GXO 10-K & 10-Q changes, risk factors and insider trading

Labor represents a significant portion of our operating expenses,expenses; thus, compliance with these evolving laws and regulations could substantially increase our cost of doing business, while failure to do so could subject us to significant fines and lawsuits and could adversely affect our business, results of operations, cash flows and financial condition. We are currently subject to employment-related claims in connection with our operations. These claims, lawsuits and proceedings are in various stages of adjudication or investigation and involve a wide variety of claims and potential outcomes.

We depend on our ability to attract and retain qualified employees, including our executive officers and managers. In particular, we recently hired a new Chief Executive Officer, Chief Operating Officer and Chief Commercial Officer, which officer assumed the duties of our former Chief Revenue Officer, and have announced changes in our Chief Financial Officer and Chief Accounting Officer. If we are unable to attractattract, successfully onboard and retain such individuals, we may be unable to maintain our current competitive position within the industry, meet our customers’ expectations or successfully expand and grow our business.

Our ability to meet customer demands and expectations, especially during periods of peak volume, is substantially dependent on our ability to recruit and retain qualified temporary part-time and full-time workers. Increased demand for temporary workers, low unemployment or changes in federal or state minimum wage laws may increase the costs of temporary labor, and any such increases in labor costs could adversely affect our business, results of operations, cash flows and financial condition. In addition, macro-economic headwinds such as inflation and supply changechain disruptions may increase the potential for labor shortages and heightened levels of employee turnover. Therefore, our inability to recruit a qualified temporary workforce may result in our inability to meet our customers’ performance targets.

Our success depends on our ability to consistently deliver operational excellence and strong customer service. Our inability to deliver our services and solutions as promised on a consistent basis, or our customers having a negative experience or otherwise becoming dissatisfied, can negatively impact our relationships with new or existing customers and adversely affect our brand and reputation, which could, in turn, adversely affect revenue and earnings growth. Adverse publicity (whether or not justified) relating to activities by our employees, contractors, agents or others with whom we do business, such as customer service issues, could tarnish our reputation and reduce the value of our brand. With the increase in the use of social media outlets such as LinkedIn, X (formerly Twitter),X, Facebook, Instagram and YouTube, adverse publicity can be disseminated quickly and broadly, making it increasingly difficult for us to effectively respond. This unfavorable publicity could also require us to allocate significant resources to rebuild our reputation.

The nature of our business exposes us to the potential for various types of claims and litigation. We are subject to claims and litigation related to our customer contracts and relationships, labor and employment, personal injury, vehicular accidents, cargo and other property damage, business practices, environmental liability and other matters, including claims asserted under various other theories of agency or employer liability, such as the investigation by Italian authorities into the deductibility of value-added tax payments by the Company to certain third-party cooperative labor providers.liability. Claims against us may exceed the amount of insurance coverage that we have or may not be covered by insurance at all. Businesses that we acquire also increase our exposure to litigation. Material increases in liability claims or workers’ compensation claims, the unfavorable resolution of claims or our failure to recover, in full or in part, under indemnity provisions could materially and adversely affect our operating results. In addition, significant increases in insurance costs or the inability to purchase insurance as a result of these claims could affect our earnings.

The U.S. Congress, the Organisation for Economic Co-operation and Development (“OECD”), the EU and other government agencies in jurisdictions in which we and our affiliates do business have maintained a focus on the taxation of multinational companies. During 2023, the OECD issued administrative guidance for the Pillar Two Global Anti-Base Erosion rules (“Pillar Two”), which generally imposes a 15% global minimum tax on multinational companies. Many Pillar Two rules are effective for fiscal years beginning on January 1, 2024, with other aspects to be effective from 2025. On July 4, 2025, the One Big Beautiful Bill Act (P.L. 119-21) was signed into law. The legislation has multiple effective dates, with certain provisions effective in 2025 and others effective through 2027. The Company regularly monitors developments in its jurisdictions and considers the impact of the tax-related proposals as they arise.

