What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-06 compared with 2025-08-06 · 75 added, 83 removed, 154 unchanged (51% of the section changed)

31 unchanged sentences

Results of Operations

Three Months Ended June 30, 2025 compared with the Three Months Ended June 30, 2024

Three Months Ended June 30,

Three Months Ended September 30, 2025 compared with the Three Months Ended September 30, 2024

Three Months Ended September 30,

(In millions, except percentages) 2025 2024 $ Change % Change

9 unchanged sentences

Interest expense, net (35) (33) (2) 6 %

Income before income taxes 43 53 (10) (19) %

Income tax expense (15) (14) (1) 7 %

Income before income taxes 88 42 46 n/m

Income tax expense (28) (7) (21) n/m

Net income $ 60 $ 35 $ 25 71 %

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Revenue for the three months ended June 30, 2025 increased by 16%, or $453 million, to $3.3 billion compared with $2.8 billion for the same period in 2024.

The increase reflects $168 million from the Wincanton Acquisition and growth in our business.

Foreign currency favorable movements increased our revenue by $127 million for the three months ended June 30, 2025.

Revenue for the three months ended September 30, 2025 increased by 8%, or $238 million, to $3.4 billion compared with $3.2 billion for the same period in 2024.

The increase reflects growth in our business and $115 million of favorable foreign currency movements for the three months ended September 30, 2025.

Direct operating expense is comprised of both fixed and variable expenses and consists of operating costs related to our warehouses, including personnel costs, rent expenses, utility costs, equipment maintenance and repair costs, transportation costs, costs of materials and supplies, and information technology expenses.

Direct operating expense for the three months ended June 30, 2025 increased by 18%, or $424 million, to $2.8 billion compared with $2.4 billion for the same period in 2024.

The increase reflects $148 million from the Wincanton Acquisition, growth in our business and foreign currency movements.

As a percentage of revenue, Direct operating expense for the three months ended June 30, 2025, was 85.3% compared with 83.9% for the same period in 2024.

The increase in Direct operating expense as a percentage of revenue was primarily related to the Wincanton Acquisition.

Direct operating expense for the three months ended September 30, 2025 increased by 7%, or $186 million, to $2.9 billion compared with $2.7 billion for the same period in 2024.

The increase reflects growth in our business and foreign currency movements.

As a percentage of revenue, Direct operating expense for the three months ended September 30, 2025, was 84.2% compared with 84.6% for the same period in 2024.

Selling, general and administrative expense (“SG&A”) primarily consists of salary and benefits costs for executive and administrative functions, professional fees, bad debt expense and legal costs.

SG&A for the three months ended June 30, 2025 increased by $2 million, to $272 million compared with $270 million for the same period in 2024.

Depreciation and amortization expense for the three months ended June 30, 2025 increased by $11 million, to $110 million compared with $99 million for the same period in 2024.

Amortization expense was $30 million and $22 million for the three months ended June 30, 2025 and 2024, respectively.

Depreciation and amortization expense increased primarily due to the Wincanton Acquisition.

Transaction and integration costs for the three months ended June 30, 2025 and 2024 were $14 million and $15 million, respectively, and primarily related to the Wincanton Acquisition.

Other income (expense), net decreased to an expense, primarily due to increased unrealized foreign currency loss on foreign currency contracts.

SG&A for the three months ended September 30, 2025 increased by $20 million, to $285 million compared with $265 million for the same period in 2024.

Depreciation and amortization expense for the three months ended September 30, 2025 increased by $7 million, to $118 million compared with $111 million for the same period in 2024.

Amortization expense was $31 million and $36 million for the three months ended September 30, 2025 and 2024, respectively.

Transaction and integration costs for the three months ended September 30, 2025 and 2024 were $14 million and $21 million, respectively, and primarily related to the Wincanton Acquisition.

Other income (expense), net increased from expense to income, primarily due to foreign currency gain on foreign currency contracts.

