GXO LOGISTICS, INC. GXO Logistics, Inc.:Benefit to free cash flow from trade receivables programs
GXO Factoring & Securitization
Principle:When the company sells receivables, it accelerates cash receipts, thereby increasing reported free cash flow.
Examples:
On 6/1, company generates an accounts receivable invoice of $100. If the receivable is outstanding at end of quarter (customer has not paid) and the company sells the receivable for cash consideration on 6/30, operating cash flows (and free cash flow) during the quarter have benefitted from the receivable sale.
By way of contrast, if the company sells the receivable on 6/1 and the customer remits payment on or before 6/30, the sale
of the receivable has not benefitted free cash flow during the quarter because, absent the sale, operating cash flows would have reflected the cash receipt.
(Note, GXO has visibility to customer remittances post‐sale as it functions as a servicer on behalf of receivable purchasers)
Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | ||
$m | ||||||
Benefit (reduction) to free cash flow from trade receivables programs | (0) | (0) | 27 | (5) | 3 | |
Factoring Programs | ||||||
AMAPAC | 73.7 | 65.6 | 80.0 | 75.0 | 88.2 | |
UK&I | 159.2 | 169.0 | 177.1 | 142.3 | 141.3 | |
EUROPE | 29.7 | 34.9 | 29.8 | 73.0 | 61.1 | |
Clipper | 1.2 | |||||
A | Receivables sold in period | 263 | 269 | 288 | 290 | 291 |
B | Cash Consideration | 261 | 268 | 286 | 288 | 289 |
C | Less: sold receivables due or collected within period | (7) | (14) | (5) | (13) | (10) |
D | Cash consideration from prior sequential quarter | (254) | (254) | (254) | (281) | (276) |
E | Total cash impact of factoring programs (B + C + D) | (0) | (0) | 27 | (5) | 3 |
Benefit (reduction) to free cash flow from trade receivables programs (E) | (0) | (0) | 27 | (5) | 3 | |
Year‐to‐date benefit (reduction) to free cash flow from trade receivables programs | 3 | |||||
B | With respect to trade receivables sold during the period indicated, represents cash received on sold receivables | |||||
Any difference between cash purchase price and gross amount of receivables sold represents the discount on sale of receivables and | ||||||
is recorded within interest expense | ||||||
C | Receivables sold with a due date intra quarter are excluded from cash impact |
The examples above are for illustrative purposes only. Neither the Company's independent auditors, nor any other independent accountants have compiled, examined or performed any procedures with respect to the examples, nor have they expressed any opinion or any other form of assurance on such examples.
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GXO Logistics Inc. published this content on 09 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 09 May 2024 14:07:07 UTC.
