GXO Logistics, Inc. 10-K

Item 8. Financial Statements and Supplementary Data. Index to Financial Statements Page Report of Independent Registered Public Accounting Firm 34 Consolidated Statements of Operations for the Years Ended December 31, 202 5 , 202 4 and 202 3 37 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 202 5 , 202 4 and 202 3 38 Consolidated Balance Sheets as of December 31, 202 5 and 202 4 39 Consolidated Statements of Cash Flows for the Years Ended December 31, 202 5 , 202 4 and 202 3 40 Consolidated Statements of Changes in Equity for the Years Ended December 31, 202 5 , 202 4 and 202 3 42 Notes to Consolidated Financial Statements 43 Note 1 - Organization 43 Note 2 - Basis of Presentation and Significant Accounting Policies 43 Note 3 - Revenue Recognition 49 Note 4 - Segment Information 50 Note 5 - Acquisition and D ivestiture 51 Note 6 - Goodwill 53 Note 7 - Intangible Assets 53 Note 8 - Property and Equipment 54 Note 9 - Leases 54 Note 10 - Debt and Financing Arrangements 56 Note 11 - Fair Value Measurements and Financial Instruments 58 Note 12 - Accrued Expenses 61 Note 13 - Stockholders ’ Equity 61 Note 14 - Stock-Based Compensation 62 Note 15 - Employee Benefit Plans 65 Note 16 - Restructuring Costs and Other 67 Note 17 - Income Taxes 68 Note 18 - Commitments and Contingencies 73 33 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors GXO Logistics, Inc.: Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting We have audited the accompanying consolidated balance sheets of GXO Logistics, Inc. and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income, cash flows, and changes in equity for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Basis for Opinions The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. 34 Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Sufficiency of audit evidence over revenue from contracts with customers As discussed in Notes 2 and 3 to the consolidated financial statements, revenue is recognized over the period in which services are provided under the terms of the Company’s contractual relationship with its customers. For the year ended December 31, 2025, the Company reported $13.2 billion of revenue. We identified the evaluation of the sufficiency of audit evidence over revenue from contracts with customers (revenue) as a critical audit matter. Subjective auditor judgment and IT professionals with specialized skills and knowledge were required to evaluate the sufficiency of audit evidence obtained over revenue due to the number and dispersion of warehouse management and other IT systems used in the processing and recording of revenue. The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment to determine the nature and extent of procedures to be performed over the processing and recording of revenue. We evaluated the design and tested the operating effectiveness of certain internal controls related to the processing and recording of revenue, including manual controls related to the examination of revenue contracts and detection of revenues recorded outside of expectations. We involved IT professionals with specialized skills and knowledge to test certain manual and automated controls, including general IT controls, over multiple relevant IT systems and information used in internal control. We compared certain revenue activity recorded during the year to cash received, adjusted for reconciling items. We evaluated the relevance and reliability of certain reconciling items to underlying documentation, including the changes in accounts receivable and deferred revenue. We examined a selection of revenue contracts and transactions to assess that revenue was recorded in accordance with the Company’s accounting policy. Additionally, for a sample of accrued revenue at year-end, we confirmed with the Company’s customers the amount of revenue billed subsequent to year-end and compared the result to the Company’s accounting records. We evaluated the 35 sufficiency of audit evidence obtained by assessing the results of procedures performed, including the appropriateness of the nature and extent of such evidence. /s/ KPMG LLP We have served as the Company’s auditor since 2021. New York, New York February 25, 2026 36 GXO Logistics, Inc. Consolidated Statements of Operations Year Ended December 31, (Dollars in millions, shares in thousands, except per share amounts) 2025 2024 2023 Revenue $ 13,178 $ 11,709 $ 9,778 Direct operating expense 11,190 9,853 8,035 Selling, general and administrative expense 1,106 1,061 998 Depreciation and amortization expense 457 415 361 Transaction and integration costs 54 76 34 Restructuring costs and other 27 25 25 Regulatory matter and litigation expense 65 59 — Net loss on divestiture of business 34 2 7 Operating income 245 218 318 Other income (expense), net ( 8 ) 31 1 Interest expense, net ( 133 ) ( 103 ) ( 53 ) Income before income taxes 104 146 266 Income tax expense ( 68 ) ( 8 ) ( 33 ) Net income 36 138 233 Net income attributable to Noncontrolling Interests (“NCI”) ( 4 ) ( 4 ) ( 4 ) Net income attributable to GXO $ 32 $ 134 $ 229 Earnings per share Basic $ 0.28 $ 1.12 $ 1.93 Diluted $ 0.28 $ 1.12 $ 1.92 Weighted-average shares outstanding used in computation of earnings per share Basic 115,677 119,413 118,908 Diluted 116,303 119,798 119,490 See accompanying Notes to the Consolidated Financial Statements. 37 GXO Logistics, Inc. Consolidated Statements of Comprehensive Income Year Ended December 31, (In millions) 2025 2024 2023 Net income $ 36 $ 138 $ 233 Other comprehensive income (loss), net of tax Foreign currency translation adjustments 147 ( 34 ) 19 Cash flow hedges ( 3 ) ( 1 ) ( 2 ) Fair value hedges ( 1 ) — — Pension plans ( 31 ) ( 42 ) ( 1 ) Other comprehensive income (loss), net of tax 112 ( 77 ) 16 Comprehensive income, net of tax 148 61 249 Less: Comprehensive income attributable to NCI 4 1 5 Comprehensive income attributable to GXO $ 144 $ 60 $ 244 See accompanying Notes to the Consolidated Financial Statements. 38 GXO Logistics, Inc. Consolidated Balance Sheets December 31, (Dollars in millions, shares in thousands, except per share amounts) 2025 2024 ASSETS Current assets Cash and cash equivalents $ 854 $ 413 Accounts receivable, net of allowance of $ 15 and $ 15 2,028 1,799 Other current assets 406 429 Total current assets 3,288 2,641 Long-term assets Property and equipment, net of accumulated depreciation of $ 2,126 and $ 1,732 1,151 1,160 Operating lease assets 2,563 2,329 Goodwill 3,781 3,549 Intangible assets, net of accumulated amortization of $ 781 and $ 618 909 986 Other long-term assets 570 601 Total long-term assets 8,974 8,625 Total assets $ 12,262 $ 11,266 LIABILITIES AND EQUITY Current liabilities Accounts payable $ 758 $ 776 Accrued expenses 1,492 1,271 Current debt 446 110 Current operating lease liabilities 745 647 Other current liabilities 434 385 Total current liabilities 3,875 3,189 Long-term liabilities Long-term debt 2,619 2,521 Long-term operating lease liabilities 2,044 1,898 Other long-term liabilities 709 623 Total long-term liabilities 5,372 5,042 Commitments and Contingencies (Note 18) Stockholders’ Equity Common Stock, $ 0.01 par value per share; 300,000 shares authorized, 119,868 and 119,496 shares issued and 114,512 and 119,496 shares outstanding, respectively 1 1 Treasury stock, at cost; 5,356 and 0 shares, respectively ( 202 ) — Preferred Stock, $ 0.01 par value per share; 10,000 shares authorized, 0 issued and outstanding — — Additional Paid-In Capital (“APIC”) 2,667 2,629 Retained earnings 718 686 Accumulated Other Comprehensive Income (Loss) (“AOCIL”) ( 201 ) ( 313 ) Total stockholders’ equity before NCI 2,983 3,003 NCI 32 32 Total equity 3,015 3,035 Total liabilities and equity $ 12,262 $ 11,266 See accompanying Notes to the Consolidated Financial Statements. 39 GXO Logistics, Inc. Consolidated Statements of Cash Flows Year Ended December 31, (In millions) 2025 2024 2023 Cash flows from operating activities: Net income $ 36 $ 138 $ 233 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization expense 457 415 361 Goodwill and intangibles write-down loss held for sale 25 — — Stock-based compensation expense 47 39 35 Deferred tax benefit ( 29 ) ( 38 ) ( 41 ) Other 10 1 23 Changes in operating assets and liabilities Accounts receivable ( 88 ) 118 ( 17 ) Other assets 21 ( 54 ) 28 Accounts payable ( 61 ) 23 ( 3 ) Accrued expenses and other liabilities 16 ( 93 ) ( 61 ) Net cash provided by operating activities 434 549 558 Cash flows from investing activities: Capital expenditures ( 324 ) ( 359 ) ( 274 ) Proceeds from sale of property and equipment 149 61 18 Acquisition of business, net of cash acquired — ( 863 ) ( 149 ) Net investment hedges settlement ( 24 ) 4 ( 3 ) Other 3 — ( 2 ) Net cash used in investing activities ( 196 ) ( 1,157 ) ( 410 ) Cash flows from financing activities: Common stock repurchased ( 200 ) — — Proceeds from long-term debt, net of issuance discount 577 1,096 — Payments for debt issue costs ( 2 ) ( 9 ) — Net borrowings under revolving credit facilities ( 25 ) ( 122 ) ( 18 ) Repayments of debt ( 180 ) ( 286 ) ( 122 ) Repayments of finance lease obligations ( 50 ) ( 45 ) ( 29 ) Taxes paid related to net share settlement of equity awards ( 9 ) ( 8 ) ( 12 ) Other — 10 ( 5 ) Net cash provided by (used in) financing activities 111 636 ( 186 ) Effect of exchange rates on cash and cash equivalents 23 ( 13 ) 13 Net increase (decrease) in cash, restricted cash and cash equivalents 372 15 ( 25 ) Cash, restricted cash and cash equivalents, beginning of year 485 470 495 Cash, restricted cash and cash equivalents, end of year $ 857 $ 485 $ 470 Reconciliation of cash, restricted cash and cash equivalents Cash and cash equivalents $ 854 $ 413 $ 468 Restricted Cash (included in Other current assets) 2 — — Restricted cash (included in Other long-term assets) 1 72 2 Total cash, restricted cash and cash equivalents $ 857 $ 485 $ 470 See accompanying Notes to the Consolidated Financial Statements. 40 GXO Logistics, Inc. Consolidated Statements of Cash Flows Year Ended December 31, (In millions) 2025 2024 2023 Supplemental cash flow information: Cash paid for interest, net $ 128 $ 97 $ 57 Cash paid for income taxes, net 59 43 84 Noncash financing activities: Excise tax liability related to stock repurchases 2 — — See accompanying Notes to the Consolidated Financial Statements. 41 GXO Logistics, Inc. Consolidated Statements of Changes in Equity Common Stock APIC Retained Earnings AOCIL Equity Before NCI NCI Total Equity (Shares in thousands, dollars in millions) Shares Amount Treasury stock December 31, 2022 118,728 $ 1 $ — $ 2,575 $ 323 $ ( 254 ) $ 2,645 $ 33 $ 2,678 Net income — — — — 229 — 229 4 233 Other comprehensive income — — — — — 15 15 1 16 Stock-based compensation — — — 35 — — 35 — 35 Vesting of stock compensation awards 555 — — — — — — — — Tax withholding on vesting of stock compensation awards ( 226 ) — — ( 12 ) — — ( 12 ) — ( 12 ) Dividends to NCI — — — — — — — ( 4 ) ( 4 ) December 31, 2023 119,057 $ 1 $ — $ 2,598 $ 552 $ ( 239 ) $ 2,912 $ 34 $ 2,946 Net income — — — — 134 — 134 4 138 Other comprehensive loss — — — — — ( 74 ) ( 74 ) ( 3 ) ( 77 ) Stock-based compensation — — — 39 — — 39 — 39 Vesting of stock compensation awards 607 — — — — — — — — Tax withholding on vesting of stock compensation awards ( 168 ) — — ( 8 ) — — ( 8 ) — ( 8 ) Dividends to NCI — — — — — — — ( 3 ) ( 3 ) December 31, 2024 119,496 $ 1 $ — $ 2,629 $ 686 $ ( 313 ) $ 3,003 $ 32 $ 3,035 Net income (loss) — — — — 32 — 32 4 36 Other comprehensive income — — — — — 112 112 — 112 Stock-based compensation — — — 47 — — 47 — 47 Vesting of stock compensation awards 587 — — — — — — — — Tax withholding on vesting of stock-based compensation awards ( 215 ) — — ( 9 ) — — ( 9 ) — ( 9 ) Common stock repurchased ( 5,356 ) — ( 202 ) — — — ( 202 ) — ( 202 ) Dividends to NCI — — — — — — — ( 4 ) ( 4 ) December 31, 2025 114,512 $ 1 $ ( 202 ) $ 2,667 $ 718 $ ( 201 ) $ 2,983 $ 32 $ 3,015 See accompanying Notes to the Consolidated Financial Statements. 