Our performance is affected by recessionary economic cycles, downturns in customers’ business cycles and changes in customers’ business practices. Our customers experience cyclical fluctuations in demand for their products due to economic recessions, which reduces the demand for our services and could adversely affect our business, results of operations, cash flows and financial condition. The ramifications of any period of heightened geopolitical tensions or conflicts, including increased international trade sanctions or tariffs, may negatively impact regional and global economic markets, including where we operate, may cause supply chain disruptions, may reduce consumer demand and may cause inflation with increased costs for labor, transportation and energy. Any period of heightened geopolitical tensions or conflict can increase financial market volatility and could negatively affect our ability to raise additional capital when required. While we do not conduct business in Russia, the conflict and its effects could adversely affect our business, results of operations, cash flows and financial condition.

Additionally, various jurisdictions, such as the State of California, the United Kingdom, and the European Union, have enacted legislation requiring certain companies to disclose climate-related financial risk as well as GHG emissions, and other non-financial information. The requirements differ across regulations, increasing the cost of compliance. We may incur additional expenses both in the management of disclosure as well as potential changes in company operations to comply with the regulations. Certain jurisdictions have enacted legislation requiring certain companies to look ininto their supply chain and more actively manage risk and disclose non-financial metrics such as GHG emissions and health and safety. Managing bespoke customer requests related to ESG regulation may also increase our expenses. As the nature, scope and complexity of ESG reporting, diligence and disclosure requirements expand, we may have to undertake additional costs to control, assess and report on ESG metrics. Any failure or perceived failure to satisfy various ESG reporting standards within the timelines we announce, or at all, could increase the risk of litigation.

In addition, we are subject to Section 203 of the Delaware General CorporateCorporation Law (the “DGCL”), which could have the effect of delaying or preventing a change of control. Section 203 provides that, subject to limited exceptions, persons that acquire, or are affiliated with persons that acquire, more than 15% of the outstanding voting stock of a Delaware corporation may not engage in a business combination with that corporation, including by merger, consolidation or acquisitions of additional shares, for a three-year period following the date on which that person or any of its affiliates become the holder of more than 15% of the corporation’s outstanding voting stock.

In February 2025, our board of directors authorized the repurchase by the Company of up to $500 million of our common stock. The share repurchase plan permits repurchases of our common stock to be made from time to time in management’s discretion, through a variety of methods, including a 10b5-1 trading plan, open market purchases, privately negotiated transactions or otherwise. The timing and number of shares of common stock repurchased will depend on a variety of factors, including price, general business and market conditions, alternative investment opportunities and funding considerations. As a result, there can be no guarantee regarding the timing or volume of our share repurchases. The share repurchase program could affect the price of our common stock, increase volatility and diminish our cash reserves. The repurchase program may be suspended or discontinued at any time and, even if fully implemented, may not enhance long-term shareholder value. As of December 31, 2025, the remaining authorization under the Repurchase Plan was $300 million.

The most dramatic growth in demand in recent years has been in e-commerce and related sectors, including omnichannel retail and other direct-to-consumer channels. We expect to attract new customers and expand the services we provide to existing customers through new projects,projects; thus earning more of their logistics spending. We use technology to manage advanced automation, labor productivity, sustainability, safety and the complex flow of goods within sophisticated warehouse environments.

OnIn April 29, 2024, the Company completed the acquisition of Wincanton plc (now “Wincanton Limited”), a U.K. logistics provider specializing in both warehousing and transportation solutions (“the Wincanton Acquisition”). OnThe OctoberWincanton 23,Acquisition 2023,was subject to review by the CompanyU.K. completedCompetition theand acquisitionMarkets of PFSweb, Inc. (“PFS”), an e-commerce order fulfillment company based in Irving, TexasAuthority (the “PFS AcquisitionCMA”). DueIn June 2025, the CMA approved the Wincanton Acquisition, subject to the acquisitionsdivestment of Wincantoncertain grocery contracts in 2024the andU.K. PFSWe expect to complete the Wincanton Divestment in 2023, comparisons in our results of operations between 2024 and 2023 are less meaningful. For additional information regarding our acquisitions, see Note 4. “Acquisitions” to the Consolidated Financial Statements.2026.

Revenue for 20242025 increased by 20%,13%, or $1.9$1.5 billion, to $13.2 billion, up from $11.7 billion comparedin with $9.8 billion for 2023.2024. The increase primarily reflects $1.6$655 billionmillion from the acquisitionsWincanton of WincantonAcquisition and PFS. Also, revenue increasedgrowth in our Continentalbusiness Europefrom new contract implementations and U.K. and Ireland businesses, mainly driven by higher pricing. ForeignFavorable foreign currency movements increased revenue by $109$352 million in 2024.2025.

Direct operating expensesexpense comprisecomprises both fixed and variable expensescosts and consist ofinclude operating costsexpenses related to our warehouse operations, including personnel costs, rent expenses, utility costs, equipment maintenance and repair costs, transportation costs, costs of materials and suppliessupplies, and information technology expenses. Direct operating expense for 20242025 increased by 23%,14%, or $1.8$1.3 billion, to $11.2 billion, up from $9.9 billion comparedin with $8.0 billion for 2023.2024. The increase primarily reflects $1.4$595 billionmillion from the acquisitions of Wincanton and PFS,Acquisition and higher personnel and temporary labor expensescosts indriven the U.K. and Irelandby business from growth in the business. Direct operating expense also increased due to foreign currency movement in our U.K. and Ireland and Continental Europe businesses.growth. As a percentage of revenue, direct operating expense was 84.1%84.9% in 2025 and 82.2%84.1% in 2024 and 2023, respectively. The increase in Direct operating expense as a percentage of revenue was primarily related to the Wincanton Acquisition.2024.

Selling, general and administrative expense (“SG&A”) primarily consists of salary and benefit costs for executive and certain administrationadministrative functions, professional fees, bad debtbad-debt expense and legal costs. SG&A for 20242025 increased by 6%,4%, or $63$45 million, to $1.1$1,106 billion,million, comparedup withfrom $998$1,061 million in 2023.2024. The increase was primarily driven by the acquisitionsWincanton of WincantonAcquisition and PFS.higher personnel costs.

Depreciation and amortization expense for 20242025 increased by $54$42 millionmillion, to $457 million, up from $415 million comparedin with2024. $361Amortization expense totaled $119 million forand 2023.$108 million in 2025 and 2024, respectively. Depreciation and amortization expense increased primarily due to the acquisitions of Wincanton and PFS. Depreciation and amortization expense included amortization of intangible assets acquired of $108 million and $71 million in 2024 and 2023, respectively.Acquisition.

Transaction and integration costs weretotaled $54 million in 2025, compared with $76 million in 2024,2024. comparedTransaction withand $34integration costs in 2025 primarily included $48 million forrelated 2023.to the Wincanton Acquisition. Transaction and integration costs in 2024 primarily included $61 million related to the Wincanton Acquisition and $8 million related tofor the integrationPFSweb, ofInc. PFS. Transaction and integration costs in 2023 primarily included $20 million related to the integration of Clipper Logistics plc and $12 million related to the PFS Acquisition.integration.

We engage in restructuring actions as part of our ongoing efforts to best use our resources and infrastructure. These costs are primarily related to severance, including projects to optimize human resources, finance and information technology activities, and are not associated with customer attrition. Restructuring costs and other were $27 million for 2024,2025, compared with $32$25 million for 2023.2024. Restructuring costs and other in 2025 consisted of severance paid to exiting individuals from the Company’s leadership team and severance paid as part of an initiative to optimize corporate expenses. Restructuring costs and other for 2024 related to a restructuring plan designed to centralize certain finance, human resource and IT functions.functions Restructuringfrom costsregional and other for 2023 included $16 million related to severance, $11 million for impairment charges, and $5 million associated with the exit of a non-core businesses in Asia.teams.

Other income,income (expense), net was as follows:

Income tax expense was $68 million in 2025, compared with $8 million in 2024, compared with $33 million in 2023.2024. Our effective tax rate was 65.4% in 2025 and 5.6% in 20242024. andThe 12.4%change in 2023.the The decrease in ourCompany’s effective income tax rate was primarily driven by incomenon-deductible taxregulatory benefitsmatter fromand transaction costs in 2025 and the release of a valuation allowancesallowance in France in 2024.

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 and factoring programs. Our principal uses of cash in the future will be primarily to fund our operations, working capital needs, capital expenditures, repayment of borrowings and strategic business development transactions. The timing and magnitude of our new contract 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.

As of December 31, 2024,2025, we held cash and cash equivalents of $413$854 million,million and restricted cash of $72$3 million recorded in Other long-term assets,million, and we hadhave $999$794 million of borrowing capacity available, net of letters of credit under our revolving credit facilities. During 2024, we deposited €68 million ($70 million as of December 31, 2024) of restricted cash in relation to a contingency, and in January 2025, the Company deposited an additional amount of €16 million ($17 million).facility.

We believe that our cash and cash equivalents on hand, our cash flows fromgenerated by our operations, theborrowings borrowing capacityavailable under our revolving credit facilities, andfacility, the use of our factoring programsprograms, and refinancing options available to us in the capital markets, will provide sufficient liquidity to operate our business and fundmeet our current and assumed obligations for at least the next 12twelve months.months and for the foreseeable future thereafter.

For additional information regarding our cash requirements from contractual obligations, indebtedness and lease obligations, and legal matters, see Note“Contractual 18. “Commitments and Contingencies,Obligations” Note 10. “Debt and Financing Arrangements” and Note 9. “Leases” to the Consolidated Financial Statements.below.

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

Cash flows provided byfrom operating activities for 2024 decreased by $9$115 million in 2025 compared to 2023.2024. ThisThe declinedecrease was drivendue byto decreasedlower net income after adjustmentsadjusted for the net effect of non-cash items,items offsetand by benefits fromincreased working capital activityconsumption comparedin to the prior year.2025.

Investing activities used $1.2$196 billionmillion of cash in 20242025 compared with $410$1.2 billion in 2024. In 2025, we used $324 million into 2023.purchase Duringproperty and equipment, paid $24 million to settle net investment hedges, and received $149 million from the sale of property and equipment. In 2024, we used $863 million, net of cash received, to fund the Wincanton Acquisition, used $359 million of cash to purchase property and equipment, partially offset byreceived $61 million of proceeds from the salessale of property and equipmentequipment, and received $4 million in net proceeds from the settlement of cross-currencynet swapinvestment agreements, excluding accrued interest. During 2023, we used $274 million of cash for capital expenditures, used $149 million in connection with the PFS Acquisition and $3 million in settlement of cross-currency swap agreements, excluding accrued interest, partially offset by $18 million of proceeds from the sales of property and equipment.hedges.

As of December 31, 2025, our outstanding obligations included $2.8 billion in operating leases, $326 million in finance leases, and $2.8 billion in long-term debt, including the current portion. In addition, we have obligations forunder agreements to purchase goods or services entered into induring the ordinary course of businessbusiness, thatwhich are enforceable and legally binding.

Our estimates of fair value are based upon reasonable assumptions but are inherently uncertain and unpredictable, and as a result, actual results may differ from these estimates. During the measurement period, which is up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings. For additional informationinformation, see Note 4.5. “AcquisitionsAcquisition and Divestiture” to the Consolidated Financial Statements.

We sponsor various retirement plans, with the most significant plans held in the U.K. (the “U.K. Retirement Plans”). Assumptions used in the accounting for these employee benefit plans include the discount rate and expected return on plan assets. Assumptions are determined based on company data and appropriate market indicators and are evaluated each year at December 31. The December 31, 2025 pension funded status and 2026 expense are affected by year-end 2025 assumptions. A change in any of these assumptions would have an effect on the net periodic pension cost reported in the Consolidated Financial Statements.

