GXO Logistics Sales Surge to $3. 6B Yet Cash Flow Slips

A logistics giant just posted its third quarter numbers and the story is mixed. GXO brought in $3.6 billion in revenue. That sounds huge. The boss says their new game plan is working. They landed over a billion dollars in fresh contracts so far this year. That nearly matches everything they won in all of last year. Forty percent of those deals come from hot sectors like aerospace defense tech and life sciences. The company is clearly betting on where the future is heading.

Here is the catch though. Profits got squeezed. Operating income dropped to ninety six million from one eighteen million a year ago. The profit margin shrank too. Adjusted EBITDA margin fell to seven percent from seven point four percent. Cash flow took a hit as well. Operating cash flow fell to one fifty six million from two thirty two million. Free cash flow plunged to eighty five million from one eighty seven million. Costs rose faster than sales. Direct operating expenses jumped to three point zero six billion from two point eight six billion. That gap explains the pressure.

Not every business line moved in the same direction. Tech and consumer electronics revenue surged eighteen point six percent to four ninety eight million. Industrial manufacturing grew four point nine percent to four hundred five million. Omnichannel retail the biggest chunk inched up two point seven percent to one point six nine billion. But food and beverage slid five point four percent to three fifty one million. Geography matters too. The UK stayed the top market at one point seven five billion up seven point six percent. US revenue rose five point six percent to eight forty six million.

Despite the margin squeeze the company stuck to its full year targets. They still expect organic revenue growth of four to five percent. Adjusted EBITDA should land between nine forty five and nine sixty five million. Adjusted earnings per share are projected at two ninety five to three fifteen. Free cash flow conversion should hit thirty to forty percent. Through nine months revenue hit ten point three three billion up six point eight percent. Nine month adjusted EBITDA reached six seventy million versus six twenty six million last year.

The company also bought back eighty four million in stock during the quarter. That brings the year total to one hundred million. They held three forty million in cash at quarter end. Debt sits around two point eight billion. An earnings call is set for Wednesday morning at eight thirty.