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Great. Next up, we have longtime friends of Laguna, GXO, and very happy to welcome CFO Mark Suchinski and Chief Strategy Officer Christine Kabaki. Thank you so much for being here. Thank you. So, it's been an interesting 12 months for everybody, especially for you guys, kind of a lot going on, obviously with macro, kindof idiosyncratically with you guys as well. Maybe you can start by just giving us an update on business trends and kind of how they've trended versus your expectations, kind of especially since the last time you spoke with us in Duke, you call. Yeah, thanks. You know, things really haven't, I think, materially changed since our last earnings call. You know we started the year with the assumptions that volumes would be flat. As we've progressed throughout the year, at least through the first half of the year what we've seen is maybe B2B, a bit stronger than we had anticipated. B2C, maybe a little bit softer than we anticipated. But, you know, overall, I would say, you Know, when you think about the breadth of our customers, 30% of our consumers are blue chip Fortune 100. We've got a very diversified customer base. And, you Now, we have a lot of our customers in certain sectors that are growing very strongly, like aerospace and defense, like data centers. So there's a little bit of a natural hedge as it relates to how diversified our business is and how global we are. We're in 27 different countries. We are in the U.S., the UK, and continental Europe. So overall, I think volumes and from a market backdrop, you know we we feel pretty good about where our plans are I would say you know overall when we think about our business it's long longer cycle than nature you know typically our contracts are five years in length as well as I think when you look at our business over the last five years you don't see the type of cyclicality you see in some transport areas we don't go as high as some we don't down as low yep so it's a little bit more resilient and you know I would say that, you know, as we move into the, you know, the peak season here, I would expect those trends to continue where B2B is a little bit stronger, a little bit softer. But obviously with the macro going on and the conflicts in the Middle East and where fuel prices are, it's something we continue to keep an eye on. Got it. That's super helpful. Maybe to unpack that a little bit, any particular color around the strength in B2P and the weakness in BTC, especially weakness in C2C, kind of it feel like e-commerce is doing reasonably well, what's, is that kind of, do you think it's ideal to you guys, or do you thing it's market place, kind of any color there? No, I think you're right. I think e-commerce continues to do quite well, right? You know, so that continues to be fairly resilient. I think that the consumer continues to fairly resilient, right, when you, even in light of where fuel prices are. So it isn't just our higher growth verticals like aerospace and defense and data centers and some other industrials. We're seeing other parts of our business continue to be fairly resilient, and I think that's a great testament to the strength of the customers that we have and the book of business that we've built over the last five years. Understood. So if e-commerce is doing reasonably well, does that feel like the, especially European, you know, food and bev, kind of non-e-commerce retail is probably where the softness is? A little bit there. I would say, you have heard that from others as well. Continental Europe, I think not as much as the U.K. I think we're seeing a little bit more softening in the United Kingdom and Ireland. A little less so from a continental Europe standpoint. and then, you know, our North America business has been a little bit stronger along those lines. Got it. You guys are one of the best peak season checks of any of the companies in our coverage. What are you seeing out there? Some of the early reads we're getting from the trucking guys is that this appears to be a very strong peak season, but maybe that's just supply-driven on their side. So what are you hearing from your customers so far? You know, at this point in time, you know, we've, we saw, you know, they've launched the summer campaigns. Inventories are filling, you know, from a seasonality standpoint, the third quarter shaping up how we had expected. So, you know, at this point in time, you know I think the peak, you know, the season has kicked off. The trends that we had expected when we laid out the plan at the beginning of the year, you know, were seeing a reaffirmation by our customers at this point in time. you know there's still more to go between now and the end of the year before we get to black friday in the higher part of the season but at but at this point in time you know i would just say we're not seeing any any pullback in light of you know where the global economy is understood obviously you guys have made great progress or continue to build on your progress on the pipeline of new business can you talk about some of the trends there both geographically and segment wise well you know i think it's a it's a testament to to patrick and the strategy that he's laid out you know before you know as he came on board as a ceo and we've pivoted from