Other income (expense), net was as follows:

Three Months Ended June 30,

Three Months Ended September 30,

(In millions, except percentages) 2025 2024 $ Change % Change

3 unchanged sentences

Realized foreign currency option and forward contracts loss

(4) (1) (3) n/m

(5) (4) (1) 25 %

Unrealized foreign currency option and forward contracts gain (loss)

(8) 1 (9) n/m

Foreign currency transaction and remeasurement loss

Foreign currency transaction and remeasurement gain, net of intercompany forwards

— 1 (1) (100) %

Total foreign currency loss (14) (4) (10) n/m

Total foreign currency gain (loss) 2 (11) 13 n/m

Other loss (2) (2) — — %

Other income (expense), net $ 5 $ (6) $ 11 n/m

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Interest expense, net, primarily increased due to debt incurred for the Wincanton Acquisition.

Interest expense, net was as follows:

Three Months Ended June 30,

Three Months Ended September 30,

(In millions, except percentages) 2025 2024 $ Change % Change

4 unchanged sentences

Interest income

(1) — (1) n/m

(2) (2) — — %

Interest expense, net $ 35 $ 33 $ 2 6 %

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Income before income taxes for the three months ended June 30, 2025 was $43 million compared with $53 million for the same period in 2024.

The decrease in income before income taxes was due to higher operating income, offset by higher other expense, net, and higher interest expense, net.

Income tax expense for the three months ended June 30, 2025 was $15 million compared with $14 million for the same period in 2024.

Our effective tax rate for the three months ended June 30, 2025 was 34.6% compared with 25.4% for the same period in 2024.

The increase in our effective tax rate was primarily driven by a decrease in pre-tax income.

While the United States has not adopted the Pillar Two Global Anti-Base Erosion rules issued by the Organization for Economic Co-operation and Development (“Pillar Two”), we have incorporated the estimated annual effect of Pillar Two into our income tax provision for the three months ended June 30, 2025.

For the three months ended June 30, 2024, Pillar Two did not have a material impact on our income tax expense.

Six Months Ended June 30, 2025 compared with the Six Months Ended June 30, 2024

Six Months Ended June 30,

Income before income taxes for the three months ended September 30, 2025 was $88 million compared with $42 million for the same period in 2024.

The increase in income before income taxes primarily reflects growth in our business.

Income tax expense for the three months ended September 30, 2025 and 2024 was $28 million co mpared with $7 million, respectively, and the Company’s effective tax rate for the three months ended September 30, 2025 and 2024 was 31.2% and 16.5%, respectively .

The change in the Company’s effective tax rate was primarily driven by a jurisdictional shift in pre-tax income.

While the United States has not adopted the Pillar Two Global Anti-Base Erosion rules issued by the Organization for Economic Co-Operation and Development (“Pillar Two”), we have incorporated the estimated annual effect of Pillar Two into our income tax provision for the three months ended September 30, 2025.

For the three months ended September 30, 2024, Pillar Two did not have a material impact on our income tax expense.

Nine Months Ended September 30, 2025 compared with the Nine Months Ended September 30, 2024

Nine Months Ended September 30,

(In millions, except percentages) 2025 2024 $ Change % Change

9 unchanged sentences

Interest expense, net (103) (69) (34) 49 %

Income (loss) before income taxes (50) 7 (57) n/m

Income before income taxes 38 49 (11) (22) %

Income tax expense (45) (11) (34) n/m

1 unchanged sentence

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Revenue for the six months ended June 30, 2025 increased by 18%, or $974 million, to $6.3 billion compared with $5.3 billion for the same period in 2024.

Revenue for the nine months ended September 30, 2025 increased by 14%, or $1.2 billion, to $9.7 billion compared with $8.5 billion for the same period in 2024.

The increase reflects $655 million from the Wincanton Acquisition, and growth in our business.

Foreign currency favorable movements increased our revenue by $94 million for the six months ended June 30, 2025.

Direct operating expense for the six months ended June 30, 2025 increased by 21%, or $926 million, to $5.4 billion compared with $4.4 billion for the same period in 2024.

Favorable foreign currency movements increased our revenue by $209 million for the nine months ended September 30, 2025.

Direct operating expense for the nine months ended September 30, 2025 increased by 16%, or $1.1 billion, to $8.2 billion compared with $7.1 billion for the same period in 2024.

The increase reflects $595 million from the Wincanton Acquisition, growth in our business and foreign currency movements.

As a percentage of revenue, Direct operating expense for the six months ended June 30, 2025, was 85.6% compared with 83.8% for the same period in 2024.

As a percentage of revenue, Direct operating expense for the nine months ended September 30, 2025, was 85.1% compared with 84.1% for the same period in 2024.