Sensitivity Analysis. The discount rate is determined based on the yield on a portfolio of high-quality bonds, constructed to provide cash flows necessary to meet our pension plans’ expected future benefit payments, as determined for the accumulated benefit obligation. A 50-basis-point decrease in the discount rate of the U.K. Retirement Plans would resulthave resulted in an estimated increase in the accumulated benefit obligation of approximately $91$94 million.million in 2025. The expected return on plan assets assumption is derived usingfrom the current and expected asset allocation of the pension plan assetsassets, and consideringit considers historical as well asand expected returns onfor various classes of plan assets. An increase or decrease of 50 basis points in the expected return on plan assets for the U.K. Retirement Plans would have decreased or increased our net periodic pension cost by approximately $9 million in 2025.2026. For additional informationinformation, see Note 15. “Employee Benefit Plans” to the Consolidated Financial Statements.

Three Months Ended MarchJune 31,30, 2026 compared with the Three Months Ended MarchJune 31,30, 2025

Revenue for the three months ended MarchJune 31,30, 2026, increased by 11%,4%, or $321$142 million, to $3.3$3.4 billion compared with $3.0$3.3 billion for the same period in 2025. The increase reflects growth in our business and $198$29 million of foreign currency movements for the three months ended MarchJune 31,30, 2026.

Direct operating expense for the three months ended MarchJune 31,30, 2026, increased by 10%,4%, or $250$120 million, to $2.8$2.9 billion compared with $2.6$2.8 billion for the same period in 2025. As a percentage of revenue, Direct operating expense for the three months ended MarchJune 31,30, 2026, decreasedwas to 85.1%85.2% compared with 85.9%85.3% for the same period in 2025. The increase in Direct operating expense reflects growth in our business and $158$24 million of foreign currency movements for the three months ended MarchJune 31,30, 2026. For the three months ended March 31, 2026, we recorded a net benefit of $28 million, primarily in rent expense, from a real estate transaction that resulted in an early termination of a lease. The increase in Direct operating expense before recognizing the real estate transaction was in line with our business growth.

Selling, general and administrative expense (“SG&A”) for the three months ended MarchJune 31,30, 2026, increased by $35$23 million, to $296$295 million compared with $261$272 million for the same period in 2025. The increase reflects growth in our business and $19 million of foreign currency movements for the three months ended March 31, 2026.business.

Other income (expense), net increased from expense to income, primarily due to higher pension income and foreign currency gain on foreign currency contracts.contracts in the current period. Other income (expense), net was as follows:

Income (loss) before income taxesRevenue for the threesix months ended MarchJune 31,30, 2026, wasincreased incomeby of7%, $17or million$463 million, to $6.7 billion compared with a$6.3 loss of $93 millionbillion for the same period in 2025. The increase from loss to income reflects higher operating income, primarily due to growth in our business and a net benefit of $28$227 million from a real estate transaction, lower regulatory matters, and unrealized gain onof foreign currency contracts.movements for the six months ended June 30, 2026.

Income tax expense for the threesix months ended MarchJune 31,30, 2026, was $12$33 million compared with $2$17 million for the same period in 2025. Our effective tax rate for the threesix months ended MarchJune 31,30, 2026, was an expense on a pre-tax income of 68.9%,50.6%, compared to an expense on a pre-tax loss of (2.735.3)% for the same period in 2025. The change to our effective tax rate was primarily driven by an increase in pre-tax income, as well as an increase in unrecognized tax benefits,benefits for the six months ended June 30, 2026, and a non-deductible fair value adjustment related to the Wincanton Divestment in the current period, and the regulatory matter induring the priorsix period.months ended June 30, 2025.

As of MarchJune 31,30, 2026, we held cash and cash equivalents of $794$769 million and restricted cash of $3$4 million, and we had $793 million of borrowing capacity, net of letters of credit under our revolving credit facility. Upon maturity in July 2026, we repaid $400 million of unsecured notes using cash on hand.

In February 2025, our board of directors authorized and announced thea repurchase ofplan for up to $500 million of our common stock (the “Repurchase Plan”). The Repurchase Plan permits shares of common stock to be repurchased from time to time in management’s discretion. The Repurchase Plan does not obligate the Company to repurchase any specific number of shares of common stock and may be suspended or discontinued at any time. We expect to fund any remaining repurchases with existing cash on hand, borrowings onunder our revolving credit facility, and/or other financing sources. No shares were repurchased duringIn the firstsecond quarter of 2026.2026, we repurchased $16 million of shares. As of MarchJune 31,30, 2026, the$284 remainingmillion authorizationremained authorized under the Repurchase PlanPlan. wasDuring $300July million.2026, we repurchased an additional $5 million of shares.

We believe that our cash and cash equivalents on hand, our cash flows generated by our operations, amounts available under the revolving credit facility, the use of our factoring programs, and refinancing options available to us in the capital markets,markets will provide sufficient liquidity to operate our business, including the repayment of the current portion of our debt, for at least the next 12 months and for the foreseeable future thereafter.

There were no material changes in our total assets and total liabilities from December 31, 2025,2025 to MarchJune 31,30, 2026.2026, other than the reclassification of $275 million of debt from long-term to current.

Cash flows provided by operating activities for the threesix months ended MarchJune 31,30, 2026, increased by $2$75 million compared with the same period in 2025. The increase was due to higher net income adjusted for the net effect of non-cash items,items and lower accounts payable cash outflow, partially offset by workinghigher capitalcash consumptionusage infrom 2026.accounts receivable and other assets. For the six months ended June 30, 2026 and June 30, 2025, net cash provided by our factoring programs was $14 million and $78 million, respectively.

Investing activities used $62$126 million and $77$123 million of cash for the threesix months ended MarchJune 31,30, 2026,2026 and MarchJune 31,30, 2025, respectively. During the threesix months ended MarchJune 31,30, 2026, we utilized $65$130 million of cash to purchase property and equipment and received $3$4 million from the sale of property and equipment. During the threesix months ended MarchJune 31,30, 2025, we utilized $78$125 million of cash to purchase property and equipment and received $1$2 million from the sale of property and equipment.

Financing activities used $26$62 million and $66$227 million of cash for the threesix months ended MarchJune 31,30, 2026,2026 and MarchJune 31,30, 2025, respectively. The primary use of cash from financing activities during the threesix months ended MarchJune 31,30, 2026, was $15$25 million to repay finance lease obligations, $18 million to repurchase shares of our common stock pursuant to the Repurchase Plan and to pay excise tax, $17 million in payments for employee taxes on net settlement of equity awards and $14$10 million tonet repayobligations financeunder leasefactoring obligations,arrangements, partially offset by $7 million in proceeds from the exercise of stock options.options and $1 million increase in bank overdraft. The primary use of cash from financing activities during the threesix months ended MarchJune 31,30, 2025, was $106$200 million used to repurchase shares of our common stock pursuant to the Repurchase Plan, $11$55 million to repay debt, $24 million to repay finance lease obligations, $12 million net obligations under factoring arrangements and $6$7 million in payments for employee taxes on net settlement of equity awards, partially offset by $56$64 million increase in bank overdraft and $8 million of net borrowings under revolving credit facilities.

The following information is provided to comply with Rule 13-01 of Regulation S-X under the Securities Exchange Act of 1934, as amended,1934 for the €500 million 3.750% notes due 2030 issued by GXO Logistics Capital B.V. (“GXO Capital”), a subsidiary of the Company incorporated under the laws of the Netherlands. GXO Capital was incorporated in October 2025.

The following tables set forth the summarized financial information for the threesix months ended MarchJune 31,30, 2026, and as of MarchJune 31,30, 2026,2026 and December 31, 2025, of GXO and GXO Capital, on a standalone basis, which does not include the consolidated impact of the assets, liabilities, and financial results of their subsidiaries except as noted in the tables below, nor does it include any impact of intercompany eliminations as there were no intercompany transactions between GXO and GXO Capital. This summarized financial information is not intended to present the financial position or results of operations of GXO or GXO Capital in accordance with U.S. generally accepted accounting principles (“GAAP”).

As of MarchJune 31,30, 2026, the Company’s contractual obligations had not materially changed compared with December 31, 2025.