gxo-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________________________

FORM 10-Q

_______________________________________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-40470

_______________________________________________________

GXO Logistics, Inc.

(Exact name of registrant as specified in its charter)

____________________________________________________________________________________________________________


Delaware						86-2098312
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)
Two American Lane
Greenwich, Connecticut						06831
(Address of principal executive offices)						(Zip Code)

(203) 489-1287

Registrant’s telephone number, including area code

_______________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.01 per share

GXO

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 6, 2024, there were 119,431,782 shares of the registrant’s common stock, par value $0.01 per share, outstanding.


GXO Logistics, Inc.
Form 10-Q
For the Quarterly Period Ended March 31, 2024
Table of Contents
						Page
Part I—Financial Information
Item 1. Financial Statements (Unaudited)						2
Condensed Consolidated Statements of Operations						2
Condensed Consolidated Statements of Comprehensive Income (Loss)						3
Condensed Consolidated Balance Sheets						4
Condensed Consolidated Statements of Cash Flows						5
Condensed Consolidated Statements of Changes in Equity						6
Notes to Condensed Consolidated Financial Statements						7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations						19
Item 3. Quantitative and Qualitative Disclosures About Market Risk						23
Item 4. Controls and Procedures						24
Part II—Other Information
Item 1. Legal Proceedings						25
Item 1A. Risk Factors						25
Item 6. Exhibits						26
Signatures						27

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GXO Logistics, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended March 31,
(Dollars in millions, shares in thousands, except per share amounts)	2024		2023
Revenue	$	2,456	$	2,323
Direct operating expense	2,056		1,906
Selling, general and administrative expense	249		258
Depreciation and amortization expense	92		83
Transaction and integration costs	19		13
Restructuring costs and other	16		21
Litigation expense	63		—
Operating income (loss)	(39)		42
Other income, net	6		—
Interest expense, net	(13)		(13)
Income (loss) before income taxes	(46)		29
Income tax (expense) benefit	10		(3)
Net income (loss)	(36)		26
Net income attributable to Noncontrolling Interests (“NCI”)	(1)		(1)
Net income (loss) attributable to GXO	$	(37)	$	25

Earnings (loss) per share
Basic	$	(0.31)	$	0.21
Diluted	$	(0.31)	$	0.21

Weighted-average common shares outstanding
Basic	119,273		118,781
Diluted	119,273		119,231

See accompanying Notes to Condensed Consolidated Financial Statements.

GXO Logistics, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)


	Three Months Ended March 31,
(In millions)	2024		2023
Net income (loss)	$	(36)	$	26
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments	(14)		13
Cash flow hedges	1		(3)
Pension plans	2		—
Other comprehensive income (loss), net of tax	(11)		10
Comprehensive income (loss), net of tax	(47)		36
Less: Comprehensive income attributable to NCI	—		1
Comprehensive income (loss) attributable to GXO	$	(47)	$	35

See accompanying Notes to Condensed Consolidated Financial Statements.

GXO Logistics, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)


	March 31,		December 31,
(Dollars in millions, shares in thousands, except per share amounts)	2024		2023
ASSETS
Current assets
Cash and cash equivalents	$	423	$	468
Accounts receivable, net of allowance of $10 and $11	1,665		1,753
Other current assets	375		347
Total current assets	2,463		2,568
Long-term assets
Property and equipment, net of accumulated depreciation of $1,599 and $1,545	951		953
Operating lease assets	2,192		2,201
Goodwill	2,870		2,891
Intangible assets, net of accumulated amortization of $542 and $528	542		567
Other long-term assets	362		327
Total long-term assets	6,917		6,939
Total assets	$	9,380	$	9,507
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	615	$	709
Accrued expenses	976		966
Current debt	126		27
Current operating lease liabilities	597		597
Other current liabilities	311		327
Total current liabilities	2,625		2,626
Long-term liabilities
Long-term debt	1,511		1,620
Long-term operating lease liabilities	1,836		1,842
Other long-term liabilities	505		473
Total long-term liabilities	3,852		3,935
Commitments and Contingencies (Note 12)
Stockholders’ Equity
Common Stock, $0.01 par value per share; 300,000 shares authorized, 119,368 and 119,057 issued and outstanding	1		1
Preferred Stock, $0.01 par value per share; 10,000 shares authorized, none issued and outstanding	—		—
Additional Paid-In Capital (“APIC”)	2,602		2,598
Retained earnings	515		552
Accumulated Other Comprehensive Income (Loss) (“AOCIL”)	(249)		(239)
Total stockholders’ equity before NCI	2,869		2,912
NCI	34		34
Total equity	2,903		2,946
Total liabilities and equity	$	9,380	$	9,507

See accompanying Notes to Condensed Consolidated Financial Statements.

GXO Logistics, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended March 31,
(In millions)	2024		2023
Cash flows from operating activities:
Net income (loss)	$	(36)	$	26
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization expense	92		83
Stock-based compensation expense	8		9
Deferred tax benefit	(2)		(7)
Other	14		9
Changes in operating assets and liabilities
Accounts receivable	70		57
Other assets	(42)		11
Accounts payable	(106)		(49)
Accrued expenses and other liabilities	52		(100)
Net cash provided by operating activities	50		39
Cash flows from investing activities:
Capital expenditures	(73)		(91)
Proceeds from sale of property and equipment	6		9

Purchase of Wincanton plc shares	(15)		—

Net cash used in investing activities	(82)		(82)
Cash flows from financing activities:

Repayments of debt, net	—		(21)
Repayments of finance lease obligations	(8)		(8)
Taxes paid related to net share settlement of equity awards	(4)		(4)
Other	4		4
Net cash used in financing activities	(8)		(29)
Effect of exchange rates on cash and cash equivalents	(5)		3
Net decrease in cash, restricted cash and cash equivalents	(45)		(69)
Cash, restricted cash and cash equivalents, beginning of period	470		495
Cash, restricted cash and cash equivalents, end of period	$	425	$	426

Reconciliation of cash, restricted cash and cash equivalents
Cash and cash equivalents	$	423	$	426
Restricted Cash (included in Other long-term assets)	2		—
Total cash, restricted cash and cash equivalents	$	425	$	426

See accompanying Notes to Condensed Consolidated Financial Statements.

GXO Logistics, Inc.

Condensed Consolidated Statements of Changes in Equity

(Unaudited)


	Common Stock			APIC		Retained Earnings		AOCIL		Equity Before NCI		NCI		Total Equity
(Shares in thousands, dollars in millions)	Shares	Amount
Balance As of December 31, 2023	119,057	$	1	$	2,598	$	552	$	(239)	$	2,912	$	34	$	2,946
Net income (loss)	—	—		—		(37)		—		(37)		1		(36)
Other comprehensive loss	—	—		—		—		(10)		(10)		(1)		(11)
Stock-based compensation	—	—		8		—		—		8		—		8
Vesting of stock compensation awards	394	—		—		—		—		—		—		—
Tax withholding on vesting of stock compensation awards	(83)	—		(4)		—		—		(4)		—		(4)

Balance as of March 31, 2024	119,368	$	1	$	2,602	$	515	$	(249)	$	2,869	$	34	$	2,903


	Common Stock			APIC		Retained Earnings		AOCIL		Equity Before NCI		NCI		Total Equity
(Shares in thousands, dollars in millions)	Shares	Amount
Balance as of December 31, 2022	118,728	$	1	$	2,575	$	323	$	(254)	$	2,645	$	33	$	2,678
Net income	—	—		—		25		—		25		1		26
Other comprehensive income	—	—		—		—		10		10		—		10
Stock-based compensation	—	—		9		—		—		9		—		9
Vesting of stock compensation awards	265	—		—		—		—		—		—		—
Tax withholding on vesting of stock compensation awards	(104)	—		(4)		—		—		(4)		—		(4)
Balance as of March 31, 2023	118,889	$	1	$	2,580	$	348	$	(244)	$	2,685	$	34	$	2,719

See accompanying Notes to Condensed Consolidated Financial Statements.

GXO Logistics, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements of GXO Logistics, Inc. (“GXO” or the “Company”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and pursuant to the rules of the U.S. Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included.

Operating results for the interim periods are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. The Company’s Condensed Consolidated Financial Statements include the accounts of GXO and its majority-owned subsidiaries and variable interest entities of which the Company is the primary beneficiary. The Company has eliminated intercompany accounts and transactions.

The accompanying Condensed Consolidated Financial Statements and Notes thereto should be read in conjunction with the Annual Report on Form 10-K for the year ended December 31, 2023. Certain amounts reported for prior periods have been reclassified to conform to the current period’s presentation.

The Company presents its operations as one reportable segment.

Accounting Pronouncements Issued But Not Yet Adopted

In March 2024, the SEC adopted final rules designed to enhance public company disclosures related to the risks and impacts of climate-related matters. The new rules include disclosures relating to climate-related risks and risk management, as well as the board and management’s governance of such risks. In addition, the rules include requirements to disclose the financial effects of severe weather events and other natural conditions in the audited financial statements. Larger registrants will also be required to disclose information about greenhouse gas emissions, which will be subject to a phased-in assurance requirement. The disclosures are required for annual periods ending December 31, 2025. In April 2024, the SEC issued an order staying the implementation of the new climate-related disclosure rules pending completion of judicial review of consolidated changes to the rules by the Court of Appeals for the Eighth Circuit. The Company continues to monitor developments and evaluate the potential impact of these rules on its Consolidated Financial Statements.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which provides for expanded disclosures primarily related to income taxes paid and the rate reconciliation. The amendments are effective for annual periods beginning after December 15, 2024 and early adoption is permitted. The guidance can be applied prospectively or retrospectively. The Company is currently evaluating the impact of this ASU on its Consolidated Financial Statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements. Early adoption is permitted. The Company is currently evaluating the impact of this ASU on its Consolidated Financial Statements.

2. Revenue Recognition

Revenue disaggregated by geographical area was as follows:


	Three Months Ended March 31,
(In millions)	2024		2023
United Kingdom	$	913	$	844
United States	747		714
Netherlands	218		196
France	200		202
Spain	129		127
Italy	93		88
Other	156		152
Total	$	2,456	$	2,323

The Company’s revenue can also be disaggregated by various verticals, reflecting the customer’s principal industry. Revenue disaggregated by industry was as follows:


	Three Months Ended March 31,
(In millions)	2024		2023
Omnichannel retail	$	1,022	$	964
Technology and consumer electronics	382		366
Food and beverage	316		307
Consumer packaged goods	295		226
Industrial and manufacturing	266		270
Other	175		190
Total	$	2,456	$	2,323

Contract Assets and Liabilities

The contract asset and contract liability balances from contracts with customers were as follows:


	March 31,		December 31,
(In millions)	2024		2023
Contract assets included in:
Other current assets	$	22	$	21
Other long-term assets	166		160
Total contract assets	$	188	$	181
Contract liabilities included in:
Other current liabilities	$	210	$	210
Other long-term liabilities	112		115
Total contract liabilities	$	322	$	325

Revenue recognized included the following:


	Three Months Ended March 31,
(In millions)	2024		2023
Amounts included in the beginning of year contract liability balance	$	105	$	82

Remaining Performance Obligations

The remaining performance obligations relate to firm customer contracts for which services have not been performed and future revenue recognition is expected. As permitted in determining the remaining performance obligation, the Company omits obligations that have original expected durations of one year or less or contain variable consideration.

As of March 31, 2024, the fixed consideration component of the Company’s remaining performance obligation was approximately $3.7 billion, and the Company expects to recognize approximately 75% of that amount over the next three years and the remainder thereafter. The Company estimates remaining performance obligations at a point in time, and actual amounts may differ from these estimates due to changes in foreign currency exchange rates and contract revisions or terminations.

3. Leases

The Company has operating leases for real estate, warehouse equipment, trucks, trailers, containers and material handling equipment. In addition, the Company has finance leases for warehouse equipment.

The following amounts were recorded in the Condensed Consolidated Balance Sheets related to leases:


	March 31,		December 31,
(In millions)	2024		2023
Operating leases:
Operating lease assets	$	2,192	$	2,201

Current operating lease liabilities	$	597	$	597
Long-term operating lease liabilities	1,836		1,842
Total operating lease liabilities	$	2,433	$	2,439

Finance leases:
Property and equipment, net	$	100	$	107

Current debt	$	26	$	26
Long-term debt	81		90
Total finance lease liabilities	$	107	$	116

The components of lease expense recorded in the Condensed Consolidated Statements of Operations were as follows:


	Three Months Ended March 31,
(In millions)	2024		2023
Operating leases:
Operating lease cost	$	209	$	218
Short-term lease cost	24		26
Variable lease cost	39		28
Total operating lease cost (1)	$	272	$	272
Finance leases:
Amortization of leased assets	$	7	$	7
Interest expense on lease liabilities	1		1
Total finance lease cost	$	8	$	8
Total operating and finance lease cost	$	280	$	280

(1) Operating lease cost is primarily included in Direct operating expense in the Condensed Consolidated Statements of Operations.

Supplemental cash flow information was as follows:


	Three Months Ended March 31,
(In millions)	2024		2023
Leased assets obtained in exchange for new lease obligations:
Operating leases	$	167	$	73
Finance leases	—		3

4. Acquisitions

Wincanton Acquisition

On February 29, 2024, the Company and the board of directors of Wincanton plc, a logistics company based in Chippenham, United Kingdom (“Wincanton”), reached an agreement on the terms of a cash offer by the Company for the acquisition of the entire issued ordinary share capital of Wincanton (the “Wincanton Acquisition”). Wincanton is a British logistics provider specializing in both warehousing and transportation solutions. Wincanton services industries in grocery, retail and manufacturing, consumer goods, ecommerce, healthcare, defense, industrial, and energy. Under the terms of the agreement, Wincanton shareholders will be entitled to receive 605 pence ($7.64 as of March 31, 2024) in cash for each Wincanton share held.

In connection with the Wincanton Acquisition, (i) the Company entered into a bridge term loan credit agreement, (ii) the Company entered into a three-year term loan credit agreement (“Three-Year Term Loan due 2027”), and (iii) in April 2024, the Company issued $1.1 billion aggregate principal amount of its senior notes (the “Unsecured Notes”). For additional information regarding the financing agreements entered in connection with the Wincanton Acquisition, see Note 5. Debt and Financing Arrangements and Note 13. Subsequent Events.

During March 2024, the Company purchased approximately 2.0 million Wincanton shares for approximately £12 million ($15 million).

PFSweb Acquisition

On September 13, 2023, the Company entered into an Agreement and Plan of Merger to acquire PFSweb, Inc., a Delaware corporation headquartered in Irving, Texas (“PFS”), and on October 23, 2023, the Company completed its acquisition of PFS (the “PFS Acquisition”). The Company acquired the shares of PFS at a price per share of $7.50 in cash, totaling approximately $149 million, net of cash acquired. PFS is a global provider of omnichannel commerce

solutions, including a broad range of technology, infrastructure and professional services, in the United States, Canada and Europe. PFS’s service offerings include order fulfillment, fulfillment-as-a-service, order management and customer care.

The Company recorded the preliminary fair value of assets acquired and liabilities assumed on the date of acquisition, including intangible assets comprising customer relationships, trademarks, trade names and developed technology of $55 million with a weighted-average amortization period of 13 years. Goodwill acquired in connection with the acquisition was $82 million, recorded in the Americas and Asia-Pacific reporting unit, and was attributed to anticipated synergies. The Company does not expect the goodwill recognized in connection with the PFS Acquisition to be deductible for income tax purposes. The Company expects to finalize the purchase price allocation within the measurement period, which will not exceed one year from the acquisition date.

5. Debt and Financing Arrangements

The following table summarizes the carrying value of the Company’s debt:


			March 31,		December 31,
(In millions)	Rate (1)		2024		2023
Unsecured notes due 2026 (2)	1.65	%	$	398	$	398
Unsecured notes due 2031 (3)	2.65	%	397		397
Three-Year Term Loan due 2025	6.55	%	235		235
Five-Year Term Loan due 2027 (4)	6.68	%	499		499
Finance leases and other debt	Various		108		118
Total debt			1,637		1,647
Less: Current debt			126		27
Total Long-term debt			$	1,511	$	1,620

(1) Interest rate as of March 31, 2024.

(2) Net of unamortized debt issuance costs of $2 million as of March 31, 2024 and December 31, 2023.

(3) Net of unamortized debt issuance costs of $3 million as of March 31, 2024 and December 31, 2023.

(4) Net of unamortized debt issuance costs of $1 million as of March 31, 2024 and December 31, 2023.

Bridge Term Loan

On February 29, 2024, the Company entered into a bridge term loan credit agreement that provided a £763 million ($963 million as of March 31, 2024) unsecured term loan facility (the “Bridge Term Loan”) to fund the Wincanton Acquisition. The Bridge Term Loan matures 364 days after an advance. Loans under the Bridge Term Loan bear interest at the daily simple Sterling Overnight Index Average Rate (“SONIA”) plus an applicable margin calculated based on the Company’s credit ratings. No amounts were outstanding under the Bridge Term Loan as of March 31, 2024.

Concurrently with the closing of the Three-Year Term Loan due 2027, the Company reduced the commitments under the Bridge Term Loan by the aggregate amount of commitments under the Three-Year Term Loan due 2027. Concurrently with the closing of the Unsecured Notes, the Company terminated the remaining commitments under the Bridge Term Loan.

Three-Year Term Loan due 2027

On March 29, 2024, the Company entered into a term loan credit agreement with the lenders and other parties from time to time party thereto and Bank of America N.A., as administrative agent. The Three-Year Term Loan due 2027 provided for a three-year multicurrency £250 million ($316 million as March 31, 2024) unsecured term facility, that may be borrowed by the Company to fund the Wincanton Acquisition.

Loans under the Three-Year Term Loan due 2027 will bear interest at a fluctuating rate per annum equal to, (a) with respect to borrowings in U.S. Dollars, at the Company’s option, the alternate base rate or term Secured Overnight Financing Rate (“SOFR”) and (b) with respect to borrowings in Pounds Sterling, daily simple SONIA, in each case, plus an applicable margin calculated based on the Company’s credit ratings. No amounts were outstanding under the Three-Year Term Loan due 2027 as of March 31, 2024.

Concurrently with the closing of the Unsecured Notes, the Company terminated the commitments under the Three-Year Term Loan due 2027. For additional information regarding subsequent financing agreements entered in connection with the Wincanton Acquisition, see Note 13. Subsequent Events.

Revolving Credit Agreement

On March 29, 2024, the Company terminated its previous revolving credit agreement expiring in 2026 and entered into a new revolving credit agreement with Bank of America N.A., as administrative agent and an issuing lender (the “Revolving Credit Agreement”). The Revolving Credit Agreement is a five-year unsecured, multicurrency revolving facility expiring in 2029. The aggregate commitment of all lenders under the Revolving Credit Agreement will be equal to $800 million, of which $100 million is available for the issuance of letters of credit.

Loans under the Revolving Credit Agreement will bear interest at a fluctuating rate per annum equal to (a) with respect to borrowings in U.S. Dollars, at the Company’s option the alternate base rate or term SOFR, (b) with respect to borrowings in Canadian Dollars, term Canadian Overnight Repo Rate Average (“CORRA”), (c) with respect to borrowings in Pounds Sterling, daily simple SONIA and (d) with respect to borrowings in Euros, Euro Interbank Offered Rate (“EURIBOR”), in each case, plus an applicable margin calculated based on the Company’s credit ratings. No amounts were outstanding under the new or previous revolving credit agreements as of March 31, 2024 or December 31, 2023.

Factoring Programs

The Company sells certain of its trade receivables on a non-recourse basis to third-party financial institutions under various factoring agreements.

Information related to the trade receivables sold was as follows:


	Three Months Ended March 31,
(In millions)	2024		2023
Receivables sold in period	$	291	$	263
Cash consideration	289		261
Net cash provided by operating cash flows	3		—

Covenants and Compliance

The covenants for the Company’s debt securities, which are customary for financings of this type, limit the Company’s ability to incur indebtedness and grant liens, among other restrictions. In addition, the facilities require the Company to maintain a consolidated leverage ratio below a specified maximum.

As of March 31, 2024, the Company complied with the covenants contained in its debt and financing arrangements.

6. Fair Value Measurements and Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The levels of inputs used to measure fair value are:

•Level 1—Quoted prices for identical instruments in active markets;

•Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets; and

•Level 3—Valuations based on inputs that are unobservable, generally utilizing pricing models or other valuation techniques that reflect management’s judgment and estimates.

Assets and Liabilities

The Company bases its fair value estimates on market assumptions and available information. The carrying values of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and current maturities of long-term debt approximated their fair values as of March 31, 2024, and December 31, 2023, due to their short-term nature.

Debt

The fair value of debt was as follows:


		March 31, 2024				December 31, 2023
(In millions)	Level	Fair Value		Carrying Value		Fair Value		Carrying Value
Unsecured notes due 2026	2	$	366	$	398	$	362	$	398
Unsecured notes due 2031	2	326		397		326		397
Three-Year Term Loan due 2025	2	231		235		231		235
Five-Year Term Loan due 2027	2	493		499		493		499

Financial Instruments

The Company directly manages its exposure to risks arising from business operations and economic factors, including fluctuations in interest rates and foreign currencies. The Company uses derivative instruments to manage the volatility related to these exposures.

The notional amount and fair value of derivative instruments were as follows:


	March 31, 2024				December 31, 2023				Balance Sheet Location
(In millions)	Notional Amount		Fair Value		Notional Amount		Fair Value
Derivatives designated as net investment hedges:

Cross-currency swap agreements	$	487	$	11	$	487	$	3	Other long-term assets

Cross-currency swap agreements	165		3		165		7		Other current liabilities
Cross-currency swap agreements	883		29		883		49		Other long-term liabilities

Derivatives designated as cash flow hedge:

Interest rate swaps	$	125	$	1	$	125	$	2	Other current assets
Interest rate swaps (1)	250		6		125		3		Other long-term assets

Derivatives not designated as hedges:

Foreign currency option contracts	$	314	$	8	$	397	$	8	Other current assets
Foreign currency forward contracts	3		—		1		—		Other current assets

(1) In January 2024, the Company entered into an interest rate swap schedule to mature in 2025, with a notional amount of $125 million.

As of March 31, 2024 and December 31, 2023, the derivatives were classified as Level 2 within the fair value hierarchy. The derivatives are valued using inputs other than quoted prices such as foreign exchange rates and yield curves.

The effect of hedges on AOCIL and in the Condensed Consolidated Statements of Operations was as follows:


	Three Months Ended March 31, 2024						Three Months Ended March 31, 2023
(In millions)	Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative		Gain (Loss) Reclassified from AOCIL into Net Income (1)		Gain (Loss) Recognized in Net Income on Derivative (Excluded from effectiveness testing) (1)		Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative		Gain (Loss) Reclassified from AOCIL into Net Income (1)		Gain (Loss) Recognized in Net Income on Derivative (Excluded from effectiveness testing) (1)
Derivatives designated as net investment hedges
Cross-currency swap agreements	$	32	$	(2)	$	1	$	(16)	$	(3)	$	1
Derivatives designated as cash flow hedges
Interest rate swaps	$	2	$	—	$	—	$	(3)	$	—	$	—

(1) Amounts reclassified to Net income (loss) are reported within Interest expense, net in the Condensed Consolidated Statements of Operations.

Derivatives Not Designated as Hedges

Gains and losses recognized in Other income, net in the Condensed Consolidated Statements of Operations for foreign currency options and forward contracts were as follows:


	Three Months Ended March 31,

(In millions)	2024		2023
Realized loss	$	(1)	$	(2)
Unrealized gain	3		1
Foreign currency gain (loss)	$	2	$	(1)

7. Earnings per Share

The computations of basic and diluted earnings (loss) per share were as follows:


	Three Months Ended March 31,
(Dollars in millions, shares in thousands, except per share amounts)	2024		2023
Net income (loss) attributable to common shares	$	(37)	$	25

Basic weighted-average common shares	119,273		118,781
Diluted weighted-average common shares (1)	119,273		119,231

Basic earnings (loss) per share	$	(0.31)	$	0.21

SEC Form 10-Q filed by GXO Logistics Inc.