The increase in Direct operating expense as a percentage of revenue was primarily related to the Wincanton Acquisition.

SG&A for the six months ended June 30, 2025 increased by $14 million, to $533 million compared with $519 million for the same period in 2024.

SG&A for the nine months ended September 30, 2025 increased by $34 million, to $818 million compared with $784 million for the same period in 2024.

SG&A increased primarily due to the Wincanton Acquisition.

Depreciation and amortization expense for the six months ended June 30, 2025 increased by $28 million, to $219 million compared with $191 million for the same period in 2024.

Amortization expense was $59 million and $41 million for the six months ended June 30, 2025 and 2024, respectively.

Depreciation and amortization expense for the nine months ended September 30, 2025 increased by $35 million, to $337 million compared with $302 million for the same period in 2024.

Amortization expense was $90 million and $77 million for the nine months ended September 30, 2025 and 2024, respectively.

Depreciation and amortization expense increased primarily due to the Wincanton Acquisition.

Transaction and integration costs for the six months ended June 30, 2025 and 2024 were $36 million and $34 million, respectively and primarily related to the Wincanton Acquisition.

Restructuring costs and other were primarily related to severance in connection with actions taken to optimize certain administrative functions.

Restructuring costs and other for the six months ended June 30, 2025 were $19 million, compared with $17 million for the same period in 2024.

Regulatory matter and litigation expense for the six months ended June 30, 2025 and 2024, were $65 million and $60 million, respectively.

For the six months ended June 30, 2025, we recorded $65 million of expense related to a regulatory matter for the deductibility of value-added tax payments made by us to certain third-party service providers challenged by the Italian authorities.

For the six months ended June 30, 2024, we recorded $60 million of litigation expense related to a dispute between us and one of our customers, which was settled in the second quarter

Transaction and integration costs for the nine months ended September 30, 2025 and 2024 were $50 million and $55 million, respectively and primarily related to the Wincanton Acquisition.

Restructuring costs and other were primarily related to severance paid to our executive team, as well as actions taken to optimize certain administrative functions.

Restructuring costs and other for the nine months ended September 30, 2025 were $22 million, compared with $26 million for the same period in 2024.

Regulatory matter and litigation expense for the nine months ended September 30, 2025 and 2024, were $65 million and $59 million, respectively.

For the nine months ended September 30, 2025, we recorded $65 million of expense related to a regulatory matter for the deductibility of value-added tax payments made by us to certain third-party service providers challenged by the Italian authorities.

For the nine months ended September 30, 2024, we recorded

$59 million of litigation expense related to a dispute between us and one of our customers, which was settled in the second quarter of 2024.

For additional information regarding our regulatory and legal matters, see Note 14.

“Commitments and Contingencies” in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Other income (expense), net decreased to an expense, primarily due to increased unrealized foreign currency loss on foreign currency contracts.

Other income (expense), net decreased from income to expense, primarily due to foreign currency loss on foreign currency contracts.

Other income (expense), net was as follows:

Six Months Ended June 30,

Nine Months Ended September 30,

(In millions, except percentages) 2025 2024 $ Change % Change

4 unchanged sentences

(9) (6) (3) 50 %

Unrealized foreign currency option and forward contracts gain (loss)

Unrealized foreign currency option and forward contracts loss

(11) (4) (7) n/m

Foreign currency transaction and remeasurement loss

Foreign currency transaction and remeasurement loss, net of intercompany forwards

(2) (2) — — %

Total foreign currency loss (24) (1) (23) n/m

Total foreign currency loss (22) (12) (10) 83 %

Other loss (2) (2) — — %

Other income (expense), net $ (10) $ 1 $ (11) n/m

2 unchanged sentences

Interest expense, net was as follows:

Six Months Ended June 30,

Nine Months Ended September 30,

(In millions, except percentages) 2025 2024 $ Change % Change

6 unchanged sentences

Interest expense, net $ 103 $ 69 $ 34 49 %

Income (loss) before income taxes for the six months ended June 30, 2025 was a $50 million loss compared with $7 million income for the same period in 2024.

The decrease in income before income taxes to a loss was due to lower operating income, higher other expense, net, and higher interest expense, net.

