What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-08-08 compared with 2022-05-10 · 216 added, 155 removed, 115 unchanged (76% of the section changed)

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All forward-looking statements set forth in this Quarterly Report are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by the company will be realized or, even if substantially realized, that they will have the expected consequence to or effects on the company or its business or operations.

The following discussion should be read in conjunction with the Company’s unaudited Condensed Consolidated Financial Statements and related notes thereto included elsewhere in this Quarterly Report, and with the audited consolidated financial statements and related notes thereto included in the 2021 Annual Report on Form 10-K.

The following discussion should be read in conjunction with the company’s unaudited Condensed Consolidated Financial Statements and related notes thereto included elsewhere in this Quarterly Report, and with the audited consolidated financial statements and related notes thereto included in the 2021 Form 10-K.

Forward-looking statements set forth in this Quarterly Report speak only as of the date hereof, and we do not undertake any obligation to update forward-looking statements to reflect subsequent events or circumstances, changes in expectations or the occurrence of unanticipated events, except to the extent required by law.

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Our company has two reportable segments — (i) North American LTL and (ii) Brokerage and Other Services — and within each segment, we are a leading provider in vast, fragmented transportation sectors with growing penetration.

As of March 31, 2022, we had approximately 42,000 employees and 731 locations in 20 countries serving approximately 50,000 multinational, national, regional and local customers.

We believe that our substantial exposure to secular industry growth trends, our first-mover advantage as an innovator and our blue-chip customer relationships are compelling competitive advantages.

2022 Strategic Plan

On March 8, 2022, we announced that our Board of Directors approved a plan to pursue the strategic spin-off of our tech-enabled brokered transportation platform in North America as a publicly traded company and to pursue two divestitures:

the sale of our North American intermodal operation and the sale or listing of our European business.

If the spin-off to XPO shareholders is completed, the transaction will result in two pure-play, publicly traded companies with simplified business models and clearly delineated value propositions.

The core business of the spin-off will be our truck brokerage service, with complementary brokered services for managed transportation, last mile logistics and global forwarding.

The remaining company will be an asset-based provider of LTL service in North America.

As of June 30, 2022, we had over 43,000 employees and 749 locations in 20 countries serving approximately 50,000 multinational, national, regional and local customers.

We believe that our substantial exposure to secular industry growth trends, our first-mover advantage as an innovator, our blue-chip customer relationships and our company-specific avenues for value creation are compelling competitive advantages.

2022 Planned RXO Spin-Off

On March 8, 2022, we announced that our Board of Directors approved a strategic plan to pursue the spin-off of our tech-enabled brokered transportation platform in North America as a publicly traded company.

In addition, the Board of Directors authorized two divestitures:

our North American intermodal operation, which we sold in March 2022, and the divestiture of our European business.

The spin-off to XPO shareholders, if completed as planned, will result in two independent, publicly traded companies with simplified business models and clearly delineated value propositions.

The spin-off company will be RXO, Inc.

(“RXO”) and will be comprised of our asset-light core truck brokerage business and complementary brokered services for managed transportation, last mile logistics and global forwarding.

The remaining company, XPO, will be the third largest pure-play provider of asset-based LTL service in North America.

The planned spin-off transaction, which is intended to be tax-free to XPO and our shareholders for U.S.

federal income tax purposes, would result in XPO shareholders owning stock in both companies.

In connection with

the transaction, it is anticipated that a portion of XPO’s outstanding debt may be repaid using proceeds from borrowings incurred and debt securities to be issued by the spun-off company.

We currently expect to complete the spin-off in the fourth quarter of 2022, subject to various conditions, including the effectiveness of a Form 10 registration statement, receipt of a tax opinion from counsel, the refinancing of XPO’s debt on terms satisfactory to the XPO Board of Directors, and final approval by the XPO Board of Directors, among other requirements.

federal income tax purposes, will

result in XPO shareholders owning stock in both XPO and RXO.

In connection with the transaction, it is anticipated that a portion of XPO’s outstanding debt will be repaid using proceeds from debt incurred by RXO.

We currently expect to complete the RXO spin-off transaction in the fourth quarter of 2022, subject to various conditions, including the effectiveness of a Form 10 registration statement, receipt of a tax opinion from counsel, the refinancing of XPO’s debt on terms satisfactory to our Board of Directors, and final approval by the Board of Directors, among other requirements.

There can be no assurance that any strategic transaction will occur, or if one or more do occur, of the terms or timing.

In March 2022, we sold our North American intermodal operation for cash proceeds of approximately $705 million, net of cash disposed and subject to a customary post-closing purchase price adjustment.

We recorded a pre-tax gain on the sale of $450 million, net of transaction costs, for the three months ended March 31, 2022.

2022 Divestiture of North American Intermodal

In March 2022, we sold our North American intermodal operation for cash proceeds of approximately $705 million, net of cash disposed and subject to customary post-closing working capital adjustments that remain ongoing.

We recorded a $450 million pre-tax gain on the sale, net of transaction costs, during the first quarter of 2022.

During the second quarter of 2022, we recognized a working capital adjustment of $16 million, which reduced the gain initially recognized in the first quarter of 2022.

We agreed to provide certain specified customary transition services for a period not exceeding 12 months from the sale.

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For information on our discontinued operations, see Note 2—Discontinued Operations.

During the three months ended March 31, 2022 and 2021, we incurred approximately $4 million and $13 million, respectively, of costs related to the GXO spin-off.

For the three months ended March 31, 2021, $12 million of these costs are reflected within income from discontinued operations in our Condensed Consolidated Statements of Income.

No costs related to the GXO spin-off were incurred for the three months ended June 30, 2022.

For the six months ended June 30, 2022, we incurred costs of approximately $4 million related to the GXO spin-off.

For the three and six months ended June 30, 2021, we incurred costs of approximately $30 million and $43 million, respectively, related to the GXO spin-off, of which $27 million and $39 million, respectively, are reflected within income from discontinued operations in our Condensed Consolidated Statements of Income.

North American Less-Than-Truckload Segment

XPO is the fourth largest provider of asset-based LTL services in North America — we have one of the industry’s largest networks of tractors, trailers and terminals, and approximately 8% share of the $51 billion LTL market as of December 31, 2021.

We provide our customers with geographic density and day-definite regional, inter-regional and transcontinental LTL freight services.

Our services include cross-border U.S.

freight movements to and from Mexico and Canada, as well as intra-Canada service.