42 GXO Logistics, Inc. Notes to Consolidated Financial Statements 1. Organization Nature of Operations GXO Logistics, Inc., together with its subsidiaries (“GXO” or the “Company”), is the largest pure-play contract logistics provider in the world. The Company provides its customers with high-value-added warehousing and distribution, order fulfillment, e-commerce, reverse logistics, and other supply chain services differentiated by its ability to deliver technology-enabled, customized solutions at scale. GXO serves a broad range of customers across various industries, such as e-commerce, omnichannel retail, technology and consumer electronics, food and beverage, industrial and manufacturing, and consumer packaged goods, among others. The Company presents its operations in the Consolidated Financial Statements as one reportable segment. The Company became a standalone publicly traded company on August 2, 2021, when XPO, Inc. spun off the Company to GXO’s stockholders and GXO’s common stock, par value of $ 0.01 per share, began trading independently on the New York Stock Exchange under the ticker symbol “GXO”. GXO was incorporated as a Delaware corporation in February 2021. 2. Basis of Presentation and Significant Accounting Policies Basis of Presentation The Company’s Consolidated Financial Statements include the accounts of GXO Logistics, Inc. and its majority-owned subsidiaries and variable interest entities where the Company is the primary beneficiary. The Company has eliminated intercompany accounts and transactions. Certain amounts reported for prior years have been reclassified to conform to the current year’s presentation. Use of Estimates The preparation of Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires the use of estimates, judgments and assumptions that affect the reported amounts in the Consolidated Financial Statements and accompanying notes. The Company bases its estimates and judgments on historical information and on various other assumptions that it believes are reasonable under the circumstances. GAAP requires the Company to make estimates and judgments in several areas, including, but not limited to, those related to revenue recognition, income taxes, loss contingencies, defined benefit plans, valuation of long-lived assets including goodwill and intangible assets and their associated estimated useful lives, collectability of accounts receivable and the fair value of financial instruments. Actual results may vary from those estimates. Significant Accounting Policies Cash, Restricted Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less on the date of purchase to be cash equivalents. Restricted cash relates to deposits in connection with the ordinary conduct of 43 business. Restricted cash is recorded in Other current assets and Other long-term assets on the Consolidated Balance Sheets. Accounts Receivable and Allowance for Credit Losses Accounts receivable represents the Company’s unconditional right to receive consideration from its customers. The Company records accounts receivable at the contractual amount and records an allowance for doubtful accounts for the amount it estimates it may not collect. In determining the allowance for doubtful accounts, the Company considers historical collection experience, the age of the accounts receivable balances, the credit quality and risk of its customers, any specific customer collection issues, current economic conditions and other factors that may impact its customers’ ability to pay. The Company writes off accounts receivable balances once the receivables are no longer deemed collectible. The roll forward of the allowance for doubtful accounts was as follows: Year Ended December 31, (In millions) 2025 2024 2023 Beginning balance $ 15 $ 11 $ 12 Provisions charged to expense 5 16 10 Write-offs, less recoveries, and foreign exchange translation ( 5 ) ( 12 ) ( 11 ) Ending balance $ 15 $ 15 $ 11 Property and Equipment Property and equipment, which includes assets recorded under finance leases, are stated at cost less accumulated depreciation or, in the case of property and equipment acquired in a business combination, at fair value at the date of acquisition. Maintenance and repair expenditures are charged to expenses as incurred. For internally developed computer software, all costs incurred during the planning and evaluation stages are expensed as incurred. Software development costs are capitalized once the preliminary project stage is complete, and it is probable that the project will be completed and the software will be used to perform the intended function. Depreciation is computed using the straight-line method over the estimated useful lives of the assets or the remaining lease term, whichever is shorter. Land and assets held within construction in progress are not depreciated. The estimated useful lives of property and equipment are described below: Estimated Useful Life Buildings 40 years Leasehold improvements Shorter of useful life or term of lease Warehouse equipment, fleet and other 3 to 15 years Technology and automated systems 3 to 15 years Computer equipment 1 to 5 years Internal-use software 1 to 5 years Leases The Company has entered into noncancelable operating and finance leases primarily for real estate and warehouse equipment. The Company determines whether an arrangement is a lease at inception and, if so, whether that lease meets the classification criteria for a finance or an operating lease at the commencement date. 44 For leases with terms greater than 12 months, the Company recognizes lease assets and lease liabilities at lease commencement based on the present value of lease payments over the lease term. For most of the Company’s leases, the implicit rate cannot be readily determined and, as a result, the Company uses the incremental borrowing rates at the commencement date to determine the present value of future lease payments. For leases that include fixed rental payments for both the use of the asset (“lease costs”) as well as for other occupancy or service costs relating to the asset (“non-lease costs”), the Company generally includes both the lease costs and non-lease costs as a single lease component in the measurement of the lease asset and lease liability. Certain lease agreements include rental payments based on changes in the consumer price index (“CPI”) or fair market value. Lease liabilities are not remeasured due to changes in the CPI or fair market value; instead, such changes are treated as variable costs and are excluded from the measurement of the right-of-use asset and lease liability. These payments are recognized in the period in which the related obligation is incurred. Lease agreements may include rent escalation clauses, renewal or termination options, rent holidays, and certain landlord incentives, such as tenant improvement allowances. Lease expense is recognized on a straight-line basis over the noncancelable lease term and renewal periods that are considered reasonably certain. Incentives received from a landlord are included as a reduction to the lease asset and are included within operating activities on the Consolidated Statement of Cash Flows. Goodwill and Intangible Assets The Company records goodwill as the excess of the consideration transferred over the fair value of net assets acquired in business combinations. Goodwill is tested for impairment at the reporting unit level, which is an operating segment, or one level below. The Company has three reporting units: i) Americas and Asia-Pacific, ii) United Kingdom and Ireland and iii) Continental Europe. The Company measures goodwill impairment, if any, as the amount by which the carrying amount of the reporting unit exceeds its fair value, not to exceed the carrying amount of goodwill. The Company performed its annual goodwill impairment test on November 1. The review of goodwill impairment consists of either using a qualitative approach to determine whether it is more likely than not that the fair value of the assets is less than their respective carrying values or a one-step quantitative impairment test. In performing the qualitative assessment, the Company considers many factors in evaluating whether the carrying value of goodwill may not be recoverable, including declines in the Company’s stock price, market capitalization of the Company and macroeconomic conditions. If, based on the results of the qualitative assessment, it is concluded that it is not more likely than not that the fair value of a reporting unit exceeds its carrying value, additional quantitative impairment testing is performed. The quantitative test requires that the carrying value of each reporting unit be compared with its estimated fair value. If the carrying value of a reporting unit is greater than its fair value, a goodwill impairment charge will be recorded for the difference (up to the carrying value of goodwill). The Company uses the income approach and/or a market-based approach to determine the reporting units’ fair values. The determination of discounted cash flows used in the income approach requires significant estimates and assumptions. Due to the inherent uncertainty involved in making these estimates, actual results could differ from those estimates. The Company’s intangible assets consist of customer relationships, trade names, trademarks, and developed technology which are amortized on a straight-line basis or over the period the economic benefits are expected to be realized. The Company reviews its intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Impairment of Long-lived Assets The Company reviews long-lived assets to be held-and-used for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. If an impairment indicator is present, the Company evaluates recoverability by comparing the carrying amount of the asset group to the sum of the undiscounted expected future cash flows over the remaining useful life of a long-lived asset group. If the assets are impaired, an impairment loss is measured as the amount by which the carrying amount of the asset group 45 exceeds the fair value of the asset. The Company estimates fair value using the expected future cash flows discounted at a rate consistent with the risks associated with the recovery of the asset. For assets held for sale, to the extent the carrying amount is greater than the asset’s fair value less costs to sell, an impairment loss is recognized for the difference. Revenue Recognition The Company generates revenue by providing logistics services for its customers, including