growing and scaling the business via m&a to a pivot of you we've scaled off enough we've got the capabilities now let's go deploy those capabilities right and let's go grow the business let's focus on organic growth let's focus our attention on maybe where we've underperformed, like North America. Let's focus on these higher growth, higher margin-type verticals, like aerospace and defense and data centers. And so, as part of that overall strategy, you know, we established a corporate chief commercial officer that is focused on customer excellence, standing up that organization, really strengthening account management, focusing in our large customers as opposed to having three points of contact across our regions, having one point of contact, and then collaborating with the regions as we look at those customers that are in multiple regions. And we're starting to see the fruits of that labor. Last time we spoke, pipeline, roughly $2.7 billion, continues to be near all-time highs. In the second quarter, contract wins up over $400 million, 30% higher than the prior year. Forty percent of our contract wins in the second corner came from the higher growth, higher margin verticals, aerospace and defense, and data centers. So the effort, the commercial excellence team, the leadership change in AMAPAC where we've inserted a new president of the region as well as put in a new sales leader, the momentum is there. We've got the capability. It's really, really focusing our efforts and targeting our sales, our go-to-market, our value proposition to the right markets, to the Right Customer Base. and we've got great capability, and right now we've got the bandwidth to focus our attention on focusing on customer growth and execution, whereas the last couple of years, there's been a lot of time consumed around M&A in the integration, so we're pivoting to the ongoing execution, and so at this point in time, when we really look at the second quarter, one quarter doesn't make a trend. For us, we stacked another quarter We felt really good at the time of our earnings release on where the contract wins were being projected for the third quarter. We continue to feel good about that. And so our goal here is to deliver another strong contract win quarter as well as, you know, show a sequential improvement in organic growth in the third corner. And we're very focused on that. and we look forward to continuing to provide some positive news as we move through the rest of the year. Got it. Maybe even looking back before the spin, is there a reason why you guys have been so good and so successful in Europe and kind of maybe not quite replicated that success in North America? Is it just a genesis of NorBear and kindof it started out with European strength and that's what you were good at? Is it an end market thing? Is it a capabilities thing? What's the answer to that? Well, I don't have the history. Of course you do. You know, being around approximately six months. But, you know, I would say the NordBear acquisition led to a lot of capabilities in the U.K. Also, our former CEO was based in London. Sure. So when you have a significant acquisition made in that sector and your CEO, who from a cultural standpoint was based in the U.K., you tend to gravitate towards what you know best. Absolutely. And so as a result of that, I think we've accomplished a lot in the UK and continental Europe. From a market standpoint, we're number one in theUK. We did a couple of acquisitions to add to that. So that part of our business is solidly in good shape, mature, and so we need to continue to execute with our current customers and look for some opportunities to win. Our UK&I team had a great win last year with NHS, the national health system in the UK, and that's a big win for us. Now as we think about maturing those sectors of our business, those regions of our business, now we can pivot to North America, which has been probably unsupported from a leadership standpoint. And we've got the right leader in there, and we've Got the Right Focus. So, you know, we think UK and I and continental Europe are in a good place from a capability and a customer standpoint. Now our focus is pivoting to, you Know, the largest economy in the world, which is North America, where the greatest potential of growth for us are, and really trying to take advantage of the North American market. Not only with the B2B and the higher-end verticals, but just in general, there is a lot of opportunities for us to grow in North America, and our team is excited. They have some momentum, and they're really ready to get after it. Got it. Is North American success just about that renewed focus on the market? You said new local management team, regional management team as well. Do you need more skills and capabilities? Do you need more technology, or is it just a case of we have what we need, just go off to the business? You know, leadership changes are important, and we've done that. Partnering them with our corporate chief commercial officer from a partnership in account management, she'll bring in capabilities like digital marketing to help expand. For us, we have 340 sites in North America, 40,000 employees, so it's a big-scale operation. We have a lot of capabilities in North American, and I think for us, it's being able to translate and