Welcome to our GXO Investor Day. I'm Brad Jacobs, Chairman and Chief Executive Officer of XPO Logistics, and I'll also be Chairman of GXO after the spin. We appreciate your interest in the company. I'll begin with a quick rundown of the presentation you'll see today. First, Malcolm Wilson, GXO's incoming CEO, will elaborate on the big three secular tailwinds of e-commerce, automation, and outsourcing. Our logistics business has built a leading position in e-commerce, with about 40% of revenue coming from pure-play e-tailers and omni-channel retailers. The automation tailwind is coming from customer demand for robotics and other kinds of advanced automation in logistics operations. The accelerating trend towards outsourcing logistics to 3PLs is another long runway for us as supply chains become more complex and consumers become more demanding. Following Malcolm will be Mark Manduca, our incoming Chief Investment Officer. Mark will discuss the favorable contract profile of our customers and explain our resilient outperformance through all parts of the cycle. You'll hear from Richard Cawston, President of Europe, and Eduardo Pelleissone, President of the Americas and Asia Pacific. Richard will discuss the $130 billion of logistics spend that's currently outsourced in North America and Europe. There's also an opportunity for $300 billion more that's currently insourced. That's a total potential addressable market of about $430 billion across regions where we already hold leadership positions, and it's fragmented. This is an industry where the top five players hold less than 25% of outsourced logistics. Eduardo will give you some specific examples of our best-in-class solutions. Our expertise in solving complex supply chain problems for customers is validated by our long-term partnerships with preeminent global brands, including over 30% of the Fortune 100. It's notable that on average, we've served our top 20 customers for 15 years. Our Chief Commercial Officer, Bill Fraine, will discuss GXO's strong ESG backbone, and he'll show you how we've solved some unique supply chain problems for customers through cutting-edge innovation. Gavin Williams, President of Operations in the U.K. and Ireland, will detail how our technology is both a competitive advantage in a growing market and importantly, a margin-enhancing lever for the business. Our final presenter will be Baris Oran, our incoming CFO. Baris will explain GXO's strict focus on generating outsized return on invested capital. Spoiler alert, a little-known fact is that GXO's return on invested capital is 28%. Let me repeat that, an ROIC of 28%. There are two main themes to our presentation today, the enormous growth potential of the industry and GXO's outperformance. GXO is best in class at standing up complex technology-enabled supply chain solutions. We do it at scale with speed and precision, and we're generating market-leading double-digit revenue growth while at the same time expanding our margins. Also, GXO's new investment-grade credit rating will further elevate our standing with our blue-chip customers. In 2022, we expect GXO's adjusted earnings before interest, taxes, depreciation, and amortization to grow by 17% year-over-year based on the midpoint of our adjusted EBITDA guidance. Looking at EBITDAR, which excludes rental expense, we're expecting to generate $1.5 billion of EBITDAR in 2022. This provides a reference point to our European peers who report under IFRS. I'd like to conclude my remarks with a brief video that will introduce you to GXO's operations before I pass the baton over to Malcolm Wilson. Some of you know Malcolm. He spent over 30 years driving outstanding growth across multinational logistics operations. In recent years, he successfully led XPO's European business as chief executive. Earlier, he grew one of Europe's largest logistics platforms to global scale as part of Norbert Dentressangle, which we acquired in 2015. Malcolm will walk you through the key investment highlights that make GXO uniquely compelling as a public company. First, here's the video. [Presentation] Thank you, Brad. Hello, everyone. I'll start by summarizing why GXO is such an attractive investment opportunity. We benefit from three massive secular tailwinds: the growth of e-commerce, the demand for logistics automation, and outsourcing. We have long-tenured contractual relationships with blue-chip customers, primarily in consumer-focused verticals. We have critical scale in a growing market, and today we will show you that outsized benefits accrue to best-in-class scale operators. We offer cutting-edge technology solutions that propel our growth and profitability. At the same time, these solutions help solve increasingly complex supply chain problems for our customers by helping them to grow more efficiently. Our business model generates robust free cash flow and is extremely resilient. We have a cohesive team of seasoned leaders with a track record of outperformance. GXO's key attribute is its significant growth opportunity. The three major structural tailwinds I mentioned put us on a multi-year growth trajectory as consumer demand for e-commerce continues to increase, customer demand for robust technological solutions continues to grow. As a result, the trend towards outsourcing of supply chain logistics is accelerating. As you can see, all three of these opportunities are under-penetrated and offer immense growth runways for us. We're especially excited about the growth from outsourcing, which presents us with hundreds of billions of dollars of additional opportunity. This is on top of our already vast $130 billion addressable market. Here you see our vertical mix. Over three-quarters of our revenue is tied to consumer end markets. We work with some of the most demanding companies in these industries. We love the challenge because it showcases our expertise. Many of these companies embraced e-commerce and omnichannel strategies early on. They value the fact that we have Europe's largest outsourced e-commerce fulfillment platform and a high-growth presence in North America, including our GXO Direct distribution network. These capabilities and our expertise in omnichannel keep us high on the radar for new business in the fast-growing e-commerce sector. We're incredibly proud to work with many of the bluest of blue-chip companies in the world. You see some of them here, Apple, Disney, L'Oréal, and many others. These customers rely on us for best-in-class results, allowing them to focus on designing, making, and marketing great products. These are deep relationships that extend for years, and over time, they grow in scope. The average tenure for our top 20 accounts is 15 years, and as large as these companies are, we have low concentration risk, with no single customer accounting for more than 4% of our total revenue in 2020. The critical nature of the solutions we provide puts us in a strong position to grow our business with our existing customers, and we also leverage our track record to win new customers. GXO has a broad geographic presence that allows us to meet the needs of our global customer base. Importantly, our scale makes us one of only a handful of global players that can satisfy the logistics requirements of the world's largest multinational companies, like Coca-Cola and Nike. We have over 200,000,000 sq ft of warehousing space across nearly 900 locations worldwide and close to 100,000 team members. Our ability to support these customers at the highest level is a key growth opportunity specific to GXO. The contract logistics market is highly fragmented. The spin-off will establish GXO as the largest pure-play logistics company, with around 5% of the $130 billion of logistics that's currently outsourced in our key geographies. We will be the second-largest contract logistics company in the world. In fact, we're up to eight times larger in revenue than our listed pure-play peers. While our peers are excellent businesses run by great management teams, we believe our scale provides us with tangible competitive advantages. The solutions we provide are as diverse as the customer base we serve, with some important similarities. In each case, we tailor our solutions to specific customer requirements, typically enabled by technology. Most importantly, they are all critical to our customers' success. For companies with consumer markets, these solutions include order fulfillment, reverse logistics, demand forecasting, and peak management. We employ state-of-the-art warehousing technologies, and we integrate them with our proprietary software tools to exceed our customers' expectations. Our long-term focus on automation gives GXO a first-mover advantage and differentiates us as a logistics partner of choice. We've already made nearly a decade of investments to develop world-class technology, and now we're reaping the benefits in terms of speed, accuracy, and margin enhancement. Where we deploy robots and autonomous goods-to-person systems, we see material increases in productivity of up to six times versus the human hand. When we design and operate warehouses, we have a rigorous ESG framework for worker safety and environmental impact at the heart of everything we do. In this presentation, we're excited to share our targets for GXO, including being carbon neutral by 2040. Behind the scenes, we have a focus on continuous improvement that delivers more value for our customers. Because we work with over 1,000 customers in 27 countries, we have the ability to share best practices and deploy them across our footprint. I'll conclude with a showcase of our best-in-class technology that's differentiating GXO, helping us win customers, and propel our growth. I'll then hand it over to our Chief Investment Officer, Mark Manduca, to talk about our favorable contract profile and resilient performance. Thank you, Malcolm. Our global scale, our agility, our technology, and our healthy balance sheet make us the partner of choice for customers to run their supply chain operations. This industry has transitioned away from a commoditized, price-based market dynamic to a focus on deep expertise and value-added services. We utilize a collaborative approach, bringing together our sales, implementation, and technology teams to provide best-in-class solutions tailored to a customer's current and anticipated needs. This approach is a key differentiator for us and positions GXO well in any RFP process. It also means that when we're hired, we can hit the ground running that much sooner. The typical contracting process starts with an initial RFP with three to five bidders, but there are often, at most, two contenders who can offer the scale and breadth of services that we can. Our broad, typically proprietary value-added suite of capabilities and institutional know-how positions us to check every box that a customer needs and places us in the best position to win the business profitably. We structure our contracts to manage risk. Our customers typically cover most upfront costs, which reduces our capital outlay. Most of our contracts have a variable component that matches volume to revenue. They also pass through the