warehousing and distribution, order fulfillment, reverse logistics, packaging and labeling, factory and aftermarket support and inventory management ranging from a few months to a few years. Generally, the Company’s contracts provide the customer an integrated service that includes two or more services, including but not limited to facility and equipment costs, construction, repair and maintenance services and labor. For these contracts, the Company does not consider the services to be distinct within the context of the contract when the separate scopes of work combine into a single commercial objective or capability for the customer. Accordingly, the Company generally identifies one performance obligation in its contracts, which is a series of distinct services that remain substantially the same over time and possess the same pattern of transfer. Revenue is recognized using the series guidance over the period in which services are provided under the terms of the Company’s contractual relationships with its customers. The transaction price is based on the amount specified in the contract with the customer and contains fixed and variable consideration. In general, the fixed consideration in a contract represents reimbursement for warehouse, technology and equipment costs incurred to satisfy the performance obligation and is recognized on a straight-line basis over the term of the contract. The variable consideration is comprised of cost reimbursement based on the costs incurred, per-unit pricing is determined based on units provided and time and materials pricing is based on the hours of services provided. The variable consideration component is recognized over time based on the level of activity. Generally, pricing can be adjusted based on contractual provisions related to achieving agreed-upon performance metrics, changes in volumes, services and market conditions. Revenue relating to these pricing adjustments is estimated and included in the consideration if it is probable that a significant revenue reversal will not occur in the future. The estimate of variable consideration is determined by the expected value or most likely amount method and factors in current, past and forecasted experience with the customer. Customers are billed based on terms specified in the revenue contract and they pay us according to approved payment terms. Contract Assets and Liabilities Contract assets consist of two components: customer acquisition costs and costs to fulfill a contract. The Company capitalizes direct and incremental costs incurred to obtain and to fulfill a contract in advance of revenue recognition, such as certain labor, third-party service and related product costs. These costs are recognized as an asset if the Company expects to recover them. Contract assets are recognized consistent with the transfer of the underlying performance obligations to the customer based on the specific contracts to which they relate. Contract assets are amortized to Direct operating expense in the Consolidated Statements of Operations over the contract term. Contract liabilities represent the Company’s obligation to transfer services to a customer for which the Company has received consideration or the amount that is due from the customer. Derivative Instruments The Company records all its derivative financial instruments on the Consolidated Balance Sheets as assets or liabilities measured at fair value. For derivatives designated as a hedge, and effective as part of a hedge transaction, the effective portion of the gain or loss on the hedging derivative instrument is reported as a component of other comprehensive income or as a basis adjustment to the underlying hedged item and reclassified to earnings in the year in which the hedged item affects earnings. The effective portion of the gain or loss on hedges of foreign net investments is generally not reclassified to earnings unless the net investment is disposed. To the extent derivatives 46 do not qualify or are not designated as hedges, or are ineffective, their changes in fair value are recorded in earnings immediately, which may subject the Company to increased earnings volatility. Stock-Based Compensation The Company accounts for stock-based compensation based on the equity instrument’s grant date fair value. Stock compensation expense is recognized over the requisite service period of the award, based on the grant date fair value, which is generally the vesting term. For grants of stock options, the Company determines the fair value based on the Black-Scholes option-pricing model. For grants of restricted stock units (“RSU”) subject to service-based vesting conditions, the Company establishes the fair value based on the market price on the date of the grant. For grants of awards subject to both market-based and performance-based vesting conditions (“PSU”), the Company determines the fair value based on a Monte Carlo simulation model. The Company accounts for forfeitures as they occur. Earnings per Share Basic earnings per share (“EPS”) is based upon net earnings available to common stockholders divided by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by giving effect to all potentially dilutive stock awards that were outstanding. The computation of diluted earnings per share excludes the effect of the potential exercise of stock-based awards when the effect of the potential exercise would be anti-dilutive. Anti-dilutive shares were immaterial for the years ended December 31, 2025, 2024 and 2023. Defined Benefit Plans The Company calculates its employer-sponsored retirement plan obligations using various actuarial assumptions and methodologies. Assumptions include discount rates, expected long-term rate of return on plan assets, mortality rates and other factors. The assumptions used in recording the projected benefit obligation and fair value of plan assets represent the Company’s best estimates based on available information regarding historical experience and factors that may cause future expectations to differ. The Company’s obligation and future expense amounts could be materially impacted by differences in experience or changes in assumptions. The Company determines the net periodic benefit cost of the plans using assumptions regarding the projected benefit obligation and the fair value of the plan assets as of the beginning of the year. Net periodic benefit cost is recorded in Other income, net in the Consolidated Statement of Operations. The Company calculates the funded status of the defined benefit plan as the difference between the projected benefit obligation and the fair value of the plan assets. The impact of plan amendments, actuarial gains and losses and prior-service costs are recorded in AOCIL and are generally amortized as a component of net periodic benefit cost over the remaining service period of the active employees covered by the defined benefit pension plans. Cumulative gains and losses over 10% of the greater of the beginning of year benefit obligation or fair value of the plan assets are amortized over the expected average life expectancy. Income Taxes The Company accounts for income taxes using the asset and liability method on a legal entity and jurisdictional basis, under which the Company recognizes the amount of taxes payable or refundable for the current year and deferred tax assets and liabilities for the future tax consequences of events that have been recognized in the Consolidated Financial Statements or tax returns. The calculation of the annual effective tax rate relies on several factors including pre-tax earnings, various jurisdiction statutory tax rates, tax credits, uncertain tax positions, valuation allowances and differences between tax laws and accounting laws. The effective tax rate in any financial statement period may be materially impacted by changes in the blend and/or level of earnings by individual taxing jurisdictions. 47 If the Company considers that a tax position is more likely than not to be sustained upon audit, based solely on the technical merits of the position, presuming an examination by a taxing authority with full knowledge of all relevant information, the Company recognizes all or a portion of the benefit. Valuation allowances are established when it is more likely than not that the Company’s deferred tax assets will not be realized based on all available evidence. The Company uses judgments and estimates in evaluating its tax positions. The Company’s tax returns are subject to examination by U.S. Federal, state and local and foreign taxing jurisdictions. The Company regularly assesses the potential outcomes of these examinations and any future examinations for the current or prior years. The Company recognizes tax benefits from uncertain tax positions only if based on the technical merits of the position it is more likely than not that the tax positions will be sustained upon audit. The Company adjusts these tax liabilities, including related interest and penalties, based on the current facts and circumstances. The Company reports tax-related interest and penalties as a component of income tax expense. Foreign Currency Translation and Transactions The assets and liabilities of the Company’s foreign subsidiaries that use their local currency as their functional currency are translated to U.S. dollars (“USD”) using the exchange rate prevailing at each balance sheet date, with balance sheet currency translation adjustments recorded in AOCIL in the Consolidated Balance Sheets. The Company converts foreign currency transactions recognized in the Consolidated Statements of Operations to USD by applying the exchange rate prevailing on the date of the transaction. Gains and losses arising from foreign currency transactions and the effects of remeasuring monetary assets and liabilities are recorded in Other income, net in the Consolidated Statements of Operations. Adoption of New Accounting Standards In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which provides for expanded disclosures primarily related to income taxes paid and the rate reconciliation. The amendments are effective prospectively for annual periods beginning after December 15, 2024. The ASU 2023-09 did not have a material impact on the Company’s results of operations, financial position or cash flows, other than additional disclosure requirements. The Company has retrospectively adopted and presented comparative periods in conformity with the new standard. See Note 17. “Income Taxes.” Accounting Pronouncements Issued But Not Yet Adopted In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This standard requires all public companies to disclose more detailed information about certain costs and expenses in the notes to the financial statements at interim and annual reporting periods. This standard is effective for annual reporting periods beginning after December 15, 2026, with early adoption permitted. The Company does not expect this standard to have a material impact on its results of operations, financial position or cash flows, and is currently evaluating the impact of adopting this standard on its disclosures. In September 2025, the FASB issued ASU 2025-06, Intangibles- Goodwill and Other- Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The amendments in this Update remove all references to prescriptive and sequential software development stages (referred to as “project stages”) throughout Subtopic 350-40. Therefore, an entity is required to start capitalizing software costs when certain capitalization criteria are met. The ASU also supersedes guidance on website development costs. The amendments are effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. The Company is currently evaluating the impact of this standard on its results of operations, financial position or cash flows, and the impact of adopting this standard on its disclosures. 