communicate to new customers as it relates to the capabilities, the things that we're doing, like complex kitting and parts distribution from an aerospace and defense, like building racks for data centers, doing wiring. We have a value proposition. We have the right data centers. We have to have a lot of capabilities. And so it's our opportunity now as these RFP opportunities arise that we sell our story, right, and make sure that we have the proper bandwidth to go support the growth and make certain that we're prepared for the implementations because as we're growing faster, you know, operational excellence is going to be needed to support the customer growth. Got it. Another kind of big characteristic of a business is the percentage of open book versus fixed variable contracts. Is that something else that you're looking to address? Obviously, one gives you defensiveness, the other gives you operating leverage, And so is part of this pivot also kind of looking at that mix? Customer mix, revenue mix, I think over time continues to shift. You know, 70% of our revenue is CPG. 30% is B2B. So over time, as we focus on the new higher growth verticals, the shift will change. That will help on the top line. It will help On the bottom line. As it relates to OpenBook, it's not totally negative. It's low risk, very consistent cash flow. So OpenBook will always be part of our overall portfolio. Today, OpenBook is around 55% of our contracts. And as I see over time as we pivot and focus more growth in North America, which is more fixed-type contracting, we grow faster there. it gives us an opportunity to leverage and grow margins. That pivot will continue to shift the mix of open book downward a bit, more to the fixed side of things. And even some of our open book contracts, we're having lots of conversations in the U.K. about continuous improvement, where we make investments, where we get returns, how do we support the customers. So I think there's some additional pricing strategies that can be deployed that would end up being a win-win for us and our customers. But what you just described from a mix standpoint, those mix shifts, no doubt, and pivots will help us grow the top line, but I think it will have a meaningful impact on our margins. Got it. Let us take a little bit of a step back here and focus on maybe some broader industry or macro trends. The world's been a chaotic place for at least six years, if not longer than that. It doesn't look like that's changing anytime soon. What has that done to corporates thinking about their supply chains, thinking about whether to outsource or not? Does that make them want to do it more, or does that make them want the same thing? Or do they want to say, hey, this is a core function for us, and so we need to do this in-house and have more control over it? The trends that we're seeing is the challenges that you just described are making supply chains more complex for companies. They want to be less integrated. They want focus their management bandwidth, their attention, their investments on their core business. So as part of that, you're seeing a lot of focus on onshoring, moving product closer to the home base, and I think that trend will continue very strongly. I do think that with the complexity of the world and the challenges that you just described, companies are looking to go to people like GXO who have the expertise to deal with the complexity of the supply chain of starting up operations, implementing automation, robotics, deploying AI, as well as having the scale of being in 27 countries and operating in dozens and dozens of free trade zones. So I think that's a real benefit that we can deploy for our customers. And, you know, through the first half of this year, around 17% of our wins have come from companies who have pushed their supply chain out into the supply base. Historically speaking, about a third of our wins have typically been by big blue-chip companies that are using vendors to step in and manage their supply chain. And so those trends will continue, and I think as the world continues to be more challenging, more complex, more and more companies are going to look for people like GXO to handle the complexity of that. Got it. also kind of just going back to the chaos of the last six years how has trade policy moving to a multipolar world again brought renewed scrutiny of global supply chains where you store your inventory near shoring what is that all what does all of this mean to you kind of in some ways to your point supply chains have become more complex in some way it's actually become simplified if If you're nearshoring stuff, if you're storing more inventory, places closer than customer, what does it mean for you guys? Want to pick that one up? No, I think the complexity that we've seen is increasing our value proposition. So, in fact, you think about maybe where supply chains were in farther off places, then those weren't regions that we were playing in. But certainly as we're moving those supply chains to North America and we're doing more of the warehousing, the fulfillment here in North America or in continental Europe, that helps us because it's right in our background. And I think you're seeing that in our pipeline as well. As Mark mentioned, our pipeline is near a record. And in this last quarter, at the end of June, we ended at $2.3 billion. And three weeks later, our Pipeline was up to $2,7 billion. So I think our customers are certainly, the value proposition is resonating. and they're looking for partners to help them with not only their complex challenges that they're facing today, but really with our chief commercial officer's strategy, it's about how are we partnering with them in looking out 10 years? How are their supply chains? What's the real strategic things that they'RE doing, and how can we help them, not only over the next, like I said, the next month, but, really, over the last 10 years. Over the next five years. Got it. I want to spend some time talking about the competitive environment, because I think one of the amazing things about your business is that it's basically two companies globally who can do what you do yourself and obviously your large peer is that still the case do you expect that to still be the case going forward do you think some of the more regional competitors are getting more sophisticated and as companies look to like you said kind of outsource their supply chains is it basically a two-player game or do you think some of the others can can kind of continue to be competitive well i would say this we um we don't rest on our accomplishments right we're very focused on continuing to to be the number one player in the market uh for us we are the the only sole warehouse logistics company in the marketplace yep pure play warehouse logistics and it's a very fragmented industry. So there's lots of opportunities for us to grow our competition as well as maybe the smaller companies. And so what I would say is I worry about all of them as it relates to their focus on growing. They're focused on their business. Everybody is going faster looking to deploy automation, robotics, and AI. Andso we can't stand still. We need to continue to move the ball forward. We've been a market leader, I would saying, in adopting automation, robotics, and AI. Our CEO is very, very focused on deploying the technology to support our customers, but also deploying that technology to drive operational efficiency and execution. You know, we've done pilots from a humanoid standpoint. Patrick's talked a lot about that. But as we think about, you know, how warehouse logistics looks in five years, it's obviously going to look a lot different than it is today. And so we can't just sit back and rest on the fact that we're number one in the UK. We need to continue to focus on getting better, gaining market share, winning new business. And that's all part of the four-pillared strategy. And really, when you think about our business, we're called or kind of placed in the transportation sector, I really view ourselves as we're morphing into a tech services company. Yep. Right. Really, we provide services. We solve our customers' biggest challenges, which is the supply chain. And today, more and more of our ability to solve those problems are related to technology. It's the automation and it's the robotics. And then the ever-emerging internal work that we've done from AI as well as using, complementing that with external AI, it's allowing us to be more efficient, to be more reactive, to support our customers' ever-changing needs, and today it's more dynamic than ever. Dr. Ravi, I would just add, I mean, you talked about the competitive dynamic. I mean our market is massive. I mean we talked about an excess of a 500 billion dollar TAM, and us and our nearest competitors, we make up small percentages of that, so We're still our largest, you know, 70% of the market's still done in-house today. And we've acquired a tremendous amount of capabilities with the M&A that we've done over the last, you know, five years and ten years. And so now we are continuing to unlock, even across our core markets, these new strategic growth verticals. We have a tremendous playing field and a tremendous runway of organic growth opportunities. We've seen it on the pipeline, the wind. So, again, I don't think we're resting on our laurels, but I think it's up for us to go grab. We have tremendous opportunity on the organic growth runway. Got it. Mark, you mentioned AI and robotics. I have a bunch of questions on that. Christine knows that. So it's coming your way. But before we get there, just one more on competition. Obviously, there was a lot of headline focus on Amazon announcing the supply chain solutions business earlier this year. You guys came out and said, hey, maybe that's a competitor to GX or Direct, but the rest of what we do is really complex. And can you just unpack that a little bit, and maybe what investors are missing, kind of still focused on that potential risk? Yeah, let me jump into this, and then I'll hand it off to Christine. But yeah, lots of questions since April on this topic. And hey, Amazon is a massive company with a lot of capability, and they do a great job of what they do. But when we look at what we do for our customers, In many ways, they are very specific, customized services, site-specific, one site, one location, with very bespoke automation technology that's being deployed from a warehouse management system standpoint. I think the criticality of our or the ability of us to customize solutions for that individual customer, right, is what makes us different