GXO’s stock cratered 15 percent in trading Thursday after the company issued a lower-than-expected guidance for 2025 as some customers scaled back their warehouse capacity with the logistics provider.
This capacity realignment, which was largely driven by three of its large customers, is expected to predominantly impact the contract logistics provider’s profit in the first quarter. According to chief financial officer Baris Oran, GXO “completely offset” any revenue impacts by onboarding new customers.
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“These are one-off in nature,” said Oran during the company’s earnings call. “The network realignment is a short-term impact. They are not lost customers.”
One customer exited an older warehouse, and will enter four new sites throughout 2025, he said. Another warehouse that was freed up after a second customer left the facility will be refilled this year with a new customer. A third customer exited a site because of lower consumer volumes.
For 2025, organic revenue growth is expected to range between 3 percent and 6 percent, while adjusted EBITDA is projected within the $840 million to $860 million range.
In the fourth quarter, GXO saw revenue jump 25 percent year over year to $3.3 billion, with organic revenue jumping 4 percent. Most of the company’s annual sales growth comes from last year’s acquisition of U.K.-based logistics services provider Wincanton.
Net income increased to $100 million, compared with $73 million for the fourth quarter of 2023. Diluted earnings per share increased to 83 cents, up from last year’s 61 cents.
CEO Malcolm Wilson, who is retiring in 2025, said it was too early to gauge the impact of tariffs on GXO’s U.S. operation, but since it is a domestic business, “we don’t think there’s a likelihood of any material impacts feeding through in that regard.”
However, the outgoing CEO also said GXO’s sales team has generated inquiries from U.S. customers that want to bring more domestic business back as they seek to reorient supply chains in account of the tariffs.
And far as the back-and-forth fate of the de minimis exception goes, Wilson said “it doesn’t affect us right now. We don’t really work with customers that utilize that, but that will probably drive more customers to put local warehousing into the market…We’re pretty confident that a lot of those customers will ultimately need to convert existing supply chains to have a presence here instead of what they are doing today.”