48 3. Revenue Recognition Revenue disaggregated by geographical area was as follows: Year Ended December 31, (In millions) 2025 2024 2023 United Kingdom $ 6,296 $ 5,248 $ 3,664 United States 3,158 3,087 2,909 Netherlands 1,035 922 831 France 822 809 830 Spain 651 571 529 Italy 405 391 382 Other 811 681 633 Total $ 13,178 $ 11,709 $ 9,778 The Company’s revenue can also be disaggregated by various verticals, reflecting the customers’ principal industry. Revenue disaggregated by industry was as follows: Year Ended December 31, (In millions) 2025 2024 2023 Omnichannel retail $ 6,406 $ 5,360 $ 4,100 Technology and consumer electronics 1,644 1,541 1,467 Industrial and manufacturing 1,529 1,339 1,078 Food and beverage 1,381 1,331 1,331 Consumer packaged goods 1,258 1,259 1,027 Other 960 879 775 Total $ 13,178 $ 11,709 $ 9,778 Contract Balances The contract asset and contract liability balances from contracts with customers were as follows: December 31, (In millions) 2025 2024 Contract assets and contract costs included in: Other current assets $ 36 $ 37 Other long-term assets 235 196 Total contract assets $ 271 $ 233 Contract liabilities included in: Other current liabilities $ 279 $ 272 Other long-term liabilities 101 128 Total contract liabilities $ 380 $ 400 Revenue recognized included the following: Year Ended December 31, (In millions) 2025 2024 2023 Amounts included in the beginning of year contract liability balance $ 272 $ 208 $ 122 49 4. Segment Information The Company is organized geographically into three operating segments: i) Americas and Asia-Pacific, ii) United Kingdom and Ireland, and iii) Continental Europe. The Company’s reporting unit results are regularly provided to the chief operating decision maker (“CODM”). The CODM is our Chief Executive Officer, who assesses the Company’s performance and allocates resources. The CODM evaluates the Company’s performance and allocates resources primarily based on adjusted earnings before interest, taxes, depreciation and amortization, adjusted for transaction and integration costs, restructuring costs and other, regulatory matter and litigation expense, net loss on divestiture of business, and unrealized gain/loss on foreign currency contracts (“Adjusted EBITDA”). The CODM uses Adjusted EBITDA to communicate performance targets to the segment managers, allocate resources to the segments, and to monitor segment performance. Additionally, the CODM considers the performance of this measure against planned and forecasted amounts to make investing and resource allocation decisions. The actual results are used in assessing performance of the Company and in establishing management’s compensation. For disclosure purposes, we aggregate these three operating segments into one reportable segment due to the similar nature of their operations and economic characteristics. The Company’s segment results were as follows: Year Ended December 31, (In millions) 2025 2024 2023 Revenue $ 13,178 $ 11,709 $ 9,778 Direct operating expense 11,190 9,853 8,035 Selling, general and administrative expense (1) 1,029 996 931 Other (income) expense, net (2)(4) 1 ( 20 ) 4 Segment Adjusted EBITDA $ 958 $ 880 $ 808 Less: Corporate expenses (3) 77 65 67 Depreciation expense 338 307 290 Amortization of intangible assets acquired 119 108 71 Transaction and integration costs 54 76 34 Restructuring costs and other 27 25 25 Regulatory matter and litigation expense 65 59 — Net loss on divestiture of business 34 2 7 Unrealized (gain) loss on foreign currency contracts (4) 7 ( 11 ) ( 5 ) Interest expense, net 133 103 53 Income before income taxes 104 146 266 Income tax expense ( 68 ) ( 8 ) ( 33 ) Net income $ 36 $ 138 $ 233 (1) Excludes unallocated corporate expenses. (2) Other (income) expense, net excluding unrealized (gain) loss on foreign currency contracts. (3) Corporate expenses include unallocated costs related to corporate functions such as salaries and benefits, rent, and professional fees which are recorded in Selling, general and administrative expenses in the Consolidated Statements of Operations. (4) Included in Other income/expense, net in the Consolidated Statements of Operations. 50 Long-lived assets geographic information The Company’s long-lived assets for this disclosure are defined as Property and equipment, net of accumulated depreciation, plus operating lease assets. The Company’s long-lived assets by geographic region were as follows: December 31, (In millions) 2025 2024 United States $ 1,278 $ 1,498 Europe (1) 1,198 939 United Kingdom 1,190 1,006 Other (2) 48 46 Total $ 3,714 $ 3,489 (1) Europe exclusive of the United Kingdom. (2) Includes Asia, Latin America and Canada. 5. Acquisition and Divestiture On April 29, 2024, the Company completed the acquisition of Wincanton plc (now “Wincanton Limited”) for a total consideration of £ 762 million ($ 958 million as of the acquisition date) (the “Wincanton Acquisition”). The Wincanton Acquisition was subject to review by the U.K. Competition and Markets Authority (the “CMA”). On June 19, 2025, the CMA approved the Wincanton Acquisition, subject to the divestment of certain grocery contracts in the U.K. (the “Wincanton Divestment”). In the fourth quarter of 2025, the Company met the held-for-sale criteria for the anticipated Wincanton Divestment and recorded a $ 37 million write-down loss, including $ 4 million of goodwill, $ 21 million of customer relationships , and $ 12 million fair value adjustment. Assets and liabilities held for sale were not material and are included in Other current assets and Other current liabilities, respectively, in the Consolidated Balance Sheets. The Company expects to complete the Wincanton Divestment in 2026. In connection with the Wincanton Acquisition, the Company incurred transaction costs of $ 48 million and $ 61 million for the years ended December 31, 2025 and 2024, respectively, which were included in Transaction and integration costs in the Consolidated Statements of Operations. 51 The final fair value of assets acquired and liabilities assumed at the acquisition date was: (In millions) ASSETS Current assets Cash and cash equivalents $ 90 Accounts receivable 238 Other current assets 65 Total current assets 393 Long-term assets Property and equipment 128 Operating lease assets 177 Intangible assets (1) 532 Other long-term assets 152 Total long-term assets 989 Total assets $ 1,382 LIABILITIES Current liabilities Accounts payable $ 67 Accrued expenses 293 Current debt 7 Current operating lease liabilities 41 Other current liabilities 147 Total current liabilities 555 Long-term liabilities Long-term debt 215 Long-term operating lease liabilities 136 Other long-term liabilities 240 Total long-term liabilities 591 Total liabilities $ 1,146 Net assets purchased $ 236 Purchase price $ 958 Goodwill recorded (2) $ 722 (1) The Company acquired $ 532 million of intangible assets, comprised of customer relationships, trade names, and intellectual property with weighted-average useful lives of 12.5 years. (2) Goodwill represents the excess of the purchase price over the fair value of identifiable assets acquired and liabilities assumed at the acquisition date. Goodwill acquired was recorded in the United Kingdom and Ireland reporting unit and was primarily attributed to anticipated synergies. The Company does not expect the goodwill recognized in connection with the Wincanton Acquisition to be deductible for income tax purposes. 52 6. Goodwill The following tables present the changes in goodwill for the years ended December 31, 2025 and 2024. (In millions) Balance as of December 31, 2023 $ 2,891 Acquisitions (1) 730 Foreign exchange translation (2) ( 72 ) Balance as of December 31, 2024 3,549 Acquisition (1) ( 4 ) Wincanton Divestment (3) ( 4 ) Foreign exchange translation (2) 240 Balance as of December 31, 2025 $ 3,781 (1) In 2024, includes $ 726 million and $ 4 million for the preliminary purchase price allocation for the Wincanton Acquisition and adjustments to the purchase price allocation for the PFSweb, Inc. acquisition, respectively. In 2025, includes $ 4 million reduction for the purchase price allocation of the Wincanton Acquisition. (2) Changes to goodwill amounts resulting from foreign currency translation after the acquisition date are presented as the impact of foreign exchange translation. (3) For additional information see note 5. As of December 31, 2025 and 2024, there were $ 4 million and zero accumulated goodwill impairment losses, respectively. 7. Intangible Assets The following table summarizes identifiable intangible assets subject to amortization: December 31, 2025 December 31, 2024 (In millions) Gross Carrying Amount Accumulated Amortization Net Value Gross Carrying Amount Accumulated Amortization Net Value Customer relationships $ 1,609 $ ( 747 ) $ 862 $ 1,527 $ ( 600 ) $ 927 Trade names and trademarks 64 ( 29 ) 35 60 ( 15 ) 45 Developed technology 17 ( 5 ) 12 17 ( 3 ) 14 Total $ 1,690 $ ( 781 ) $ 909 $ 1,604 $ ( 618 ) $ 986 Intangible asset amortization expense was $ 119 million, $ 108 million and $ 71 million for the years ended December 31, 2025, 2024 and 2023, respectively. In addition, in connection with the Wincanton Divestment (see note 5), $ 21 million of customer relationships were impaired in 2025. Estimated amortization expense for each of the five succeeding fiscal years and thereafter is as follows: (In millions) 2026 2027 2028 2029 2030 Thereafter Estimated amortization expense $ 108 $ 105 $ 93 $ 79 $ 72 $ 452 53 8. Property and Equipment The following table summarizes property and equipment: December 31, (In millions) 2025 2024 Land, buildings and leasehold improvements $ 589 $ 515 Warehouse equipment, fleet and other 1,279 1,113 Technology and automated systems 582 531 Computer equipment 391 335 Internal-use software 436 398 Total property and equipment, gross 3,277 2,892 Less: accumulated depreciation and amortization ( 2,126 ) ( 1,732 ) Total property and equipment, net $ 1,151 $ 1,160 Depreciation of property and equipment was $ 338 million, $ 307 million and $ 290 million for the years ended December 31, 2025, 2024 and 2023, respectively. 9. Leases The components of lease cost recorded in the Consolidated Statements of Operations were as follows: Year Ended December 31, (In millions) 2025 2024 2023 Operating leases: Operating lease cost $ 915 $ 830 $ 751 Short-term lease cost 181 202 225 Variable lease cost 222 153 129 Total operating lease cost (1) $ 1,318 $ 1,185 $ 1,105 Finance leases: Amortization of the right-of-use assets $ 36 $ 30 $ 30 Interest on the lease liabilities 18 10 5 Total finance lease cost $ 54 $ 40 $ 35 Total operating and finance lease cost $ 1,372 $ 1,225 $ 1,140 (1) Operating lease cost is primarily included in Direct operating expense in the Consolidated Statements of Operations. 54 The following amounts were recorded in the Consolidated Balance Sheets related to leases: December 31, (In millions) 2025 2024 Operating leases: Operating lease assets $ 2,563 $ 2,329 Current operating lease liabilities $ 745 $ 647 Long-term operating lease liabilities 2,044 1,898 Total operating lease liabilities $ 2,789 $ 2,545 Finance leases: Property and equipment, net $ 306 $ 239 Current debt $ 45 $ 39 Long-term debt 281 237 Total finance lease liabilities $ 326 $ 276 Supplemental cash flow information related to leases was as follows: Year Ended December 31, (In millions) 2025 2024 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 876 $ 791 $ 696 Operating cash flows for finance leases 18 10 5 Financing cash flows for finance leases 50 45 29 Right-of-use assets obtained in exchange for lease liabilities: Operating leases, including $ 166 and $ 52 from an acquisition in 2024 and 2023, respectively $ 863 $ 815 $ 568 Finance leases, including $ 83 and $ 1 from an acquisition in 2024 and 2023, respectively 74 211 10 Supplemental weighted-average information for leases was as follows: December 31, 2025 2024 Weighted-average remaining lease term Operating leases 5.5 years 5.6 years Finance leases 16.6 years 24.1 years Weighted-average discount rate Operating leases 5.1 % 4.9 % Finance leases 5.6 % 5.4 % 55 Maturities of lease liabilities as of December 31, 2025 were as follows: (In millions) Finance Leases Operating Leases 2026 $ 68 $ 854 2027 51 706 2028 42 513 2029 34 348 2030 30 245 Thereafter 296 563 Total lease payments 521 3,229 Less: Interest ( 195 ) ( 440 ) Present value of lease liabilities $ 326 $ 2,789 As of December 31, 2025, the Company had operating leases that have not yet commenced with future undiscounted lease payments of approximately $ 176 million. These operating leases will begin in 2026 and 2027, with initial lease terms ranging from four to ten years . 10. Debt and Financing Arrangements The following table summarizes the carrying value of the Company’s debt: December 31, (In millions, except percentages) Rate (1) 2025 2024 Unsecured notes due 2026 (2) 1.65 % $ 400 $ 399 Unsecured notes due 2029 (3) 6.25 % 594 593 Unsecured notes due 2031 (4) 2.65 % 398 397 Unsecured notes due 2034 (5) 6.50 % 491 490 Euro Unsecured notes due 2030 (€ 500 principal) (6) 3.75 % 580 — Three-Year Term Loan due 2025 (7) — % — 50 Five-Year Term Loan due 2027 (8)(9) 5.19 % 275 399 Finance leases and other debt Various 327 303 Total debt $ 3,065 $ 2,631 Less: Current debt (10) 446 110 Long-term debt $ 2,619 $ 2,521 (1) Interest rates as of December 31, 2025. (2) Net of unamortized discount and debt issuance costs of zero and $ 1 million, as of December 31, 2025 and 2024, respectively. (3) Net of unamortized discount and debt issuance costs of $ 6 million and $ 7 million as of December 31, 2025 and 2024, respectively. (4) Net of unamortized discount and debt issuance costs of $ 2 million and $ 3 million as of December 31, 2025 and 2024, respectively. (5) Net of unamortized discount and debt issuance costs of $ 9 million and $ 10 million as of December 31, 2025 and 2024, respectively. (6) Net of unamortized discount and debt issuance costs of $ 7 million, as of December 31, 2025. (7) In May 2025, the Company repaid the remaining $ 50 million of the Three- Year Term Loan due 2025. (8) Net of unamortized debt issuance costs of zero and $ 1 million, as of December 31, 2025 and 2024, respectively. (9) In November 2025, the Company repaid $ 125 million of the Five Year Term Loan due 2027. (10) As of December 31, 2025, current debt includes $ 400 million of Unsecured notes due 2026. Euro Unsecured Notes In November 2025, GXO Logistics Capital B.V., a wholly owned, indirect consolidated subsidiary of the Company (the “Issuer”), issued € 500 million (approximately $ 580 million) of 3.750 % notes due 2030 at a discount to par at a price of 99.776 % (the “EUR Unsecured notes due 2030”). The EUR Unsecured notes due 2030 accrue interest at 3.750 % per year, and mature on November 24, 2030. Interest on the EUR Unsecured notes due 2030 is payable annually in arrears on November 24 of each year, beginning on November 24, 2026. The EUR Unsecured notes due 56 2030 are fully and unconditionally guaranteed on an unsecured, unsubordinated basis by GXO Logistics, Inc. (“GXO” and GXO’s guarantee of the Notes, the “Parent Guarantee”). The EUR Unsecured notes due 2030 and the Parent Guarantee are unsecured, unsubordinated obligations of the Issuer and GXO, respectively, and they rank equally in right of payment with all of the Issuer’s and GXO’s respective existing and future unsecured, unsubordinated indebtedness. Unsecured Notes In 2024, the Company issued $ 1.1 billion of unsecured notes, consisting of $ 600 million of notes due 2029 (the “Unsecured notes due 2029”) and $ 500 million of notes due 2034 (the “Unsecured notes due 2034”) to fund the Wincanton Acquisition. The Unsecured notes due 2029 accrue interest at 6.25 % per annum, payable semiannually on May 6 and November 6 of each year, and mature on May 6, 2029. The Unsecured notes due 2034 accrue interest at 6.50 % per annum, payable semiannually on May 6 and November 6 of each year, and mature on May 6, 2034. In 2021, the Company issued $ 800 million of unsecured notes, consisting of $ 400 million of notes due 2026 (the “Unsecured notes due 2026”) and $ 400 million of notes due 2031 (the “Unsecured notes due 2031”). The 2026 Notes bear interest at a rate of 1.65 % per annum payable semiannually in arrears on January 15 and July 15 of each year, and mature on July 15, 2026. The 2031 Notes bear interest at a rate of 2.65 % per annum payable semiannually in arrears on January 15 and July 15 of each year, and mature on July 15, 2031. Five-Year Term Loan due 2027 In 2022, the Company entered into a $ 500 million five-year unsecured term loan (the “ Five-Year Term Loan”), which matures on May 26, 2027. The loan bears interest at a fluctuating rate per annum equal to, at the Company’s option, the alternate base rate or the adjusted Secured Overnight Financing Rate (SOFR), plus an applicable margin based on the Company’s credit ratings. In 2025 and 2024, the Company repaid $ 125 million and $ 100 million, respectively, of the Five- Year Term Loan due 2027. Three-Year Term Loan due 2025 In 2022, the Company borrowed a $ 235 million three-year term loan tranche (the “ Three-Year Term Loan”) which was to mature on May 26, 2025. The Three-Year Term Loan bore interest at a fluctuating rate per annum equal to, at the Company’s option, the alternate base rate or the adjusted SOFR, plus an applicable margin based on the Company’s credit ratings. The Company repaid $ 185 million in 2024 and $ 50 million in 2025. Revolving Credit Facilities In 2024, the Company entered into a revolving credit agreement with Bank of America N.A., as administrative agent and an issuing lender (the “Revolving Credit Agreement”). The Revolving Credit Agreement is a five-year , unsecured, multicurrency revolving facility expiring in 2029. The aggregate commitment of all lenders under the Revolving Credit Agreement is equal to $ 800 million, of which $ 100 million is available for the issuance of letters of credit. Loans under the Revolving Credit Agreement bear interest at a fluctuating rate per annum equal to (a) with respect to borrowings in U.S. dollars, at the Company’s option the alternate base rate or term Secured Overnight Financing Rate (“SOFR”), (b) with respect to borrowings in Canadian Dollars, term Canadian Overnight Repo Rate Average (“CORRA”), (c) with respect to borrowings in Pounds Sterling, daily simple Sterling Overnight Index Average Rate (“SONIA”) and (d) with respect to borrowings in Euros, Euro Interbank Offered Rate (“EURIBOR”), in each case, plus an applicable margin calculated based on the Company’s credit ratings. In addition, the Company is paying a commitment fee of 0.15 % per annum on the unused portion of the commitments under the Revolving Credit Facility. As of December 31, 2025 and 2024, no principal amounts were outstanding, and letters of credit were $ 6 million and $ 1 million, respectively, under the Revolving Credit Agreement. 57 In connection with the Wincanton Acquisition, the Company assumed a revolving credit facility agreement (the “Wincanton Revolving Credit Agreement”) under which it may, at any time, borrow up to £ 175 million, which was to mature in 2027. Loans under the Wincanton Revolving Credit Agreement bore interest at a daily simple rate based on SONIA plus a margin. In November 2025, the Company terminated the Wincanton Revolving Credit Agreement. As of December 31, 2024, the Company had £ 15 million ($ 19 million) in outstanding borrowings under this agreement. Borrowings under revolving credit facilities maturing in three months or less are presented net in the Consolidated Statement of Cash Flows. Long-Term Debt Maturities Set forth below is the aggregate principal amount of the Company’s long-term debt (excluding finance lease obligations, and unamortized debt issuance costs and discounts) as of December 31, 2025, maturing during the following years. (In millions) 2026 2027 2028 2029 2030 Thereafter Long-term debt $ 400 $ 275 $ — $ 600 $ 587 $ 900 Factoring Programs The Company sells certain of its trade receivables on a non-recourse basis to third-party financial institutions under various factoring programs. The Company accounts for these transactions as sales of receivables and presents cash proceeds as cash provided by operating activities in the Consolidated Statements of Cash Flows. The Company accounts for these transactions as sales because it sells full title and ownership in the underlying receivables, and control of the receivables is considered transferred. For these transfers, the receivables are removed from the Consolidated Balance Sheets at the date of transfer. Information related to trade receivables sold was as follows: Year Ended December 31, (In millions) 2025 2024 2023 Receivables sold in period $ 2,794 $ 1,856 $ 1,110 Cash consideration 2,777 1,843 1,103 Net cash provided by operating cash flows 40 200 21 Covenants and Compliance The covenants for the Company’s debt securities, which are customary for financings of this type, limit the Company’s ability to incur indebtedness and grant liens, among other restrictions. In addition, the facilities require the Company to maintain a consolidated leverage ratio below a specified maximum. As of December 31, 2025, the Company complied with the covenants contained in its debt and financing arrangements. 