than Amazon. I'm not quite sure. Amazon is huge. They have a lot of space. They have great technology. And I think in many ways they're looking to utilize the assets that they have. Do they really want to start up and build a brand-new warehouse for one customer and set up a solution for that? I don't know, right? I would say this, though. We can't sit back and assume that they don't want to be a competitor. We need to make sure that we're continuing to strengthen our company from a growth standpoint, from an execution standpoint, from an automation robotic standpoint, so that we don't give our customers an excuse to go look at somebody else. But I think at the end of the day, in RFPs, we don'T see them in our competitive bids. We don'T compete against them. Our solutions are very bespoke and very tailored towards our customers. I think we do a great job of protecting our customers' data and their data integrity. So I think there's a lot of differences between a GXO and an Amazon, if you want to add to it. I think you hit it as well. Sounds great. Again, maybe switch gears a little bit. Talking about the margin opportunity, obviously lots going on here, pipeline of new business, shifting mix towards better mixed product, maybe looking at that move towards more fixed variable contracts. There's the GXO way, which is a bunch of productivity initiatives you have. So what do the building blocks of margins look like over the next few years? Well, you made some mention. I think the commercial X1 strategy that we have will accelerate growth and allow us to expand margins. But holistically, when we look at the opportunity for us to expand our margins and achieve the type of margins that we believe our company should generate, is really going to be focused on further deployment of automation, robotics, and AI. AI via the GXO IQ technology, the middleware that connects the systems in the warehouses, as well as the GxO way, which is with our new COO, driving standard operating KPIs measurements, true, robust, continuous improvement projects, the right types of KPIs, lean, six sigma, running our warehouses like a small factory. Our warehouses are like a small factory. The only difference is we don't own the inventory. So from a flow standpoint, removing bottlenecks, so the GXOIQ has shown us to improve the day-to-day operations by connecting the data within the different automated solutions, whether it's warehouse management systems, the demand platform from our customers, the auto store connecting all those allows us throughout the day to pivot through the challenges of loads came in late somebody called in sick today the product is missing here it is adaptive and gets smarter every single day that we run the operation so we've been on that journey we've rolled out 50 or 60 sites and over the next couple years the goal is to roll out gxo iq across the entire portfolio. But with the GXO way, you know, driving productivity, driving efficiencies in our locations, we have 150,000 employees. That is a lot of people across 27 countries. The team has done a great job of managing that and servicing our customers, and we've done that without what I'll call a real operating platform, right? A management operating system, and what BART is bringing on board is the operating methodology. So we talk about automation and robotics. I talked about AI, but adaptive technology. How do we adapt technology that has a return on investment that reduces our need from a labor standpoint? And we've continued to deploy that. You know, right now we have 17,000 pieces of automation throughout our portfolio. By the end of the year, we'll approach 20,000. So for us, continue to rely and adopt automation robotics, making those investments and rolling out GXOIQ. But a big productivity initiative that we have from a labor standpoint is implementing labor management systems. And I compare that to a manufacturing operation. Right now, we're piloting six pilots in our regions we've picked two providers two vendors and labor management systems today we have a clocking system we clock in when you come in the door and then you have lunch you clock out you clock back in and then your clock out you go home people get paid labor management system enable us to have people clock on a job and clock off a job that enables us to understand how long it takes somebody to do a job look at the variability of that job and based on those jobs you add up all your jobs in your factory to determine the amount of manpower that you need you can drive accountability you can understand why where there's challenges you know today it took johnny 12 minutes to do this job tomorrow it took 20 minutes this day it took 15 so establishing what i call like the call in my own manufacturing days champion times each job what is the champion time what is the best time possible and sit and then translating that into a standard, and then we create standards in the factory and hold people accountable to those standards. And so for us, I think this is a way to think about our business through a manufacturing mindset to drive productivity and efficiency. So we've got the tool set of automation and IQ to help us from a slotting and a picking standpoint, but now you have labor management tools that can be deployed to the management teams there to know