RXO, Inc. 10-K

Item 8. Financial Statements and Supplementary Data. Index to Consolidated Financial Statements Page Report of Independent Registered Public Accounting Firm (PCAOB ID 34 ) 36 Report of Independent Registered Public Accounting Firm (PCAOB ID 185 ) 39 Consolidated Balance Sheets as of December 31, 2025 and 2024 40 Consolidated Statements of Operations for the Years Ended December 31, 2025, 2024 and 2023 41 Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2025, 2024 and 2023 42 Consolidated Statements of Cash Flows for the Years Ended December 31, 2025, 2024 and 2023 43 Consolidated Statements of Changes in Equity for the Years Ended December 31, 2025, 2024 and 2023 44 Notes to Consolidated Financial Statements 45 35 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of RXO, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of RXO, Inc. and subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), cash flows, and changes in equity, for the years ended December 31, 2025 and 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements 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 the years ended December 31, 2025 and 2024, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), 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 and our report dated February 9, 2026 , expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the 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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the 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 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 financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the 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 financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. Self-insurance Automobile Liabilities - Refer to Note 2 to the financial statements Critical Audit Matter Description The Company participates in a combination of self-insurance programs and purchased insurance that are managed to provide for the costs of liability, automobile, and workers compensation (self-insured claims). The Company records estimates of the undiscounted liabilities associated with claims incurred as of the balance sheet date, including estimates of claims incurred, but not yet reported, by considering historical experience, demographic, and severity factors, and judgments about current and expected levels of cost per claim and retention levels. 36 Table of Contents We identified the assessment of certain of the estimated liabilities for self-insured automobile claims as a critical audit matter. The subjectivity of estimating the claims liabilities for pending claims and incurred but not reported claims requires a high degree of auditor judgment and an increased extent of effort, including the need to involve our actuarial specialists, when performing audit procedures to evaluate whether claims liabilities are appropriately stated as of December 31, 2025. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the self-insured claims – automobile liability included the following, among others: • Evaluated the design and tested the operating effectiveness of certain internal controls related to the self-insured automobile claims liabilities, including controls over the projected development of known claims and incurred but not reported claims. • Tested the underlying data and inputs for completeness and accuracy that served as the basis for the actuarial analysis, including reconciling the claims data to the Company’s actuarial analysis and testing current year claims and payment data. • Compared the Company’s actuarial reserving methodologies with accepted actuarial methods and procedures. • Evaluated assumptions and data used in determining the liability, including the ultimate loss selection, historical loss triangles, exposures by year (revenue and mileage), and the expected level of cost per claim, in relation to recent historical loss payment trends and severity factors. • With the assistance of our actuarial specialists, we developed an independent range of estimates of the claims liabilities, utilizing loss development factors from the Company’s historical data and industry claim development factors, and compared our estimated range to management's recorded liability. • Evaluating the reasonableness of the methodologies used in management’s estimate based on actuarial methods followed in the insurance industry associated with such liabilities. /s/ Deloitte & Touche LLP Charlotte, North Carolina February 9, 2026 We have served as the Company’s auditor since 2024. 37 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of RXO, Inc. Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of RXO, Inc. and subsidiaries (the “Company”) 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 (COSO). 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 COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2025, of the Company and our report dated February 9, 2026 , expressed an unqualified opinion on those financial statements. Basis for Opinion The Company’s management is responsible 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 internal control over financial reporting based on our audit. We are a public accounting firm registered with the 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. 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. /s/ Deloitte & Touche LLP Charlotte, North Carolina February 9, 2026 We have served as the Company’s auditor since 2024. 38 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors RXO, Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated statements of operations, comprehensive income (loss), cash flows, and changes in equity of RXO, Inc. for the year ended December 31, 2023, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audit 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 audit 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. We believe that our audit provides a reasonable basis for our opinion. /s/ KPMG LLP We served as the Company’s auditor from 2022 to 2023. Charlotte, North Carolina February 12, 2024, except for Note 4, as to which the date is February 26, 2025 39 Table of Contents RXO, 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 $ 17 $ 35 Accounts receivable, net of $ 16 and $ 13 in allowances, respectively 1,226 1,227 Other current assets 74 77 Total current assets 1,317 1,339 Long-term assets Property and equipment, net of $ 381 and $ 317 in accumulated depreciation, respectively 134 135 Operating lease assets 238 276 Goodwill 1,111 1,123 Identifiable intangible assets, net of $ 164 and $ 146 in accumulated amortization, respectively 453 499 Other long-term assets 24 42 Total long-term assets 1,960 2,075 Total assets $ 3,277 $ 3,414 LIABILITIES AND EQUITY Current liabilities Accounts payable $ 539 $ 568 Accrued expenses 397 373 Short-term debt and current maturities of long-term debt 17 17 Short-term operating lease liabilities 75 81 Other current liabilities 10 26 Total current liabilities 1,038 1,065 Long-term liabilities Long-term debt and obligations under finance leases 387 351 Deferred tax liabilities 51 88 Long-term operating lease liabilities 191 215 Other long-term liabilities 69 83 Total long-term liabilities 698 737 Commitments and Contingencies (Note 17) Equity Preferred stock, $ 0.01 par value; 10,000 shares authorized; 0 shares issued and outstanding as of December 31, 2025 and 2024 — — Common stock, $ 0.01 par value; 300,000 shares authorized; 164,160 and 162,517 shares issued and outstanding as of December 31, 2025 and 2024, respectively 2 2 Additional paid-in capital 1,929 1,904 Accumulated deficit ( 384 ) ( 284 ) Accumulated other comprehensive loss ( 6 ) ( 10 ) Total equity 1,541 1,612 Total liabilities and equity $ 3,277 $ 3,414 See accompanying notes to consolidated financial statements. 40 Table of Contents RXO, Inc. Consolidated Statements of Operations Years Ended December 31, (Dollars in millions, shares in thousands, except per share amounts) 2025 2024 2023 Revenue $ 5,742 $ 4,550 $ 3,927 Cost of transportation and services (exclusive of depreciation and amortization) 4,611 3,565 2,967 Direct operating expense (exclusive of depreciation and amortization) 190 202 235 Sales, general and administrative expense 832 666 591 Depreciation and amortization expense 116 87 67 Transaction and integration costs 22 53 12 Restructuring costs 38 33 16 Goodwill impairment 12 — — Operating income (loss) ( 79 ) ( 56 ) 39 Other expense 1 218 3 Interest expense, net 35 30 32 Income (loss) before income taxes ( 115 ) ( 304 ) 4 Income tax provision (benefit) ( 15 ) ( 14 ) — Net income (loss) $ ( 100 ) $ ( 290 ) $ 4 Earnings (loss) per share Basic $ ( 0.59 ) $ ( 2.17 ) $ 0.03 Diluted $ ( 0.59 ) $ ( 2.17 ) $ 0.03 Weighted-average common shares outstanding Basic 168,462 133,412 116,871 Diluted 168,462 133,412 119,456 See accompanying notes to consolidated financial statements. 41 Table of Contents RXO, Inc. Consolidated Statements of Comprehensive Income (Loss) Years Ended December 31, (In millions) 2025 2024 2023 Net income (loss) $ ( 100 ) $ ( 290 ) $ 4 Other comprehensive income (loss), net of tax Foreign currency gain (loss) $ 4 $ ( 7 ) $ 1 Other comprehensive income (loss) 4 ( 7 ) 1 Comprehensive income (loss) $ ( 96 ) $ ( 297 ) $ 5 See accompanying notes to consolidated financial statements. 42 Table of Contents RXO, Inc. Consolidated Statements of Cash Flows Years Ended December 31, (In millions) 2025 2024 2023 Operating activities Net income (loss) $ ( 100 ) $ ( 290 ) $ 4 Adjustments to reconcile net income (loss) to net cash from operating activities Depreciation and amortization expense 116 87 67 Stock compensation expense 29 23 19 Deferred tax benefit ( 21 ) ( 19 ) ( 8 ) Deemed non-pro rata distribution — 216 — Impairment of operating lease assets 4 13 — Goodwill impairment 12 — — Other 11 7 9 Changes in assets and liabilities Accounts receivable ( 5 ) ( 109 ) 158 Other current assets and other long-term assets 19 8 ( 14 ) Accounts payable ( 16 ) ( 65 ) ( 86 ) Accrued expenses, other current liabilities and other long-term liabilities 2 117 ( 60 ) Net cash provided by (used in) operating activities 51 ( 12 ) 89 Investing activities Payment for purchases of property and equipment ( 59 ) ( 45 ) ( 64 ) Business acquisition, net of cash acquired ( 10 ) ( 1,019 ) — Proceeds from sale of property and equipment 2 — — Other ( 4 ) — ( 2 ) Net cash used in investing activities ( 71 ) ( 1,064 ) ( 66 ) Financing activities Proceeds from borrowings on revolving credit facilities 566 238 76 Repayment of borrowings on revolving credit facilities ( 533 ) ( 226 ) ( 71 ) Proceeds from issuance of common stock and pre-funded warrants — 1,125 — Payment for equity issuance costs ( 1 ) ( 30 ) — Repayment of debt and finance leases ( 2 ) ( 3 ) ( 104 ) Payment for debt issuance costs — ( 3 ) — Payment for tax withholdings related to vesting of stock compensation awards ( 19 ) ( 4 ) ( 14 ) Repurchase of common stock — — ( 2 ) Other ( 10 ) 11 ( 2 ) Net cash provided by (used in) financing activities 1 1,108 ( 117 ) Effect of exchange rates on cash, cash equivalents and restricted cash 2 ( 2 ) 1 Net increase (decrease) in cash, cash equivalents and restricted cash ( 17 ) 30 ( 93 ) Cash, cash equivalents and restricted cash, beginning of period 35 5 98 Cash, cash equivalents and restricted cash, end of period $ 18 $ 35 $ 5 Supplemental disclosure of cash flow information: Cash paid for income taxes, net 7 4 27 Cash paid for interest, net 32 27 32 Purchases of property and equipment in accounts payable, accrued expenses and other liabilities 11 3 2 Accrued tax withholdings related to vesting of stock compensation awards — 15 — See accompanying notes to consolidated financial statements. 43 Table of Contents RXO, Inc. Consolidated Statements of Changes in Equity Common Stock (Dollars in millions, shares in thousands) Shares Amount Additional Paid-In Capital Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Loss Total Equity Balance as of December 31, 2022 116,400 $ 1 $ 588 $ 2 $ ( 4 ) $ 587 Net income — — — 4 — 4 Other comprehensive income — — — — 1 1 Stock compensation expense — — 19 — — 19 Vesting of stock compensation awards 726 — — — — — Tax withholdings related to vesting of stock compensation awards — — ( 15 ) — — ( 15 ) Repurchase of common stock ( 100 ) — ( 2 ) — — ( 2 ) Balance as of December 31, 2023 117,026 $ 1 $ 590 $ 6 $ ( 3 ) $ 594 Net loss — — — ( 290 ) — ( 290 ) Other comprehensive loss — — — — ( 7 ) ( 7 ) Stock compensation expense — — 23 — — 23 Vesting of stock compensation awards 739 — — — — — Tax withholdings related to vesting of stock compensation awards — — ( 19 ) — — ( 19 ) Deemed non-pro-rata distribution — — 216 — — 216 Issuance of common stock and pre-funded warrants, net of issuance costs 44,752 1 1,094 — — 1,095 Balance as of December 31, 2024 162,517 $ 2 $ 1,904 $ ( 284 ) $ ( 10 ) $ 1,612 Net loss — — — ( 100 ) — ( 100 ) Other comprehensive income — — — — 4 4 Stock compensation expense — — 29 — — 29 Vesting of stock compensation awards 1,643 — — — — — Tax withholdings related to vesting of stock compensation awards — — ( 4 ) — — ( 4 ) Balance as of December 31, 2025 164,160 $ 2 $ 1,929 $ ( 384 ) $ ( 6 ) $ 1,541 See accompanying notes to consolidated financial statements. 44 Table of Contents RXO, Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025, 2024 and 2023 1. Organization RXO, Inc. (“RXO”, the “Company” or “we”) is a brokered transportation platform defined by cutting-edge technology and an asset-light business model. The largest component is our core truck brokerage business. Our operations also include asset-light managed transportation and last mile services, which complement our truck brokerage business. We present our operations in the consolidated financial statements as one reportable segment. RXO’s common stock, par value of $ 0.01 per share, began trading on the New York Stock Exchange under the ticker symbol “RXO” on November 1, 2022. RXO was incorporated as a Delaware corporation in May 2022. 2. Basis of Presentation and Significant Accounting Policies Basis of Presentation The Company’s consolidated financial statements include the accounts of RXO, Inc. and its majority-owned subsidiaries. The Company has eliminated intercompany accounts and transactions. 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, insurance reserves, 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 Business Combinations We apply the acquisition method of accounting with respect to the identifiable assets and liabilities of a business combination and record the assets acquired and liabilities assumed at their estimated fair values as of the acquisition date. The excess of the cost of the acquired business and the fair value of the assets acquired and liabilities assumed is recognized as goodwill. Estimates of fair value represent management’s best estimate of assumptions and about future events and uncertainties, including significant judgments related to future cash flows, discount rates, competitive trends, margin and revenue growth assumptions, including customer attrition rates, market comparables and others. Inputs used are generally obtained from historical data supplemented by current and anticipated market conditions and growth rates. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, as well as contingent consideration, where applicable, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recognized in our consolidated statements of operations. 45 Table of Contents Significant judgment is required in estimating the fair value of identifiable intangible assets and in assigning their respective useful lives. The fair value estimates are based on historical information and on future expectations and assumptions deemed reasonable by management, but which are inherently uncertain. See Note 3 — Acquisition for further information regarding the fair value determination of each of the classes of identifiable intangible assets. Determining the useful life of an intangible asset also requires judgment. The useful lives of identifiable intangibles with determinable useful lives are based on a variety of factors, including, but not limited to, the competitive environment, historical customer attrition rates, market share, operating plans and the macroeconomic environment. The costs of determinable-lived intangible assets are amortized to expense over the estimated useful life. Revenue Recognition We recognize revenue when we transfer control of promised services to customers in an amount equal to the consideration we expect to receive for those products or services. Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when the performance obligation is satisfied. We generate revenue by providing truck brokerage and other transportation services for our customers. Additional services may be provided to our customers under their transportation contracts, including unloading and other incidental services. The transaction price is based on the consideration specified in the customer’s contract. A performance obligation is created when a customer under a transportation contract submits a bill of lading for the transport of goods from origin to destination. These performance obligations are satisfied as the shipments move from origin to destination. We recognize transportation revenue proportionally as a shipment moves from origin to destination and the related costs are recognized as incurred. Some of our customer contracts contain our promise to stand ready to provide transportation services. For these contracts, we recognize revenue on a straight-line basis over the term of the contract because the pattern of benefit to the customer, and our efforts to fulfill the contract, are generally distributed evenly throughout the period. Performance obligations are generally short-term, with transit times usually less than one week. Generally, customers are billed upon shipment of the freight or on a weekly or monthly basis and make payment according to approved payment terms. When we do not control the specific services, we recognize revenue as the difference between the amount the customer pays us for the service less the amount we are charged by third parties who provide the service. Generally, we can adjust our pricing based on contractual provisions related to achieving agreed-upon performance metrics, changes in volumes, services and market conditions. 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. Cash, Cash Equivalents and Restricted Cash We consider all highly liquid investments with an original maturity of three months or less on the date of purchase to be cash equivalents. As of December 31, 2025, our restricted cash included in Other current assets on our Consolidated Balance Sheets was $ 1 million. Restricted cash relates to amounts that are subject to contractual restrictions and are not readily available. 46 Table of Contents Accounts Receivable and Allowance for Credit Losses We record accounts receivable at the contractual amount, and we record an allowance for credit losses for the amount we estimate we may not collect. In determining the allowance for credit losses, we consider historical collection experience, the age of the accounts receivable balances, the credit quality and risk of our customers, any specific customer collection issues, current economic conditions, and other factors that may impact our customers’ ability to pay. We also consider reasonable and supportable forecasts of future economic conditions and their expected impact on customer collections in determining our allowance for credit losses. We write off accounts receivable balances once the receivables are no longer deemed collectible. The rollforward of the allowance for credit losses is as follows: Years Ended December 31, (In millions) 2025 2024 2023 Beginning balance $ 13 $ 12 $ 13 Provision charged to expense 8 5 5 Write-offs, less recoveries, and other adjustments ( 5 ) ( 4 ) ( 6 ) Ending balance $ 16 $ 13 $ 12 The Company may sell certain accounts receivable from time to time on a non-recourse basis pursuant to factoring arrangements to better match and neutralize the cash flow impact of transportation cost outflows. During the quarter ended December 31, 2023, we received cash for accounts receivable balances sold of $ 36 million under these arrangements. Property and Equipment Property and equipment, which includes assets recorded under finance leases, is stated at cost less accumulated depreciation or, in the case of acquired property and equipment, at fair value at the date of acquisition. Maintenance and repair expenditures are charged to expense as incurred. For internally-developed computer software, all costs incurred during planning and evaluation are expensed as incurred. Costs incurred during the application development stage are capitalized and included in property and equipment. Capitalized software also includes the fair value of acquired internally-developed technology. Certain costs incurred for implementation, setup, and other upfront activities in a hosting arrangement that is a service contract are capitalized during the application development stage. Upgrades and enhancements are capitalized if they will result in additional functionality. Amortization of capitalized costs is recorded on a straight-line basis over the term of the associated hosting arrangement, inclusive of reasonably certain renewal periods. We compute depreciation expense on a straight-line basis over the estimated useful lives of the assets as follows: Classification Estimated Useful Life Buildings and leasehold improvements Term of lease to 39 years Vehicles, tractors and trailers 3 to 14 years Machinery and equipment 3 to 10 years Computer software and equipment 1.5 to 7 years 47 Table of Contents Leases We have operating leases primarily for real estate, tractors and trailers and finance leases for equipment. We determine if an arrangement is a lease at inception and evaluate whether the lease is an operating lease or finance lease at the commencement date. We recognize operating lease right-of-use assets and lease liabilities at the lease commencement date based on the estimated present value of the lease payments over the lease term. As most of our leases do not provide an implicit rate, we use the incremental borrowing rates of RXO based on the information available at the commencement date to determine the present value of future lease payments. This rate is determined from a hypothetical yield curve available at the lease commencement date that takes into consideration market yield levels of RXO’s relevant debt outstanding as well as the index that matches RXO’s credit rating, and then adjusts as if the borrowings were collateralized. Lease liabilities assumed through acquisitions are measured at the present value of the future minimum lease payments over the remaining lease term and the incremental borrowing rate of RXO as if the acquired leases were new leases as of the acquisition date. Right-of-use assets are equal to the amount of the lease liability at the acquisition date adjusted for any off-market terms of the lease. The remaining lease term is based on the remaining term at the acquisition date, and may include options to extend or terminate the lease when it is reasonably certain the Company will exercise that option. We include options to extend or terminate a lease in the lease term when we are reasonably certain to exercise such options. We exclude variable lease payments (such as payments based on an index or reimbursements of lessor costs) from our initial measurement of the lease liability. We recognize leases with an initial term of 12 months or less as lease expense over the lease term, and those leases are not recorded on our Consolidated Balance Sheets. We account for lease and non-lease components within a contract as a single lease component for our real estate leases. Lease expense for operating leases is recognized on a straight-line basis over the lease term, while variable lease payments are expensed as incurred. Finance lease expense is recognized based on the effective interest method over the lease term. Other Current Assets The components of other current assets are as follows: December 31, (In millions) 2025 2024 Prepaid expenses $ 32 $ 37 Contract assets 26 17 Other current assets 16 23 Total other current assets $ 74 $ 77 Goodwill We measure goodwill as the excess of consideration transferred over the fair value of net assets acquired in business combinations. We allocate goodwill to our reporting units for the purpose of impairment testing. We evaluate goodwill for impairment annually, or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. We measure goodwill impairment, if any, at the amount a reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill. Our reporting units are our operating segments or one level below our operating segments for which discrete financial information is prepared and regularly reviewed by segment management. We have six reporting units. 48 Table of Contents 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 entity considers many factors in evaluating whether the carrying value of goodwill may not be recoverable, including declines in the entity’s stock price and market capitalization of the entity 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 a combination of the income approach and a market-based approach to determine the reporting units’ fair values. Under the income approach, the determination of discounted cash flows of the reporting units and assets and liabilities within the reporting units requires significant estimates and assumptions. These estimates and assumptions primarily include, but are not limited to, the discount rate, terminal growth rates, earnings before depreciation and amortization, and capital expenditures forecasts. Due to the inherent uncertainty involved in making these estimates, actual results could differ from those estimates. The Company evaluates the merits of each significant assumption, both individually and in the aggregate, used to determine the fair value of the reporting units, as well as the fair values of the corresponding assets and liabilities within the reporting units. The market approach of determining fair value is based on comparable market multiples for companies engaged in similar businesses, as well as recent transactions within our industry. For our 2025 goodwill assessment, we performed a quantitative analysis for our reporting units using a combination of the income and market approaches. See Note 9 — Goodwill and Intangible Assets for more information on our goodwill. Intangible Assets and Long-lived Assets We review intangible assets and 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. An asset is considered to be impaired if the sum of the undiscounted expected future cash flows over the remaining useful life of a long-lived asset group is less than its carrying amount. An impairment loss is measured as the amount by which the carrying amount of the asset group exceeds the fair value of the asset. We estimate fair value using the expected future cash flows discounted at a rate comparable with the risks associated with the recovery of the asset. Our intangible assets subject to amortization consist of customer relationships and trade names. We amortize intangible assets on a straight-line basis or on a basis consistent with the pattern in which the economic benefits are realized. The estimated useful life is 4 to 16 years for customer relationships and 15 years for trade names. Accrued Expenses The components of accrued expenses are as follows: December 31, (In millions) 2025 2024 Accrued transportation and facility charges $ 262 $ 211 Accrued salaries and wages 60 73 Accrued insurance 46 48 Other accrued expenses 29 41 Total accrued expenses $ 397 $ 373 Insurance We participate in a combination of self-insurance programs, partially through a wholly-owned captive insurance company, and purchased insurance that are managed to provide for the costs of medical, casualty, liability, vehicular, cargo, workers’ compensation, cyber risk and property claims. Insurance coverage levels are adjusted annually based on risk tolerance and premium expense. 49 Table of Contents Liabilities for the risks we retain, including estimates of claims incurred but not reported, are not discounted and are estimated, in part, by considering retention levels, historical cost experience, demographic and severity factors, and judgments about current and expected levels of cost per claim. Changes in these assumptions can impact actual costs paid to settle the claims and those amounts may be different than estimates. Additionally, claims may emerge in future years for events that occurred in a prior year at a rate that differs from previous actuarial projections. At December 31, 2025 and 2024, our insurance liabilities amounted to $ 91 million and $ 111 million, respectively, and are included in Accrued expenses and Other long-term liabilities on our Consolidated Balance Sheets. Income Taxes We account for income taxes using the asset and liability method on a legal entity and jurisdictional basis, under which we recognize 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 our financial statements or tax returns. Our calculation relies on several factors, including pre-tax earnings, differences between tax laws and accounting rules, statutory tax rates, tax credits, uncertain tax positions, and valuation allowances. We use judgment and estimates in evaluating our tax positions. Valuation allowances are established when, in our judgment, it is more likely than not that our deferred tax assets will not be realized based on all available evidence. We recognize 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 on examination by the tax authority. We adjust these tax liabilities, including related interest and penalties, based on the current facts and circumstances. We report tax-related interest and penalties as a component of income tax expense. Foreign Currency Translation and Transactions The assets and liabilities of our 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 accumulated other comprehensive loss on our Consolidated Balance Sheets. The assets and liabilities of our foreign subsidiaries whose local currency is not their functional currency are remeasured from their local currency to their functional currency and then translated to USD. The results of operations of our foreign subsidiaries are translated to USD using average exchange rates prevailing for each period presented. We convert foreign currency transactions recognized on our 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 expense in our Consolidated Statements of Operations and were not material for any of the periods presented. Stock-Based Compensation We account for stock-based compensation based on the equity instrument’s grant date fair value. For grants of restricted stock units (“RSUs”) subject to service-based or performance-based vesting conditions only, the Company establishes the fair value based on the market price on the date of the grant. For grants of RSUs subject to market-based vesting conditions, we establish the fair value using the Monte Carlo simulation lattice model. The Company recognizes the grant date fair value of equity awards as compensation cost over the requisite service period. The Company accounts for forfeitures as they occur. Recent Accounting Pronouncements Adoption of New Accounting Standard In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 seeks to enhance income tax information primarily through changes in the rate reconciliation and income taxes paid information. The amendments are effective for annual periods beginning after December 15, 2024 on a prospective basis. Refer to Note 15 — Income Taxes for required disclosures. 50 Table of Contents Accounting Pronouncements Issued but Not Yet Effective In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) - Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 seeks to improve the disclosures about a public business entity’s expenses by requiring more detailed information about the types of expenses in commonly presented expense captions. The amendments are effective for annual periods beginning after December 15, 2026 and interim reporting periods after December 15, 2027 on either a prospective or retrospective basis. Early adoption is permitted. We are currently evaluating the impact of the new guidance. In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”), which creates a new optional practical expedient related to the estimation of future expected credit losses on accounts receivable. If elected, this expedient removes the requirement, when estimating expected credit losses, to consider changes in forecasted macroeconomic conditions, such as changes in unemployment rates or gross domestic product growth. Instead, companies electing the practical expedient may assume that current conditions as of the balance sheet date will not change for the remaining life of the asset. The amendments in ASU 2025-05 are effective for annual reporting periods beginning after December 15, 2025, including interim periods within those fiscal years. Early adoption is permitted and the amendments should be applied prospectively. We are currently evaluating the potential impact of the new guidance. 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 (“ASU 2025-06”). ASU 2025-06 improves the operability of the accounting for internal-use software by removing all references to software development project stages so that the guidance is neutral to different software development methods. This standard is effective for annual periods beginning after December 15, 2027, including interim periods within those fiscal years, and early adoption is permitted. We are currently evaluating the potential impact of the new guidance. In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements (“ASU 2025-11”), which clarifies the guidance in Topic 270 to improve the consistency of interim financial reporting. ASU 2025-11 provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. This standard is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, with early adoption permitted. We are currently evaluating the potential impact of the new guidance. On July 4, 2025, the U.S. enacted into law H.R.1, commonly referred to as “The One Big Beautiful Bill Act” (the “Act”). The Act contains several key tax provisions impacting businesses, including the permanent reinstatement of 100% bonus depreciation for qualified property and the restoration of immediate expensing of domestic research and experimental expenditures. The Act also modifies the business interest deduction limitation as well as several international tax provisions. The legislation has various effective dates of implementation from 2025 through 2027. The impact of the Act has been reflected in our consolidated financial statements for the year ended December 31, 2025. The Act did not have any material impact on our effective tax rate or cash flow in the current fiscal year. 3. Acquisition On September 16, 2024 (the “acquisition date”), the Company acquired the technology-driven, asset-light based truckload freight brokerage services business, as well as certain assets used to conduct haulage, dedicated transport and warehousing services in the United Kingdom (collectively, “Coyote”), from United Parcel Service of America, Inc. (“UPS”) and certain subsidiaries of UPS (the “Transaction”). We acquired Coyote for $ 1.038 billion in cash, subject to certain additional customary adjustments. The purchase price was subsequently increased by $ 10 million for working capital and other post-closing adjustments, which was paid in the first quarter of 2025. We believe the acquisition of Coyote enhances our competitive position with greater scale, a broader array of service offerings and strengths in a more diverse set of end markets. 51 Table of Contents The Transaction was accounted for under the acquisition method of accounting. The purchase price was allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair values at the acquisition date. The following table summarizes the final allocation of the purchase price to Coyote’s identifiable tangible and intangible assets acquired and liabilities assumed by the Company at the acquisition date. During the measurement period, adjustments to the preliminary purchase price allocation were made primarily to reflect the final valuation of acquired identifiable intangible assets, property and equipment, self-insured liabilities and deferred tax liabilities. (In millions) Cash and cash equivalents $ 19 Accounts receivable 394 Other current assets 31 Property and equipment 25 Intangible assets 459 Operating lease assets 88 Other long-term assets 19 Total assets $ 1,035 Accounts payable $ ( 209 ) Accrued expenses ( 62 ) Short-term operating lease liabilities ( 17 ) Deferred tax liabilities ( 80 ) Long-term operating lease liabilities ( 70 ) Other long-term liabilities ( 41 ) Total liabilities $ ( 479 ) Net assets acquired $ 556 Purchase price $ 1,048 Goodwill recorded $ 492 The purchase price exceeded the estimated fair value of the net assets acquired, and, as such, the excess was allocated to goodwill. Goodwill will not be amortized but instead will be reviewed for impairment at least annually, absent any indicators of impairment. Goodwill is attributable to synergies expected to be achieved from the combined operations of the Company and Coyote and the assembled workforce. Goodwill recognized in the Transaction is not expected to be deductible for tax purposes. The following table summarizes the purchase price allocated to the identifiable intangible assets acquired: (Dollars in millions) Fair Value Weighted Average Useful Life (Years) Customer relationships $ 444 15 Trademarks 15 4 Total $ 459 15 The Company’s results of operations included $ 796 million of revenue and a $ 21 million pre-tax loss attributable to Coyote for the year ended December 31, 2024. The Company incurred acquisition-related costs of $ 43 million for the year ended December 31, 2024, which are included in Transaction and integration costs in the consolidated statements of operations. 52 Table of Contents The following unaudited pro forma financial information presents the Company’s results of operations as if the Coyote acquisition occurred on January 1, 2023. The unaudited pro forma information includes adjustments for intangible assets acquired and elimination of historical intercompany transactions between RXO and Coyote. The pro forma results for the year ended December 31, 2023 include a non-recurring charge of $ 216 million related to the deemed non-pro rata distribution, as further discussed in Note 13 — Stockholders ’ Equity . The unaudited pro forma financial information is for informational purposes only and is not necessarily indicative of our consolidated results of operations of the combined business had the acquisition been completed as of January 1, 2023 or of the results of our future operations of the combined business. Years Ended December 31, (In millions) 2024 2023 Revenue $ 6,390 $ 7,079 Loss before income taxes ( 92 ) ( 298 ) 4. Segment Reporting The Company is a brokered transportation platform defined by cutting-edge technology and an asset-light business model. The largest component is our core truck brokerage business. Our operations also include asset-light managed transportation and last mile services, which complement our truck brokerage business. Our chief operating decision maker (“CODM”), identified as our chief executive officer, regularly reviews financial information at the operating segment level to allocate resources and assess performance. The CODM assesses operating segment performance by using segment adjusted earnings before interest, taxes, depreciation and amortization (“segment adjusted EBITDA”). The CODM uses segment adjusted EBITDA predominantly in the annual budget and forecasting process. The CODM considers budget-to-actual variances for this profit measure when making decisions about the allocation of operating and capital resources. The CODM also uses adjusted EBITDA to evaluate pricing strategy and to assess the overall performance of the Company. We have determined that all our operating segments share the following similar economic and qualitative characteristics and therefore meet the criteria for operating segments to be aggregated into one reportable segment: • The operating segments have similar economic characteristics (e.g., comparable segment adjusted EBITDA margins, our measure of segment profitability), and similar long-term financial models; • The nature of the services offered by each operating segment is similar: all the services leverage technology and an asset-light infrastructure to arrange for the transportation of customer goods by qualified independent carriers; • The operating segments all operate within the transportation industry and in primarily the same geography (North America); • All operating segments provide business-to-business services, with no segment transacting directly with the end-user customer; • Each operating segment’s customer base spans diversified industry verticals that overlap with other operating segments and have a common salesforce engaged in significant cross-selling activities; and • All operating segments conduct business in a similar regulatory environment applicable to the transportation industry, including regulation and licensing by various governmental agencies; most notably, the Federal Motor Carrier Safety Administration of the U.S. Department of Transportation. 53 Table of Contents All of our operating segments can be expected to have similar future prospects as they have similar economic attributes. The causes for fluctuations in operating and financial performance are generally the same among the operating segments and include such factors as: (i) changes in overall demand for outsourced freight transportation services, (ii) changes in prices charged by third-party carriers, (iii) decisions by customers to develop or expand internal transportation capabilities, and (iv) macroeconomic impacts on supply chains for materials, parts and finished goods. The tables below provide information about the Company’s reportable segment: Years Ended December 31, (In millions) 2025 2024 2023 Revenue $ 5,742 $ 4,550 $ 3,927 Less: Cost of transportation and services (exclusive of depreciation and amortization) 4,611 3,565 2,967 Direct operating expense (exclusive of depreciation and amortization) 190 202 235 Sales, general and administrative expense (1) 796 648 555 Other expense (income) 1 ( 1 ) 1 Segment adjusted EBITDA $ 144 $ 136 $ 169 Unallocated corporate expenses 35 15 35 Depreciation and amortization expense 116 87 67 Transaction and integration costs 22 53 12 Restructuring and other costs 39 36 17 Goodwill impairment 12 — — Other expense — 219 2 Interest expense, net 35 30 32 Consolidated income (loss) before income taxes $ ( 115 ) $ ( 304 ) $ 4 (1) Excludes unallocated corporate expenses and other costs. December 31, (In millions) 2025 2024 Segment assets $ 3,207 $ 3,345 Corporate assets 70 69 Total assets $ 3,277 $ 3,414 5. Revenue Recognition Disaggregation of Revenues We disaggregate our revenue by geographic area, service offering and industry sector. The majority of our revenue, based on sales office location, is generated in the U.S. Approximately 7 % of our revenues were generated outside the U.S. (primarily in Canada, Mexico, Europe and Asia) for each of the years ended December 31, 2025, 2024 and 2023. 54 Table of Contents Our revenue disaggregated by service offering is as follows: Years Ended December 31, (In millions) 2025 2024 2023 Truck brokerage $ 4,225 $ 3,029 $ 2,358 Last mile 1,196 1,055 1,014 Managed transportation 549 600 690 Eliminations ( 228 ) ( 134 ) ( 135 ) Total $ 5,742 $ 4,550 $ 3,927 Our revenue disaggregated by industry sector is as follows: Years Ended December 31, (In millions) 2025 2024 2023 Retail/e-commerce $ 2,147 $ 1,677 $ 1,533 Industrial/manufacturing 1,077 854 743 Food and beverage 907 578 438 Logistics and transportation 519 419 197 Automotive 369 412 411 Other 723 610 605 Total $ 5,742 $ 4,550 $ 3,927 For the year ended December 31, 2025, revenue from our largest customer represented approximately $ 653 million, or 11.4 %, of total revenue. Performance Obligations Remaining performance obligations represent firm contracts for which services have not been performed and future revenue recognition is expected. As permitted in determining the remaining performance obligation, we omit obligations that: (i) have original expected durations of one year or less or (ii) contain variable consideration. As of December 31, 2025, the fixed consideration component of our remaining performance obligation was approximately $ 13 million, and we expect approximately 94 % of that amount to be recognized over the next three years and the remainder thereafter. We estimate remaining performance obligations at a point in time and actual amounts may differ from these estimates due to contract revisions or terminations. 6. Restructuring Charges We engage in restructuring actions as part of our ongoing efforts to best use our resources and infrastructure. These actions generally include severance and impairment of real estate and equipment operating lease assets, and are intended to improve our efficiency and profitability going forward. The following is a roll-forward of the Company’s restructuring activity: Year Ended December 31, 2025 (In millions) Reserve Balance as of December 31, 2024 Charges Incurred Payments and Other Reserve Balance as of December 31, 2025 Severance $ 5 $ 21 $ ( 18 ) $ 8 Equipment and facilities 15 17 ( 13 ) 19 Total $ 20 $ 38 $ ( 31 ) $ 27 55 Table of Contents Year Ended December 31, 2024 (In millions) Reserve Balance as of December 31, 2023 Acquisition Charges Incurred Payments and Other Reserve Balance as of December 31, 2024 Severance $ 4 $ 1 $ 13 $ ( 13 ) $ 5 Equipment and facilities 2 — 19 ( 6 ) 15 Contract termination — — 1 ( 1 ) — Total $ 6 $ 1 $ 33 $ ( 20 ) $ 20 We expect the majority of the cash outlays related to the remaining severance restructuring liability at December 31, 2025 to be complete within twelve months. Cash outlays related to the remaining equipment and facilities restructuring liability at December 31, 2025 will be completed over the remaining term of the impaired leases. 7. Property and Equipment The following table summarizes our property and equipment : December 31, (In millions) 2025 2024 Property and equipment Buildings and leasehold improvements $ 57 $ 45 Vehicles, tractors and trailers 23 25 Machinery and equipment 47 44 Computer software and equipment 388 338 Total property and equipment, gross 515 452 Less: accumulated depreciation ( 381 ) ( 317 ) Total property and equipment, net $ 134 $ 135 Net book value of capitalized internally-developed software included in property and equipment, net $ 63 $ 67 Depreciation of property and equipment and amortization of computer software was $ 69 million, $ 60 million and $ 55 million for the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025 and 2024, our long-lived tangible assets outside of the U.S. were not significant. 56 Table of Contents 8. Leases Most of our leases are operating leases and consist of real estate leases. In addition, we lease trucks, tractors and trailers. The following amounts are recorded in the Consolidated Balance Sheets related to leases: December 31, (In millions) 2025 2024 Operating leases: Operating lease assets $ 238 $ 276 Short-term operating lease liabilities $ 75 $ 81 Long-term operating lease liabilities 191 215 Total operating lease liabilities $ 266 $ 296 Finance leases: Property and equipment, gross $ 9 $ 9 Accumulated depreciation ( 7 ) ( 5 ) Property and equipment, net $ 2 $ 4 Current portion of obligations under finance leases $ 2 $ 2 Long-term portion of obligations under finance leases 1 2 Total finance lease liabilities $ 3 $ 4 Supplemental weighted-average information for leases is as follows: December 31, 2025 2024 Weighted-average remaining lease term (years) Operating leases 4.5 4.7 Finance leases 1.4 2.3 Weighted-average discount rate Operating leases 5.2 % 5.5 % Finance leases 5.6 % 5.6 % The components of our lease expense are as follows: Years Ended December 31, (In millions) 2025 2024 2023 Operating lease cost $ 99 $ 85 $ 59 Short-term lease cost 9 11 15 Variable lease cost 13 11 15 Total operating lease cost $ 121 $ 107 $ 89 Finance lease cost: Amortization of leased assets $ 3 $ 3 $ 2 Interest on lease liabilities — — 1 Total finance lease cost $ 3 $ 3 $ 3 Total lease cost $ 124 $ 110 $ 92 57 Table of Contents Supplemental cash flow information related to leases is as follows: Years 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 $ 90 $ 70 $ 57 Financing cash flows for finance leases 2 2 2 Leased assets obtained in exchange for new lease obligations: Operating leases 49 75 100 Finance leases — — 2 Future minimum lease payments as of December 31, 2025 are as follows: (In millions) Finance Leases Operating Leases 2026 $ 2 $ 85 2027 1 72 2028 — 55 2029 — 36 2030 — 22 Thereafter — 31 Total lease payments 3 301 Less: interest — ( 35 ) Present value of lease liabilities $ 3 $ 266 As of December 31, 2025, we had additional operating leases that have not yet commenced with future undiscounted lease payments of $ 52 million. These operating leases will commence in 2026, with initial lease terms ranging from 7 years to 11 years . 9. Goodwill and Intangible Assets The following table presents the changes in goodwill for the years ended December 31, 2025 and 2024: (In millions) Balance as of December 31, 2023 $ 630 Acquired goodwill (1) 493 Balance as of December 31, 2024 1,123 Goodwill impairment ( 12 ) Adjustments to acquired goodwill (2) ( 1 ) Foreign exchange translation 1 Balance as of December 31, 2025 $ 1,111 Goodwill $ 1,123 Accumulated impairment losses ( 12 ) Balance as of December 31, 2025 $ 1,111 (1) Represents the excess of the purchase price over the estimated fair value of net assets acquired resulting from the Coyote acquisition. (2) Represents adjustments to the preliminary purchase price allocation for the Coyote acquisition. 58 Table of Contents As of November 30, 2025, we completed our annual impairment tests for goodwill. During 2025, our ground and air express reporting unit experienced lower than anticipated operating results and changing market fundamentals, resulting in the decision to restructure the reporting unit. Based on the quantitative assessment performed in 2025, we recognized an impairment loss of $ 12 million to fully impair the goodwill of our ground and air express reporting unit as the discounted cash flows expected to be generated by the reporting unit were not sufficient to recover its carrying value. No impairments resulted for our remaining reporting units as their assessed fair values exceeded their carrying values. Our identifiable intangible assets consist of customer relationships and trade names, all of which are definite-lived. We did not recognize any impairment of our identified intangible assets in 2025 or 2024. The following table summarizes the balance of our identifiable intangible assets as of December 31, 2025: (In millions) Gross Carrying Amount Accumulated Amortization Net Book Value Customer relationships $ 613 $ ( 163 ) $ 450 Trade name 4 ( 1 ) 3 Total $ 617 $ ( 164 ) $ 453 The following table summarizes the balance of our identifiable intangible assets as of December 31, 2024: (In millions) Gross Carrying Amount Accumulated Amortization Net Book Value Customer relationships $ 630 $ ( 139 ) $ 491 Trade name 15 ( 7 ) 8 Total $ 645 $ ( 146 ) $ 499 Estimated future amortization expense for amortizable intangible assets for the next five years and thereafter is as follows: (In millions) 2026 2027 2028 2029 2030 Thereafter Estimated amortization expense $ 42 $ 41 $ 38 $ 37 $ 36 $ 259 Actual amounts of amortization expense may differ from estimated amounts due to changes in foreign currency exchange rates, additional intangible asset acquisitions, future impairment of intangible assets, accelerated amortization of intangible assets and other events. Intangible asset amortization expense was $ 47 million, $ 28 million and $ 13 million for the years ended December 31, 2025, 2024 and 2023, respectively. 59 Table of Contents 10. Debt The following table summarizes the principal balance and carrying value of our debt: December 31, 2025 December 31, 2024 (In millions) Principal Balance Carrying Value Principal Balance Carrying Value Revolver $ 35 $ 35 $ — $ — 7.50 % Notes due 2027 (1) 355 351 355 349 Finance leases, asset financing and short-term debt 18 18 19 19 Total debt and obligations under finance leases 408 404 374 368 Less: Short-term debt and current maturities of long-term debt 17 17 17 17 Total long-term debt and obligations under finance leases $ 391 $ 387 $ 357 $ 351 (1) Th e carrying value of the 7.50 % Notes due 2027 is presented net of unamortized debt issuance cost and discount of $ 4 million and $ 6 million as of December 31, 2025 and December 31, 2024, respectively. Our principal payment obligations on debt (excluding finance leases) for the next five years and thereafter is as follows: (In millions) 2026 2027 2028 2029 2030 Thereafter Principal payments on debt $ 15 $ 355 $ — $ 35 $ — $ — Notes On October 25, 2022, we completed an offering of $ 355 million in aggregate principal amount of unsecured notes (the “Notes” or the “ 7.50 % Notes due 2027”). The Notes bear interest at a rate of 7.50 % per annum payable semiannually in cash in arrears on May 15 and November 15 of each year, beginning May 15, 2023, and mature on November 15, 2027, unless earlier repurchased or redeemed, if applicable. The Notes were issued at an issue price of 98.962 % of par. The effective interest rate on the Notes was 8.13 % as of December 31, 2025. We may redeem the Notes, in whole or in part, at any time at a redemption price equal to (i) 101.875 % of the principal amount to be redeemed if the redemption occurs during the 12-month period beginning on November 15, 2025 and (ii) 100 % of the principal amount to be redeemed if the redemption occurs on or after November 15, 2026, in each case plus accrued and unpaid interest, if any, to, but excluding, the redemption date. The Notes are guaranteed by each of our direct and indirect wholly-owned domestic subsidiaries (other than certain excluded subsidiaries). The Notes and their guarantees are unsecured, senior indebtedness for us and our guarantors. The Notes contain covenants customary for debt securities of this nature. At December 31, 2025, the Company was in compliance with the covenants of the Notes. Revolving Credit Facilities On October 18, 2022, we entered into a five-year , $ 500 million, unsecured multi-currency revolving credit facility (the “Revolver”), with $ 50 million available for the issuance of letters of credit. Loans under the Revolver bear interest at a fluctuating rate plus an applicable margin based on the Company’s credit ratings, with interest payable quarterly. The Company is required to pay a commitment fee on any unused commitment, based on pricing levels set forth in the agreement. The effective interest rate on the Revolver was 5.40 % as of December 31, 2025. On November 2, 2023, the Company exercised a feature to increase the total commitments under the Revolver from $ 500 million to $ 600 million. 60 Table of Contents The covenants in the Revolver are customary for financings of this type. The Revolver requires the Company to maintain a minimum interest coverage ratio of not less than 3.00 :1.00. On August 8, 2024, the Company and lenders entered into an amendment, which, following the completion of the Coyote acquisition on September 16, 2024, increased the Company’s maximum consolidated leverage ratio to not greater than 4.50 :1.00. At December 31, 2025, the Company was in compliance with the covenants of the Revolver. There were no letters of credit outstanding on the Revolver at December 31, 2025. In addition, the amendment extended, upon the completion date of the Coyote acquisition, the Revolver maturity date five years from the amendment date to September 16, 2029. To the extent there is more than $ 50 million of the Company’s Notes outstanding on the date that is 91 days prior to the earlier of the extended maturity date and the maturity date of the Notes, then the extended maturity date will be subject to a springing earlier maturity date that is 91 days prior to the earlier of the extended maturity date and the Notes maturity date, unless the Notes are refinanced or replaced with debt that matures at least 91 days after the extended maturity date. As of December 31, 2025, the Company had $ 565 million committed under the Revolver, net of outstanding borrowings. As of December 31, 2025, the Company’s available borrowing capacity under the Revolver, after giving effect to the financial covenants described above, was $ 202 million. In connection with entering into the ABL Facility, on February 5, 2026, the existing Revolver was fully repaid and terminated. We also have a non-U.S. revolving credit facility with a maximum commitment of approximately $ 17 million. This facility has a one-year term and we had $ 15 million outstanding as of December 31, 2025 classified as short-term debt. Letters of Credit The Company maintains a bilateral unsecured letter of credit facility. As of December 31, 2025, we had $ 41 million in aggregate face amount of letters of credit outstanding under the facility. ABL Facility On February 5, 2026, we entered into an asset-based five-year revolving credit facility (the “ABL Facility”) in an amount of up to $ 450 million, with the option to request an increase in the revolving commitment by up to the greater of $ 200 million and the amount, if positive, by which the borrowing base exceeds the aggregate commitments of the lenders, not to exceed 5 % of the aggregate amount of the commitments of the lenders at such time. A portion of the ABL Facility, not to exceed $ 100 million, is available for the issuance of letters of credit. On February 5, 2026, the $ 41 million in aggregate face amount of letters of credit outstanding described above were converted into letters of credit issued and outstanding under the ABL Facility. The Company is required to pay a commitment fee on any unused commitment, based on pricing levels set forth in the agreement. Proceeds from loans under the ABL Facility were used to repay and terminate the existing Revolver. The ABL Facility is secured by a first priority perfected security interest (subject to customary exceptions) in all assets of the credit parties, whether consisting of personal, tangible or intangible property; provided that all interests in fee-owned real property and all leasehold interests in real property are excluded. Amounts available to be drawn under the ABL Facility are determined by calculating the applicable borrowing base, which is based upon applicable percentages of the values of eligible investment grade accounts receivable, eligible non-investment grade accounts receivable, eligible unbilled accounts receivable, and eligible liquid assets, less reserves. Outstanding amounts under the ABL Facility bear interest at a rate per annum equal to, at the Company’s election: (i) a base rate plus an applicable margin or (ii) an adjusted term SOFR plus an applicable margin; interest is payable quarterly. 61 Table of Contents Subject to customary exceptions and restrictions, the Company may voluntarily prepay outstanding amounts under the ABL Facility at any time without premium or penalty. Any voluntary prepayments made will not reduce commitments under the ABL Facility. The ABL Facility contains mandatory prepayment provisions which require prepayment of amounts outstanding under the ABL Facility (i) upon the receipt of proceeds from the issuance of any non-permitted indebtedness and (ii) when there is an availability shortfall. The ABL Facility contains customary representations and warranties, events of default and financial, affirmative and negative covenants for facilities of this type, including, but not limited to, financial covenants relating to a fixed charge coverage ratio, a minimum liquidity requirement and a minimum excess availability requirement, and restrictions on indebtedness, liens, investments and acquisitions, asset dispositions, specified agreements, restricted payments and prepayment of certain indebtedness. 11. Fair Value Measurements 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; • 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, generally 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, accrued expenses and short-term debt and current maturities of long-term debt approximated their fair values as of December 31, 2025 and December 31, 2024, due to their short-term nature and/or being receivable or payable on demand. Debt The fair value of our debt and classification in the fair value hierarchy is as follows: (In millions) Level December 31, 2025 December 31, 2024 Revolver 3 $ 35 $ — 7.50 % Notes due 2027 1 363 365 We valued Level 1 debt using quoted prices in active markets. We valued Level 3 debt using unobservable inputs, which reflect the Company’s best estimate of what hypothetical market participants would use to determine a transaction price for the asset or liability at the reporting date. 12. Employee Benefit Plan The Company sponsors a defined contribution plan that is available to employees whose primary place of employment is the U.S. The Company matches up to 5 % of employees’ pre-tax contributions, after completing one year of service. The Company’s costs for the defined contribution plan were $ 14 million, $ 12 million and $ 9 million for the years ended December 31, 2025, 2024 and 2023, respectively, and were primarily included in Sales, general and administrative expense in the Consolidated Statements of Operations. 62 Table of Contents 13. Stockholders’ Equity On August 12, 2024, the Company entered into purchase agreements with investors in which the Company agreed to issue and sell to the investors in a private placement an aggregate of 20,954,780 shares of the Company’s common stock, par value $ 0.01 per share (“common stock”), at a purchase price of $ 20.21 per share and pre-funded warrants to purchase 6,259,471 shares of common stock at a purchase price of $ 20.20 per warrant. The aggregate gross proceeds from the private placement were $ 550 million before deducting offering expenses. The Company incurred $ 6 million in equity issuance costs related to the private placement, which were recorded as a reduction to Additional paid-in capital in the consolidated balance sheets. Net proceeds from the private placement were used to finance a portion of the acquisition of Coyote on September 16, 2024. In connection with the private placement common stock issuance completed in August 2024, a deemed non-pro rata distribution of $ 216 million was recorded within Other expense in the consolidated statements of operations for the year ended December 31, 2024, based on the difference between the issuance price and the closing market price of common stock on August 12, 2024, the effective date of the private placement. On September 9, 2024, the Company agreed to sell 19,230,770 shares of the Company’s common stock at a public offering price of $ 26.00 per share. In connection with the offering, the Company granted the underwriters an option to purchase up to an additional 2,884,615 shares of common stock, which was exercised in full. The aggregate gross proceeds from the public offering, including the shares issued pursuant to the option granted to and exercised by the underwriters, were $ 575 million before deducting offering expenses. The Company incurred $ 25 million in equity issuance costs related to the public offering, which were recorded as a reduction to Additional paid-in capital in the consolidated balance sheets. Net proceeds from the public offering were used to finance a portion of the acquisition of Coyote on September 16, 2024. On May 2, 2023, the Company’s Board of Directors authorized the repurchase of up to $ 125 million of the Company’s common stock (the “2023 Share Repurchase Program”). During 2023, the Company repurchased 100,000 shares of its common stock for $ 2 million at an average price of $ 20.53 per share, funded by available cash. There were no share repurchases under the 2023 Share Repurchase Program during 2025 or 2024. As of December 31, 2025, $ 123 million remained approved to be used for share repurchases under the 2023 Share Repurchase Program. The 2023 Share Repurchase Program does not have an expiration date and may be suspended or discontinued at any time at the discretion of the Company’s Board of Directors. We are not obligated to repurchase any specific number of shares or use a specific dollar amount of the approved and remaining $ 123 million. 14. Stock-Based Compensation In October 2022, the Company established the RXO, Inc. 2022 Omnibus Incentive Plan (the “2022 Incentive Plan” or the “Plan”), which authorizes the issuance of up to 13.9 million shares of common stock as awards. Under the 2022 Incentive Plan, directors, officers and employees may be granted various types of stock-based compensation awards, including stock options, restricted stock, restricted stock units (“RSUs”), performance-based restricted stock units (“PRSUs”), stock appreciation rights and cash incentive awards (collectively, “Awards”). As of December 31, 2025, 4.3 million shares of common stock were available for the grant of Awards under the 2022 Incentive Plan. The following table summarizes stock-based compensation expense recorded in Sales, general and administrative expense in our Consolidated Statements of Operations: Years Ended December 31, (In millions) 2025 2024 2023 Restricted stock and RSUs $ 21 $ 17 $ 14 PRSUs 8 6 5 Total stock-based compensation expense $ 29 $ 23 $ 19 Tax benefit on stock-based compensation $ 7 $ 6 $ 4 63 Table of Contents RSUs and PRSUs We grant RSUs and PRSUs to our key employees, officers and directors with various vesting requirements. RSUs generally vest based on the passage of time (service conditions) and PRSUs generally vest based on the achievement of our financial targets (performance conditions). PRSUs may also be subject to stock price (market conditions), employment conditions and other non-financial conditions. The holders of the RSUs and PRSUs 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. The number of RSUs and PRSUs vested includes shares of our common stock that we withheld or sold on behalf of our employees to satisfy the minimum tax withholdings. The Company granted a portion of PRSUs subject to market-based vesting conditions. The Company determines the fair value of PRSUs subject to market-based vesting conditions using a Monte Carlo simulation model that incorporates the probability of the market conditions being met as of the grant date. Assumptions used in the Monte Carlo simulation model for the estimated fair value were as follows: Years Ended December 31, 2025 2024 Expected volatility 44.2 % 41.3 % Risk-free interest rate 4.0 % 4.5 % A summary of RSU and PRSU award activity for the year ended December 31, 2025 is presented below: RSUs PRSUs Number of RSUs Weighted-Average Grant Date Fair Value Number of PRSUs Weighted-Average Grant Date Fair Value Outstanding as of December 31, 2024 1,712,379 $ 21.29 1,100,768 $ 19.59 Granted 978,281 20.37 752,531 19.65 Vested ( 835,309 ) 21.45 ( 207,863 ) 19.00 Forfeited and canceled ( 184,329 ) 20.99 ( 139,061 ) 20.23 Outstanding as of December 31, 2025 1,671,022 $ 20.70 1,506,375 $ 19.65 The total aggregate fair value of RSUs and PRSUs that vested during 2025, 2024 and 2023 was $ 20 million, $ 18 million and $ 13 million, respectively. As of December 31, 2025, all outstanding RSUs vest subject to service conditions. Of the outstanding PRSUs as of December 31, 2025, 0.5 million vest subject to service and performance conditions and 1.0 million vest subject to service and market conditions. As of December 31, 2025, unrecognized compensation cost related to unvested RSUs and PRSUs of $ 32 million is anticipated to be recognized over a weighted-average period of approximately 1.5 years. 15. Income Taxes Income before taxes related to our U.S. and foreign operations is as follows: Years Ended December 31, (In millions) 2025 2024 2023 U.S. $ ( 107 ) $ ( 307 ) $ ( 2 ) Foreign ( 8 ) 3 6 Income (loss) before income taxes $ ( 115 ) $ ( 304 ) $ 4 64 Table of Contents The components of the income tax provision (benefit) consist of the following: Years Ended December 31, (In millions) 2025 2024 2023 Current: U.S. Federal $ — $ ( 2 ) $ 4 State 3 2 3 Foreign 3 5 1 Total current income tax provision 6 5 8 Deferred: U.S. Federal ( 20 ) ( 14 ) ( 8 ) State — ( 3 ) ( 1 ) Foreign ( 1 ) ( 2 ) 1 Total deferred income tax benefit ( 21 ) ( 19 ) ( 8 ) Total income tax provision (benefit) $ ( 15 ) $ ( 14 ) $ — The table below provides the updated requirements of ASU 2023-09 for 2025. See Note 2 — Basis of Presentation and Significant Accounting Policies for additional details on the adoption of ASU 2023-09. The reconciliation of the statutory federal income tax rate to the effective income tax rate for the year ended December 31, 2025, consists of the following: Year Ended December 31, 2025 (Dollars in millions) $ % Provision for income taxes at U.S. federal statutory rate $ ( 24 ) 21.0 % State and local income taxes, net of federal benefit (1) 3 ( 2.6 ) Foreign tax effects: Mexico Return to provision ( 4 ) 3.5 Valuation allowance 5 ( 4.3 ) Other foreign jurisdictions 1 ( 0.9 ) Tax credits: Research and development tax credits ( 2 ) 1.7 Non-taxable or non-deductible items: Meals and entertainment 1 ( 0.9 ) Non-deductible compensation 2 ( 1.7 ) Goodwill impairment 2 ( 1.7 ) Other adjustments 1 ( 0.8 ) Total income tax benefit and effective tax rate $ ( 15 ) 13.3 % (1) State taxes in California, Georgia, Pennsylvania and Texas made up the majority (greater than 50%) of the tax effect in this category. 65 Table of Contents As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the reconciliation of the statutory federal income tax rate to the effective income tax rate consists of the following: Years Ended December 31, 2024 2023 U.S. federal statutory tax rate 21.0 % 21.0 % State taxes, net of U.S. federal benefit 0.5 42.4 Non-deductible expenses ( 1.2 ) 81.6 Foreign rate differential ( 0.1 ) 17.1 Foreign operations (1) ( 0.8 ) 32.2 Provision to return and deferred tax adjustments ( 0.4 ) 4.5 Changes in uncertain tax positions — ( 55.5 ) Non-deductible deemed non-pro rata distribution ( 14.9 ) — Other 0.5 ( 156.3 ) Effective tax rate 4.6 % ( 13.0 ) % (1) Foreign operations include the net impact of changes to valuation allowances, the cost of inclusion of foreign income in the U.S. net of foreign taxes, and permanent items related to foreign operations. Components of the Net Deferred Tax Asset or Liability The tax effects of temporary differences that give rise to significant portions of the deferred tax asset and deferred tax liability are as follows: December 31, (In millions) 2025 2024 Deferred tax asset Net operating loss and other tax attribute carryforwards $ 42 $ 8 Accrued expenses 39 33 Property and equipment — 6 Other 23 26 Total deferred tax asset 104 73 Valuation allowance ( 13 ) ( 4 ) Total deferred tax asset, net 91 69 Deferred tax liability Intangible assets ( 128 ) ( 138 ) Property and equipment ( 4 ) — Other ( 4 ) ( 15 ) Total deferred tax liability ( 136 ) ( 153 ) Net deferred tax liability $ ( 45 ) $ ( 84 ) The deferred tax asset and deferred tax liability above are reflected on our Consolidated Balance Sheets as follows: December 31, (In millions) 2025 2024 Other long-term assets $ 6 $ 4 Deferred tax liabilities ( 51 ) ( 88 ) Net deferred tax liability $ ( 45 ) $ ( 84 ) 66 Table of Contents Operating Loss and Tax Credit Carryforwards Our operating loss and tax credit carryforwards are as follows: December 31, (In millions) Expiration Date 2025 2024 Federal net operating losses for all U.S. operations Indefinite $ 113 $ 3 Tax effect (before federal benefit) of state net operating losses Various times starting in 2028 (1) 3 3 Foreign net operating losses available to offset future taxable income Various times starting in 2029 (1) 19 7 Federal tax credit carryforwards Various times starting in 2045 2 2 (1) Some losses have unlimited carryforward periods. Valuation Allowance We established a valuation allowance for some of our deferred tax assets, as it is more likely than not that these assets will not be realized in the foreseeable future. We concluded that the remaining deferred tax assets will more likely than not be realized, though this is not assured, and as such no valuation allowance has been provided on these assets. The balances and activity related to our valuation allowance are as follows: (In millions) Beginning Balance Additions Reductions Ending Balance Year Ended December 31, 2025 $ 4 $ 9 $ — $ 13 Year Ended December 31, 2024 1 3 — 4 Year Ended December 31, 2023 1 — — 1 Unrecognized Tax Benefits A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: Years Ended December 31, (In millions) 2025 2024 2023 Beginning balance $ 8 $ — $ — Gross amount of increase recorded against goodwill for uncertainties arising from acquisition — 8 — Reductions due to the statute of limitations ( 1 ) — — Ending balance $ 7 $ 8 $ — Interest and penalties — — — Gross unrecognized tax benefits $ 7 $ 8 $ — Total unrecognized tax benefits that, if recognized, would impact the effective income tax rate as of the end of the year $ 7 $ 8 $ — We are subject to taxation in the U.S. and various states and foreign jurisdictions. As of December 31, 2025, we have no tax years under examination by the IRS, states or in any foreign jurisdictions. The U.S. federal tax return after the completion of the separation from XPO, Inc. on November 1, 2022, certain state and local returns after 2017 and non-U.S. returns after 2011 are open under relevant statutes of limitations and are subject to audit. 67 Table of Contents We consider prior year earnings and current year earnings to be permanently reinvested to the extent of working capital needs in each of the Company’s foreign subsidiaries. To the extent current earnings are in excess of working capital needs, we do not assert permanent reinvestment. Additionally, circumstances may arise in which current earnings are in excess of working capital needs, but due to regulatory restrictions, the excess earnings remain in the local jurisdictions. Where necessary, taxes resulting from foreign distributions of current and accumulated earnings have been considered in our provision for income taxes. For each of the years ended December 31, 2025 and December 31, 2024, $ 1 million of deferred tax liability was recorded. We have not recorded incremental income taxes for outside basis differences in its investments in foreign subsidiaries as these amounts are indefinitely reinvested. Determining the amount of unrecognized deferred tax liability related to the outside basis differences in these entities is not practicable. Cash Paid for Income Taxes The following is a supplemental schedule of cash paid for income taxes, net of refunds, for the year ended December 31, 2025: (In millions) Year Ended December 31, 2025 U.S. State and local $ 3 Foreign 4 Total cash paid for income taxes, net of refunds $ 7 Individual jurisdictions equaling 5% or more of the total cash paid for income taxes, net of refunds, for the year ended December 31, 2025 include Canada at $ 1.6 million, Mexico at $ 1.2 million, Texas at $ 0.7 million, Florida at $ 0.4 million, India at $ 0.4 million and North Carolina at $ 0.3 million. 16. Earnings Per Share Diluted earnings per share is computed by giving effect to all potentially dilutive stock awards that are 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. The computations of basic and diluted earnings per share are as follows: Years Ended December 31, (Dollars in millions, shares in thousands, except per share amounts) 2025 2024 2023 Net income (loss) $ ( 100 ) $ ( 290 ) $ 4 Basic weighted-average common shares (1) 168,462 133,412 116,871 Dilutive effect of stock-based awards — — 2,585 Diluted weighted-average common shares (1) 168,462 133,412 119,456 Basic earnings (loss) per share $ ( 0.59 ) $ ( 2.17 ) $ 0.03 Diluted earnings (loss) per share $ ( 0.59 ) $ ( 2.17 ) $ 0.03 Antidilutive shares excluded from diluted weighted-average common shares 1,980 2,783 396 (1) Of the 6,259,471 pre-funded warrants issued in the private placement, warrants to purchase 2,558,753 shares of common stock did not require stockholder approval; therefore, basic and diluted weighted-average common shares include 2,558,753 pre-funded warrants from their August 13, 2024 issuance date. Stockholder approval for the remaining warrants was obtained on December 5, 2024; therefore, basic and diluted weighted-average common shares include 3,700,718 pre-funded warrants from the December 5, 2024 approval date. For all pre-funded warrants, the exercise price of $ 0.01 per share is not substantive. 68 Table of Contents 17. Commitments and Contingencies We are involved, and will continue to be involved, in numerous proceedings arising out of the conduct of our business. These proceedings may include claims for property damage or personal injury incurred in connection with the transportation of freight, environmental liability, commercial disputes, and employment-related claims, including claims involving asserted breaches of employee restrictive covenants. These matters also include several class action and collective action cases involving claims that the contract carriers with which we contract for performance of delivery services, or their delivery workers, should be treated as employees, rather than independent contractors (“misclassification claims”). Plaintiffs in such cases may seek substantial monetary damages (including claims for unpaid wages, overtime, unreimbursed business expenses, deductions from wages, penalties and other items), injunctive relief, or both. We establish 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. If a loss is not both probable and reasonably estimable, or if an exposure to loss exists in excess of the amount accrued, we assess 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, we disclose the estimate of the possible loss or range of loss if it is material and an estimate can be made, or disclose 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 our assessment, together with legal counsel, regarding the ultimate outcome of the matter. We believe that we have adequately accrued for the potential impact of loss contingencies that are probable and reasonably estimable. We do not believe that the ultimate resolution of any matters to which we are presently a party will have a material adverse effect on our results of operations, cash flows or financial condition. 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 our results of operations, cash flows or financial condition. Legal costs incurred related to these matters are expensed as incurred. We carry liability and excess umbrella insurance policies that are deemed sufficient to cover potential legal claims arising in the normal course of conducting our operations as a transportation company. The liability and excess umbrella insurance policies generally do not cover the misclassification claims described in this note. In the event we are required to satisfy a legal claim outside the scope of the coverage provided by insurance, our results of operations, cash flows or financial condition could be negatively impacted. Our last mile subsidiary is involved in several class action and collective action cases involving misclassification claims. The misclassification claims related solely to our last mile business, which operated as a wholly owned subsidiary of XPO until the spin-off of RXO was completed. Pursuant to the Separation and Distribution Agreement between XPO and RXO, the liabilities of XPO’s last mile subsidiary, including legal liabilities, if any, related to the misclassification claims, were spun-off as part of RXO as of November 1, 2022. Pursuant to the Separation and Distribution Agreement, RXO has agreed to indemnify XPO for certain matters relating to RXO, including indemnifying XPO from and against any liabilities, damages, costs, or expenses incurred by XPO arising out of or resulting from the misclassification claims. In one of the misclassification claims, Gonzalez v. RXO Last Mile, Inc. , we recently reached an agreement to settle the matter for an immaterial amount without admitting any liability. We have accrued the full amount of the settlement. We continue to believe the other misclassification claims are without merit and we intend to defend the Company vigorously in these matters. We do not believe that the incurrence of a loss is probable at this time and, accordingly, we have not accrued for any losses in these matters. Further, the plaintiffs have not quantified damages sought in the misclassification claims and we are unable at this time to determine the amount of the possible loss or range of loss, if any, that we may incur as a result of the other misclassification claims. 69 Table of Contents Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. None.