Income tax expense for the six months ended June 30, 2025 was $17 million compared with $4 million for the same period in 2024.

Our effective tax rate for the six months ended June 30, 2025 was an expense on a pre-tax loss of (35.3)%, compared to an expense on pre-tax income of 52.3% for the same period in 2024.

The change in our effective tax rate was primarily driven by a decrease in pre-tax income, offset by non-deductible regulatory matter and transaction costs.

While the United States has not adopted Pillar Two, we have incorporated the estimated annual effect of Pillar Two into our income tax provision for the six months ended June 30, 2025, and we expect to incur additional income tax related to Pillar Two during fiscal 2025.

For the six months ended June 30, 2024, Pillar Two did not have a material impact on our income tax expense.

Pillar Two did not have a material impact on our fiscal 2024 income tax expense.

We continue to monitor Pillar Two developments, including the impact of the statement issued by the G7 on June 28, 2025 regarding the interplay between the U.S.

Income before income taxes for the nine months ended September 30, 2025 was $38 million compared with $49 million for the same period in 2024.

The decrease in income before income taxes primarily reflects higher operating income due to growth in our business, offset by higher other expense, net and interest expense, net.

Income tax expense for the nine months ended September 30, 2025 and 2024 was $45 million and $11 million, respectively, and the Company’s effective tax rate for the nine months ended September 30, 2025 and 2024 was 118.1%, and 21.9%, respectively.

The change in the Company’s effective tax rate was primarily driven by a non-deductible regulatory matter in 2025.

While the United States has not adopted Pillar Two, we have incorporated the estimated annual effect of Pillar Two into our income tax provision for the nine months ended September 30, 2025, and we expect to incur additional income tax related to Pillar Two during fiscal 2025.

For the nine months ended September 30, 2024, Pillar Two did not have a material impact on our income tax expense.

We continue to monitor Pillar Two developments, including the impact of the statement issued by the Group of Seven (“G7”) on June 28, 2025 regarding the interplay between the U.S.

international tax system and Pillar Two as it relates to U.S.-headquartered companies.

4 unchanged sentences

We continually evaluate our liquidity requirements and capital structure in light of our operating needs, growth initiatives and capital resources.

As of June 30, 2025, we held cash and cash equivalents of $205 million and restricted cash of $2 million, and we had $1,003 million of borrowing capacity, net of letters of credit under our revolving credit facilities .

As of September 30, 2025, we held cash and cash equivalents of $339 million and restricted cash of $5 million, and we had $969 million of borrowing capacity, net of letters of credit under our revolving credit facilities .

On February 18, 2025, our board of directors authorized and announced the repurchase of up to $500 million (the “Repurchase Plan”) of our common stock.

3 unchanged sentences

The Repurchase Plan does not obligate the Company to repurchase any specific number of shares of common stock and may be suspended or discontinued at any time.

As of June 30, 2025, the remaining authorization under the Repurchase Plan was $300 million.

We believe that our cas h and cash equivalents on hand, cash flows from operations, the revolving credit facilities, and the use of our factoring programs will provide sufficient liquidity to operate our business and fund our current and assumed obligations for at least the next 12 months.

As of September 30, 2025, the remaining authorization under the Repurchase Plan was $300 million.

We believe that our cas h and cash equivalents on hand, our cash flows generated by our operations, amounts available under the revolving credit facilities, the use of our factoring programs, and refinancing options available to us in the capital markets, will provide sufficient liquidity to operate our business and fund our current and assumed obligations for at least the next 12 months and for the foreseeable future thereafter.

For additional information regarding our cash requirement from lease obligations, indebtedness and contractual obligations, see Note 4.

4 unchanged sentences

The following table summarizes our asset and liability balances:

June 30, December 31,

September 30, December 31,

(In millions, except percentages) 2025 2024 $ Change % Change

7 unchanged sentences

4,985 5,042 (57) (1) %

Current assets primarily decreased due to cash used for the repurchase of our common stock and repayment of debt, partially offset by an increase in accounts receivable resulting from foreign currency translation.

Long-term assets primarily increased due to the addition of operating lease assets and the impact of foreign currency translation.

Current liabilities primarily increased due to bank overdraft and the increase in the fair value of our derivatives.

Long-term liabilities primarily increased due to the addition of capital and operating lease liabilities and the increase in the fair value of our derivatives.

Also, our assets and liabilities increased due to foreign currency translation from our non-USD operations, primarily the British pound sterling and the Euro.

Current liabilities primarily increased due to the current portion of our long-term debt.

Our assets and liabilities increased due to foreign currency translation from our non-USD operations, primarily the British pound sterling and the Euro, compared to December 31, 2024.

Cash Flow Activity

Our cash flows from operating, investing and financing activities, as reflected on our Condensed Consolidated Statements of Cash Flows, are summarized as follows:

Six Months Ended June 30,

Nine Months Ended September 30,

(In millions, except percentages)

7 unchanged sentences

Operating Activities

Cash flows provided by operating activities for the six months ended June 30, 2025 decreased by $133 million compared with the same period in 2024.

The decrease was primarily due to lower income and increased working capital consumption driven by accounts payable for the six months ended June 30, 2025, compared with the same period in 2024.

Cash flows provided by operating activities for the nine months ended September 30, 2025, decreased by $99 million compared with the same period in 2024.

The decrease was due to working capital consumption resulting from decreased collections and increased vendor payments, partially offset by income (loss) adjusted for non-cash items for the nine months ended September 30, 2025, compared with the same period in 2024.

Investing Activities

Investing activities used $123 million of cash for the six months ended June 30, 2025 and $1.0 billion for the same period in 2024.

During the six months ended June 30, 2025 we used $125 million of cash to purchase property and equipment and received $2 million of cash from sales of property and equipment.

During the six months ended June 30, 2024 we used $863 million, net of cash received, to fund the Wincanton Acquisition, used $161 million of cash to purchase property and equipment and received $10 million of cash from sales of property and equipment.

Investing activities used $169 million and $1.1 billion of cash for the nine months ended September 30, 2025 and September 30, 2024, respectively.

During the nine months ended September 30, 2025, we utilized $269 million of cash to purchase property and equipment, settled $1 million of cash in cross-currency swap agreements, and received $101 million of cash from sales of property and equipment.

The nine months ended September 30, 2025, include the purchase of property and equipment, which was sold for $90 million in the third quarter of 2025.

During the nine months ended September 30, 2024, we utilized $863 million, net of cash acquired, to fund the Wincanton Acquisition, utilized $255 million of cash to purchase property and equipment, settled $5 million of cash in cross-currency swap agreements, and received $16 million of cash from sales of property and equipment.

Financing Activities

Financing activities used $227 million and generated $857 million of cash for the six months ended June 30, 2025 and June 30, 2024, respectively.

The primary use of cash from financing activities during the six months ended June 30, 2025 was $200 million to repurchase shares of our common stock under the Repurchase Plan, $55 million to repay debt, $24 million to repay finance lease obligations and $7 million in payments for employee taxes on net settlement of equity awards, partially offset by $64 million increase in bank overdraft and $8 million of net borrowings under our revolving credit facilities.

The primary source of cash from financing activities during the six months ended June 30, 2024 was $1.1 billion of proceeds from issuance of long-term debt and $3 million increase in bank overdraft, partially offset by $196 million of cash used to repay debt, $19 million of cash used to repay finance lease obligations and $7 million in payments for employee taxes on net settlement of equity awards.

Financing activities used $266 million and generated $829 million of cash for the nine months ended September 30, 2025 and September 30, 2024, respectively.

The primary use of cash from financing activities during the nine months ended September 30, 2025 was $200 million to repurchase shares of our common stock under the Repurchase Plan, $56 million to repay debt, $38 million to repay finance lease obligations and $8 million in payments for employee taxes on net settlement of equity awards, partially offset by $38 million of net borrowings under our revolving credit facilities.

The source of cash from financing activities during the nine months ended September 30, 2024, was $1.1 billion of proceeds from issuance of long-term debt, partially offset by $150 million of cash used to repay debt, $32 million of cash used to repay finance lease obligations, and $8 million in payments for employee taxes on net settlement of equity awards.

Off-Balance Sheet Arrangements

1 unchanged sentence

Contractual Obligations

As of June 30, 2025, the Company’s contractual obligations had not materially changed compared with December 31, 2024.

As of September 30, 2025, the Company’s contractual obligations had not materially changed compared with December 31, 2024.

Critical Accounting Policies and Estimates

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis