GXO Logistics (GXO 4.23%) beat top- and bottom-line expectations for the fourth quarter but provided little reason for investors to get excited about what's to come in 2025.
Investors are displeased, sending GXO shares down 15% as of 10:15 a.m. ET.
Strong finish, bleak outlook
GXO is a contract logistics provider, managing warehouses, supply chains, and deliveries for large corporate customers. The company earned $1 per share in the fourth quarter on revenue of $3.3 billion, topping Wall Street's estimate for $0.95 per share on sales of $3.2 billion.
"In 2024, GXO delivered record revenue and adjusted EBITDA, and drove strong operating return on invested capital," CEO Malcolm Wilson said in a statement. "We also accelerated our organic growth sequentially throughout the year and closed more than $1 billion of new business wins for the second consecutive year."
But GXO is forecasting soft volumes up ahead. The company expects organic growth of 3% to 6% in 2025, below expectations, and warned of material headwinds in the first quarter related to site closures and capacity realignment among some large customers. Overall, the company is predicting adjusted EBITDA of between $2.40 and $2.60 per share for the year, well below Wall Street's $3.09-per-share consensus estimate.
NYSE: GXO
Key Data Points
Is GXO stock a buy?
The bull case for GXO is that as warehouses and supply chains become more automated and specialized, an increasing number of large customers will turn to experts instead of running things in-house. It is notable that about half of the new business won in 2024 came from either outsourcing or new activity from customers.
The long-term thesis remains intact, but GXO has a lot of near-term headwinds. The company's 2024 acquisition of Wincanton remains hung up in regulatory limbo, the strong dollar is likely to weigh heavily on trade and GXO's large European operation, and uncertainty remains about the health of the global macroeconomy. The company also has to find a replacement for Wilson, who announced in December that he plans to retire this year.
Patience will be required of any investor buying in today.
