Malcolm Wilson: Chris, it’s Malcolm here. Let me give you some color on that question. So in fact, as we mentioned earlier in the call, pipelines remained around $2 billion. What we are seeing is our pre-pipeline is actually increasing. So pre-pipeline for us is where we’re receiving projects in can be from existing customers. It can be from brand-new customers, new brands. That’s actually increasing. So, that’s a good sign. That bodes well, I think, for the year ahead. And also, what we’re seeing is our ability to convert from the pipeline into close one new business is actually also improving. And that’s a function of the different works that we have underway within our sales organization to actually improve our actual process with customers.
A couple of quarters ago, we did actually see a momentary kind of hesitation from customers about making decisions. But I have to remember that, in fact, quarter two, it was actually a record of new business signings. So, it was kind of a little bit disguised, but we definitely — our sales teams were reporting to us just a little bit of hesitation. That’s gone. We’re not seeing that now at all and our pipeline, I think it’s a very healthy pipeline, good proportion of very long-term big projects, big automation projects, as we mentioned, this $1 billion deal that we’ve just signed. I’m sorry, we can’t share the customer name, but I hope we will do on our next call. So there’s a healthy proportion of those kind of deals. And need of deals for sort of ’24.
So it’s a good pipeline as we see it right now. And nothing that we’re seeing from our customer base or the market is given us any feel that, that’s going to change as we progress forward.
Operator: Our next questions come from the line of Scott Schneeberger with Oppenheimer & Company. Please proceed with your question.
Scott Schneeberger: Good morning, everyone. I’m going to focus a bit on acquisitions. Malcom, could you please discuss for PFSweb, the attributes that really drew you to the business. Are there any synergy opportunities that you see? What type of integration duration are you anticipating for this? And what’s the combination of them in the portfolio are going to look like with for you?
Malcolm Wilson: Well, listen, it’s a great customer-based organization, and we’ve acquired a super company and at a very attractive valuation. So, it’s going to allow us to accelerate the PFS business itself. We will be able to leverage our own scale into the Company. And it’s also going to allow us to leverage all of the very specialized blue-chip customer relationships that they have on a more global business. PFSweb is a double-digit growth business. I think it shows very well the strategy that we’ve had where we’ve been very selective from an M&A perspective. We’ve always talked about what is a good M&A for GX. Well, it’s a company with really strong, good management, good market position either allowing us to enter into a new geographic area or allowing us to enter into new verticals.
So, this business roughly around $220 million service equivalent of revenues, $20 million of adjusted EBITDA a year in our fourth quarter, we have this business since late October. So, it’s a limited impact in 2023, but really coming with a number of specialized high-touch fulfillment-type services in really very attractive verticals. So,, health and beauty, jewelry and collectibles, prestige kind of luxury goods, and some of the customers, I mean, wow, they are just incredible, Chanel, L’Oreal, Shiseido, Tiffany and Pandora. I mean, I get excited every time I read the customers. And the last thing I’d say is it’s a really super company, great management, myself, Baris and several of the management team, we were down in North Carolina having one of our own business meetings with our own teams.
Several of the PFS team joined the other week. We then also joined down in Dallas and met the entire team. I’m really stoked. I’m ever so excited about what’s lying ahead and the top line synergy and just the absolute opportunity of us growing this business on the North American footprint, which is really the core of the business, even though they do have small activities outside of North America. We’re very excited. It’s a great deal.
Scott Schneeberger: And Malcolm, what is — or maybe how are you thinking about — or how should we think about the M&A pipeline right now? Is there a lot that’s ripe? Should we see more of this similar size maybe over the coming 12 months? Or is there going to be a digestion period on this? And just as a side question on that, any update on Clipper integration progress that quantifiable you’d like to share.
Malcolm Wilson: Yes. Scott, let me hand you over to Baris to cover on those topics.
Baris Oran: Sure. We have acquired a great business growing at double-digit rates with fantastic customers and great proposition to the end consumer. I mean — and all of this is an attractive valuation. So Scott, this is more of the type of M&A we would like to do. We have a strong pipe of M&A right now in a different range of verticals and geographies. We’re interested in Germany. North America are quite interesting. We’ll be looking into growing in these locations, but at the core of this is creating value for our shareholders. We’ll always wait against investing in our own company through a buyback. So, valuation is important for us. Opportunities for growing these enterprises faster under GXO is very important for us in fact with PFS after the acquisition, we already started working on a number of ways we can even accelerate the growth of PFS into new geographies. We are very excited.
Malcolm Wilson: And Scott, just to finish off. On the Clipper aspect, I mean, for us, to be frank, it’s broadly completed. The integration has been a big success, and now, we’re very pleased in the context of how that business is moving forward. And if you remember, we used Clipper as a foothold in the German market where GXO, we’re incredibly really, we’re small. And when we put our business together with Clippers that really gave us for the first time a footprint and we’re now capitalizing on that. We’ve recently opened a state-of-the-art facility at Dormagen. We talked earlier on the call quality group in Germany. It’s one of the first big wins that’s going into that site. We’ve got other facilities in the plan. And we’ve just launched our GXO service business in Germany.
So, really, that also — it’s been a very successful M&A for us. And with all M&As, we should never lose sight of the fact that the secret of success is a good deal but also great management execution on the integration. And I’m sure that combined with the PFS team equally, that will be a very successful integration as we move over the next few months.
Operator: Our next questions come from the line of Ravi Shanker with Morgan Stanley. Please proceed with your question.
Christyne McGarvey: This is Christyne McGarvey on for Ravi. I want to switch gears a little bit here, maybe and ask on the strategy, really the evolution of the strategy as we look forward. And I think the first one on this front, maybe for Adrian. I appreciated your comments at the start of the call, but just digging in a little bit more. I was hoping you could parse out how you see the role of automation and GXO strategy as you look forward over the next couple of years and how that’s differed maybe from history here? And if you could talk a little bit about how much of the focus you think is really on revenue or customer acquisition versus cost for automation and robotics, et cetera?
Malcolm Wilson: Christina, it’s Malcolm here. Let me just say a short point before handing over Adrian. So Adrian mentioned earlier, he’s been in our business a couple of years. He’s been really at the forefront. One of our key leaders in our North American business over that period of time, and in that window, he delivered consistent improvement for our customers in terms of efficiency, productivity and importantly, GXO results. That’s very important because he brings a practical way of figuring out what is the right automation to use in the right solution. So, we’re very pleased that he stepped into this new mission. It’s really his role, we have to remember back to January when we undertook our Investor Day, his role is absolutely a reinforcement of our strategy about accelerating the tech deployment across our business, good for margins, good for customer retention.