majority of labor cost inflation. Our leases are generally liability-matched to the tenure of our contracts. We prioritize long-term contracts that foster relationships with our customers and add predictability to our outlook. GXO's contracts provide an attractive mix of stability and upside potential. Traditionally, our industry has been defined by open and closed-book contracts. Open-book contracts have minimal initial upfront costs, which boosts our return on invested capital through the life of the contract. What's more, our margins stay broadly fixed. If a customer experiences volatility, our profitability is protected regardless of the macro environment. On closed-book contracts, GXO takes on higher costs up front but also has upside through contract outperformance. Our continuous technology-driven improvements to operations enable us to boost margins throughout the life of the contract and capture all the value that we create. Increasingly, however, we're seeing a hybrid approach preferred by our customers. These hybrids combine elements of open and closed-book contracts, and they often have provisions to pass through certain cost increases. This provides the greatest flexibility for GXO to drive a win-win partnership. Our contract profile gives us outstanding revenue visibility in the near and medium term and supports our 2022 guidance. These contracts are long-term by nature. Recently, we're seeing larger contracts in the 5-10-year range. We're a company focused on financial returns. When we evaluate whether to enter into a new contract, we hold ourselves to rigorous investment criteria, including return on invested capital and a cash payback target within three years. Our strategic positioning and attractive business prospects have resulted in consistent growth over the last two decades. This looks set to continue. As you can see, the business has shown excellent resilience and remained profitable through downturns in the economy. Building on our past performance, I want to highlight a few key points that demonstrate GXO's best-in-class growth profile going forward. Our 8%-12% organic revenue growth in 2022 is supported by net new business wins and growth in existing facilities. This growth will help us achieve $700 million-$735 million of adjusted EBITDA next year, which equates to a 25% CAGR from 2020 to 2022. This is a business that performs well across economic cycles and is positioned to benefit from massive secular tailwinds. All in all, this sets us up for double-digit EBITDA growth moving forward. Richard Cawston, the head of our European business, will discuss our operating landscape, including our geographically diverse revenue growth opportunity. Richard? Thanks, Mark, and hello, everyone. As we noted, the logistics market is vast. Moreover, it's highly fragmented. Less than 25% of that $130 billion outsourcing spend is split among the top five players. GXO only holds around 5% of this spend, and we over-index in our core consumer verticals. We expect the strongest players, like GXO, will continue to outperform as technological expertise, scale, and dependability of service continue to be major differentiators in the eyes of customers. We hold leading positions in all our major geographies. This places us at the forefront of growth opportunities from the tailwinds of e-commerce, automation, and outsourcing, all of which are substantially under-penetrated. We're one of the few operators capable of managing large, complex contracts within these geographies, and it also serves to highlight our global value proposition when dealing with multinational corporations, for example, H&M and PepsiCo. Our regional positioning is complemented by our strong foothold in key verticals where we have demonstrated best-in-class solutions. For such customers, vertical expertise is the critical differentiator of our offering. Our core competency is in consumer sectors, particularly e-commerce and omnichannel retail. These are bedrock sectors for sophisticated supply chain management. Our capabilities for data-driven inventory management, reverse logistics, and our ability to provide capacity and staffing, for example, from the Black Friday peak through the Christmas rush, truly stand out in the marketplace. The market for outsourced logistics is highly attractive, growing at 4% per year. GXO has significantly outpaced this growth, and we expect to continue to do so. We divide our revenue opportunity into three distinct buckets. First is our strong strategic positioning in countries with increasing expectations around consumer service and in verticals such as e-commerce, where we expect growth to be especially rapid, and we enjoy considerable competitive advantages. Second, we believe our expertise in technology, such as our ability to integrate warehouse automation, will result in significant additional market share gains. Third, these two attributes will also encourage first-time outsourcing to GXO, which will capture revenue from the vast majority of the market that is still held in-house. All three drivers of demand are directly benefiting our business, and we expect them to support even greater levels of growth. With e-commerce adoption standing at 20%-30% in North America and Europe, there's a large runway for growth in both regions. Industry forecasts anticipate 11% annual growth in e-commerce across our key geographies. We expect GXO's growth in this vertical to outpace the industry. Our conviction in our ability to outperform is due in part to the pressing need for capacity from both pure-play e-tailers and omnichannel retailers. It is exceedingly difficult for brands to quickly establish or grow direct-to-consumer channels at scale without the help of a leading 3PL like GXO. One of the fastest-growing revenue drivers of our e-commerce business is reverse logistics, which is the management of product returns. Our revenue CAGR for reverse logistics has been almost 16% over the last three years. We see it accelerating. Importantly, when one of our brick-and-mortar customers converts to online sales, it creates an opportunity for 3x- 10x the revenue due to the demand for more complex activity. This is driven by increased picking, packing, and sortation needs, as well as value-added services to maintain inventory turnover. We're often the final touchpoint as products move to end consumers, so our high service quality and reliability are key parts of our offering. With reverse logistics, the revenue uplift can be 2x-5x that of an outbound order. Our customers have an acute need to get these returns back into inventory where they can be monetized, avoiding a future write-off for them. The volume growth in e-commerce fulfillment and associated value-add services is resulting in supply chain challenges for retailers. Consumers are demanding and have grown to expect next-day or even same-day delivery options. This requires highly efficient logistics processes that rely on both technology and know-how to meet later delivery cutoffs. At the same time, customers are having to manage high return rates, which can tie up billions of dollars of inventory in warehouses unless it's rapidly cycled back to consumers. It's creating a huge structural demand for warehousing and inventory efficiency within the industry, and as I've said, for increasingly complex solutions to overcome these challenges. GXO is a leader in delivering the solutions e-commerce customers need. This allows us to target the vast majority of contract logistics that's still operated in-house. When you look across the major services in the supply chain, logistics is the least concentrated by far and with the most expansive outsourcing potential. Now I'll turn over the presentation to Eduardo Pelleissone, my counterpart across the Atlantic, to talk to you about GXO's winning culture. Thanks, Richard. As the logistics market continues to increase in complexity, GXO's proposition to customers becomes more compelling. We break out our value proposition into three simple buckets that remain the same regardless of the customer's requirements. One is scale. Scale to serve customers across geographies, scale to operate across different channels, scale to negotiate better terms with landlords, and scale to implement innovative technologies. Two is expertise. We stand up complex, technologically advanced supply chain solutions at scale and with speed. Three is trust. We are a trusted partner to world-class brands. Our consistent outperformance results in high levels of customer retention, which is why our top 20 customers have been with us an average of 15 years. In addition, our ongoing investments in technology, our commitment to continuous improvement, and our ESG credentials set us apart from our peers. You've heard a lot about scale in this presentation. As you can see, we are much larger than other pure plays. I'd like to talk about how scale helps us improve our operations and manage costs. There are three core inputs in our business: people, real estate, and technology. Scale gives us the ability to secure labor more effectively. As one of the largest tenants, if not the largest tenant, for many industrial landlords, scale enables us to secure better terms on real estate, and scale gives us the capital and expertise to apply technology more expertly. Shifting to the second part of our value proposition, our expertise. At the most basic level, our business is about solving customer challenges in a timely and effective manner. It's about helping customers achieve their cost and revenue goals in three ways: by ensuring a superior customer experience, by delivering high levels of productivity, and by managing inventory with great efficiency. As you can see here, GXO excels at leveraging our strengths to provide solutions that are in high demand, including complex full-service e-commerce logistics, consistent service across borders, predictable outcomes, and cost-effective real estate in the right strategic locations. Here's a real-life example with our customer, Disney. In 2013, Disney saw a partner that could execute the supply chain for its new MagicBand product, which required a personalized engraving process. This is the digital wristband guests use when they visit the parks. We were selected by Disney to develop custom software and hardware for the MagicBand fulfillment process by leveraging our RFID technology. The solution we created satisfies Disney's production and shipping objectives, and it also provides their guests with a unified payment solution. This aligns with Disney's goal of having its parks become increasingly cash-free. We implement rigorous controls, including engraving the correct name on each band during fulfillment. We also create a memorable unboxing experience for each guest ahead of visiting the parks. The success of our MagicBand solution has led to an enduring eight-year partnership between GXO and Disney. Our services help Disney's guests enjoy the parks and resorts with a magical experience. Now, I'm going to turn it over to my colleague, Chief Commercial Officer, Bill Fraine, who will walk you through how we meet our customers' needs through innovation. Bill. Thanks, Eduardo. Logistics is undergoing a technical revolution, and GXO is at the forefront of this exciting transition. Our scale and expertise ensure that we have both the know-how and the experience to implement these game-changing solutions. We're able to grow with our customers to ensure continuous improvement over the lifetime of a contract and bring more value to the table as technology is enhanced, and we're able to save costs and generate productivity gains by leveraging our central software investments. Some examples of this are overcoming product-specific challenges in dealing with reverse logistics, ensuring high levels of accuracy in order fulfillment, and leveraging our data capabilities to drive more workforce productivity. I'm extremely proud of our work with Nike, which I've had the pleasure of overseeing for the last seven years. Our work together encompasses three high-value sites in the U.S. and one in Europe, with two additional being implemented for the U.S. and one in Spain. We also manage Nike's North American reverse logistics, and this relationship is a great demonstration of the value we bring through our technological expertise. In 2017, Nike needed help addressing the challenges they faced with their product returns. Our solution was to leverage our expertise in reverse logistics and set up a 1,000,000 sq ft facility that accelerated the processing of inbound returns. We deployed advanced planning to predict inbound volumes and prioritize high-value products in the reverse logistics process. This reduces unnecessary inspections and remerchandising of low-value products. For Nike, this resulted in increased margin through improved velocity, sophisticated planning and analytics at a state-of-the-art facility with a highly engaged workforce. In the last 12 months, we provided an outbound e-commerce solution operating from their return center. That's enabled them to have some of their strongest results. Take a look at what Rebound brings to Nike customers. [Presentation] Taken in combination, our scale, expertise, and technology comprise a winning culture that makes GXO a stalwart of our customer supply chains. Specifically, our customers trust us to manage their data carefully and impartially, execute complex projects, and help them meet their ESG objectives. All of this results in customers trusting GXO with their most important asset, their reputation. You just saw an example of continuous improvement at Nike Rebound, where the video ended with two young men going to a Nike store to pick up their corrected shipment. That is not the case today. The product would meet them at their own front door. As I mentioned earlier, we strategized with Nike and built an e-fulfillment capability as part of Rebound, which now allows Nike to be more responsive. This solution is saving costs for Nike and driving customer satisfaction because it's seamless and it eliminates steps in the process. We leverage this same culture of continuous improvement across all of our operations to drive margin expansion and top-line growth while delivering better performance for our customers. We have numerous levers we can pull, including labor optimization through our smart productivity tools, operational efficiencies through our vertical expertise, and dedicated customer-specific initiatives to build long-term trust. These levers drive annual gains of 1%-2% and reinforce our partnerships with our most valuable customers. Let me tell you about GXO Direct. It is a testament to our commitment to continuous improvement and our culture of innovation. GXO Direct is a shared space distribution network we offer in North America. It provides our customers with a fluid way to position inventory close to targeted populations. Importantly, it lets customers leverage our scale and capacity and innovation so they can reduce fixed costs and transit times. In doing this, GXO Direct solves one of the biggest challenges for e-commerce customers, which is how to position goods close to consumers as demand patterns change. Finally, Direct gives smaller customers more agility than traditional distribution options with a variable cost model, and it allows retailers, e-tailers, and manufacturers to have access to our industry-leading resources as needed with technology that allows them to integrate our solution into their online and omni-channel strategy, or with a third-party e-commerce platform like Shopify. This offering differentiates us from other logistics providers in North America. It increases the utilization rate of our existing facilities. GXO Direct is a great success. We believe it will continue to be a growth engine moving forward. This year, we're on track for around 35% revenue growth. GXO is an ESG leader with a long-standing focus on reducing environmental impact at our sites. Specifically, we're targeting the following environmental goals: a 30% reduction in greenhouse gas emissions by 2030 versus 2019, carbon neutrality by 2040, 50% of our electricity generated by renewable sources by 2030, LED lights used by 80% of our operations by 2025, and an 80% recycling rate by 2025. These goals have been well considered. We're confident in our ability to achieve them. A great example of our meaningful impact on environmental goals is our relationship with the Italian luxury brand group, Kering, which owns Gucci and Saint Laurent, among others. Kering required a complex e-commerce solution to incorporate the logistics for multiple brands while reducing environmental impact and developing a reverse logistics model. Our solution was to build a state-of-the-art facility with numerous sustainability features, including one of Europe's largest rooftop solar facilities. It's estimated that this will reduce CO2 by 7,500 tons annually. The energy generated from what will be a carbon-negative facility will be more than sufficient to power this distribution center, with excess energy provided back to the grid for the surrounding community. It's the first industrial site in Italy that will produce more energy than it consumes. We're equally committed to ESG within our own operation. We take a proactive approach to enhancing our work environment. We have an industry-leading safety record in our logistics sites. In the U.S., our warehouse safety record for OSHA-reportable incidents is more than four times better than the industry average. In addition, we have a clear focus on diversity, with 78% of U.S. hires in 2020 being diverse. We have consistently high levels of employee engagement with numerous community outreach programs. Take a look at this video, where you'll hear directly from our team about GXO's focus on safety, diversity, and culture. [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] Everything I just discussed is propelling our business wins. Our growth is fueled by our pipeline, which is at all-time highs. Additionally, we're excited that a large portion of our pipeline is focused on our biggest, most attractive vertical of e-commerce, omnichannel retail, and technology. Our pipeline gives us high visibility into our forecasts and the conviction that we'll hit our projections. To highlight our momentum, I can tell you that we've won over 50 new logos in the first six months of this year, including world-class brands such as Apple. Our sales pipeline has clearly been driven by our preeminent blue-chip customers. However, we also like to incubate companies that we think will become blue chip in the future, and this fortifies our standing as being critical to their success. Our President of Operations in the U.K. and Ireland, Gavin Williams, is going to take you through our business innovation. Take it away, Gavin. Thanks, Bill. In the last 10 years, there have been seismic developments in the technology that can be applied to logistics and distribution. However, because logistics is a hugely fragmented market and typically operates on a multi-year contract cycle, the adoption of these capabilities is still at an early stage. Now, there's a growing customer need to benefit from technological capabilities, and we believe these significant secular growth trends will accelerate. For example, with a customer who's a leading e-commerce player in Europe, we would typically represent around 3% of their cost base, but a largely disproportionate and defining part of their consumer experience. They want to partner with their finger on the pulse of the latest in technology. We see more and more customers asking us to apply technology to realize greater precision in inventory management, improve speed and accuracy in order fulfillment, and a reduction in labor intensity. They see the potential to realize substantial cost savings through automation and gain a competitive edge through the customization we provide. Technology not only generates better outcomes for our customers, it also delivers superior growth and margins for our company. There are four substantial drivers at work here. We have a higher conversion rate within our pipeline when customers choose automation, as we're seen globally as leaders in the delivery of technology. Technology also enables us to deliver better service to our customers by automating certain tasks. Automated customers tend to be bigger and stay with us for longer. Some of our technology contracts are up to 10-15 years in duration. Tech improves ESG metrics around safety and sustainability, which is another incentive for customers to grow with us. All told, technology is a growth driver for GXO across the board. It increases the cadence of outsourcing, and it helps us gain market share in a fragmented industry because we're known for both operational excellence and as a technology leader. From our perspective, a technology solution involves the integration of hardware and software with an overlay of continuous improvement. I'll outline a few benefits of our offering. Automation reduces variable costs and optimizes our use of labor. It also helps us manage peaks in demand and handle increased volumes with fewer resources while improving our ability to meet customer expectations. Together with our software solutions, automation increases the visibility, predictability, and control of logistics operations around the clock. It cuts fulfillment time while maintaining the highest possible accuracy and elevating service quality, and it improves safety and ergonomics for employees. For example, cobots reduce walk time in our facilities, which mitigates the risk of injury. The logistics market's adoption of automation will continue to accelerate, GXO is ideally positioned to capitalize on that tailwind. Here you can see some of the fantastic efficiency and quality benefits from our deployment of technology. On some projects, we're now able to drive productivity gains of 4- 16 times compared to manual methods. Given the amount of R&D that's being focused on supply chains, we see further upside to productivity ahead. From an investor perspective, the important points about the investments we make in automation are that they drive higher margins and faster revenue growth. We're already significantly more automated than the industry, around six times as automated as the industry as a whole. Given the rates of return we see, we're confident investing in best-in-class solutions for our customers. Why does technology produce higher margins and faster revenue growth? Because for our customers, quality and reliability are more important than price. Our distribution centers can hold billions of stock and working capital. For our customers, the speed, agility, and precision of their supply chain is fundamental to their success. Software and agile integration are what make hardware and automation come alive. Our proprietary software gives us the ability to develop customized solutions that are specific to each site we operate. We have software modules for labor management, warehouse management, order management, and for the integration and control of robotics and other advanced automation. By using proprietary analytics, machine learning, and artificial intelligence to generate multidimensional forecasts and other business intelligence, we can generate real-time predictive insights into operations. Our proprietary software is seamlessly integrated and provides a better solution for customers than other third-party providers. We want to highlight one of the technologies we developed for our logistics sites called GXO Smart. GXO Smart is our proprietary suite of intelligent analytics and labor management tools. Smart delivers substantial productivity improvements by optimizing labor resources both in the present and in the future. We use Smart in tandem with other software solutions, including our warehouse management system, time and attendance system, and data-driven demand forecasting. Together, these tools are optimizing resources within our distribution centers and generating an uplift to our EBITDA. The potential impact is huge. Smart improves warehouse productivity by 5%-7% on average. Once deployed at a site, Smart continues to become more adept at those operations, bringing more and more benefit to GXO beyond the penetration achieved. To put this in context, our total labor cost is around $3 billion, and our current penetration of Smart is approximately 60% of sites overall, some of which are just starting to realize the benefits of this productivity improvement. It's clear why we see such a large potential upside to productivity when this technology is fully utilized in all our logistics sites. Take a look at this video that showcases the potential of GXO Smart. [Presentation] Now we're going to show you a short video about a facility we created for Nestlé in the U.K. It's a flagship example of how our integration of advanced automation can innovate end-to-end logistics operations. The backstory is that three years ago, Nestlé wanted a state-of-the-art digital warehouse of the future for global product distribution with an innovation center as part of the design. They narrowed down their potential partners to just two logistics providers worldwide. They chose us. Last year, our specialist teams oversaw the design and development of a 638,000 sq f t, fully automated, sustainable facility that we brought online in just two years. It's an amazing operation that has the ability to dispatch 1 million pallets per year. That's the highest throughput of any distribution center in Nestlé's global logistics network. Before I turn it over to our CFO, Baris Oran, for the financial overview, here's a video of our technology in action for Nestlé. [Presentation] Thank you, Gavin. Here you see a recap of the key milestones that have taken us steadily towards our target closing date of August 2nd. After announcing the spin in December, we filed our public Form 10 registration statement on June 9th. We completed GXO's debt financing on July 2nd, and we assembled a top-tier leadership team, some of whom you heard from today. GXO has an excellent growth profile. We expect continued strong growth in revenue and EBITDA in 2022, backed by this year's contracted business wins we have in-hand, and our pipeline of over $2 billion. In fact, our growth profile is best in class among contract logistics providers. Our team is focused on generating meaningful returns on invested capital. We decide all new investments based on maintaining or increasing our 28% return on invested capital. Our business model generates robust free cash flow with a strong conversion rate from net income. This is driven by low maintenance CapEx requirement of around 1% of revenue. Notably, despite the challenges associated with COVID, we generated substantial positive free cash flow in 2020. We maintain a robust capital allocation process with the primary goal of investing in organic growth. With our investment-grade balance sheet, we have the flexibility to grow the business organically and accelerate growth through accretive M&A. We are focused on maintaining our above-market growth rates. We will continue to invest in technology and other productivity initiatives to enhance our operations, create value for our customers, and expand our margins. Any acquisitions we consider must have a clear strategic rationale and strong synergies. They must also exceed our rigorous investment criteria. A good example of this is our acquisition of Kuehne+Nagel's contract logistics operations in the U.K. and Ireland. We see additional opportunities for tactical M&A in the future. If we have excess cash following our growth investments, we expect to return capital to shareholders. Finally, we are committed to maintaining our investment-grade credit rating. To ensure that our capital allocation priorities are met, we have clearly defined investment criteria that informs our decision-making about both organic and inorganic growth. This ensures that we continue to make disciplined decisions with a consistent focus on maximizing shareholder value. For organic investments, we target a payback period of three years. Additionally, we review all new investments in the context of our ESG criteria. For 2022, we are targeting organic revenue growth of 8%-12%, with new business wins contributing 5%-8% of that growth. We have a robust multi-billion dollar sales pipeline across multiple verticals and geographies. We have a strong conversion rate of pipelines to wins, and we are confident in realizing another 3%-4% growth from our existing customer relationships, driven by a combination of price and volume increases. Here you see the anticipated impact of the three mega trends we spoke about earlier. The ongoing consumer adoption of e-commerce, which was accelerated by COVID, the increasing customer demand for advanced warehouse automation, and the continued trend towards outsourcing, driven by increasingly complex supply chains. Looking towards the future, we expect these same trends to continue to propel our growth. We have a proven track record of above-market revenue growth. We are confident in our ability to continue to outperform the market to achieve double-digit EBITDA growth. In the near term, we expect to deliver this double-digit EBITDA growth through a mix of new business wins and wallet share gains with existing customers, coupled with further efficiencies. We are constantly evaluating initiatives that can drive operational improvements in the business and expand our margins. The column on the right side of the screen shows our 2022 target for adjusted EBITDA of $700 million-$735 million. This is approximately 17% higher from the midpoint of the range for GXO's full-year pro forma outlook for adjusted EBITDA this year. Beyond 2022, we are targeting reaching double-digit revenue growth. We will continue to leverage our strengths and execute on company-specific margin initiatives. There are four major levers at our disposal. One is technology, specifically our GXO Smart Labor Management tools. Two is the contracts we have with multinational customers. Three is value-added services that we tailor to a customer's need. Four is our targeted sales strategy. I'll explain a little more about each one of these levers. The 5%-7% productivity improvement from GXO Smart will apply to more and more of our labor cost base as we continue to roll out these tools. Our aim is to serve more customers across more geographies, which can enhance our growth. Right now 41% of our customers are using our services in four or more geographies, so we have a lot of room to expand. Value-added services are at the heart of our offering. Earlier, you heard how our ability to customize logistics solutions is a major differentiator for us. Value-added services are a natural extension of customization. These are high-margin additions to the core solutions we provide. Our strategic accounts team is heavily incentivized to deliver quality top-line growth in line with our returns criteria. The team is laser-focused on signing the most important accounts in our pipeline, and they also work with existing customers to expand the contracts we already have. At the time of the spin, our forecast for net leverage is expected to be just over 1.1 x. We have a low average cost of debt at approximately 2.15%, which strongly reflects the strong financials for our business and our ability to tap into favorable interest rate environments. We have no maturities due before 2026. We plan to maintain at least $900 million of liquidity through a combination of cash and revolving credit facility. Our low CapEx requirements and leverage, together with stable cash flows, will allow us to continue to scale our investments. I want to emphasize again that we are firmly committed to maintaining our investment-grade credit rating. We view this as strategically important to our growth plans as it gives us lower cost of capital, additional liquidity, and more importantly, a favorable competitive positioning. As we demonstrated, we are a rapidly growing business with strong and expanding margins. Our business model creates high returns for our investors because of its low capital intensity. We also generate substantial free cash flow. In 2021, we expect our free cash flow to grow faster than our EBITDA growth. As you can see, GXO is a high-growth, high-return, and free cash flow machine. Our chairman, Brad Jacobs, has some final comments. Thank you, Baris. To summarize, we have strong conviction in the future of GXO for five reasons. One, our business is being propelled by massive secular tailwinds of e-commerce, warehouse automation, and outsourcing. Two, we have critical scale in this vast and growing industry. Three, we have longstanding relationships with blue-chip customers across diverse markets. Four, we provide differentiated solutions powered by proprietary technology that save our customers money and help them delight their end customers. Five, this is a rare business model. How often do you see a business that's an industry leader with revenue growth at multiples of GDP, currently compounding at double-digit EBITDA growth, while at the same time producing 28% return on invested capital? We very much appreciate your interest in GXO, and this concludes our prepared remarks. Next, we'll open the floor to questions after a short break. [Break] Greetings. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star one. Before we begin, I'd like to turn the call over to Neil Shelton, GXO's Chief Strategy Officer, for brief introductory remarks. Thank you, Kevin. I'd like to thank everyone for listening in to our Investor Day. We hope that you share our excitement for GXO's quite phenomenal outlook. I will be helping to moderate today's question and answer session. With me today are all of the leaders you've heard from this morning, Brad Jacobs, Chairman of GXO, Malcolm Wilson, GXO's incoming CEO, Mark Manduca, our incoming Chief Investment Officer, Richard Cawston, President of Europe Operations, Eduardo Pelleissone, President of the Americas and Asia Pacific, Bill Fraine, Chief Commercial Officer, Gavin Williams, President of Operations in the U.K. and Ireland, and Baris Oran, our incoming CFO, as well as Angus Tweedie, Senior Vice President of Strategy. I will now turn it back to Kevin, the operator, to open the line for your questions. Thank you. Our first question today is coming from Brandon Oglenski from Barclays. Your line is now live. Hey. Good morning, everyone. Thanks for taking my question. I guess, guys, I appreciate the top-line outlook. How do you reconcile a 4% CAGR in the last four years? Brandon, thanks for your question. Baris, would you like to talk about the historic performance of GXO, and then afterwards I'll turn it over to Malcolm to reiterate our future outlook. Sure. Thank you. During the last couple of years, we have eliminated some underperforming contracts, and they have reflected on our top-line growth. Looking to the future, $2 billion worth of pipeline gives us a lot of confidence for our future growth. Malcolm, why are you so excited about the future growth? Those strong secular tailwinds, mega trends, e-commerce, focus on automation, the scale we have, the rise of outsourcing, increasing complexity of global supply chains is increasing the demand for our services, is helping accelerate the growth in the total addressable market. All in all, low-risk, infrastructure-like contracts provide us with great visibility into the future. We can already now see what's happening for 2022 into 2023, into 2024 and beyond. Thank you, Malcolm. Kevin, next question, please. Okay. The next question is coming from Amit Mehrotra from Deutsche Bank. Your line is now live. Hey, thanks everyone. Good morning, afternoon, and thank you for the presentation. I have a three-parter since you seem like we're cutting off after the first question. My first question, if I could, is on free cash flow and how to think about what free cash flow is in 2022 that corresponds to $700 million and $735 million of EBITDA. I'm getting to about $280 million, but I think my working capital assumptions may be a bit low, so if you can help us out on that. Also, incremental margins in 2022 kind of imply a 14% incremental on an apples-to-apples basis. Is that the right way to think about the contribution margins on incremental revenue growth? I just would've thought it would be a little bit higher given the XPO Smart and some of the automation initiatives. My last question, if I could, is more broad. The number one question I get is about risk management in this long-term contract structure business. It wasn't that long ago that Toys"R" Us went into administration and caused DHL a lot of issues. There was obviously that chicken shortage that shut down all KFC stores in the U.K., which I think was a supply chain issue. Then even GXO had issues related to House of Fraser bankruptcy and taking a $16 million write-off on the balance sheet, which is a big number relative to the earnings contribution of that business. My last question on that front is can you just talk about what can go wrong in this business and how you guys, and I think you guys protect yourselves better than anyone in the industry about that, and I wanted you to expand on how you write your contracts to protect you from all the different things that can go wrong? Thank you. Amit, thank you for your questions. I'll turn the free cash flow question over to Angus, the operational question over to Baris, and Malcolm will finish up with our risk management question. Angus? Yeah. Hi, Amit. Look, it's a good question. Certainly on free cash flow, as you highlight, there is a bit of a drag on working capital given the growth we're experiencing in the business. It's hard to be precise on that looking at 2022, and we haven't provided guidance on that yet, as it will come down to the cadence and phasing very much of the pipeline. Certainly, I think you're in the ballpark and you're thinking about it in the right way. Just before I hand over to Baris, I would just say on the incremental margins, the point here that the growth is very much tied to new contract wins, although we are doing some very exciting stuff on the efficiencies as well. Baris, your thoughts on operational leverage from the growth we see in front of us? Sure. Thank you. Very good question. On the cash flow side, we're expecting 80% of our net income and roughly 30% of our EBITDA to convert into cash flow. On your detailed question on the working capital side, I would generally take around 2% of our revenue as our working capital drag on the free cash flow generation. As we mentioned, roughly 1% of CapEx is maintenance CapEx and 2% of revenue as growth CapEx as we continue to expand our business. On the EBITDA margin, as you rightly indicated, 2022 guidance is showing a higher EBITDA margin, that's at the back of expanding the implementation of GXO Smart, but also additional and high growth services we provide and high margin services we provide such as reverse logistics gives us that comfort. Finally, Malcolm, Amit suggested that GXO's risk management was better than peer average. Would you share that thought? Well, Amit, thanks for the compliment. It's coming as a consequence of the very strong governance that we have when we're contracting. No industry can be devoid of challenges altogether. It's impossible. We pay attention to the detail. We pay great attention to the risks that could exist. We do that through the contracting phase, in the selection of the customers that we're working with, which are invariably blue-chip organizations. We utilize all of our resources, our technology, people, our finances. We really pay strong attention to how we're using those. Thank you, Malcolm. Kevin, next question, please. Thank you. Our next question is coming from Allison Poliniak from Wells Fargo. Your line is now live. Hi, guys. Good morning and good afternoon. Just want to go back to you talked about the high margin value-added services. Is there a way to help us understand the relative benefit to that in terms of next year, your EBITDA margin? I think you also mentioned 30% penetration in things like return logistics. What are you thinking in terms of how that progresses over the next few years in terms of penetration? Thanks. I'll ask Baris to talk about the opportunity in terms of EBITDA growth from value-added services, and then Bill to comment on the growth outlook from such activities. Baris? Yes. Thank you. The value-added services we provide are solving many problems of our customers today. E-commerce overall is growing faster than the industry. The value-added services such as reverse logistics is growing faster than the e-commerce itself. The margins are much higher compared to our overall margin for GXO. Thank you. Bill, on the ground, what are your customers saying with regards to the value-added services that GXO is now offering? Thank you, Neil. When we talk with customers, we, myself and Baris with one of our top customers this week, and they were talking about their future 2025 and how they had to build out a transportation network to get to the e-commerce needs of today. Being close, being fast, and being efficient, and how they wanted us to partner with them and add them a huge amount of leverage in terms of sites around the country to help them with that. That's a normal conversation we're having today with existing customers and a lot of value-added services in that. At the same time, in e-commerce, as Baris mentioned, it always turns to reverse because if you have e-commerce, you have reverse. What we've been able to do is been able to speed the process of reverse for our customers, so products that come back into the facility are able to throughput quickly and go back out as new e-com still. In that case, we've built digital or e-commerce abilities in the back of our reverse centers, so a product coming in is right back in the market again, saving money and process time for our customer. Last, what I'd say is we're talking to customers together almost on a weekly, daily basis. This phenomenon isn't just e-com. If I'm talking to somebody in aerospace or automotive or food and beverage, their customers expect to have a phone in their hand, to be able to walk through an airport, hit a button, and get a part delivered in two days. They're faced with the same things, and they're coming to us as that port in the storm to answer those questions. We have a great team. We have great respect with our existing customers. Finally, large new customers are coming to us to figure out what's going on and how they can best capitalize on this. Thanks, Bill. Allison, thank you very much indeed for your questions. Thank you. Our next question today is coming from Scott Schneeberger from Oppenheimer. Your line is now live. Thanks very much. Good morning. Could you please discuss the contract mix of open book versus closed book versus hybrid, perhaps discuss the margin profiles and the general geographies of each? Where would you expect, I suppose, that mix or the business to be going over the coming years? I'll hand over to Baris to talk about the different contract terms, open versus closed books. We'll pass over to Richard, who runs the European operations, and Eduardo for comments on the U.S. too. Thank you. In our open book contracts, revenue is based on our actual cost plus an agreed management fee. We also share our productivity gains with our customers where majority of the upfront investment is taken over by the customer, therefore, the return invested capital returns are quite high. On the closed book contracts, revenues are based on a combination of price per unit processed and a fixed payment. Typically, these are lease payments, equipment, and site team management expenses. We have productivity gains on the closed book contracts, but those gains are capped in-house and margins expand over time higher. Therefore, it will be a margin expansion for us. Today, majority of our contracts are a blend of open and closed book, and we expect that trend to continue in the future. Thank you, Baris. Richard, in terms of open book versus closed book in Europe, what are you seeing in terms of the current momentum? Very stable because the hybrid model actually covers the best of both worlds. You can tailor it to each of the customer's needs and each of the dynamics of the situation. The complexity, the evolution of the contract, and the lifespan of the customer's business needs. The hybrid model works really the best in our business. Eduardo, are you seeing much change in the open book versus closed book nature of contracts in the U.S.? Thanks, Neil. As Baris and Richard said, we operate pretty much on the same way and the same standards as Europe as we are a global company. The majority of our contracts, they are hybrid contracts where we have leading KPIs that help us with the customers to secure labor at the right wages, so we don't feel the shortage or the hit in our productivity. Mark, have you got any closing thoughts on open book versus closed book? Just linking Eduardo, Richard, and Baris's excellent points on contracts. I think the most important point to make is where these contracts have migrated to. We've migrated away from a price discussion in these contracts. More often than not, what we see is customers asking for a scale player, a global player, someone with a good balance sheet, someone who's technologically advanced, and that's where we win. Thanks, Mark. Scott, thanks for your question. Thank you. Our next question is coming from Hamzah Mazari from Jefferies. Your line is now live. Hi, this is Mario Cortellacci filling in for Hamzah. Could you just walk us through the sales cycle for new customers? You gave good detail in the pipeline, I think on page 47, but maybe you could talk about how much of that is near-term opportunity versus long-term opportunity. Also maybe if you can give us a sense for what that conversion rate has looked like historically and then where it can go in the future. I'll start off with Malcolm to walk through the typical sales type cycle, and then ask Bill to give you a bit more commentary around the sales pipeline. Malcolm? Thank you, Neil. It's a very similar process, whether it's an existing, very long-tenured blue-chip customer that we've been working with over many years or a brand-new customer. Invariably, we're talking about a specific business need that they have. We'll make the analyzing, we'll make the solution design, working really very closely as teams with our customers. Ultimately, we'll agree the various different terms of that process. That could be a s you point out, we have short-term arrangements where from start to finish, that could be six months. More and more, the very nature of the complexity of the supply chain solutions that we're bringing, the problems that we're solving for our customers, means that that timeframe can easily become 12 months or even a bit longer. Remembering that those deals are typically five, 10, even 15 years in duration. A lot of work goes in upfront, but then we're seeing long horizon of benefits after the implementation. Bill, if you could follow up with some commentary around the sales pipeline that you see in front of you. Yes. First of all, we talked about it being a $2 billion pipeline. One thing that we didn't talk about is the very stringent way those customers get into our pipelines. We work with them. We go out and seek out customers we know will have a value for us, not just short-term but long-term. We go through a go, no-go process, which then brings them into something that we're going to spend time and effort on. From that, what we do is, as Malcolm just said, some of these are long-term, and they're longer-term, more complex contracts. Others is really the reason why we created GXO Direct. They're shorter-term, and they want to come on more quickly, and GXO Direct gives that ability. Customers come on board. They can come on board and ship direct with us. I'll give you an example of a customer who came on last year, a technology customer in one site, and they expanded into seven in the next year. That's the benefit of Direct. We're a network. Once they're in and installed once, we can replicate that same technology around the other sites. Secondarily, as customers come on, they work through Shopify. We feed Shopify. We do the work of processing. Newer customers in the market want to come on quickly. They come to XPO, GXO, sorry, and they come into our Direct network. We have the ability to manage both. There's been almost 50 new customers, large logos brought on this year, including some the size of Apple. A really exciting time so far. That's so far this year. Thank you. Thanks, Bill. Mario, thank you for your question. Thank you. Our next question today is coming from Ari Rosa from Bank of America. Hi, good morning, guys, and congrats on the spin here. Malcolm, I wanted to direct a question at you and just wanted to understand maybe if you could give a little more color on what you see the benefits of being a standalone entity and maybe what that's going to allow you to do that you weren't able to do beforehand. Separately, I wanted to get a little bit better understanding of where you're seeing evidence that there are scale benefits in this industry. You spoke a lot about how the industry is incredibly fragmented, but it sounds like in the process of looking to expand, you're maybe going to be looking to do acquisitions. Obviously the fragmented nature of the industry would suggest that maybe there aren't such large benefits to scale, especially if you're providing these really customized, tailored solutions. Maybe you could give some thoughts on that. I'll start off with Malcolm in terms of answering your question in terms of benefits of scale, benefits of being a standalone business, and then hand over to Mark to talk about M&A and the impact of GXO's ability to consolidate this industry going forward. Malcolm? Thanks, Neil. The spin-off that's taking place now, it's creating two powerhouse companies, so XPO on transportation and GXO. For GXO, it's really about the business structure. It's going to enable management to pursue opportunities for long-term growth and profitability unique to GXO's business, unique to GXO's customers. It allows us to implement our own optimal capital structure, investment identity, the resources, allocation of strategies, strong focus on logistics, warehouses overwhelmingly, what we do, technology, talent, all of these things really come as a consequence of what's happening. Thanks. Mark, Ari asked about M&A. It's a great point, Ari. Thank you for the question. Before I answer that, I just wanted to link back to Malcolm's points and Brad's earlier comments as well, that this is a rare breed of business, Ari. Let's just think about what we were hearing earlier about free cash flow. We're producing excellent free cash flow for a high-growth company. How often do you see a business that has our visibility of contracts, our infrastructure-like contracts, our revenue growth, where we've got double that of the pure-play peers, where you've got GXO's EBITDA growth, double that again of the pure-play peers, our margin expansion opportunity, and also that 28% return on invested capital that we talked about in the presentation. I think there is a very good argument here, Ari, that this business, GXO, should trade at a premium to that of the high teens multiples that you see at some of our excellent pure plays. Secondly, on M&A, we still hold a 5% market share of this fast-growing $130 billion outsourced logistics market in both Europe and North America, as you know. With our strong balance sheet and track record of successful M&A, which you know about, we sit, I think, in the perfect position to be a consolidator in this market as the right opportunities present themselves. Organic growth, as you heard about on this call and as the questions earlier alluded to, that's clearly going to be our priority given the phenomenal secular tailwind that you heard about in our presentation. Let's be clear. If the right multiples present themselves, we will keenly look at them as a management team, but they need to hit 28% return on invested capital or better as a threshold, and obviously there's going to be a keen focus as well on EPS accretion within our business. On that note, it's probably worth asking Gavin to talk about our recent bolt-on with Kuehne+Nagel assets in the U.K. Gavin? Thanks, Neil. Yeah, the acquisition of the majority of the K+N contract logistics business in the U.K. and Ireland was a cracking example where we've taken a tactical acquisition in the U.K. and Ireland. We're way down the path of integration of that business now. What it gave us is three new verticals for us to go and secure and also grow. We're now seeing already a great pipeline of opportunities with customers that are new logos to GXO. A great example where we will be responsive and positively react to an opportunity as a tactical M&A. Thank you. Ari, thanks so much for your question. Thank you. Next question today is coming from Brian Ossenbeck from JP Morgan. Your line is now live. Hey, good afternoon. Thanks for taking my questions. Multi-parter here as well. I wonder if you could just talk about the labor market tightness, both for starting up a new contract, new warehouse, and also managing through the day-to-day operations, including peak. Are you finding that customers are still willing to take on that pass-through risk or at least taking on that additional cost as part of the service when you're doing these outsourcing contracts? That's the first one, just broadly speaking. Mark Manduca just mentioned about high teens multiple versus the peers. Wanted to clarify if that was on the EBITDA basis or adjusted for lease accounting for IFRS. As you know, that's something we've all been working through to different degrees here. If you could clarify that'd be helpful. Lastly, on the ROIC, it's been brought up a couple of times at 20%, which I think is adjusted. I haven't seen the appendix yet, it's a clear focal point of how you're looking at the business and in classifying some of the growth opportunities. Maybe you can just walk us through that real quickly here as well. Thank you. Brian, thank you for your questions. I'll start off with Richard to talk about the tightness of the European labor market, Eduardo to talk about the U.S. labor market, Mark to talk about the multiples that our peers are trading on, Baris to talk about our return on invested capital. Richard. Thank you, Brian. Great question. The labor market is very tight at the moment. I think that's part of the rapid bounce back of the economies across the globe from the pandemic. As labor sort of reorganizes itself into the right places, and we expect this to pass, it will happen again in the future. That's where our deep customer relationships come into play, our strong contract protection. Our customers understand the critical nature of this and will pay for it. It's critical to our service, and these deep relationships really help us get through these tight spots in such labor markets. Eduardo, in the U.S., what are you seeing in terms of the labor markets? Similar to Richard, we are in a tight labor market. We are taking pretty much the same actions as Richard is taking in Europe. Just want to add that the tight labor market is actually giving us a great opportunity for growth, driven by the high level of automation that we can add to our warehouse and our solutions and our operations that reduce our dependency on the tight labor market. Thank you. Mark, Brian's second question was about the multiples of pure-play peers. Yeah, just picking up on Eduardo's comments there as well on inflation just first, and then I'll get to the multiples. For us, inflation volatility, adding to Eduardo's comments, it drives outsourcing by customers towards third-party logistics providers like us. Of course, if you think about labor inflation, it causes customers to want to automate more. It means more robotics. Of course, as we know from the presentation earlier, we are a global tech leader when it comes to automating warehouses. On your point on EV to EBITDA, the comparable pure-play companies, as you know, include ID Logistics, Wincanton, Clipper Logistics. I think for choice, Clipper, given its similar e-commerce exposure, its high revenue and EBITDA growth, and strong return on invested capital profile, as I mentioned, that's probably the most likely name as a comparable to GXO's business model. Look, very simply, we're best in class, as we heard in the presentation, at standing up complex technologically advanced supply chain solutions. We are worthy, in our view, of a high teens EV to EBITDA 2022 multiple. We have no doubt. Baris. Thank you. Let me give you some framework around the differences between Europe and U.S. A company in supply chain business would have different EBITDA under IFRS and U.S. GAAP. The largest difference is coming from the treatment of operating leases, which is very large in our industry. IFRS would not book them in EBITDA as an expense. Therefore, EBITDA would look higher and multiples under IFRS would look lower. If some of our peers were reporting under U.S. GAAP, their multiples would have been higher. It is important to be mindful of that fact when you compare us to the European peers, especially pure plays. That's why we have provided guidance on EBITDAR for those of you who would be looking for a quick and easy way to go through that calculation. Now coming into your question on return on invested capital. The calculation is, basically we start from our EBITDA guidance of $600 million-$630 million. We back out our depreciation amortization and also provide a 26%-28% average tax to come up with our NOPAT number of roughly $266 million-$274 million. On the denominator side, we start with equity, back out our debts, our financial leases, cash, goodwill, and intangibles, and come with a number around $957 million. That reflects roughly how much cash on cash returns we have when we invest into this business. In another way, if I give $100 to Eduardo, Rich, Gavin, or Bill, they generate roughly $28 per annum after even $5 are allocated to shared expenses. $100 returning $28 per annum. Thank you, Baris. Brian, thank you for your question. Thank you. Next question today is coming from Jason Seidl from Cowen. Your line is now live. Great. Thanks for the question. This is Elliot Alper for Jason. GXO has signed some of the largest contracts while being connected to XPO legacy. Will not being part of the logistics business affect GXO's ability to sign future contracts? How have customers perceived the spin, and are there any implications on how new larger contracts will be signed in the future? Bill, are customers excited by the GXO spin and anticipating that with bigger contracts? Yes. Thank you, Neil. While being part of XPO has been great, I can tell you that nothing's slowed down. We are signing in the middle of some extremely large contracts right now, not just in the U.S. but globally. That's a big plus for us because we have very large global customers today that we work with around the globe, in all regions of the globe successfully. Very critical customers, very detailed customers. Our quality isn't just in a region. The way we work, the processes we follow, the commitment we have is very dedicated. As you've heard on this call, I'm surrounded by sales processes with the people on the call with me, meaning we're all involved. You've heard Eduardo and Baris, Mark, and Richard, and Gavin, and everybody here, Malcolm, talk in detail about our customer process, talk in detail about how we service customers, what it means for them to be part of GXO. That's really the key strength in this. Having the technology is key, having the scale is key, having the geographical reach is key. On top of that, having a leadership team that is as well-entrenched with their customers as we are, I really believe is going to be the thing that tips us over the top. Thank you, Bill. Elliot, thank you for your question. Thank you. Next question today is coming from Stephanie Moore from Truist. Your line is now live. Hi, good morning. Morning, Stephanie. [audio distortion] My question is, and I appreciate all the color that you gave, just comparing GXO size and how the scale matches up to your pure- play competitors. Did want to touch a little bit on your other competitor who is a global competitor and often number one in some of your key markets, particularly North America. Maybe you could just talk about the competitive landscape with them, how GXO stacks up and really your competitive advantage when you go head to head on new contract wins specifically against that competitor. Thanks. Malcolm, would you like to talk about our competitive advantages and the landscape as you see it? Stephanie, in North America, one of our great competitors is DHL. It's a great business, great scale, and scale is important. We respect them as a competitor. Most important thing is scale and focus. For GXO, we're really overwhelmingly focused on warehousing. High levels of tech enablement. We're really levered to fast growth verticals, e-commerce, omni-channel technology, food and beverage, consumer packaged goods. All these are really strong secular growers. GXO is a growth company. That's why we're driving forward strong double-digit EBITDA growth, strong revenue growth. That's really the differentiator for us. Thank you. Stephanie, thank you so much for your question. Thank you. Next question is coming from Todd Fowler from KeyBanc Capital Markets. Your line is now live. Great. Thanks and good morning. I wanted to ask on the leverage targets, the 1x-1.5x that you have for a longer-term target. On a pro forma basis, it seems like you're going to be really towards the low end of that and with the EBITDA guidance and the free cash flow maybe below it. How do we think about near-term capital deployment and being within that target range on a near-term basis? That's the first part of my question. Second, can you talk about the scalability of the organization? How much more revenue and growth do you think that the current organization, the infrastructure can basically handle before there'd be a significant investment requirement on the corporate side? Thank you. Baris, do you want to talk about the GXO balance sheet, investment priorities, and the fact that we can grow generating cash flow? Sure. Thank you. Yes, we are starting day one with an investment-grade credit rating and balance sheet. Our leverage is around 1.1 x or so. We are firmly committed to keeping our investment-grade balance sheet and credit rating. It's very important for us also from a competitive perspective. We have the unique nature of creating a lot of free cash flow while we continue to grow and create 28% of return on invested capital. We are comfortable that we will be able to fund our growth through our cash generation and the asset-light nature of our business is giving us a lot of strength to fuel our growth in the future. Todd, thanks so much for your question. Thank you. Next question is coming from David Vernon from Bernstein Research. Your line is now live. Hey, good morning, guys. Thanks for taking the time. Maybe Malcolm or Mark, could you help us think about CapEx from the micro level and then take us out to the macro? If you think about a project, like the Nestlé one you showed the video of, how should we think about what level of investment you're making in the proprietary hardware and IP that's going to operationalize that facility versus the investment that Nestlé's making? How should we think about that kind of expanding up to support growth in terms of CapEx in relation to future revenue growth? Baris, would you like to talk about our growth CapEx and how this will drive revenues in the business from here? Sure. Roughly 2% of our revenue is going to growth CapEx and 1% of our revenue goes into maintenance CapEx. When you look into the details of the growth CapEx, around 50% of that is going to robotics and automation. That's directly related to our activities, improving the labor productivity and the productivity overall in our facilities for our new customers. When you look into our maintenance CapEx, which we have invested quite a lot during the last couple of years in the IT side, around 50% of our maintenance CapEx is primarily information technology. That's going back to our technology investments, and we have invested quite a lot in last couple of years, and we are reaping the benefits of that as those investments mature. Thank you, Baris. Malcolm, is there anything you could add with regards to the solutions we provide for our customers and how technology helps them? Yeah. Just to add to Baris' comment. At the high level, sometimes our customers put capital in, sometimes we put it in. There is no cookie-cutter approach on this. We look at every solution, every requirement in individual way, and then we will determine what the right solution is going forward. In every instance, though, what we are bringing into that solution is all of the expertise that we have in the standing up of that new facility for the customer, all the intelligence that we have in terms of the systems, the integration of different automations, different robotics. It is really one of the key differentiators for GXO. Thank you, Malcolm. David, thank you very much for your question. Thank you. Our next question today is coming from Bascome Majors from Susquehanna Financial Group. Your line is now live. Thanks for taking my questions here. I appreciate the reluctance to guide free cash flow for next year, given the uncertainty on implementations and timing and things like that. Can you talk about over long term, if you're planning to grow EBITDA double digits moving forward, do you think free cash flow grows above, beyond, in line with that over the cycle? Any thoughts on what the gap between those two metrics might be? As a follow-up, you've talked a lot about the favorable cyclical and secular conditions that are really propelling a lot of your businesses across the globe right now. Can you talk about the kind of environment that would be more challenging cyclically for you and what changes you might have to take to protect your margins, earnings, and cash flows in that scenario? Thank you. I'll hand over to Baris to talk about how our free cash flow growth will outpace EBITDA, then ask Malcolm to talk about the kind of positive secular conditions that we continue to see in front of us. Then afterwards, ask Bill to talk about feedback from what his customers on the ground are seeing with regards to the broader economy. Thank you. We're really not shy about our free cash flow number at all. 30% conversion from EBITDA to free cash flow, 80% conversion from net income to free cash flow. If you look into those numbers, they are much better than compared to last couple of years. What's giving us that comfort is 93% retention rate on our customers and $2 billion of pipeline. We are a secular growth company. We are a secular growth business, therefore we are not impacted by the cyclicality. Therefore, we expect our free cash flow to continue to grow over time. Even in 2020, we were able to generate substantial free cash flow. That's the proof of that. Malcolm, the secular outlook, is that outweighed by anything you're seeing potentially on the cyclical front? No. We're seeing really a very, very positive environment as we go forward, not just for the remainder of 2021, but also through 2022, where we've provided guidance, 2023, 2024. We can already see projects that will be landing in those windows. Just to add to Baris' comment, we've just come through a pandemic, and the business performed incredibly strongly. Our contractual structure which we work with our customers protects us, gives us benefits in really up cycles, but also gives us strong protection if things are in a downward environment. I think we're in a great shape going forward. Bill, the feedback you're picking up from customers, they're looking to the future to invest, or how are they minded right now? Yes, Neil, the bulk of the customers we're talking to are telling us they're talking to us about 2025. They're talking years out. They're talking about the changes they have to make in their business to be viable in the future to add value to what they do for their customers. What we're doing is we're working with them to partner and to show the ways we can get there. On the new RFP is the exact same way. People aren't looking for us to take over site management. They're looking for us to change the structure and the strategy of where they are in the world and where they are in their markets, and how they can improve to meet today's demands versus what they were doing in the past. All of these things involve, as we talked about before, scale, technology, and in many cases, global. They are looking at how I do that around the world, not just in one market. Thank you, Bill. Bascome, thank you very much for your questions. Thank you. Next question today is coming from Thomas Wadewitz from UBS. Your line is now live. Yeah, good morning. Thanks for the chance at some questions here. I am going to give you two to work with. I wanted to get your thoughts on retention rate. I think one of the concerns historically on logistics was that you could do a great job with a customer, and then when the contract expires, you got to come up with something new and kind of new cost savings. My guess is that that's changed a bit over time. Can you talk about, first question would just be, how has that changed over time in terms of retention and pressure to further reduce costs when the contract expires? Has your retention rate changed over time? Is it rising? The second one would just be management focus. Should we judge you on revenue growth? I mean, it seems like there's more focus on revenue growth. Is margin expansion a greater focus? Investors like simple stories. Should we think more about margin or more about revenue growth? Thank you. I'll hand over to Malcolm to talk about customer retention, the strong level that we've seen, and the contract duration that we currently enjoy. Then over to Baris to talk about the kind of mix of revenue growth, EBITDA growth that the business is focusing on. Malcolm? Thanks, Thomas, for the question. 93% is where we are in the context of retaining our customers. That's a high percentage, and it's actually growing. What's driving that is the solutions that we are putting into our working with customers. We're solving more and more complexity in their supply chain. We're contracting for longer periods of time. In the past, we would have looked at three to five years type of contracts. Nowadays, it's quite normal five, 10, or even longer than that contract. It's a big decision that is made at the point when we're starting to work with a customer. A lot of due diligence goes into that, a lot of governance on both sides, and that drives the businesses to be together for the long term. I think the last point I would say on that is we shouldn't look at these contracts in a kind of one-dimensional way. Almost in every case, we see that the contract's expanding scope. We become more and more connected with our customers. It drives that high level of retention. We might start with one type of service, but invariably, by the good working together that we have, great relationship, that service is expanding to new services, and we're always looking for ways to save our customers money, and that's what's driving that high level of retention. Baris, the second part of the question was, would you rather be judged for your revenue growth or your EBITDA growth? Well, I think our disclosure on how our executives are compensated would give you a good review on that. EBITDA growth is number one, revenue growth is number two, and cash flow would be number three, and all that within the context of return on invested capital of 28%. Baris, thank you very much. Thomas, thanks very much indeed for your questions. Thank you. Our next question today is coming from Amit Mehrotra from Deutsche Bank. Your line is now live. Hey, thanks for taking the follow-ups. Just a couple quick more. One is, I want to understand how you measure the labor intensity of the business. Obviously, it's over many hundreds of sites, one of the key secular trends is automation, as you guys have said many times. It's really hard to audit that from the outside in. I don't know if you guys have a statistic or a measurement date of how do you measure the labor intensity of the evolution of that over time so we can at least hold you accountable or the industry accountable for this secular trend in automation. The other question is, if I look at GXO today, it's a product of really three big acquisitions. You have Norbert in Europe, you've got New Breed in North America, and maybe even Menlo. The end market exposure for all those three businesses is quite different. My understanding is you have more industrial exposure in North America and maybe less industrial, more retail exposure in Europe. Please correct me if I'm wrong, but what does that mean for the growth prospects of the regions and the resiliency of the margins kind of over a cycle? Because obviously the industrial economy is much more cyclical than consumer packaged goods or e-commerce. Thank you. Amit, on your first question on labor intensity, I'll ask Angus and Gavin. With regards to are we different in terms of our exposure by industry vertical, I'll ask Malcolm to tackle that one. Angus? Yeah. Hi, Amit, again. Look, good question on this. As you're highlighting, I think looking from the outside in, it's hard to get an angle when you're looking across the peers. What we'd say is it's very important to consider the verticals that the companies are operating in. It's very much, as you're hearing from Malcolm, from Richard, from Bill, that it's very much down to the solution we're providing the customer that drives the services that we offer them. Therefore, that can result in sort of distortions when you're looking at the data at a company level. I'll hand over to Gavin, I think, to talk you through the kind of operational way we manage them. Thanks, Angus. Thanks, Amit, as well. In the end, the consumer demand is what's driving the labor intensity. We, as consumers, are becoming more and more demanding on how we receive our goods, which is driving complexity into our customers' supply chain. Our scale has given us the ability to significantly invest in tech and solve these customer-related complex supply chain problems, and that's on the increase, frankly. That is on the increase. Our focus is in three areas, primarily. We're focusing on our proprietary technology, that's the likes of GXO Smart or WMx or GXO Direct. We're focusing on delivering big automation projects. You heard the Nestlé project being mentioned on this call as well. We're looking at applying all of our learnings and benefits that we've derived from delivering and executing and operating those technology-specific fulfillment centers across the globe. Those are our three focus areas, which are driving the efficiency around the labor intensity question. Malcolm, the second part of Amit's question was, is there much different vertical exposure by geography? Our business in Europe and North America, indeed Asia, in fact, the actual verticals are quite similar. Nearly 48% of our total business is really e-commerce and omnichannel. There are some slight differences. In North America, for example, we have a high level of technology business, and we're hoping to transition that same best practice and expertise across to Europe. In Europe, there's a higher level of food and beverage. There are small differences. Overall, North America, not really exposed to the industrial markets. It's very much the same pattern of verticals as we see in Europe. As I mentioned, great opportunities to transition best practice learnings customers from one geography to the next. That's also one of the things that will help us in our growth as we go forward. I see Mark is keen to add a few comments. Mark? Yeah, Amit, just addressing your point on acquisitions and also relating back to the 4% point earlier that was made in one of the questions. I would say the following. Look, in Europe, we bought one company, as you know, Norbert, and it's grown extremely fast. In North America, we rolled up three companies, New Breed, Menlo, and Jacobson, as you know, and they had some great customer contracts. They also had some so-so contracts as well, which we shed in turn, which justifies that point that we were making earlier about historic growth. Now, if you think about going forward, that churn, I would argue, is behind us, and we are confident in our future growth as a business. You'll remember in our Q1 results, we announced some really whale-type wins, huge tech contracts, huge F&B contracts. In my view, Amit, we're really just getting started here. We're hitting the J curve. Amit, thank you very much indeed for your questions. I notice that we're slightly over time. I'd like to hand it back to Kevin, please. Thank you. We have now reached the end of our question and answer session. I will now turn the call over to GXO CEO, Malcolm Wilson, for closing remarks. Thank you, Kevin. I'd like to thank everybody that's attended the call today. I'm hoping that you've learned a lot about GXO, the bunch of customers that we work with, the different verticals that are growing our business, the seasoned leadership team that we have, the range of differentiated services we provide. Put it all together, this is what makes GXO such an attractive investment opportunity. We greatly appreciate your interest and are looking forward to our ongoing engagement. Thank you. Thank you. That does conclude today's call and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.