what their people are doing and when they're doing it when they're productive, when they are not productive. And so I think that's a huge breakthrough. So when we think about getting our margins to our target margins over the next couple of years, you know, those are between the commercial excellence, the automation robotics and IA, labor management systems, and the management operating system. These will deliver the results that we're talking about. For us, it's how do we make sure we We have enough bandwidth to scale and deploy these timely to achieve the benefits in the timelines that we have laid out for ourselves. And so we're really excited about this. We have to remember that, you know, as a company, we didn't have a COO. We didn't even have a CCO at the beginning of the year. Okay, Karen came in with no people as part of her team. So she's building a team. She's building account excellence. Bart is building his team. We didn't have global procurement. We're building that organization. He's hiring an implementation solutions leader for the business so that we can then take the business at this scale. We can drive it at the enterprise level. We can share best practices across the organization. We can put ourselves in a position where, as opposed to focusing regionally, hey, I have a great execution implementation team in the U.K. let me pick them up and drop them into the AMA pack where I've got a problem. That's what I'm used to seeing. And that's the path that we're on to go achieve those types of productivity efficiencies. Now, some of it will be shared with customers via open book, but I also think it will make us more competitive. There's an opportunity for us to increase our margins, but it makes us more cost competitive, and I also Think it allows us to deliver a better service to our customers so that when we talk about retention, 95%, how do we improve that to 96% or 97%? That's the path, that's the journey that we're on. Got it. So lots of blocking and tackling, but at the same time you guys are also working on the moonshot projects. I want to make sure we talk more about robotics here. You're going to hit on a lot of the basic details here, but again, you guys already leaders in warehouse robotics, what people would know to be considered to be warehouse automation at the moment, But at the same time, you're also running 45 pilots on humanoid robots. So what have your learnings been so far? What still needs to be done here? What's the pathway for that to expand into something across all your operations? Well, we think humanoids are the way of the future. Humanoids have been advanced greatly in the last couple of years, not only from an ability standpoint, from a cost standpoint. And so, you know, over time, complementing automation, robotics, and AI with humanoids is going to be groundbreaking. If you think about a humanoid, they don't get injured. They're higher levels of quality. They can work multiple shifts and not get tired. And so over the next couple of years, technology is advancing so quickly. A couple of years ago, a humanoid could maybe pick up a box. Today, humanoids actually have fingers and dexterity and actually can pick things up. The issue with humanoids today is they can't work at the speed of a human. And so there's the process of how do we improve the overall efficiency, and it will be done. No different than robotics years ago where robotic arms picked slow, and over time it got faster and went through learning. So, you know, today, 2026, when we think about the advancements of technology, every single day the advancement are, it's quicker and quicker and so before you blink your eye, we'll be in the business of deploying humanoids who are working side-by-side with humans in our facilities. We're super excited about that. It clearly is super exciting. maybe really quickly what does a humanoid do for you that is different than a dedicated warehouse like a locus or a gray orange robot like dedicated warehouse robot what additional can a the humanoid form factor do for him well i think the biggest difference is uh you know gray orange or low pad are these agvs that bring the product to a human okay bring it and take it away yeah but they can't pick the product off the shelf. So, you know, the low pads are a great tool from a planning standpoint. This is what we need. It goes out on the floor. It brings the carts to the employees. The employees have their order. They've got to go in the bins and pick them out. We can now complement the AGVs with a humanoid at a station where they'll actually be able to pick the parts or the products out of the bins and put them in boxes. And so the goal over time is to allow the humanoids and the rest of our technology to do the simple part of the work and use humans to do The More Complex decision-making. And so that's how we see building out the technology and complementing automation, robotics, AI, and the human factor. And I say this jokingly sometimes, but at some time in the future, or maybe we're looking at a complete lights-out warehouse. Sure. Absolutely. Very exciting times. Very much looking forward to your investor day in November as well. I think it's going to be a big catalyst for the stock. But Mark and Christine, thanks so much for being here. Thank you for having us. Thank you.