
substantially realized, that they will have the expected consequence to or
effects on the Company or its business or operations.

The following Management's Discussion and Analysis of Financial Condition and
Results of Operations should be read in conjunction with the audited
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed
with the SEC on February 17, 2022 (the "2021 Form 10-K"), and the unaudited
condensed consolidated financial statements and related notes thereto included
elsewhere in this Form 10-Q.

Business Overview

GXO Logistics, Inc., together with its subsidiaries ("GXO," the "Company" or
"we"), is the largest pure-play contract logistics provider in the world and a
foremost innovator in an industry propelled by strong secular tailwinds. Our
customers rely on us to move their goods with high efficiency through their
supply chains - from the moment inbound goods arrive at our logistics sites,
through fulfillment and distribution and the management of returned products.
Our customer base includes many blue-chip leaders in sectors that demonstrate
high growth and/or durable demand, with significant growth potential through
customer outsourcing of logistics services.

Our business model is asset-light and historically resilient in cycles, with
high returns, strong free cash flow and visibility into revenue and earnings.
The vast majority of our contracts with customers are multi-year agreements, and
our facility lease arrangements generally align with contract length. Most of
our customer contracts contain both fixed and variable components. The fixed
component is typically designed to cover facility, technology and equipment
costs and may cover management costs, while the variable component is determined
based on expected volumes and associated labor costs.

We use technology to manage advanced automation, labor productivity, safety and
the complex flow of goods within sophisticated logistics environments. We strive
to provide all of our customers with consistently high levels of service and
cutting-edge automation managed by our proprietary technology. We also
collaborate with our largest customers on planning and forecasting and provide
assistance with network optimization, working with these customers to design or
redesign their supply chains to meet specific goals, such as sustainability
metrics. Our multidisciplinary, consultative approach has led to many of our key
customer relationships extending for years and expanding in scope.
                                       21

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The Separation



On August 2, 2021, we completed the separation from XPO Logistics, Inc. ("XPO")
(the "Separation"). Prior to the Separation, the Company's financial statements
were prepared on a standalone combined basis and were derived from the
consolidated financial statements and accounting records of XPO. On August 2,
2021, the Company became a standalone publicly-traded company, and its financial
statements post-Separation are prepared on a consolidated basis. The combined
consolidated financial statements for all periods presented prior to the
Separation are now also referred to as "condensed consolidated financial
statements" and have been prepared in accordance with generally accepted
accounting principles in the United States of America ("GAAP").

Prior to the Separation, the Company's historical assets and liabilities presented were wholly owned by XPO and were reflected on a historical cost basis. In connection with the Separation, the Company's assets and liabilities were transferred to the Company on a carryover basis.



Prior to the Separation, the historical results of operations included
allocations of XPO costs and expenses, including XPO's corporate function, which
incurred a variety of expenses including, but not limited to, information
technology, human resources, accounting, sales and sales operations,
procurement, executive services, legal, corporate finance and communications. An
allocation of these expenses is included to burden all business units comprising
XPO's historical results of operations, including GXO. The charges reflected
have been either specifically identified or allocated using drivers including
proportional adjusted earnings before interest, taxes, depreciation and
amortization, which include adjustments for transaction and integration costs,
as well as restructuring costs and other adjustments, or headcount. The majority
of these allocated costs is recorded within Selling, general and administrative
expense; Depreciation and amortization expense; and Transaction and integration
costs in the Condensed Consolidated Statements of Operations.

The Company's consolidated financial statements include the accounts of GXO and its majority-owned subsidiaries and variable interest entities of which the Company is the primary beneficiary. The Company has eliminated intercompany accounts and transactions.

We have a single reportable segment.

Clipper Acquisition



On May 24, 2022, the Company completed the acquisition of Clipper Logistics plc
("Clipper"), an omnichannel retail logistics specialist based in Leeds, England
(the "Clipper Acquisition"). The Company acquired Clipper for $1,103 million,
consisting of $900 million in cash and the issuance of 3,749,266 shares of GXO
common stock having a value of $203 million. The Competition and Markets
Authority (the "CMA") in the U.K. is currently reviewing the Clipper
Acquisition. The Company estimates that the CMA's review of the acquisition will
be completed during the second half of 2022.

In connection with the Clipper Acquisition, (i) the Company and Clipper entered
into a Cooperation Agreement; (ii) the Company entered into a Term Loan; (iii)
the Company entered into a Five-Year Term Loan; and (iv) the Company terminated
its Bridge Term Loan agreement. For additional information regarding the
financing agreements entered in connection with the Clipper Acquisition, see
Note 6-Debt and Financing Arrangements.

The results of operations of Clipper are included in our consolidated financial
statements from the date of acquisition. The Company recorded $80 million and
$1 million of revenue and income before income taxes for both the three and six
months ended June 30, 2022, respectively.
                                       22

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Results of Operations



                                                                               Three Months Ended June 30,
(In millions)                                                2022               2021            $ Change             % Change
Revenue                                                 $     2,156          $ 1,882          $     274                     15  %
Direct operating expense                                      1,775            1,554                221                     14  %
Selling, general and administrative expense                     220              177                 43                     24  %
Depreciation and amortization expense                            77               95                (18)                   (19) %
Transaction and integration costs                                24               35                (11)                   (31) %
Restructuring costs (credits) and other                           1               (1)                 2                       n/m
Operating income                                                 59               22                 37                       n/m
Other income (expense), net                                      23               (1)                24                       n/m
Interest expense, net                                            (9)              (6)                (3)                    50  %
Income before income taxes                                       73               15                 58                       n/m
Income tax expense                                              (21)              (1)               (20)                      n/m
Net income                                              $        52          $    14          $      38                       n/m


n/m - not meaningful

Three Months Ended June 30, 2022 compared with the Three Months Ended June 30, 2021



Revenue for the three months ended June 30, 2022, increased by 15%, or $274
million, to $2.2 billion, compared with $1.9 billion for the same period in
2021. For the three months ended June 30, 2022, our North America, Asia and
Pacific operations reported growth of 22%, and our European operations reported
growth of 11%. The Clipper Acquisition contributed 6% to revenue in our European
operations and 4% to total revenue for the three months ended June 30, 2022.
Foreign currency movements decreased revenue by approximately 9% for the three
months ended June 30, 2022.

Direct operating expenses comprise both fixed and variable expenses and consist
of operating costs related to our logistics facilities, including personnel
costs and facility and equipment expenses, such as rent, utilities, equipment
maintenance and repair, transportation costs, costs of materials and supplies
and information technology expenses. Direct operating expense for the three
months ended June 30, 2022 was $1.8 billion, or 82% of revenue, compared with
$1.6 billion, or 83% of revenue, for the same period in 2021. For the three
months ended June 30, 2022, direct operating expenses increased by $147 million
due to higher personnel and temporary labor expenses, as well as higher
third-party facilities and transportation costs of $33 million.

Selling, general and administrative expense ("SG&A") primarily consists of
salary and benefits for executive and administrative functions, professional
fees and legal costs. SG&A for the three months ended June 30, 2022, increased
by $43 million, to $220 million, compared with $177 million for the same period
in 2021. SG&A for the three months ended June 30, 2022 increased compared with
the same prior year period due to higher personnel costs, primarily for certain
administrative functions, reflecting the growth in our business.

Depreciation and amortization expense for the three months ended June 30, 2022,
was $77 million, compared with $95 million for the same period in 2021. The
decrease was primarily due to allocated corporate charges from XPO before the
Separation of $9 million and the impact of foreign currency movements.
Depreciation and amortization expense included amortization of intangible assets
of $13 million and $14 million for the three months ended June 30, 2022 and
2021, respectively.

Transaction and integration costs for the three months ended June 30, 2022 were
$24 million and primarily related to the Clipper Acquisition. Transaction and
integration costs for the three months ended June 30, 2021 were $35 million and
primarily related to the Separation.

Restructuring costs (credits) and other for the three months ended June 30, 2022 and 2021 was not material.


                                       23

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Other income for the three months ended June 30, 2022 was $23 million. For the
three months ended June 30, 2022, pension income was $9 million and the gain on
foreign currency contracts was $16 million. Other expense for the three months
ended June 30, 2021 was not material.

Interest expense, net for the three months ended June 30, 2022 was $9 million
compared with $6 million for the same period in 2021. For the three months ended
June 30, 2022, interest expense primarily related to debt issued in the second
half of 2021, debt issued in 2022, and capital lease obligations, partially
offset by interest income on the cross-currency swap agreements. For the three
months ended June 30, 2021, interest expense primarily related to related-party
debt obligations with XPO before the Separation and capital lease obligations.

Income before income taxes for the three months ended June 30, 2022 increased by
$58 million, to $73 million, compared with $15 million for the same period in
2021. The increase was primarily due to higher revenue and increased other
income as a result of pension income and foreign currency contracts.

Income tax expense for the three months ended June 30, 2022 was $21 million
compared with $1 million for the same period in 2021. Our effective tax rate was
29.4% for the three months ended June 30, 2022 compared with 10.2% for the same
period in 2021. The change in our effective tax rate was primarily driven by an
increase in pre-tax losses in certain jurisdictions for which no benefit was
recognized, non-deductible transaction cost, offset by deferred true-ups.

                                                                         Six Months Ended June 30,
(In millions)                                                                2022             2021            $ Change             % Change
Revenue                                                                   $ 4,239          $ 3,704          $     535                     14  %
Direct operating expense                                                    3,523            3,074                449                     15  %
Selling, general and administrative expense                                   410              348                 62                     18  %
Depreciation and amortization expense                                         153              174                (21)                   (12) %
Transaction and integration costs                                              43               53                (10)                   (19) %
Restructuring costs and other                                                  14                3                 11                       n/m
Operating income                                                               96               52                 44                     85  %
Other income (expense), net                                                    39                -                 39                       n/m
Interest expense, net                                                         (13)             (11)                (2)                    18  %
Income before income taxes                                                    122               41                 81                       n/m
Income tax expense                                                            (32)             (10)               (22)                      n/m
Net income                                                                $    90          $    31          $      59                       n/m


n/m - not meaningful

Six Months Ended June 30, 2022 compared with the Six Months Ended June 30, 2021



Revenue for the six months ended June 30, 2022, increased by 14%, or $535
million, to $4.2 billion, compared with $3.7 billion for the same period in
2021. For the six months ended June 30, 2022, our North America, Asia and
Pacific operations reported growth of 18%, and our European operations reported
growth of 12%. The Clipper Acquisition contributed 3% to revenue in our European
operations and 2% to total revenue for the six months ended June 30, 2022.
Foreign currency movements decreased revenue by approximately 7% for the six
months ended June 30, 2022.

Direct operating expenses comprise both fixed and variable expenses and consist
of operating costs related to our logistics facilities, including personnel
costs and facility and equipment expenses, such as rent, utilities, equipment
maintenance and repair, transportation costs, costs of materials and supplies
and information technology expenses. Direct operating expense for the six months
ended June 30, 2022, was $3.5 billion, or 83% of revenue, compared with $3.1
billion, or 83% of revenue for the same period in 2021. For the six months ended
June 30, 2022, direct operating expenses increased by $327 million due to higher
personnel and temporary labor expenses, as well as higher third-party facilities
and transportation costs of $67 million.

                                       24

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SG&A primarily consists of salary and benefits for executive and administrative
functions, professional fees and legal costs. SG&A for the six months ended June
30, 2022, increased by $62 million, to $410 million, compared with $348 million
for the same period in 2021. SG&A for the six months increased compared with the
same prior year period due to higher personnel costs, primarily for certain
administrative functions, reflecting the growth in our business.

Depreciation and amortization expense for the six months ended June 30, 2022 was
$153 million, compared with $174 million for the same period in 2021. The
decrease was a result of allocated corporate charges from XPO before the
Separation of $14 million and the impact of foreign currency movements.
Depreciation and amortization expense included amortization of intangible assets
of $27 million and $28 million for the six months ended June 30, 2022 and 2021,
respectively.

Transaction and integration costs for the six months ended June 30, 2022 were
$43 million and primarily related to the Clipper Acquisition. Transaction and
integration costs for the six months ended June 30, 2021 were $53 million and
primarily related to the Separation.

Restructuring costs and other for the six months ended June 30, 2022, were
$14 million. For the six months ended June 30, 2022, restructuring costs and
other included $6 million related to severance costs and $8 million related to
the deconsolidation of a joint venture. Restructuring costs and other for the
six months ended June 30, 2021 were $3 million and primarily related to
severance costs.

Other income for the six months ended June 30, 2022 was $39 million. For the six months ended June 30, 2022, pension income was $18 million and the gain on foreign currency contracts was $24 million. Other income for the six months ended June 30, 2021 was not material.



Interest expense, net for the six months ended June 30, 2022 was $13 million
compared with $11 million for the same period in 2021. For the six months ended
June 30, 2022, interest expense primarily related to debt issued in the second
half of 2021, debt issued in 2022, and capital lease obligations, partially
offset by interest income on the cross-currency swap agreements. For the six
months ended June 30, 2021, interest expense primarily related to related-party
debt obligations with XPO before the Separation and capital lease obligations.

Income before income taxes for the six months ended June 30, 2022 increased by
$81 million, to $122 million, compared with $41 million for the same period in
2021. The increase was primarily due to higher revenue and increased other
income as a result of pension income and foreign currency contracts, partially
offset by the deconsolidation of a joint venture.

Income tax expense for the six months ended June 30, 2022, was $32 million
compared with $10 million for the same period in 2021. Our effective tax rate
was 26.4% for the six months ended June 30, 2022 compared with 24.9% for the
same period in 2021. The change in our effective tax rate was primarily driven
by $5 million non-deductible transaction cost, offset by $4 million of deferred
true-ups.

Liquidity and Capital Resources



Our ability to fund our operations and anticipated capital needs is reliant upon
the generation of cash from operations, supplemented as necessary by periodic
utilization of our revolving credit facility. Our principal uses of cash in the
future will be to fund our operations, working capital needs, capital
expenditures, repayment of borrowings and strategic business development
transactions. The timing and magnitude of our start-ups can vary and may
positively or negatively impact our cash flows.

We continually evaluate our liquidity requirements and capital structure in light of our operating needs, growth initiatives and capital resources. We believe that our existing liquidity and sources of capital are sufficient to support our operations over the next 12 months.


                                       25

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Debt and Financing Arrangements

Five-Year Term Loan



On May 25, 2022, we entered into a five-year unsecured Term Loan (the "Five-Year
Term Loan due 2027") that provided a $500 million unsecured term loan facility
to fund the Clipper Acquisition. On May 26, 2022, we borrowed $500 million that
will mature on May 26, 2027. The loan bears interest at a fluctuating rate per
annum equal to, at our option, the alternate base rate or the adjusted Secured
Overnight Financing Rate (SOFR), plus an applicable margin based on the
Company's credit ratings.

Delayed Draw Term Loan



On March 22, 2022, we entered into an unsecured delayed draw Term Loan (the
"Delayed Draw Term Loan") that provided a £375 million ($457 million as of June
30, 2022) unsecured term loan facility to fund the Clipper Acquisition. The
loans were available to us in U.S. dollars or British pounds sterling. On May
26, 2022, we borrowed in U.S. dollars a $165 million 2-year term loan tranche
(the "Two-Year Term Loan due 2024") and a $235 million 3-year term loan tranche
(the "Three-Year Term Loan due 2025") that will mature on May 26, 2024, and May
26, 2025, respectively. Loans bear interest at a fluctuating rate per annum
equal to, at our option, the alternate base rate or the adjusted SOFR, plus an
applicable margin based on the Company's credit ratings.

Bridge Term Loan



On February 28, 2022, we entered into an unsecured Bridge Term Loan (the "Bridge
Term Loan") that provided a £745 million ($907 million as of June 30, 2022)
unsecured term loan facility to fund the Clipper Acquisition. The commitments
under the Bridge Term Loan were terminated with the effectiveness of the
Five-Year Term Loan and the Delayed Draw Term Loan. No amounts were drawn under
the Bridge Term Loan credit agreement.

Unsecured Notes



In 2021, we completed an offering of $800 million aggregate principal amount of
notes, consisting of $400 million of notes due 2026 (the "2026 Notes") and $400
million of notes due 2031 (the "2031 Notes"). The 2026 Notes bear interest at a
rate of 1.65% per annum payable semiannually in cash in arrears on January 15
and July 15 of each year, beginning January 15, 2022, and maturing on July 15,
2026. The 2031 Notes bear interest at a rate of 2.65% per annum payable
semiannually in cash in arrears on January 15 and July 15 of each year,
beginning January 15, 2022, and maturing on July 15, 2031.

Revolving Credit Facility



In 2021, we entered into a five-year unsecured multi-currency Revolving Credit
Facility (the "Revolving Credit Facility"). The Revolving Credit Facility
provides commitments of up to $800 million, of which $60 million is available
for the issuance of letters of credit. No amounts were outstanding under the
Revolving Credit Facility as of June 30, 2022.

Sales of Certain Receivables



We sell certain of our trade accounts receivables on a non-recourse basis to
third-party financial institutions under various factoring agreements. We also
sold certain European trade accounts receivables under a securitization program.
In the first quarter of 2022, we terminated our securitization program. We
account for these transactions as sales of receivables and present cash proceeds
as cash provided by operating activities in the Condensed Consolidated
Statements of Cash Flows. We use the sale of certain receivables to help manage
our working capital.

                                       26

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Information related to the trade receivables sold was as follows:



                                            Three Months Ended                 Six Months Ended
                                                 June 30,                          June 30,
     (In millions)                            2022             2021            2022            2021
     Factoring agreements
     Receivables sold in period       $      228              $ 100      $     457            $ 200
     Cash consideration                      228                100            456              200
     Securitization program
     Receivables sold in period       $        -              $ 474      $       -            $ 902
     Cash consideration                        -                474              -              902



Covenants and Compliance

As of June 30, 2022, we were in compliance with the covenants contained in our debt and financing arrangements.

Financial Condition

The following table summarizes our asset and liability balances as of June 30, 2022 and December 31, 2021:



  (In millions)                     June 30, 2022       December 31, 2021       $ Change       % Change
  Total current assets             $        2,256      $            2,099      $     157            7  %
  Total long-term assets                    6,450                   5,172          1,278           25  %
  Total current liabilities                 2,364                   2,329             35            2  %
  Total long-term liabilities               3,781                   2,552          1,229           48  %



The increase in our assets and liabilities from December 31, 2021 to June 30,
2022 primarily reflects the assets acquired and liabilities assumed, as well as
various debt instruments entered into in connection with the Clipper
Acquisition.

Cash Flow Activity



Our cash flows from operating, investing and financing activities, as reflected
on our Condensed Consolidated Statements of Cash Flows, are summarized as
follows:

                                                                            Six Months Ended June 30,
(In millions)                                             2022              2021           $ Change             % Change
Net cash provided by operating activities             $     200          $   146          $     54                     37  %
Net cash used in investing activities                    (1,003)             (71)             (932)                      n/m
Net cash provided by (used in) financing                    869              (78)              947                       n/m

activities


Effect of exchange rates on cash and cash                   (15)               1               (16)                      n/m

equivalents


Net increase (decrease) in cash and cash              $      51          $    (2)         $     53                       n/m
equivalents


n/m - not meaningful

Operating Activities

Cash flows from operating activities for the six months ended June 30, 2022
increased by $54 million compared with the same period in 2021. The increase was
primarily due to a $59 million increase in net income, partially offset by an
$11 million decrease in non-cash items.

                                       27

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Investing Activities



Investing activities used $1,003 million of cash for the six months ended June
30, 2022, compared with $71 million used for the same period of 2021. During the
six months ended June 30, 2022, we used $874 million, net of cash received, to
fund the Clipper Acquisition, used $154 million to purchase property and
equipment, received $10 million in proceeds from cross-currency swap agreements,
excluding accrued interest, and received $6 million from sales of property and
equipment. During the six months ended June 30, 2021, we used $119 million to
purchase property and equipment, received $34 million net cash from the Kuehne +
Nagel acquisition, received $12 million in connection with the purchase and sale
of affiliate trade receivables, and received $2 million from sales of property
and equipment.

Financing Activities

Financing activities generated $869 million of cash for the six months ended
June 30, 2022, compared with $78 million used for the same period of 2021. The
primary sources of cash from financing activities in the six months ended June
30, 2022, were $898 million in proceeds from long-term debt, partially offset by
$15 million repayment of debt and finance leases and $12 million in payments for
employee taxes on net settlement of equity awards. The primary uses of cash from
financing activities in the six months ended June 30, 2021, were $128 million in
the purchase of a noncontrolling interest, $56 million in repayments of debt and
finance leases, and $25 million in repayment of debt related to a trade
securitization program, partially offset by $116 million of net transfers from
XPO.

Off-Balance Sheet Arrangements

We do not engage in any off-balance sheet financial arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Contractual Obligations



The Company's contractual cash requirements have not changed materially since
the 2021 Form 10-K, except for the new term loan credit agreements described
above.

Critical Accounting Policies and Estimates



Preparation of our condensed consolidated financial statements in accordance
with GAAP requires us to make estimates and assumptions that affect the reported
amounts of certain assets, liabilities, revenues and expenses, as well as
related disclosure of contingent assets and liabilities. There have been no
material changes to the critical accounting policies and estimates as previously
disclosed in Part II, Item 8 of our Annual Report on Form 10-K for the year
ended December 31, 2021, and that are hereby incorporated by reference.

Accounting Pronouncements



Information related to new accounting standards is included in Note 1-Basis of
Presentation and Significant Accounting Policies to the condensed consolidated
financial statements.

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