GXO Logistics : Investor Day Transcript

GXO Investor Day Transcript

January 12, 2023

Presenters in order of speaking:

• Malcolm Wilson, Chief Executive Officer
• Mark Manduca, Chief Investment Officer
• Bill Fraine, Chief Commercial Officer
• Marv Cunningham, Chief Operating Officer, Americas & Asia Pacific
• Gavin Williams, Managing Director, UK & Ireland
• Eduardo Pelleissone, President, Americas & Asia Pacific
• Meagan Fitzsimmons, Chief Compliance and ESG Officer
• Baris Oran, Chief Financial Officer

The following transcript should be read in conjunction with the accompanying slide presentation, which contains, among other information, additional details and source data for certain information referenced in the transcript.

Please also refer to the Legal Disclaimer included in the presentation.

Malcolm Wilson, GXO Chief Executive Officer

Slide 3: Our agenda today

Good morning, everyone, and thanks for joining us today. I'm Malcolm Wilson, the CEO of GXO.

It's been nearly 18 months since we became a publicly traded company. During this time, we've successfully navigated a period of extraordinary disruption in global supply chains. We've demonstrated the exceptional value that a scaled, pure-play logistics provider, as GXO, can offer.

This morning, you'll hear how we're executing on a five-year business plan to increase revenue organically by 8-12%, to $17 billion dollars, and nearly triple our adjusted EBITDA to $1.6 billion dollars - that is 17% compounded annual growth rate.

©2023 GXO, Inc.

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To share how we'll achieve this, with me here today are several members of our senior management team, who will talk you through why we're so excited about this business and its future. I know many of you have spoken with Baris, Mark, and me previously, and I'm pleased to be able to introduce to you some other key members of the team, who help run our company - day in, day out.

Presenting with me today will be Mark Manduca, Bill Fraine, Marv Cunningham, and Meagan Fitzsimmons. Meagan heads up all of our ESG activities.

You'll also hear from Eduardo Pelleissone, and Gavin Williams. They're running our core regional businesses. Gavin runs our UK activity, but in fact, today, he's filling in for Richard Cawston. Some of you will have met Richard in the past - he runs our Europe-wide business. Regretfully, Richard is out with COVID at the moment, so he's not able to join us.

And finally, you'll hear from Baris Oran, our CFO. He'll be running through, in some detail, the financials that are the bedrock of this business plan.

And lastly, we're very pleased to be joined today by a number of our Board of Directors, and our Chairman.

Slide 4: GXO Mission statement

As we go through the presentation today, I want you to keep two key points in mind:

• First, no other player in this space combines our scale, technology, and expertise, which enable us to solve our customers' challenges at the level we do.
• And second, we expect these differentiated features to continue to drive market share gains within an attractive and growing industry.

Slide 5: GXO at a glance

As you can see, we've established a strong foundation for value creation.

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Today, we operate 974 warehouses in 27 countries - that's more than two hundred million square feet of space! Our 130,000 global team members serve more than 1,200 global customers.

In 2021, we delivered annual revenues of approximately $8 billion dollars and pro forma adjusted EBITDA of $633 million dollars. Over the past five years, we've grown organic revenue by a compound annual rate of 8%, all while delivering strong cash conversion and an above 30% return on capital invested.

Slide 6: Full-year 2022 and full-year 2023 outlook

The focus today is our 2027 business plan and financial outlook. To provide helpful context, this morning, we announced our preliminary full-year financial results for 2022, as well as our preliminary 2023 outlook.

In 2022, we've achieved revenue of about $9 billion dollars, and adjusted EBITDA of $720-730 million dollars.

Looking specifically at 2023, despite a clearly softer macro environment, we still expect to achieve organic revenue growth of between 6 and 8%, and adjusted EBITDA of $700-730 million dollars, and that's even after taking into account a $70-million-dollar headwind coming from foreign exchange and reduced pension income.

We'll be giving you a detailed update on our 2023 guidance on the 15th of February, but the purpose of today is to outline our strategic vision for the 2027 outlook of the company, so let's all keep that as our focus.

Slide 7: We solve complex supply chain problems for the world's largest companies.

Many of the largest and most sophisticated companies in the world partner with GXO - we refer to them as the "blue-est" of the blue chips.

They depend on us to design and implement sophisticated solutions to their most complex problems. By working with GXO, they are able to realize lower costs, higher revenues, increased productivity and, importantly, lower emissions.

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The strong reputation we've developed has enabled us to deepen our relationships with our existing customers, while attracting more and more blue-chip business. This ensures great stability.

At the same time, we remain highly diversified, with low concentration risk: our largest customer still represents only 4% of our overall business.

We see an amazing runway for growth with these customers and others as we continue our track record of winning market share.

Slide 8: We're focused on the center of global supply chains.

Let me provide a high-level overview of the business. In the simplest terms, we build and operate the most advanced warehouse solutions in the world.

We are the lynchpin that enables the world's largest companies to most efficiently get their products into the hands of the consumer. This is a space that's growing more and more complex, as changing consumer expectations and preferences continue to drive a need for faster delivery times, higher levels of returned inventory, and better visibility throughout the supply chain.

Traditional warehousing solutions are no longer sufficient to fill these needs. The industry needs scaled technology players to deliver these complex solutions - and that is why GXO will continue to take market share.

Slide 9: We design and operate state-of-the-art warehouses, enabled with the latest technologies.

So, what does the world's most advanced warehouse look like?

Each warehouse is configured for the specific needs of our customers - but at a high level, GXO's facilities operate according to the same principle: how can we optimize our customer's operations, to increase speed and efficiency, improve accuracy, and enhance the experience for our people?

By deploying cutting-edge hardware and software, we're able to optimize the flow of inventory through the warehouse space and streamline the fulfillment process.

©2023 GXO, Inc.

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