11. Fair Value Measurements and Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The levels of inputs used to measure fair value are: • Level 1 - Quoted prices for identical instruments in active markets; 58 • Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets; and • Level 3 - Valuations based on inputs that are unobservable, utilizing pricing models or other valuation techniques that reflect management’s judgment and estimates. Assets and liabilities The Company bases its fair value estimates on market assumptions and available information. The carrying values of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximated their fair values as of December 31, 2025 and 2024, due to their short-term nature. Debt The fair value of debt was as follows: December 31, 2025 December 31, 2024 (In millions) Level Fair Value Carrying Value Fair Value Carrying Value Unsecured notes due 2026 2 $ 394 $ 400 $ 380 $ 399 Unsecured notes due 2029 2 631 594 617 593 Unsecured notes due 2031 2 358 398 336 397 Unsecured notes due 2034 2 540 491 514 490 EUR notes due 2030 2 586 580 — — Three-Year Term Loan due 2025 2 — — 49 50 Five-Year Term Loan due 2027 2 272 275 394 399 Financial Instruments The Company directly manages its exposure to risks arising from business operations and economic factors, including fluctuations in interest rates and foreign currencies. The Company uses derivative instruments to manage the volatility related to these exposures. The objective of these derivative instruments is to reduce fluctuations in earnings and cash flows associated with changes in foreign currency exchange rates and interest rates. These financial instruments are not used for trading or other speculative purposes. The Company does not expect to incur any losses as a result of counterparty default. Net Investment Hedges The Company uses cross-currency swaps to hedge portions of its net investments in foreign operations. For instruments that meet the hedge accounting requirements, the net gains or losses attributable to changes in spot exchange rates are recorded in the foreign currency translation adjustment within other comprehensive income, and will be recorded in the Consolidated Statement of Operations with currency translation adjustments in the future when the respective foreign entity is sold or liquidated. Cash flows from net investment hedges other than the excluded component are classified as investing activities in the Consolidated Statements of Cash Flows. Cash Flow Hedges The Company uses interest rate swaps to hedge the variability of cash flows resulting from variable-rate borrowings. For derivative instruments that are designated and qualify as cash flow hedges, gains or losses are initially recorded in other comprehensive income, and later reclassified to earnings when the hedged interest rate payments affect the Consolidated Statement of Operations. 59 Fair Value Hedges The Company uses cross-currency swaps to hedge its foreign exchange risk on intercompany loans. For derivative instruments that are designated and qualify as fair value hedges, the gain or loss on the derivative instrument is recognized in the Consolidated Statement of Operations during the current period, together with the gain or loss on the hedged item, other than the excluded component which reported in other comprehensive income, and later recorded in the Consolidated Statement of Operations over the term of the hedge. Foreign Currency Exchange Rate Risk The Company is exposed to certain risks relating to its ongoing business operations, including foreign currency exchange rate risk. The Company uses foreign currency options and forward contracts to mitigate the risk of a reduction in the value of earnings from its operations that use the Euro or British pound sterling as their functional currency. Additionally, the Company uses foreign currency forward contracts to mitigate exposure from variability of cash flows related to the forecasted interest and principal payments on intercompany loans. The foreign currency forward contracts generally expire within 12 months. While these derivatives are hedging the fluctuations in foreign currencies, they do not meet the requirements to be accounted for as hedging instruments. Derivatives The notional amount and fair value of derivative instruments were as follows: December 31, 2025 2024 (In millions) Notional Amount Fair Value Notional Amount Fair Value Balance Sheet Location Derivatives designated as net investment hedges: Cross-currency swaps $ — $ — $ 270 $ 12 Other current assets Cross-currency swaps — — 1,177 48 Other long-term assets Cross-currency swaps 422 33 98 7 Other current liabilities Cross-currency swaps 1,400 143 325 2 Other long-term liabilities Derivatives designated as cash flow hedges: Interest rate swaps $ — $ — $ 125 $ 3 Other long-term assets Derivatives designated as fair value hedges: Cross-currency swaps $ 236 $ 1 $ — $ — Other long-term liabilities Derivatives not designated as hedges: Foreign currency option contracts $ 308 $ 3 $ 300 $ 13 Other current assets Foreign currency option contracts 316 4 26 — Other current liabilities Foreign currency forward contracts 231 1 125 1 Other current liabilities As of December 31, 2025 and 2024, these derivatives were classified as Level 2 within the fair value hierarchy. These derivatives are valued using inputs other than quoted prices, such as foreign exchange rates and yield curves. 60 Derivatives designated as hedges The effects of hedges on AOCIL and in the Consolidated Statements of Operations were as follows: Year Ended December 31, 2025 Year Ended December 31, 2024 (In millions) Amount of Gain (Loss) Recognized in Other Comprehensive Income Gain (Loss) Reclassified from AOCIL into Net Income Gain (Loss) Recognized in Net Income (Excluded from effectiveness testing) Amount of Gain (Loss) Recognized in Other Comprehensive Income Gain (Loss) Reclassified from AOCIL into Net Income Gain (Loss) Recognized in Net Income (Excluded from effectiveness testing) Net investment hedges (1) : Cross-currency swaps $ ( 252 ) $ ( 3 ) $ 3 $ 108 $ 4 $ 3 Cash flow hedges (1) : Interest rate swaps $ ( 3 ) $ — $ — $ ( 1 ) $ — $ — Fair value hedges (2) : Cross-currency swaps $ ( 1 ) $ — $ — $ — $ — $ — (1) Amounts reclassified to net income are reported in Interest expense, net in the Consolidated Statements of Operations. (2) Amounts reclassified to net income are reported in Other income, net in the Consolidated Statements of Operations. Derivatives not designated as hedges Gains and losses on derivatives not designated as hedges were recognized in Other income, net in the Consolidated Statements of Operations as follows: Year Ended December 31, (In millions) 2025 2024 2023 Foreign currency gain (loss) on foreign currency contracts $ ( 15 ) $ 4 $ ( 9 ) 12. Accrued Expenses The components of accrued expenses were as follows: December 31, (In millions) 2025 2024 Salaries, benefits, related taxes and temporary labor $ 627 $ 460 Facility, transportation and related expenses 383 422 Value-added tax and other taxes 254 213 Accrued interest 22 20 Other accrued expenses 206 156 Total accrued expenses $ 1,492 $ 1,271 13. Stockholders’ Equity Stock Repurchase Plan On February 18, 2025, the Company’s board of directors authorized and announced the repurchase of up to $ 500 million (the “Repurchase Plan”) of its common stock. The Repurchase Plan permits shares of common stock to be repurchased from time to time in management’s discretion, through a variety of methods, including a 10b5-1 trading plan, open market purchases, privately negotiated transactions or otherwise. The timing and number of shares of common stock repurchased will depend on a variety of factors, including price, general business and market conditions, alternative investment opportunities and funding considerations. 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. 61 The repurchase of shares of the Company’s common stock is recorded as treasury stock within equity and is accounted for under the cost method inclusive of share repurchase costs and excise tax on share repurchases in excess of issuances. In 2025, the Company repurchased approximately 5.4 million shares of its common stock for an aggregate purchase price of $ 202 million, including share repurchase costs and excise tax. As of December 31, 2025, the remaining authorization under the Repurchase Plan was $ 300 million. Accumulated Other Comprehensive Income - Loss The following table summarizes the changes in AOCIL by component: Foreign Currency Adjustment (In millions) Foreign Currency Translation Adjustments Net Investment Hedges Cash Flow Hedges Fair Value Hedges Defined Benefit Plans Less: AOCIL attributable to NCI AOCIL attributable to GXO As of December 31, 2022 $ ( 156 ) $ 7 $ 7 $ — $ ( 112 ) $ — $ ( 254 ) Other comprehensive income (loss) before reclassifications 72 ( 66 ) ( 3 ) — ( 3 ) ( 1 ) ( 1 ) Amounts reclassified to net income — ( 3 ) — — 2 — ( 1 ) Tax amounts 1 15 1 — — — 17 Other comprehensive income (loss), net of tax 73 ( 54 ) ( 2 ) — ( 1 ) ( 1 ) 15 As of December 31, 2023 $ ( 83 ) $ ( 47 ) $ 5 $ — $ ( 113 ) $ ( 1 ) $ ( 239 ) Other comprehensive income (loss) before reclassifications ( 113 ) 108 ( 1 ) — ( 60 ) 3 ( 63 ) Amounts reclassified to net income — ( 7 ) — — 3 — ( 4 ) Tax amounts 1 ( 23 ) — — 15 — ( 7 ) Other comprehensive income (loss), net of tax ( 112 ) 78 ( 1 ) — ( 42 ) 3 ( 74 ) As of December 31, 2024 $ ( 195 ) $ 31 $ 4 $ — $ ( 155 ) $ 2 $ ( 313 ) Other comprehensive income (loss) before reclassifications 344 ( 252 ) ( 3 ) ( 1 ) ( 45 ) — 43 Amounts reclassified to net income — — — — 5 — 5 Tax amounts ( 2 ) 57 — — 9 — 64 Other comprehensive income (loss), net of tax 342 ( 195 ) ( 3 ) ( 1 ) ( 31 ) — 112 As of December 31, 2025 $ 147 $ ( 164 ) $ 1 $ ( 1 ) $ ( 186 ) $ 2 $ ( 201 ) 14. Stock-Based Compensation In 2021, the Company established the 2021 Omnibus Incentive Plan (the “2021 Incentive Plan”). The 2021 Incentive Plan authorizes the issuance of up to 11.6 million shares of common stock as awards. Under the 2021 Incentive Plan, directors, officers and employees may be granted various types of stock-based compensation awards. These awards include stock options, RSUs, PSUs, RSAs, and cash incentive awards. As of December 31, 2025, approximately 5.8 million shares of common stock were available for the grant under the 2021 Incentive Plan. 62 The following table summarizes stock-based compensation expense by line item in the Consolidated Statements of Operations: Year Ended December 31, (In millions) 2025 2024 2023 Selling, general and administrative expense $ 43 $ 38 $ 35 Restructuring costs and other 4 1 — Total stock-based compensation expense $ 47 $ 39 $ 35 Income tax expense (benefit) on stock-based compensation $ ( 5 ) $ ( 7 ) $ 1 The following table summarizes stock-based compensation expense by award type in the Consolidated Statements of Operations: Year Ended December 31, (In millions) 2025 2024 2023 RSUs $ 35 $ 28 $ 22 PSUs 10 7 8 Stock options 2 3 5 RSAs — 1 — Total stock-based compensation expense $ 47 $ 39 $ 35 Stock Options In 2021, the Company granted stock option awards that vest over five years from the grant date and have a ten-year contractual term, at an option price equal to the fair market value of the award on the grant date. A summary of the stock option award activity for the year ended December 31, 2025, is as follows: (In thousands, except per share) Number of Stock Options Weighted-Average Exercise Price Weighted-Average Remaining Term Outstanding as of December 31, 2024 895 $ 64.67 6 years Exercised ( 6 ) 12.12 Forfeited or expired ( 157 ) 64.91 Outstanding as of December 31, 2025 732 $ 65.07 4 years Exercisable as of December 31, 2025 568 $ 65.05 4 years The total intrinsic value of the stock options exercised during 2025, 2024 and 2023, was $ 0.2 million, zero and zero , respectively. As of December 31, 2025, unrecognized stock-based compensation expense related to stock options was $ 1 million and is expected to be recognized over one year . 63 Restricted Stock Units and Performance-Based Units The Company grants RSUs and PSUs to its key employees, officers and directors with various vesting requirements. The holders of the RSUs and PSUs do not have the rights of a stockholder and do not have voting rights until the shares are issued and delivered in settlement of the awards. RSUs generally vest over the service period, typically three years , and PSUs generally vest based on achieving certain predefined performance objectives along with a service period. For PSUs, the number of shares may be increased to the maximum or reduced to the minimum threshold based on the results of these performance metrics in accordance with the terms established at the time of the award. The Company granted a portion of PSUs subject to market-based vesting conditions. The Company determines the fair value of PSUs subject to market-based vesting conditions using a Monte Carlo simulation model that incorporates the probability of the performance conditions being met as of the grant date. Assumptions used in the Monte Carlo simulation model for the estimated fair value were as follows: Year Ended December 31, 2025 2024 2023 Weighted-average risk-free interest rate 4.0 % 4.9 % 4.7 % Expected volatility 41 % 30 % 32 % A summary of the RSUs and PSUs award activity for the year ended December 31, 2025, is as follows: RSUs PSUs (In thousands, except per share) Number of RSUs Weighted-Average Grant Date Fair Value Number of PSUs Weighted-Average Grant Date Fair Value Outstanding as of December 31, 2024 1,379 $ 52.38 457 $ 58.11 Granted 1,193 39.75 328 41.27 Vested (1) ( 590 ) 53.12 ( 2 ) 74.84 Forfeited ( 214 ) 46.87 ( 79 ) 62.65 Outstanding as of December 31, 2025 1,768 $ 44.27 704 $ 48.34 (1) The number of RSUs and PSUs vested included common stock shares that the Company withheld on behalf of its employees to satisfy the tax withholding. The weighted-average grant-date fair value for RSUs granted in 2025, 2024 and 2023, was $ 39.75 , $ 50.48 and $ 49.28 , respectively. The total fair value of RSUs that vested during 2025, 2024 and 2023, was $ 24 million, $ 31 million and $ 22 million, respectively. The weighted-average grant-date fair value for PSUs granted in 2025, 2024 and 2023, was $ 41.27 , $ 49.01 and $ 59.16 , respectively. The total fair value of PSUs that vested during 2025, 2024 and 2023, was zero , $ 1 million, $ 7 million, respectively. As of December 31, 2025, unrecognized stock-based compensation expense related to RSUs and PSUs was $ 63 million and is expected to be recognized over two years . Restricted Stock Awards In 2024, the Company granted 12 thousand RSAs at a weighted-average price of $ 50.38 and a fair value of $ 1 million. These shares vested and were issued upon grant. No RSAs were granted in 2025. 64 15. Employee Benefit Plans Pension Plans Certain eligible employees of the Company participated in various retirement plans in Europe. The Company sponsors a defined benefit pension scheme in the U.K. (the “GXO U.K. Retirement Plan”). In connection with the Wincanton Acquisition, the Company assumed multiple pension schemes covering certain employees in the U.K. and Ireland (the “Wincanton Retirement Plan”). The GXO U.K. Retirement Plan and the Wincanton Retirement Plan (collectively the “U.K. Retirement Plans”) do not allow for new plan participants or additional benefit accruals. Other than the U.K. Retirement Plans, the Company deems other retirement plans to be immaterial to its Consolidated Financial Statements and are excluded from the disclosure below. U.K. Retirement Plans A reconciliation of the projected benefit obligation, fair value of the plan and the funded status, the amount recognized in financial statements, the assumptions used, the plan assets and funding requirements are shown below. The change in the projected benefit obligation was as follows: December 31, (In millions) 2025 2024 Projected benefit obligation at beginning of year $ 1,617 $ 830 Liabilities assumed from Wincanton acquisition — 895 Interest cost 86 69 Actuarial gain (1) ( 8 ) ( 73 ) Settlements — ( 2 ) Benefits paid ( 110 ) ( 86 ) Foreign currency exchange rate changes 124 ( 16 ) Projected benefit obligation at end of year $ 1,709 $ 1,617 (1) In 2025, there is a significant gain due to change in inflation assumption, offset by a significant loss due to the change in mortality assumption. In 2024, there is a significant gain due to the change in the discount rate. The change in the fair value of the plan assets and funded status was as follows: December 31, (In millions) 2025 2024 Fair value of plan assets at beginning of year $ 1,770 $ 883 Assets assumed from Wincanton acquisition — 1,032 Actual return (loss) on plan assets 74 ( 44 ) Employer contributions 1 3 Settlements — ( 2 ) Benefits paid ( 111 ) ( 86 ) Foreign currency exchange rate changes 135 ( 16 ) Fair value of plan assets at end of year $ 1,869 $ 1,770 Funded status of the plan assets at end of year (1) $ 160 $ 153 (1) Funded status is recorded in Other long-term assets. 65 The amounts included in AOCIL that have not yet been recognized in net periodic benefit cost were as follows: December 31, (In millions) 2025 2024 Net actuarial loss $ ( 252 ) $ ( 211 ) Prior-service credit 14 13 Net loss recognized in AOCIL $ ( 238 ) $ ( 198 ) The components of net periodic benefit cost recognized were as follows: Year Ended December 31, (In millions) 2025 2024 2023 Interest cost component $ ( 86 ) $ ( 69 ) $ ( 40 ) Expected return on plan assets for the period 110 93 50 Amortization of prior-service credit 1 1 1 Amortization of net loss ( 6 ) ( 4 ) ( 3 ) Net periodic pension income recognized (1) $ 19 $ 21 $ 8 (1) Net periodic pension income is recorded in Other income, net. The amount recognized in other comprehensive income was as follows: Year Ended December 31, (In millions) 2025 2024 2023 Net gain (loss) $ ( 45 ) $ ( 64 ) $ 1 Amortization prior-service credit and net loss 5 3 2 Other comprehensive income (loss) $ ( 40 ) $ ( 61 ) $ 3 The weighted-average assumptions used to determine the projected benefit obligation and the net periodic benefit cost were as follows: December 31, 2025 2024 Weighted-average assumptions used to determine benefit obligations: Effective discount rate on benefit obligations 5.51 % 5.50 % Weighted-average assumptions used to determine net cost: Effective discount rate on benefit obligations 5.50 % 5.02 % Effective rate for interest cost on benefit obligations 5.25 % 4.97 % Expected return on assets 6.13 % 5.91 % No rate of compensation increase was assumed as the plans are frozen to additional participant benefit accruals. The Company’s U.K. Retirement Plans’ assets are invested by its trustees, which include representatives of the Company, to meet each of the U.K. Retirement Plans’ projected future pension liabilities. The target asset allocations for our pension plans are based upon analyzing the timing and amount of projected benefit payments, projected company contributions, the expected returns and risk of the asset classes and the correlation of those returns. The target strategic asset allocation for the U.K. Retirement Plans consists of approximately 69 % liability-driven investments, intended to minimize market and interest rate risks, and approximately 31 % growth and income assets. The actual asset allocations of the U.K. Retirement Plans are in line with the target asset allocations. 66 The fair values of investments held in the pension plans by major asset category were as follows: December 31, (In millions) Level 2025 2024 Cash and cash equivalents and other Level 1 $ 28 $ 17 Fixed income securities Level 1 — 2 Cash and cash equivalents Level 2 34 123 Equities Level 2 103 93 Fixed income securities Level 2 1,831 1,719 Repurchase agreements (1) Level 2 ( 322 ) ( 388 ) Total net assets in fair value hierarchy $ 1,674 $ 1,566 Private markets (2) 195 204 Investments, at fair value $ 1,869 $ 1,770 (1) Repurchase agreements represent short-term borrowings. The plans have an obligation to return the cash after the agreement's term. Due to the agreements' short-term nature, the outstanding balance of the obligation approximates fair value. (2) Investments that are measured using the net asset value per share (or its equivalent) practical expedient are not classified in the fair value hierarchy. The amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented for the total defined benefit pension plan assets. The expected benefit payments for the defined benefit pension plan are summarized below. These estimates are based on assumptions about future events. Actual benefit payments may vary from these estimates. (In millions) 2026 2027 2028 2029 2030 2031-2035 Expected payments $ 118 $ 122 $ 122 $ 124 $ 126 $ 632 The Company’s funding practice is to evaluate the tax and cash position, and the funded status of the plan, in determining the planned contributions. The Company estimates that it will contribute approximately $ 1 million to the U.K. Retirement Plan in 2026. Defined Contribution Plans The Company has defined contribution retirement plans for its U.S. employees and employees of certain foreign subsidiaries. The Company’s contributions for the years ended December 31, 2025, 2024 and 2023, were $ 113 million, $ 92 million and $ 66 million, respectively. Defined contribution costs were primarily recorded in Direct operating expense in the Consolidated Statements of Operations. 16. Restructuring Costs and Other Restructuring costs and other consisted of severance paid to exiting individuals from the Company’s leadership team and severance paid as part of an initiative to optimize corporate expenses. Restructuring liability is recorded in Accrued expenses and Other long-term liabilities in the Consolidated Balance Sheets. The following table summarizes the restructuring liability for the year ended December 31, 2025: (In millions) Severance Other Total Balance as of December 31, 2024 $ 10 $ — $ 10 Charges incurred 23 4 27 Payments ( 14 ) ( 6 ) ( 20 ) Non-cash reductions ( 4 ) 2 ( 2 ) Balance as of December 31, 2025 $ 15 $ — $ 15 As of December 31, 2025, $ 12 million of restructuring liability is expected to be paid over one year. 67 17. Income Taxes Income (loss) before taxes related to the Company’s domestic and foreign operations was as follows: Year Ended December 31, (In millions) 2025 2024 2023 U.S. $ 11 $ ( 88 ) $ 97 Foreign 93 234 169 Income before income taxes $ 104 $ 146 $ 266 The components of income tax expense (benefit) are presented in the following table: Year Ended December 31, (In millions) 2025 2024 2023 Current: U.S. federal $ 7 $ ( 2 ) $ 24 U.S. state and local 1 — 7 Foreign 89 48 43 Total current income tax expense $ 97 $ 46 $ 74 Deferred: U.S. federal $ ( 11 ) $ ( 12 ) $ ( 3 ) U.S. state and local 1 ( 1 ) ( 2 ) Foreign ( 19 ) ( 25 ) ( 36 ) Total deferred income tax benefit $ ( 29 ) $ ( 38 ) $ ( 41 ) Total: U.S. federal $ ( 4 ) $ ( 14 ) $ 21 U.S. state and local 2 ( 1 ) 5 Foreign 70 23 7 Total income tax expense $ 68 $ 8 $ 33 On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. The legislation includes reinstatement of favorable tax treatment for certain business provisions, including 100% bonus depreciation for qualified property placed in service after January 19, 2025, immediate expensing of domestic research and experimental costs, and revisions to the business interest expense limitations. The impact of OBBBA was limited to the current and deferred provision and did not have a material impact on the Company’s income tax expenses for the year ended December 31, 2025. The Organisation for Economic Co-operation and Development (“OECD”) has introduced the Pillar Two Global Anti-Base Erosion rules (“Pillar Two”), which generally imposes a 15% global minimum tax on multinational companies. While the Company expects to meet transitional safe harbor requirements in most jurisdictions, there are a limited number of jurisdictions where the Company expects Pillar Two taxes to apply. The income tax provision for the year ended December 31, 2025, includes the effects of Pillar Two taxes. The Company continues to monitor Pillar Two developments, including the impact of the Side-by-Side Package published by the OECD on January 5, 2026 as it relates to the interplay between the U.S. international tax system and Pillar Two for the U.S. headquartered companies. Income tax expense (benefit) for 2025, 2024 and 2023 varied from the amount computed by applying the statutory income tax rate to income (loss) before income taxes. The Company’s U.S. federal statutory tax rate was 21% for 2025, 2024 and 2023. A reconciliation of the expected U.S. federal income tax expense (benefit), calculated by applying the federal statutory rate to the Company’s actual income tax expense (benefit) is presented in the following table: 68 Year Ended December 31, 2025 2024 2023 (In millions, except percentages) Amount Percent Amount Percent Amount Percent U.S. Federal Statutory Tax Rate $ 22 21 % $ 31 21 % $ 56 21 % State and Local Taxes, Net of Federal Tax Effect (1) 2 2 % ( 1 ) ( 1 ) % 4 2 % Foreign Tax Effects Belgium Changes in valuation allowances 2 2 % — — % ( 5 ) ( 2 ) % Other — — % 2 1 % — — % Cyprus Intangible assets — — % — — % 33 13 % Other ( 1 ) ( 1 ) % ( 3 ) ( 2 ) % ( 4 ) ( 2 ) % France Changes in valuation allowances — — % ( 22 ) ( 15 ) % 2 1 % Other 4 4 % — — % 2 1 % Germany Changes in valuation allowances 7 7 % 5 3 % 1 — % Other ( 3 ) ( 3 ) % ( 1 ) ( 1 ) % ( 1 ) — % Ireland Intangible assets — — % — — % ( 51 ) ( 19 ) % Italy Litigation 14 14 % — — % — — % Other 1 1 % 4 3 % 2 1 % Malta Notional interest deduction ( 8 ) ( 8 ) % — — % — — % Other 1 1 % — — % — — % Singapore Changes in valuation allowances — — % — — % ( 5 ) ( 2 ) % Foreign rate difference ( 6 ) ( 6 ) % ( 15 ) ( 10 ) % ( 15 ) ( 5 ) % Other 4 4 % — — % — — % 69 Year Ended December 31, 2025 2024 2023 (In millions, except percentages) Amount Percent Amount Percent Amount Percent Switzerland Cantonal 7 7 % 1 1 % — — % Other 1 1 % ( 3 ) ( 2 ) % — — % United Kingdom Changes in valuation allowances ( 8 ) ( 8 ) % 1 1 % — — % Non-deductible transaction costs 7 7 % — — % — — % Return to provision 5 5 % ( 8 ) ( 6 ) % — — % Other 8 7 % 3 2 % 2 1 % Other Foreign Jurisdictions 8 7 % 10 6 % 10 4 % Effect of Cross-Border Tax Laws ( 1 ) ( 1 ) % — — % 3 1 % Tax Credits Foreign tax credits ( 9 ) ( 9 ) % — — % — — % Other — — % ( 1 ) ( 1 ) % ( 1 ) — % Changes in Valuation Allowances — — % — — % — — % Nontaxable or Nondeductible Items Non-deductible transaction costs 6 6 % 8 5 % — — % Other 3 3 % 2 1 % 1 — % Changes in Unrecognized Tax Benefits 7 7 % — — % — — % Other Adjustments Return to provision ( 5 ) ( 5 ) % ( 5 ) ( 3 ) % ( 1 ) ( 1 ) % Effective Tax Rate $ 68 65 % $ 8 6 % $ 33 12 % (1) State taxes in California and Mississippi made up the majority (greater than 50 percent) of the tax effect in this category. Income Taxes Paid Cash paid (received) for income taxes is comprised of the following: Year Ended December 31, (In millions) 2025 2024 2023 U.S. federal $ ( 2 ) $ — $ 45 U.S. state and local — — 3 Foreign France * * 6 Italy * 8 * Netherlands 14 19 15 Spain 8 9 8 Swiss Cantonal - Ticino 11 * * United Kingdom 13 * ( 7 ) Other 15 7 14 Foreign subtotal 61 43 36 Total $ 59 $ 43 $ 84 *The amount of income taxes paid (net of refunds) during the year did not meet the disaggregation threshold. 70 Components of the Net Deferred Tax Asset or Liability The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities are presented in the following table: December 31, (In millions) 2025 2024 Deferred tax assets Net operating loss and other tax attribute carryforwards $ 84 $ 92 Accrued expenses 112 122 Net unrealized losses (1) 48 — Other 7 22 Gross deferred tax assets 251 236 Valuation allowances ( 44 ) ( 26 ) Total deferred tax assets, net of valuation allowance 207 210 Deferred tax liabilities Intangible assets ( 195 ) ( 213 ) Property and equipment ( 73 ) ( 118 ) Pension and other retirement obligations ( 23 ) ( 28 ) Other ( 12 ) ( 18 ) Gross deferred tax liabilities ( 303 ) ( 377 ) Net deferred tax liability $ ( 96 ) $ ( 167 ) (1) Deferred taxes related to net unrealized gains (losses) on net investment hedge and cash flow hedge are recorded in accumulated OCI. See Note 13 – Stockholders’ Equity for additional information. The deferred tax asset and deferred tax liability above are reflected in the Consolidated Balance Sheets as follows: December 31, (In millions) 2025 2024 Other long-term assets $ 128 $ 89 Other long-term liabilities ( 224 ) ( 256 ) Net deferred tax liability $ ( 96 ) $ ( 167 ) Investments in Foreign Subsidiaries As of December 31, 2025, the Company maintained a partial indefinite reinvestment assertion on its post- 2017 undistributed foreign earnings. 71 Operating Loss and Tax Credit Carryforwards The Company’s operating loss and tax credit carryforwards were as follows: December 31, (In millions) Expiration Date (1) 2025 2024 Federal net operating losses for all U.S. operations N/A $ — $ 17 Tax effect (before federal benefit) of state net operating losses Various times starting in 2026 4 3 Federal tax credit carryforwards Various times starting in 2035 4 — State tax credit carryforwards Various times starting in 2026 8 8 Foreign net operating losses available to offset future taxable income Various times starting in 2026 274 326 (1) Some credits and losses have unlimited carryforward periods. Valuation Allowances The Company established valuation allowances for some of its deferred tax assets, as it is more likely than not that these assets will not be realized in the foreseeable future. The Company concluded that the remaining deferred tax assets will more likely than not be realized, though this is not assured, and as such no valuation allowances have been provided on these assets. The balances and activity related to the Company’s valuation allowances were as follows: (In millions) Beginning Balance Additions Reductions Ending Balance 2025 (1) $ 26 29 ( 11 ) $ 44 2024 (2) $ 50 5 ( 29 ) $ 26 2023 (3) $ 44 16 ( 10 ) $ 50 (1) In 2025, the additions primarily consisted of $ 14 million due to an increase in foreign net operating loss carryforward and $ 10 million due to the final purchase price allocation for the Wincanton Acquisition. (2) In 2024, the Company released $ 22 million of valuation allowance in France. (3) In 2023, concurrent with an acquisition, the Company acquired $ 8 million of valuation allowance. Unrecognized Tax Benefits A reconciliation of the beginning unrecognized tax benefits balance to the ending balance is presented in the following table: Year Ended December 31, (In millions) 2025 2024 2023 Beginning balance $ 3 $ 4 $ 3 Increases related to positions taken during current year 7 — — Increases related to positions taken during prior year — — 1 Settlements with tax authorities — ( 1 ) — Gross unrecognized tax benefits $ 10 $ 3 $ 4 Total unrecognized tax benefits that, if recognized, would impact the effective income tax rate as of the end of the year $ 10 $ 3 $ 4 The Company is subject to taxation in the U.S. and foreign jurisdictions. As of December 31, 2025, there are no ongoing examinations in the United States. Various foreign tax returns for years after 2009 are open under relevant statutes of limitations and are subject to audit. 72 18. Commitments and Contingencies The Company is involved, and will continue to be involved, in numerous legal proceedings arising from the conduct of its business. These proceedings may include personal injury claims arising from the transportation and handling of goods, contractual disputes and employment-related claims, including alleged violations of wage and hour laws. The Company establishes accruals for specific legal proceedings when it is considered probable that a loss has been incurred and the amount of the loss can be reasonably estimated. The Company reviews and adjusts accruals for loss contingencies quarterly and as additional information becomes available. If a loss is not both probable and reasonably estimable, or if an exposure to a loss exists in excess of the amount accrued, the Company assesses whether there is at least a reasonable possibility that a loss, or additional loss, may have been incurred. If there is a reasonable possibility that a loss, or additional loss, may have been incurred, the Company discloses the estimate of the possible loss or range of loss if it is material and an estimate can be made, or discloses that such an estimate cannot be made. The determination as to whether a loss can reasonably be considered to be possible or probable is based on management’s assessment, together with legal counsel, regarding the ultimate outcome of the matter. Management of the Company believes that it has adequately accrued for the potential impact of loss contingencies that are probable and reasonably estimable. Management of the Company does not believe that the ultimate resolution of any matters to which the Company is presently a party will have a material adverse effect on its results of operations, financial condition or cash flows. However, the results of these matters cannot be predicted with certainty, and an unfavorable resolution of one or more of these matters could have a material adverse effect on the Company’s financial condition, results of operations or cash flows. Legal costs related to these matters are expensed as they are incurred. The Company carries liability and excess umbrella insurance policies that are deemed sufficient to cover potential legal claims arising in the normal course of conducting its operations. In the event the Company is required to satisfy a legal claim outside the scope of the coverage provided by insurance, its financial condition, results of operations or cash flows could be negatively impacted. On July 2, 2024, the Italian authorities initiated an investigation into the deductibility of value-added tax (VAT) payments made by the Company to certain third-party service providers. In 2025, the Company recorded € 61 million ($ 65 million) of expense, including legal fees, and made final payments of € 59 million ($ 68 million) to the Italian authorities in connection with the settlement of this matter. Related expenses, including legal fees, were recorded in Regulatory matter and litigation expense in the Consolidated Statements of Operations. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures. None.