Our LTL business is one of the few truly national LTL providers in North America, with a historically high return on capital (“ROIC”) and robust free cash flow generation.

Our LTL customer base is levered to the industrial economy, which we expect to be a growing opportunity for us as supply chain disruptions resolve and manufacturing scales up in North America.

In addition to our competitive positioning, we benefit from favorable industry fundamentals of rational pricing and limited commoditization.

We have relationships with approximately 25,000 LTL customers in North America, the majority of which are local accounts.

For the trailing 12 months ended March 31, 2022, we delivered approximately 18 billion pounds of freight.

After the planned spin-off of our North American brokered transportation platform, our company will be the third largest pure-play LTL provider in North America.

We expect our business to move forward with continued strong momentum from the numerous company-specific initiatives we have underway for network growth and efficiency.

We are using a combination of operational tactics and investments in our capacity of tractors, trailers, doors and truck drivers, including our goal of adding 900 net new doors to our network by year-end 2023.

Importantly, the plan levers XPO-specific competitive advantages, including our continued deployment of proprietary LTL technology, the expansion of our national driver training network, and increased production at our Company-owned trailer manufacturing facility in Arkansas.

We are making good progress in these areas, including the opening of three new LTL terminals from October 31, 2021 through March 31, 2022, one new terminal in April 2022 and one expected to open in May 2022.

In January 2022, we added a second production line at our trailer manufacturing facility to double our output run-rate.

We expect to graduate approximately 1,800 driver school trainees this year, which is twice the number of 2021 graduates, to counteract the industry-wide driver shortage.

Specific to our technology, we believe that we have a significant opportunity to further improve the profitability of our LTL network through innovation, beyond the large gain in operating margin we have achieved to date.

intelligent route-building to move LTL freight across North America, and proprietary visualization tools to help reduce the cost of pickups and deliveries.

Our XPO Smart™ productivity tools are deployed in our LTL cross-dock operations.

XPO has one of the largest networks of tractors, trailers and terminals in the North American LTL industry, with approximately 8% share of a $51 billion U.S.

The LTL industry in North America has favorable fundamentals, with substantial barriers to entry, durable end-market demand, secular tailwinds and strong pricing dynamics.

XPO delivered approximately 18 billion pounds of freight during 2021.

Once the planned RXO spin-off is complete, we will be the third largest pure-play provider of LTL transportation in North America.

We serve approximately 25,000 customers with geographic density and day-definite regional, national and cross-border services that reach approximately 99% of U.S.

zip codes, as well as cross-border service to Mexico, Canada and the Caribbean.

Our capacity gives us the ability to manage large freight volumes more efficiently and balance our network to leverage fixed costs.

Importantly, our LTL business historically has generated a high return on capital and robust free cash flow.

This allows us to further develop our proprietary technology and invest in numerous other growth and optimization initiatives.

We are managing the business to specific objectives, such as high customer service scores for on-time delivery and damage-free freight, and the addition of 900 net new doors to our network from October 2021 to year-end 2023.

From October 31, 2021 through June 30, 2022, we added five new terminals to our network, representing 345 net new doors.

Additionally, we are continuing to execute on a host of idiosyncratic initiatives that are XPO-specific and independent of the macroeconomic environment.

The ongoing deployment of our proprietary LTL technology encompasses multiple levers for value creation unique to our company.

As other examples, we added a second production line at our in-house trailer manufacturing facility in January and doubled our output run-rate.

We are also investing in the next generation of truck drivers at our 130 in-house training schools and targeting to train twice as many drivers in 2022 as in 2021.

Specific to our technology, we believe we have a large opportunity to further improve the profitability of our LTL network through innovation, beyond the large gain in operating margin achieved to date.

We use intelligent route-building to move LTL freight across North America, and proprietary visualization tools to help reduce the cost of pickups and deliveries.

Our XPO Smart ® productivity tools are installed in our cross-dock operations, and we recently deployed new cost models and tracking capabilities.

Our largest opportunity is related to our proprietary pricing technology, which includes automated, dynamic pricing for local accounts and a new pricing platform utilized by our pricing experts for larger accounts.

Brokerage and Other Services Segment

XPO is one of the largest truck brokers in North America.

As of December 31, 2021, we had approximately 3% share of the $88 billion truck brokerage industry — which is a subset of the $400 billion total addressable opportunity of for-hire trucking in North America.

Shippers create truckload demand and we place their freight with qualified independent carriers, pricing the transactions on either a contract or a spot basis.

Our truck brokerage business has an agile model with a variable labor structure that generates a high ROIC and free cash flow conversion.

The key factors driving growth and margin expansion in our truck brokerage business are massive capacity, our cutting-edge XPO Connect ® technology platform and favorable industry tailwinds.

The demand for truckload capacity in the e-commerce and omnichannel retail sectors continues to be robust.

At the same time, more and more shippers are outsourcing to brokers, while increasingly preferring brokers like XPO that offer digital capabilities.

As of March 31, 2022, we had approximately 106,000 independent truckload carriers in our global brokerage network;

approximately 88,000 of these carriers are in North America, representing more than one and a half million trucks.

Our XPO Connect ® brokerage platform is a major differentiator for our business and, together with our pricing technology, we believe it can unlock incremental profitable growth well beyond our current levels.

As of March 31, 2022, cumulative truck driver downloads of the mobile app for XPO Connect ® surpassed 700,000.

Our Brokerage and Other Services segment also includes three asset-light, brokered transportation services, all of which are complementary to our truck brokerage business:

managed transportation, last mile logistics for heavy goods and global forwarding.

Our European business, which we plan to divest through either a sale or a listing, is also currently reported within this segment.

Post-spin-off, we expect all of the brokered transportation services to continue to lever the first-mover technology advantage the new company will inherit from XPO.

From 2013 through 2021, our truck brokerage business in North America generated a compound annual growth rate (“CAGR”) of 27.4% — three times the truck brokerage industry growth rate of 9.6%.

Technology and Corporate Sustainability

Proprietary technology is a major competitive advantage for us across our service lines.

Our company has been investing in transportation automation and digitization for more than a decade to innovate how goods move through supply chains.

XPO is the fourth largest truckload transportation broker in the U.S.

Our asset-light truck brokerage business places shippers’ freight with qualified independent carriers using our XPO Connect ® technology platform.

We price this service on either a contract or a spot basis, with 73% of our revenue in the second quarter of 2022 derived from customer contracts, and we operate with a variable cost structure that adjusts quickly to market changes.

We derive our revenue from diversified industry verticals, and we have many long-standing, blue-chip customer relationships — on average, our top 10 customers have a 15-year tenure with us.

Our truck brokerage business has a long track record of generating top-line growth and margin expansion, a high return on invested capital and strong free cash flow.

Notable factors driving our performance include our access to massive truckload capacity for shippers through our carrier relationships, our strong management expertise, our company-specific avenues for value creation led by our cutting-edge technology, and favorable industry tailwinds.

Broker penetration of for-hire truckload transportation has doubled in the last 15 years, and is still less than 25%.

We have approximately 4% share of the $88 billion U.S.

brokered truckload industry, giving us a long runway for revenue growth — the total addressable for-hire trucking market in 2021 was estimated to be approximately $400 billion.

Demand for truckload capacity in the e-commerce and omnichannel retail sectors continues to be robust, and more and more shippers are outsourcing to brokers, while increasingly preferring brokers like XPO that offer digital capabilities.

As of June 30, 2022, we had relationships with approximately 98,000 independent truckload carriers in North America, representing more than one and a half million trucks.

These relationships enable us to serve high demand without taking on high fixed costs.

Even though we don’t own the trucks or employ the drivers that transport our customers’ freight, shippers view us as a highly reliable core carrier due to our operational excellence and reliability.

Our XPO Connect ® brokerage platform is another major differentiator for our business, together with our pricing technology, which we believe can unlock incremental profitable growth well beyond our current levels.

We bring together seasoned transportation experts and master technologists to transform truck brokerage through digitization, making the process more productive for shippers, carriers and our company.

Through July 2022, cumulative truck driver downloads of the mobile app for XPO Connect ® were over 800,000.

The impact of XPO Connect ® is pervasive throughout our brokerage operations.

As of June 30, 2022, approximately 80% of our truck brokerage orders in North America were created or covered digitally.

From 2013 through 2021, the compound annual growth rate (“CAGR”) of our truck brokerage revenue was 27.4% — approximately three times the U.S.

brokered truckload industry CAGR of 9.6% — in part because larger customers communicate digitally with XPO Connect ® through APIs and other integrations, and our automation makes our brokerage team more efficient at tendering loads.

Our Brokerage and Other Services segment also includes asset-light, complementary brokered services for managed transportation, including expedited ground and air charter capabilities, last mile logistics for heavy goods and global forwarding, all of which use our technology.

Our European business is also reported within this segment.

Technology and Sustainability

Our proprietary technology is a major competitive advantage for us across our service lines.

Our company has been investing in transportation automation, data science and digitization for more than a decade, well ahead of the industry curve, to innovate how goods move through supply chains.

We believe that we are well-positioned to satisfy customer demands for faster, more efficient supply chains with greater visibility, while enhancing revenue and profitability.

Importantly, our technology also helps our Company and customers meet our respective environmental, social and governance (“ESG”) goals, such as a reduction in the carbon footprint of certain supply chains operations.

For a detailed discussion of our philosophy relating to innovation and ESG matters, see the Executive Overview included in our 2021 Annual Report on Form 10-K, as well as our current Sustainability Report at sustainability.xpo.com .

Importantly, our technology also helps our company and customers meet our respective environmental, social and governance (“ESG”) goals, such as a reduction in the carbon footprint of certain supply chain operations.

For a detailed discussion of our philosophy relating to innovation and ESG matters, see the Executive Overview included in our 2021 Form 10-K, as well as our current Sustainability Report at sustainability.xpo.com .

Impacts of COVID-19 and Other Notable External Conditions

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Additionally, disruptions in supply chains for industrial materials and supplies, such as semiconductor chips, have impacted some of the end-market activities that create demand for our services.

We cannot predict how long these dynamics will last in the economic recovery, or whether future challenges, if any, will adversely affect our results of operations.

To date, the totality of the actions we have taken during the pandemic, and continue to take

in the recovery, have mitigated the impact on our profitability relative to the impact on our revenue and volumes, while our strong liquidity and disciplined capital management enable us to continue to invest in growth initiatives.

We cannot predict how long these dynamics will last, or whether future challenges, if any, will adversely affect our results of operations.

To date, the totality of the actions we have taken during the pandemic, and continue to take in the recovery, have mitigated the impact on our profitability relative to the impact on our revenue and volumes, while our strong liquidity and disciplined capital management enable us to continue to invest in growth initiatives.

Additionally, economic inflation can have a negative impact on our operating costs.

A prolonged period of inflation could cause interest rates, fuel, wages and other costs to continue to increase, which would adversely affect our results of operations unless our pricing to our customers correspondingly increases.

For the three months ended March 31, 2022, the transportation industry’s truck driver shortage, together with rising fuel prices, resulted in higher transportation procurement costs to meet growing demand, which costs were largely offset by mechanisms in our customer contracts, including fuel surcharge clauses and general rate increases.

For the three and six months ended June 30, 2022, a combination of growing demand for freight transportation services, the ongoing truck driver shortage and rising fuel prices resulted in higher transportation procurement costs;

these costs were offset by mechanisms in our customer contracts, including fuel surcharge clauses and general rate increases.

An economic recession could depress customer demand for transportation services and adversely affect our results of operations.

Regarding the war between Russia and Ukraine, we have no direct exposure to those geographies.

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Consolidated Summary Financial Table

Three Months Ended March 31, Percent of Revenue Change

Three Months Ended June 30, Percent of Revenue Change Six Months Ended June 30, Percent of Revenue Change

(Dollars in millions) 2022

2022 2021 2022 vs.

Revenue $ 3,232 $ 3,186 100.0 % 100.0 % 1.4 % $ 6,705 $ 6,175 100.0 % 100.0 % 8.6 %

Cost of transportation and services (exclusive of depreciation and amortization) 2,437 2,053 70.2 % 68.7 % 18.7 %

Direct operating expense (exclusive of depreciation and amortization) 385 334 11.1 % 11.2 % 15.3 %

Sales, general and administrative expense 344 338 9.9 % 11.3 % 1.8 %

Cost of transportation and services

(exclusive of depreciation and amortization)

2,153 2,186 66.6 % 68.6 % (1.5) % 4,590 4,239 68.5 % 68.6 % 8.3 %

Direct operating expense (exclusive of

depreciation and amortization)

365 358 11.3 % 11.2 % 2.0 % 750 692 11.2 % 11.2 % 8.4 %

Sales, general and administrative

324 324 10.0 % 10.2 % — % 668 662 10.0 % 10.7 % 0.9 %

Depreciation and amortization expense 115 120 3.6 % 3.8 % (4.2) % 231 239 3.4 % 3.9 % (3.3) %

Gain on sale of business (450) — (13.0) % — % NM

(Gain) loss on sale of business 16 — 0.5 % — % NM (434) — (6.5) % — % NM

Transaction and integration costs 25 6 0.8 % 0.2 % 316.7 % 35 11 0.5 % 0.2 % 218.2 %

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Other income (15) (10) (0.5) % (0.3) % 50.0 % (29) (26) (0.4) % (0.4) % 11.5 %

Debt extinguishment loss — 8 — % 0.3 % (100.0) %

Debt extinguishment loss 26 — 0.8 % — % NM 26 8 0.4 % 0.1 % 225.0 %

Interest expense 31 58 1.0 % 1.8 % (46.6) % 68 123 1.0 % 2.0 % (44.7) %

Income from continuing operations before income tax provision 602 82 17.3 % 2.7 % 634.1 %

Income from continuing operations

before income tax provision

188 143 5.8 % 4.5 % 31.5 % 790 225 11.8 % 3.6 % 251.1 %

Income tax provision 47 30 1.5 % 0.9 % 56.7 % 160 49 2.4 % 0.8 % 226.5 %

Income from continuing operations 141 113 4.4 % 3.5 % 24.8 % 630 176 9.4 % 2.9 % 258.0 %

Income from discontinued operations, net of taxes (1) 55 — % 1.8 % NM

Income (loss) from discontinued

operations, net of taxes

— 45 — % 1.4 % NM (1) 100 — % 1.6 % NM

Net income $ 141 $ 158 4.4 % 5.0 % (10.8) % $ 629 $ 276 9.4 % 4.5 % 127.9 %

NM - Not meaningful

Three Months Ended March 31, 2022 Compared with Three Months Ended March 31, 2021

Revenue for the first quarter of 2022 increased 16.2% to $3.5 billion, compared with the same quarter in 2021.

The increase in revenue reflects growth in both our Brokerage and Other Services and LTL segments and includes the impact of increased revenue from fuel surcharges.

Foreign currency movement reduced revenue by approximately 1.2 percentage points in the first quarter of 2022.

Three and Six Months Ended June 30, 2022 Compared with Three and Six Months Ended June 30, 2021

Revenue for the second quarter of 2022 increased 1.4% to $3.2 billion, compared with the same quarter in 2021.

Revenue for the first six months of 2022 increased 8.6% to $6.7 billion, compared with the same period in 2021.

Revenue in the second quarter and first six months of 2022 compared to the same periods in 2021 reflects growth in our LTL segment and our North American truck brokerage operation, and includes the impact of increased revenue from fuel surcharges.

The increase in both periods was partially offset by the sale of our North American intermodal operation in March 2022, which reduced revenue growth by approximately 8.4 percentage points in the second quarter of 2022 and 2.8 percentage points in the first six months of 2022.

Additionally, foreign currency movement reduced revenue by approximately 2.3 percentage points in the second quarter of 2022 and 1.7 percentage points in the first six months of 2022.

Cost of transportation and services (exclusive of depreciation and amortization) includes the cost of providing or procuring freight transportation for XPO customers and salaries paid to employee drivers in our LTL and truck brokerage businesses.

Cost of transportation and services (exclusive of depreciation and amortization) for the first quarter of 2022 was $2.4 billion, or 70.2% of revenue, compared with $2.1 billion or 68.7% of revenue, for the same quarter in 2021.

The year-over-year increase as a percentage of revenue is primarily due to higher third-party transportation costs, which were partially offset by pricing actions.

Cost of transportation and services (exclusive of depreciation and amortization) for the second quarter of 2022 was $2.2 billion, or 66.6% of revenue, compared with $2.2 billion, or 68.6% of revenue, for the same quarter in 2021.

Cost of transportation and services (exclusive of depreciation and amortization) for the first six months of 2022 was $4.6 billion, or 68.5% of revenue, compared with $4.2 billion, or 68.6% of revenue, for the same period in 2021.

The year-over-year decrease as a percentage of revenue in both periods reflects the sale of our intermodal operation.

Additionally impacting the decrease as a percentage of revenue in the second quarter of 2022 was lower third-party transportation costs, which were partially offset by higher fuel costs.

For the six-month period, higher fuel costs as a percentage of revenue were partially offset by lower compensation costs.

Direct operating expenses (exclusive of depreciation and amortization) are comprised of both fixed and variable expenses and include operating costs related to our LTL service centers.

Direct operating expenses (exclusive of depreciation and amortization) consist mainly of personnel costs, facility and equipment expenses, such as rent, utilities, equipment maintenance and repair, costs of materials and supplies, information technology expenses, and gains and losses on sales of property and equipment.

Direct operating expense (exclusive of depreciation and amortization) for the first quarter of 2022 was $385 million, or 11.1% of revenue, compared with $334 million, or 11.2% of revenue, for the same quarter in 2021.

The year-over-year decrease as a percentage of revenue was primarily driven by the leveraging of compensation costs across a larger revenue base.

This decrease was almost entirely offset by a $23 million gains on sales of property and equipment in the first quarter of 2021.

There were no gains on sales of property and equipment in the first quarter of 2022.

Direct operating expense (exclusive of depreciation and amortization) for the second quarter of 2022 was $365 million, or 11.3% of revenue, compared with $358 million, or 11.2% of revenue, for the same quarter in 2021.

Direct operating expense (exclusive of depreciation and amortization) for the first six months of 2022 was $750 million, or 11.2% of revenue, compared with $692 million, or 11.2% of revenue, for the same period in 2021.

The increase in direct operating expense in both periods reflects lower gains on sales of property and equipment and higher compensation costs.

Direct operating expense for the second quarters of 2022 and 2021 included $2 million and $7 million, respectively, and the first six months of 2022 and 2021 included $2 million and $30 million, respectively, of gains on sales of property and equipment.

As a percentage of revenue, direct operating expense for the six-month period reflects the lower gains on sales of property and equipment offset by the leveraging of compensation costs across a larger revenue base.

Sales, general and administrative expense (“SG&A”) primarily consists of salaries and commissions for the sales function, salary and benefit costs for executive and certain administration functions, professional fees, facility costs, bad debt expense and legal costs.

SG&A for the first quarter of 2022 was $344 million, or 9.9% of revenue, compared with $338 million, or 11.3% of revenue, for the same quarter in 2021.

The year-over-year decrease as a percentage of revenue was primarily driven by lower compensation expense and third-party professional and consulting fees.

Depreciation and amortization expense for the first quarter of 2022 was $116 million, compared with $119 million for the same quarter in 2021.

Gain on sale of business was $450 million, net of transaction costs, for the first quarter of 2022 as we sold our North American intermodal operation.

SG&A for the second quarter of 2022 was $324 million, or 10.0% of revenue, compared with $324 million, or 10.2% of revenue, for the same quarter in 2021.

SG&A for the first six months of 2022 was $668 million, or 10.0% of revenue, compared with $662 million, or 10.7% of revenue, for the same period in 2021.

Higher compensation costs were offset by lower third-party professional and consulting fees in the second quarter of 2022.

For the six-month period, higher compensation, travel and entertainment and insurance costs were partially offset by lower third-party professional and consulting fees.

As a percentage of revenue, the year-over-year decrease in both periods was primarily driven by lower third-party professional and consulting fees.

Additionally, the year-over-year decrease as a percentage of revenue in the six-month period reflects the leveraging of compensation costs across a larger revenue base.

Depreciation and amortization expense for the second quarter of 2022 was $115 million, compared with $120 million for the same quarter in 2021.

Depreciation and amortization expense for the first six months of 2022 was $231 million, compared with $239 million for the same period in 2021.

The decrease in both periods reflected the sale of our intermodal operation.

(Gain) loss on sale of business was a gain of $434 million, net of transaction costs, for the first six months of 2022 as we sold our intermodal operation during the first quarter of 2022.

During the second quarter of 2022, we recognized a working capital adjustment of $16 million, which decreased the gain initially recognized in the first quarter of 2022.

For more information, see Note 3—Divestiture to our Condensed Consolidated Financial Statements.

Transaction and integration costs for the first quarter of 2022 were $10 million, compared with $5 million for the same quarter in 2021.

Transaction and integration costs for the first three months of 2022 and 2021 are primarily comprised of third-party professional fees related to strategic initiatives, including the spin-offs and other disposal activities, as well as retention awards paid to certain employees.

Restructuring costs for the first quarter of 2022 were $6 million, compared with $1 million for the same quarter in 2021.

We engage in restructuring actions as part of our ongoing efforts to best use our resources and infrastructure, including actions in connection with spin-offs and other disposal activities.

Transaction and integration costs for the second quarter of 2022 were $25 million, compared with $6 million for the same quarter in 2021.

Transaction and integration costs for the first six months of 2022 were $35 million, compared with $11 million for the same period in 2021.

Transaction and integration costs for the second quarter and first six months of 2022 and 2021 are primarily comprised of third-party professional fees related to strategic initiatives, including the spin-offs and other divestment activities, as well as retention awards paid to certain employees.

Restructuring costs for the second quarter of 2022 were $4 million, compared with $1 million for the same quarter in 2021.

Restructuring costs for the first six months of 2022 were $10 million, compared with $2 million for the same period in 2021.

We engage in restructuring actions as part of our ongoing efforts to best use our resources and infrastructure, including actions in connection with spin-offs and other divestment activities.

For more information, see Note 6—Restructuring Charges to our Condensed Consolidated Financial Statements.

We may incur incremental restructuring costs in 2022 in connection with the planned spin-off of our North American brokered transportation operation or for other reasons;

We may incur incremental restructuring costs in 2022 in connection with the planned spin-off of our North American brokered transportation platform or for other reasons;

however, we are currently unable to reasonably estimate these costs.

Other income primarily consists of pension income.

Other income for the first quarter of 2022 was $14 million, compared with $16 million for the same quarter in 2021.

Debt extinguishment loss was $8 million for the first quarter of 2021 and related to the write-off of debt issuance costs for the redemption of our outstanding senior notes due 2022, as well as costs incurred related to the amendment of our term loan credit agreement.

There was no debt extinguishment loss in the first quarter of 2022.

Interest expense decreased to $37 million for the first three months of 2022 from $65 million for the first three months of 2021.

The decrease in interest expense reflected lower average total indebtedness in the first quarter of 2022.

Our effective income tax rates were 18.8% and 23.0% for the first three months of 2022 and 2021, respectively.

The effective tax rates for the first quarter of 2022 and 2021 were based on forecasted full-year effective tax rates, adjusted for discrete items that occurred within the periods presented.

The primary items impacting the effective tax rate for the first three months of 2022 compared to the same quarter in 2021 included a tax expense of $78 million from the sale of our North American intermodal operation, which resulted in a reduction to our effective tax rate due to the book gain exceeding the tax gain, as well as a tax benefit of $2 million from stock-based compensation.

The primary item impacting the effective tax rate for the first quarter of 2021 was a tax benefit of $3 million from stock-based compensation.

Other income for the second quarter of 2022 was $15 million, compared with $10 million for the same quarter in 2021.

Other income for the first six months of 2022 was $29 million, compared with $26 million for the same period in 2021.

The increase in both periods is primarily related to lower foreign currency losses in the second quarter and first six months of 2022.

Debt extinguishment loss was $26 million for the second quarter and first six months of 2022 and $8 million for the first six months of 2021.

There was no debt extinguishment loss in the second quarter of 2021.

In the second quarter of 2022, we redeemed a portion of our outstanding senior notes due 2025 and wrote-off related debt issuance costs.

In the first six months of 2021, we redeemed our outstanding senior notes due 2022 and wrote-off related debt issuance costs, as well as incurred costs related to the amendment of our Senior Secured Term Loan Credit Agreement (the “Term Loan Credit Agreement”).

Interest expense decreased to $31 million for the second quarter of 2022 from $58 million for the second quarter of 2021.

Interest expense decreased to $68 million for the first six months of 2022 from $123 million for the first six months of 2021.

The decrease in interest expense reflects lower average total indebtedness in the second quarter and first six months of 2022.

Our effective income tax rates were 24.8% and 20.9% for the second quarter of 2022 and 2021, respectively, and 20.2% and 21.7% for the first six months of 2022 and 2021, respectively.

The effective tax rates for the second quarter and six-month periods of 2022 and 2021 were based on forecasted full-year effective tax rates, adjusted for discrete items that occurred within the periods presented.

The primary items impacting the effective tax rate for the second quarter of 2022 compared to the same quarter in 2021 included a reduction in tax expense of $4 million from the sale of our intermodal operation and a tax benefit of $1 million from stock-based compensation.

The primary items impacting the effective tax rate for the second quarter of 2021 were a tax benefit of $5 million from changes in reserves for uncertain tax positions partially offset by a tax expense of $2 million from return to provision adjustments.

The primary items impacting the effective tax rate for the first six months of 2022 compared to the same period in 2021 included a tax expense of $74 million from the sale of our intermodal operation, which resulted in a reduction to our effective tax rate due to the book gain exceeding the tax gain, as well as a tax benefit of $3 million from stock-based compensation.

The primary items impacting the effective tax rate for the first six months of 2021 were tax benefits of $5 million from changes in reserves for uncertain tax positions and $3 million from stock-based compensation, partially offset by a tax expense of $4 million from return to provision adjustments.

Segment Financial Results

Our chief operating decision maker (“CODM”) regularly reviews financial information at the operating segment level to allocate resources to the segments and to assess their performance.

Our CODM evaluates segment profit based on adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”), which we define as income from continuing operations before debt extinguishment loss, interest expense, income tax, depreciation and amortization expense, gain on sale of business, transaction and integration costs, restructuring costs and other adjustments.

See Note 4—Segment Reporting for further information and a reconciliation of adjusted EBITDA to Income from continuing operations.

Our CODM evaluates segment profit based on adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”), which we define as net income from continuing operations attributable to common shareholders before debt extinguishment loss, interest expense, income tax, depreciation and amortization expense, (gain) loss on sale of business, transaction and integration costs, restructuring costs and other adjustments.

See Note 4—Segment Reporting to our Condensed Consolidated Financial Statements for further information and a reconciliation of adjusted EBITDA to Net income from continuing operations attributable to common shareholders.

North American Less-Than-Truckload Segment

Three Months Ended March 31, Percent of Revenue Change

Three Months Ended June 30, Percent of Revenue Change Six Months Ended June 30, Percent of Revenue Change

(Dollars in millions) 2022 2021 2022 2021 2022 vs.

2021 2022 2021 2022 2021 2022 vs.

Revenue $ 1,239 $ 1,081 100.0 % 100.0 % 14.6 % $ 2,344 $ 2,043 100.0 % 100.0 % 14.7 %

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Depreciation and amortization expense 60 57 4.8 % 5.3 % 5.3 % 115 112 4.9 % 5.5 % 2.7 %

Revenue in our North American LTL segment increased 14.9% to $1.1 billion for the first quarter of 2022, compared with $962 million for the same quarter in 2021.

Revenue included fuel surcharge revenue of $207 million and $135 million, respectively, for the first three months of 2022 and 2021.

Revenue in our North American LTL segment increased 14.6% to $1.2 billion for the second quarter of 2022, compared with $1.1 billion for the same quarter in 2021.

Revenue increased 14.7% to $2.3 billion for the first six months of 2022, compared with $2.0 billion for the same period in 2021.

Revenue included fuel surcharge revenue of $291 million and $164 million, respectively, for the second quarters of 2022 and 2021, and $498 million and $299 million, respectively, for the first six months of 2022 and 2021.

We evaluate the revenue performance of our LTL business using several commonly used metrics, including volume (weight per day in pounds) and yield, which is a commonly used measure of LTL pricing trends.

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The following table summarizes our key revenue metrics:

Three Months Ended March 31,

2022 2021 Change %

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 Change % 2022 2021 Change %

Pounds per day (thousands) 72,333 76,520 (5.5) % 71,250 73,636 (3.2) %

Gross revenue per hundredweight, excluding fuel surcharges $ 21.34 $ 19.29 10.6 % $ 21.05 $ 19.20 9.6 %

The year-over-year increase in revenue for the first quarter of 2022 reflects an increase in gross revenue per hundredweight.

The decrease in weight per day for the first quarter reflects lower shipments per day, partially offset by higher weight per shipment.

Adjusted EBITDA was $205 million, or 18.5% of revenue, for the first three months of 2022, compared with $214 million, or 22.2% of revenue, for the same quarter in 2021.

Adjusted EBITDA for the first quarter of 2021 included $17 million of gains from real estate transactions.

There were no gains from real estate transactions in the first quarter of 2022.

Additionally, adjusted EBITDA in the first quarter of 2022 reflected higher revenue, partially offset by increased compensation costs, purchased transportation expense and fuel costs incurred to meet growing demand.

The year-over-year increases in revenue for both the second quarter and first six months of 2022 reflect an increase in gross revenue per hundredweight.

The decrease in weight per day for the second quarter and first six months reflects lower shipments per day.

The impact of lower shipments per day in the first six months of 2022 was partially offset by higher weight per shipment.

Adjusted EBITDA was $294 million, or 23.7% of revenue, for the second quarter of 2022, compared with $258 million, or 23.9% of revenue, for the same quarter in 2021.

Adjusted EBITDA was $499 million, or 21.3% of revenue, for the first six months of 2022, compared with $472 million, or 23.1% of revenue, for the same period in 2021.

Adjusted EBITDA for the second quarter and first six months of 2021 included $5 million and $22 million of gains from real estate transactions, respectively.

There were no gains from real estate transactions in the second quarter and first six months of 2022.

Additionally, adjusted EBITDA in both periods of 2022 reflects higher revenue, partially offset by increased fuel and compensation costs and purchased transportation costs from higher highway subservice costs per mile.

Brokerage and Other Services Segment

Three Months Ended March 31, Percent of Revenue Change

Three Months Ended June 30, Percent of Revenue Change Six Months Ended June 30, Percent of Revenue Change

(Dollars in millions) 2022 2021 2022 2021 2022 vs.

2021 2022 2021 2022 2021 2022 vs.

Revenue $ 2,067 $ 2,161 100.0 % 100.0 % (4.3) % $ 4,499 $ 4,232 100.0 % 100.0 % 6.3 %

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Depreciation and amortization expense 54 60 2.6 % 2.8 % (10.0) % 114 120 2.5 % 2.8 % (5.0) %

Revenue in our Brokerage and Other Services segment increased 17.4% to $2.4 billion for the first quarter of 2022, compared with $2.1 billion for the same quarter in 2021.

The year-over-year revenue increase for the first three

months of 2022 primarily reflected an increase in North American truck brokerage loads, facilitated by our digital platform, as well as strength in other services.

Foreign currency movement reduced revenue by approximately 1.7 percentage points in the first quarter of 2022.

Adjusted EBITDA was $164 million, or 6.7% of revenue, for the first three months of 2022, compared with $125 million, or 6.1% of revenue, for the same quarter in 2021.

The increase was primarily driven by higher revenue due to load growth in North American truck brokerage and strong pricing in other brokerage services, partially offset by higher third-party transportation and compensation costs.

Revenue in our Brokerage and Other Services segment decreased 4.3% to $2.1 billion for the second quarter of 2022, compared with $2.2 billion for the same quarter in 2021.

The decrease in revenue was due to the sale of our North American intermodal operation in March 2022, which impacted revenue by approximately 12.3 percentage points.

Revenue in the second quarter of 2022 benefited from an increase in North American truck brokerage loads, facilitated by our digital platform, as well as strong pricing across the segment.

Foreign currency movement reduced revenue by approximately 3.4 percentage points in the second quarter of 2022.

Revenue increased 6.3% to $4.5 billion for the first six months of 2022, compared with $4.2 billion for the same period in 2021.

Revenue in the first six months of 2022 compared to the same period in 2021 benefited from an increase in North American truck brokerage loads, as well as strong pricing across the segment.

The increase was partially offset by the sale of our intermodal operation, which reduced revenue growth by approximately 4.1 percentage points in the first six months of 2022.

Foreign currency movement reduced revenue by approximately 2.6 percentage points in the first six months of 2022.

Adjusted EBITDA was $152 million, or 7.4% of revenue, for the second quarter of 2022, compared with $130 million, or 6.0% of revenue, for the same quarter in 2021.

Adjusted EBITDA was $316 million, or 7.0% of revenue, for the first six months of 2022, compared with $255 million, or 6.0% of revenue, for the same period in 2021.

The increases were primarily driven by higher revenue in North American truck brokerage and other brokerage services, partially offset by higher third-party transportation and compensation costs and by the sale of our intermodal operation.

Liquidity and Capital Resources

Our cash and cash equivalents balance was $1.0 billion as of March 31, 2022, compared to $260 million as of December 31, 2021.

Our principal existing sources of cash are (i) cash generated from operations;

Our cash and cash equivalents balance was $436 million as of June 30, 2022, compared to $260 million as of December 31, 2021.

Our principal existing sources of cash are:

(i) cash generated from operations;

(ii) borrowings available under our Second Amended and Restated Revolving Loan Credit Agreement, as amended (the “ABL Facility”);

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and (iv) proceeds from divestiture activities.

As of March 31, 2022, we have $996 million available to draw under our ABL Facility, based on a borrowing base of $1.0 billion and outstanding letters of credit of $4 million.

Additionally, we have a $200 million uncommitted secured evergreen letter of credit facility, under which we have issued $185 million in aggregate face amount of letters of credit as of March 31, 2022.

As of March 31, 2022, we had approximately $2.0 billion of total liquidity.

As of June 30, 2022, we have $995 million available to draw under our ABL Facility, based on a borrowing base of $1 billion and outstanding letters of credit of $5 million.

Additionally, we have a $200 million uncommitted secured evergreen letter of credit facility, under which we had issued $185 million in aggregate face amount of letters of credit as of June 30, 2022.

As of June 30, 2022, we had approximately $1.4 billion of total liquidity.

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

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We sell certain of our trade accounts receivable on a non-recourse basis to third-party financial institutions under factoring agreements.

We also sell trade accounts receivable under our securitization program.

We also sell trade accounts receivable under our securitization program co-arranged by two banks (the “Purchasers”).

We use trade receivables securitization and factoring programs to help manage our cash flows and offset the impact of extended payment terms for some of our customers.

For more information, see Note 1—Organization, Description of Business and Basis of Presentation to our Condensed Consolidated Financial Statements.

The maximum amount of net cash proceeds available at any one time under our securitization program, inclusive of any unsecured borrowings, is €200 million (approximately $221 million as of March 31, 2022).

As of March 31, 2022, €1 million (approximately $1 million) was available under the program, subject to having sufficient receivables available to sell and with consideration to amounts previously purchased.

The maximum amount of net cash proceeds available at any one time under our securitization program, inclusive of any unsecured borrowings, is €200 million (approximately $210 million as of June 30, 2022).

As of June 30, 2022,

less than €1 million (less than $1 million) was available under the program, subject to having sufficient receivables available to sell and with consideration to amounts previously sold.

Under the program, we service the receivables we sell on behalf of the Purchasers, which gives us visibility into the timing of customer payments.

The benefit to our cash flow includes the difference between the cash consideration in the table below and the amount we collected as a servicer on behalf of the Purchasers.

In the first three months of 2022 and 2021, we collected cash as servicer of $464 million and $341 million, respectively.

The benefit to our cash flow includes the difference between the cash consideration and the amount we collected as a servicer on behalf of the Purchasers.

In the first six months of 2022 and 2021, we collected cash as servicer of $885 million and $753 million, respectively.

Term Loan Facilities

In the first quarter of 2021, we amended our Senior Secured Term Loan Credit Agreement (the “Term Loan Credit Agreement”) and recorded a debt extinguishment loss of $3 million.

In the first quarter of 2021, we amended our Term Loan Credit Agreement and recorded a debt extinguishment loss of $3 million in the first six months of 2021.

Senior Notes Due 2025

In March 2022, we provided notice to redeem $630 million (“Redeemed Notes”) of the $1.15 billion principal amount of our outstanding 6.25% senior notes due 2025.

The redemption price for the Redeemed Notes was 100% of the principal amount plus a premium as defined in the indenture and accrued and unpaid interest.

In April 2022, we completed the redemption of the Redeemed Notes using available liquidity.

The loss on debt extinguishment of approximately $26 million will be reflected in the second quarter of 2022 results of operations.

In April 2022, we redeemed $630 million of the then $1.15 billion outstanding principal amount of our 6.25% senior notes due 2025.

The redemption price for the notes was 100% of the principal amount plus a premium, as defined in the indenture, of approximately $21 million and accrued and unpaid interest.

We paid for the redemption using available liquidity.

We recorded a debt extinguishment loss of $26 million in the second quarter of 2022 due to this redemption.

Senior Notes Due 2022

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We paid for the redemption with available cash.

We recorded a debt extinguishment loss of $5 million in the first quarter of 2021 due to this redemption.

We recorded a debt extinguishment loss of $5 million in the first six months of 2021 due to this redemption.

Preferred Stock and Warrant Exchanges

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These exchanges were intended to simplify our equity capital structure, including in contemplation of the spin-off of our logistics segment.

In the first quarter of 2021, 975 preferred shares were exchanged, and we issued 0.1 million shares of common stock and 9.8 million warrants were exchanged, and we issued 9.2 million shares of common stock.

In the first quarter of 2021, 975 preferred shares were exchanged, and we issued approximately 139 thousand shares of common stock.

In the second quarter of 2021, the remaining 40 preferred shares were exchanged, and we issued 5,714 shares of common stock.

With respect to the warrants, in the first quarter of 2021, 9.8 million warrants were exchanged, and we issued 9.2 million shares of common stock.

Subsequent to the exchange in the second quarter of 2021, there are no shares of preferred stock or warrants outstanding.

Share Repurchases

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There have been no share repurchases since the first quarter of 2020.

Our remaining share repurchase authorization was $503 million as of March 31, 2022.

Our remaining share repurchase authorization was $503 million as of June 30, 2022.

Loan Covenants and Compliance

As of March 31, 2022, we were in compliance with the covenants and other provisions of our debt agreements.

As of June 30, 2022, we were in compliance with the covenants and other provisions of our debt agreements.

Any failure to comply with any material provision or covenant of these agreements could have a material adverse effect on our liquidity and operations.

Sources and Uses of Cash

Three Months Ended March 31,

Six Months Ended June 30,

(In millions) 2022 2021

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Net cash used in financing activities from continuing operations (673) (1,489)

During the three months ended March 31, 2022, we:

(i) generated cash from operating activities from continuing operations of $200 million and (ii) generated net proceeds from sale of a business of $705 million.

We used cash during this period primarily to purchase property and equipment of $137 million.

During the three months ended March 31, 2021, we:

(i) generated cash from operating activities from continuing operations of $77 million and (ii) generated proceeds from sales of property and equipment of $36 million.

During the six months ended June 30, 2022, we:

(i) generated cash from operating activities from continuing operations of $399 million;

and (ii) generated net proceeds from the sale of our North American intermodal operation of $705 million.

We used cash during this period primarily to:

(i) purchase property and equipment of $267 million;

and (ii) redeem a portion of our senior notes due 2025 for $651 million.

During the six months ended June 30, 2021, we:

(i) generated cash from operating activities from continuing operations of $308 million;

and (ii) generated proceeds from sales of property and equipment of $60 million.

We used cash during this period primarily to:

(i) purchase property and equipment of $135 million;

(ii) redeem our senior notes due 2022 for $1.2 billion;

and (iii) repay our ABL Facility borrowings of $200 million.

Cash flows from operating activities from continuing operations for the three months ended March 31, 2022 increased by $123 million, compared with the same period in 2021.

The increase reflects higher income from continuing operations of $426 million for the three months ended March 31, 2022, compared with the same period in 2021, and the impact of operating assets and liabilities providing $36 million of cash in the first three months of 2022, compared to utilizing $112 million during the same period in 2021.

Partially offsetting these impacts was a $450 million gain on sale of business recognized during the three months ended March 31, 2022.

Within operating assets and liabilities, accounts payable generated $332 million more cash while accounts receivable utilized $207 million more cash in the first quarter of 2022 compared to the same period in 2021 as a result of higher revenues and timing of payments.

Investing activities from continuing operations generated $571 million of cash in the three months ended March 31, 2022 and used $38 million of cash in the three months ended March 31, 2021.

During the three months ended March 31, 2022, we received $705 million of cash from the sale of our intermodal operation, net of cash disposed, and used $137 million to purchase property and equipment.

During the three months ended March 31, 2021, we used

$74 million of cash to purchase property and equipment and received $36 million from sales of property and equipment.

Financing activities from continuing operations used $24 million of cash in the three months ended March 31, 2022 and $1.5 billion of cash in the three months ended March 31, 2021.

The primary uses of cash from financing activities during the first three months of 2022 were $16 million used to repay borrowings.

The primary uses of cash from financing activities during the three months ended March 31, 2021 were $1.2 billion used to redeem the senior notes due 2022 and $200 million used to repay borrowings under our ABL Facility.

Except for the notice of our intent to redeem a portion of our senior notes due 2025 as described above, there were no material changes to our December 31, 2021 contractual obligations during the three months ended March 31, 2022.

We anticipate full year net capital expenditures to be between $425 million and $475 million in 2022 (without giving effect to the planned spin-off and other dispositions).

Cash flows from operating activities from continuing operations for the six months ended June 30, 2022 increased by $91 million, compared with the same period in 2021.

The increase reflects higher income from continuing operations of $455 million for the six months ended June 30, 2022, compared with the same period in 2021, and the impact of operating assets and liabilities utilizing $102 million of cash in the first six months of 2022, compared with utilizing $129 million during the same period in 2021.

Partially offsetting these impacts was a $434 million gain on sale of business recognized during the six months ended June 30, 2022.

Within operating assets and liabilities, accounts payable generated $184 million more cash while accounts receivable utilized $159 million more cash in the first six months of 2022, compared with the same period in 2021, as a result of higher revenues and timing of payments in the 2022 period.

Investing activities from continuing operations generated $464 million of cash in the six months ended June 30, 2022 and used $75 million of cash in the six months ended June 30, 2021.

During the six months ended June 30, 2022, we received $705 million of cash from the sale of our intermodal operation, net of cash disposed, and used $267 million to purchase property and equipment.

During the six months ended June 30, 2021, we used $135 million of cash to purchase property and equipment and received $60 million from sales of property and equipment.

Financing activities from continuing operations used $673 million of cash in the six months ended June 30, 2022 and $1.5 billion of cash in the six months ended June 30, 2021.

The primary uses of cash from financing activities during the first six months of 2022 were $651 million used to redeem a portion of the senior notes due 2025 and $32 million used to repay borrowings.

The primary uses of cash from financing activities during the six months ended June 30, 2021 were $1.2 billion used to redeem the senior notes due 2022, $200 million used to repay borrowings under our ABL Facility and $43 million used to repay our debt and finance leases.

Except for the redemption of a portion of our senior notes due 2025 as described above, there were no material changes to our December 31, 2021 contractual obligations during the six months ended June 30, 2022.

We anticipate full year net capital expenditures to be between $425 million and $475 million in 2022 (without giving effect to the planned spin-off and divestiture of our European business).

New Accounting Standards

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis