What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-01 compared with 2024-05-03 · 147 added, 91 removed, 130 unchanged (65% of the section changed)

14 unchanged sentences

We use our proprietary technology to move goods efficiently through our customers’ supply chains in North America and Europe.

As of March 31, 2024, we had approximately 39,000 employees and 610 locations in 17 countries serving approximately 52,000 customers.

As of June 30, 2024, we had approximately 38,000 employees and 615 locations in 17 countries serving approximately 53,000 customers.

Our company has two reportable segments:

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Within the tables presented, certain amounts may not add due to the use of rounded numbers.

Percentages presented are calculated from the underlying numbers in millions.

Unless otherwise indicated, percentages presented are calculated from the underlying numbers in millions.

North American LTL Segment

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

For the trailing 12 months ended March 31, 2024, our customer-focused organization of truck drivers, service center teams and sales professionals worked together to move approximately 18 billion pounds of freight through our network to its destinations.

For the trailing 12 months ended June 30, 2024, our customer-focused organization

of truck drivers, service center teams and sales professionals worked together to move approximately 18 billion pounds of freight through our network to its destinations.

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

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Since implementing our LTL 2.0 growth plan in the fourth quarter of 2021, we have added over 4,300 tractors and 13,600 trailers.

In 2023, we produced over 6,400 trailers at our in-house trailer manufacturing facility, surpassing our goal of more than 6,000 trailers.

In 2023, we produced over 6,400 trailers at our in-house trailer manufacturing facility, surpassing our goal of more than 6,000 trailers, and for the six months ended June 30, 2024, we produced over 2,600 trailers.

Our in-house trailer manufacturing is an example of a self-reliant capability that is competitively advantageous to us, particularly when industry conditions make it difficult to source equipment.

In December 2023, we completed the acquisition of 28 service centers previously operated by Yellow Corporation (the “Yellow Asset Acquisition”), representing approximately 2,900 doors.

We expect the net increase in service centers and doors to be less than the gross number purchased as we look for opportunities to rationalize our existing footprint.

We expect the net increase in doors to be approximately two-thirds of the gross number purchased as we look for opportunities to rationalize our existing footprint.

This strategic acquisition of assets aligns with our commitment to invest in expanding our LTL network capacity.

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We serve an extensive base of customers within the consumer, trade and industrial markets, including many sector leaders that have long-tenured relationships with us.

Our range of freight services in Europe encompasses dedicated truckload, LTL, truck brokerage, managed transportation, last mile, freight forwarding and, increasingly, multimodal solutions, such as road-rail and road-short sea combinations that we tailor to customer needs.

Our range of freight services in Europe encompasses dedicated truckload, LTL, truck brokerage, managed transportation, last mile, freight forwarding, warehousing and, increasingly, multimodal solutions, such as road-rail and road-short sea combinations that we tailor to customer needs.

Our operators use our proprietary technology to manage these services within our digital ecosystem in Europe.

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An LTL network of our scale has hundreds of thousands of activities underway at any given time, all managed on our technology.

For the trailing 12 months ended March 31, 2024, we moved approximately 18 billion pounds of freight 813 million miles, including moving linehaul freight an average of 2.6 million miles a day.

For the trailing 12 months ended June 30, 2024, we moved approximately 18 billion pounds of freight 823 million miles, including moving linehaul freight an average of 2.7 million miles a day.

With intelligent route-building, we can reduce empty miles in our linehaul network, improve load factor and mitigate cargo damage.

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We use our real-time visualization tools to reduce costs with pickups and deliveries and developed a robust pricing platform for contractual account management and automated, dynamic pricing for local accounts.

Importantly, our technology also helps our company meet its environmental goals and can help our customers meet their own goals.

For a detailed discussion of our philosophy relating to innovation and environmental matters, refer to “Business” in our 2023 Form 10-K.

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) 2024

2024 2023 2024 vs.

Revenue $ 2,079 $ 1,917 100.0 % 100.0 % 8.5 % $ 4,097 $ 3,824 100.0 % 100.0 % 7.1 %

Salaries, wages and employee benefits 834 762 41.3 % 40.0 % 9.4 %

Salaries, wages and employee

854 783 41.1 % 40.8 % 9.1 % 1,688 1,545 41.2 % 40.4 % 9.3 %

Purchased transportation 436 444 21.0 % 23.2 % (1.8) % 874 901 21.3 % 23.6 % (3.0) %

Fuel, operating expenses and supplies 413 427 20.5 % 22.4 % (3.3) %

Fuel, operating expenses and

402 390 19.3 % 20.3 % 3.1 % 814 817 19.9 % 21.4 % (0.4) %

Operating taxes and licenses 21 15 1.0 % 0.8 % 40.0 % 40 30 1.0 % 0.8 % 33.3 %

Insurance and claims 33 46 1.6 % 2.4 % (28.3) % 71 90 1.7 % 2.4 % (21.1) %

Gains on sales of property and equipment (2) (3) (0.1) % (0.2) % (33.3) %

Depreciation and amortization expense 117 101 5.8 % 5.3 % 15.8 %

Gains on sales of property and

(4) (2) (0.2) % (0.1) % 100.0 % (5) (5) (0.1) % (0.1) % — %

Depreciation and amortization

122 107 5.9 % 5.6 % 14.0 % 239 208 5.8 % 5.4 % 14.9 %

Transaction and integration costs 12 17 0.6 % 0.9 % (29.4) % 26 39 0.6 % 1.0 % (33.3) %

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Other income (6) (3) (0.3) % (0.2) % 100.0 % (16) (8) (0.4) % (0.2) % 100.0 %

Debt extinguishment loss — 23 — % 1.2 % (100.0) % — 23 — % 0.6 % (100.0) %

Interest expense 56 43 2.7 % 2.2 % 30.2 % 114 85 2.8 % 2.2 % 34.1 %

Income from continuing operations before income tax provision 90 21 4.5 % 1.1 % 328.6 %

Income from continuing

operations before income tax provision

147 44 7.1 % 2.3 % 234.1 % 237 65 5.8 % 1.7 % 264.6 %

Income tax provision

Income from continuing operations 67 17 3.3 % 0.9 % 294.1 %

Loss from discontinued operations, net of taxes — (3) — % (0.2) % (100.0) %

(3) 13 (0.1) % 0.7 % NM 20 17 0.5 % 0.4 % 17.6 %

Income from continuing

150 31 7.2 % 1.6 % 383.9 % 217 48 5.3 % 1.3 % 352.1 %

Income (loss) from

discontinued operations, net of taxes

— 2 — % 0.1 % (100.0) % — (1) — % — % (100.0) %

Net income $ 150 $ 33 7.2 % 1.7 % 354.5 % $ 217 $ 47 5.3 % 1.2 % 361.7 %

Three Months Ended March 31, 2024 Compared with Three Months Ended March 31, 2023

Our consolidated revenue for the first quarter of 2024 increased 5.8% to $2.0 billion, compared with the same period in 2023.

The increase in revenue in the first quarter of 2024 compared to the same period in 2023 primarily reflects growth in our North American LTL segment.

Foreign currency movement increased revenue by approximately 1.0 percentage point in the first quarter of 2024.

NM - Not meaningful.

Three and Six Months Ended June 30, 2024 Compared with Three and Six Months Ended June 30, 2023

Our consolidated revenue for the second quarter of 2024 increased 8.5% to $2.1 billion, compared with the same quarter in 2023.

Our consolidated revenue for the first six months of 2024 increased 7.1% to $4.1 billion, compared with the same period in 2023.

The increase in both periods primarily reflects growth in our North American LTL segment and, to a lesser extent, growth in our European Transportation segment.

Foreign currency movement did not impact revenue in the second quarter of 2024 and increased revenue by approximately 0.5 percentage points in the first six months of 2024.

Salaries, wages and employee benefits includes compensation-related costs for our employees, including salaries, wages, incentive compensation, healthcare-related costs and payroll taxes, and covers drivers and dockworkers, operations and facility workers and employees in support roles and other positions.

Salaries, wages and employee benefits for the first quarter of 2024 was $834 million, or 41.3% of revenue, compared with $762 million, or 40.0% of revenue, for the same period in 2023.

The year-over-year increase as a percentage of revenue primarily reflects the impact of inflation on our cost base, the insourcing of a greater proportion of linehaul from third-party transportation providers, and higher incentive compensation related to our operating performance.

Salaries, wages and employee benefits for the second quarter of 2024 was $854 million, or 41.1% of revenue, compared with $783 million, or 40.8% of revenue, for the same quarter in 2023.

Salaries, wages and employee benefits for the first six months of 2024 was $1.7 billion, or 41.2% of revenue, compared with $1.5 billion, or 40.4% of revenue, for the same period in 2023.

The year-over-year increase as a percentage of revenue in both periods primarily reflects the impact of inflation on our cost base, the insourcing of a greater proportion of linehaul from third-party transportation providers, and higher incentive compensation related to our operating performance.

The increase in salaries, wages and employee benefits also reflects higher volumes in both of our segments.

Purchased transportation includes costs of procuring third-party freight transportation.

Purchased transportation for the first quarter of 2024 was $438 million, or 21.7% of revenue, compared with $457 million, or 24.0% of revenue, for the same period in 2023.

The year-over-year decrease as a percentage of revenue primarily reflects the insourcing of a greater proportion of linehaul from third-party transportation providers and lower rates paid to third-party providers for purchased transportation miles.

Purchased transportation for the second quarter of 2024 was $436 million, or 21.0% of revenue, compared with $444 million, or 23.2% of revenue, for the same quarter in 2023.

Purchased transportation for the first six months of 2024 was $874 million, or 21.3% of revenue, compared with $901 million, or 23.6% of revenue, for the same period in 2023.

The year-over-year decrease as a percentage of revenue in both periods primarily reflects the insourcing of a greater proportion of linehaul from third-party transportation providers and, to a lesser extent, lower rates paid to third-party providers for purchased transportation miles in our North American LTL segment.

Fuel, operating expenses and supplies includes the cost of fuel purchased for use in our vehicles as well as related taxes, maintenance and lease costs for our equipment, including tractors and trailers, costs related to operating our owned and leased facilities, bad debt expense, third-party professional fees, information technology expenses and supplies expense.

Fuel, operating expenses and supplies for the first quarter of 2024 was $413 million, or 20.5% of revenue, compared with $427 million, or 22.4% of revenue, for the same period in 2023.

The year-over-year decrease primarily reflects lower fuel costs and lower bad debt expense.

Fuel, operating expenses and supplies for the second quarter of 2024 was $402 million, or 19.3% of revenue, compared with $390 million, or 20.3% of revenue, for the same quarter in 2023.

Fuel, operating expenses and supplies for the first six months of 2024 was $814 million, or 19.9% of revenue, compared with $817 million, or 21.4% of revenue, for the same period in 2023.

The year-over-year decrease as a percentage of revenue in both periods primarily reflects lower fuel costs, maintenance costs and bad debt expense as a percentage of revenue.

Operating taxes and licenses includes tax expenses related to our vehicles and our owned and leased facilities as well as license expenses to operate our vehicles.

Operating taxes and licenses for the first quarter of 2024 was $19 million, compared with $15 million for the same period in 2023.

The year-over-year increase primarily reflects property taxes on newly acquired service centers and lower tax incentives in Illinois.

Operating taxes and licenses for the second quarter of 2024 was $21 million, compared with $15 million for the same quarter in 2023.

Operating taxes and licenses for the first six months of 2024 was $40 million, compared with $30 million for the same period in 2023.

The year-over-year increase in both periods primarily reflects property taxes on newly acquired service centers and lower tax incentives in Illinois.

Insurance and claims includes costs related to vehicular and cargo claims for both purchased insurance and self-insurance programs.

Insurance and claims for the first quarter of 2024 was $38 million, compared with $44 million for the same period in 2023.

The year-over-year decrease reflects lower expense due to improved operating performance related to damaged shipments, partially offset by higher vehicular claims.

Gains on sales of property and equipment for the first quarter of 2024 was $2 million, compared with $3 million for the same period in 2023.

Depreciation and amortization expense for the first quarter of 2024 was $117 million, compared with $101 million for the same period in 2023.

The year-over-year increase reflects the impact of capital investments, in particular tractors and trailers.

Transaction and integration costs for the first quarter of 2024 were $14 million, compared with $22 million for the same period in 2023.

Transaction and integration costs for the first quarter of 2024 and 2023 are primarily comprised of stock-based compensation for certain employees related to strategic initiatives.

Insurance and claims for the second quarter of 2024 was $33 million, compared with $46 million for the same quarter in 2023.

Insurance and claims for the first six months of 2024 was $71 million, compared with $90 million for the same period in 2023.

The year-over-year decrease in both periods reflects lower expense due to improved damage frequency.

Gains on sales of property and equipment for the second quarter of 2024 was $4 million, compared with $2 million for the same quarter in 2023.

Gains on sales of property and equipment for both the first six months of 2024 and 2023 was $5 million.

The increase in the second quarter of 2024 is consistent with our lifecycle management approach for fleet in Europe.

Depreciation and amortization expense for the second quarter of 2024 was $122 million, compared with $107 million for the same quarter in 2023.

Depreciation and amortization expense for the first six months of 2024 was $239 million, compared with $208 million for the same period in 2023.

The year-over-year increase in both periods reflects the impact of capital investments, in particular tractors and trailers.

Transaction and integration costs for the second quarter of 2024 were $12 million, compared with $17 million for the same quarter in 2023.

Transaction and integration costs for the first six months of 2024 were $26 million, compared with $39 million for the same period in 2023.

Transaction and integration costs for both periods of 2024 and 2023 are primarily comprised of stock-based compensation for certain employees related to strategic initiatives, while the 2023 periods also include retention awards for certain employees.

We expect stock-based compensation costs related to our previously announced strategic initiatives to conclude in 2024.

Restructuring costs for the first quarter of 2024 were $8 million, compared with $24 million for the same period in 2023.

Restructuring costs for the second quarter of 2024 were $6 million, compared with $10 million for the same quarter in 2023.

Restructuring costs for the first six months of 2024 were $14 million, compared with $34 million for the same period in 2023.

We engage in restructuring actions as part of our ongoing efforts to best use our resources and infrastructure.

For more information, see Note 4—Restructuring Charges to our Condensed Consolidated Financial Statements.

Other income for the first quarter of 2024 was $10 million, compared with $5 million for the same period in 2023.

The year-over-year increase reflects $3 million in investment income and a $2 million increase in net periodic pension income.

Interest expense increased to $58 million for the first quarter of 2024, compared with $42 million for the same period of 2023.

The increase is primarily due to the debt issuance in the fourth quarter of 2023 to finance the Yellow Asset Acquisition and higher prevailing interest rates in 2024.

Our effective income tax rates were 25.2% and 18.3% for the first quarter of 2024 and 2023, respectively.

The effective tax rates for the first quarter of 2024 and 2023 were based on forecasted full-year effective tax rates, adjusted for discrete items that occurred within the periods presented.

The increase in our effective income tax rate for the first quarter of 2024 compared to the same period in 2023 was primarily driven by higher pre-tax book income which reduced the impact of discrete tax items.

In the first quarter of 2024, the effective tax rate was impacted by losses for which no tax benefit can be recognized and forecasted non-deductible executive compensation expense, partially offset by a discrete tax benefit of $5 million from stock-based compensation.

In the first quarter of 2023, the effective tax rate was impacted by $2 million of discrete tax benefits from revaluing deferred state taxes, partially offset by forecasted non-deductible executive compensation expense.

Other income for the second quarter of 2024 was $6 million, compared with $3 million for the same quarter in 2023.

Other income for the first six months of 2024 was $16 million, compared with $8 million for the same period in 2023.

The year-over-year increase in both periods primarily reflects an increase in net periodic pension income, as well as $3 million in investment income in the first six months of 2024.

Debt extinguishment loss was $23 million for the second quarter and first six months of 2023, which related to the refinancing of our Term Loan Facility in the second quarter of 2023.

There was no debt extinguishment loss for the second quarter and first six months of 2024.

Interest expense increased to $56 million for the second quarter of 2024, compared with $43 million for the same quarter in 2023.

Interest expense increased to $114 million for the first six months of 2024, compared with $85 million for the same period in 2023.

The increase in both periods is primarily due to the debt issuance in the fourth quarter of 2023 to finance the Yellow Asset Acquisition and higher prevailing interest rates in 2024.

Our effective income tax rates were (2.0)% and 28.8% for the second quarter of 2024 and 2023, respectively, and 8.3% and 25.4% for the first six months of 2024 and 2023, respectively.

The effective income tax rates for the second quarter and six-month periods of 2024 and 2023 were based on forecasted full-year effective income tax rates, adjusted for discrete items that occurred within the periods presented.

The year-over-year decrease in our effective income tax rates in both periods was primarily driven by a one-time tax benefit of $41 million associated with a legal entity reorganization in our European Transportation business that occurred in the second quarter of 2024 and a reduced impact from forecasted non-deductible executive compensation expense as a result of higher pre-tax income in 2024 compared to the same periods in 2023, partially offset by the impact of losses for which no tax benefit can be recognized.

We expect the legal entity reorganization to generate a net refund of approximately $45 million, primarily in 2025.

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 (loss) based on adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”), which we define as income from continuing operations before interest expense, income tax, depreciation and amortization expense, transaction and integration costs, restructuring costs and other adjustments.

Our CODM evaluates segment profit (loss) 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 provision (benefit), depreciation and amortization expense, transaction and integration costs, restructuring costs and other adjustments.

Segment Adjusted EBITDA includes an allocation of corporate costs.

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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) 2024 2023 2024 2023 2024 vs.

2023 2024 2023 2024 2023 2024 vs.

Revenue $ 1,272 $ 1,136 100.0 % 100.0 % 12.0 % $ 2,493 $ 2,256 100.0 % 100.0 % 10.5 %

Adjusted EBITDA (1)

297 208 23.3 % 18.3 % 42.8 % 551 390 22.1 % 17.3 % 41.3 %

Depreciation and amortization 86 71 6.8 % 6.3 % 21.1 % 168 139 6.7 % 6.2 % 20.9 %

Revenue in our North American LTL segment increased 9.0% to $1.2 billion for the first quarter of 2024, compared with $1.1 billion for the same period in 2023.

Revenue included fuel surcharge revenue of $210 million and $217 million, respectively, for the first quarters of 2024 and 2023.

The decrease in fuel surcharge revenue was primarily driven by lower diesel prices.

(1) Percent of Revenue is calculated using the underlying unrounded amounts.

Revenue in our North American LTL segment increased 12.0% to $1.3 billion for the second quarter of 2024, compared with $1.1 billion for the same quarter in 2023.

Revenue increased 10.5% to $2.5 billion for the first six months of 2024, compared with $2.3 billion for the same period in 2023.

Revenue included fuel surcharge revenue of $208 million and $196 million, respectively, for the second quarters of 2024 and 2023, and $418 million and $413 million, respectively, for the first six months of 2024 and 2023.

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,

2024 2023 Change %

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

2024 2023 Change % 2024 2023 Change %

Pounds per day (thousands) 72,658 70,290 3.4 % 71,687 69,587 3.0 %

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Average weight per shipment (in pounds) 1,358 1,372 (1.1) % 1,367 1,387 (1.5) %

Gross revenue per hundredweight, excluding fuel surcharges $ 23.13 $ 21.06 9.8 %

The year-over-year increase in revenue, excluding fuel surcharge revenue, in the first quarter of 2024 reflects higher volume and gross revenue per hundredweight, primarily related to our improvements in service quality and investments in capacity.

The increase in volume per day for the first quarter of 2024 reflects higher shipments per day, partially offset by lower average weight per shipment.

The increase in yield in the first quarter of 2024 reflects the benefit of numerous pricing initiatives.

In the month of April 2024 weight per day increased 3.1%, as compared with April 2023, attributable to a year-over-year increase of 4.7% in shipments per day and a decrease of 1.5% in weight per shipment.

These April 2024 operating metrics are preliminary and actual results may vary.

Adjusted EBITDA was $255 million, or 20.9% of revenue, for the first quarter of 2024, compared with $182 million, or 16.3% of revenue, for the same period in 2023.

The increase in Adjusted EBITDA as a percentage of revenue reflects higher revenue, excluding fuel surcharge revenue, driven by the pricing and volume dynamics explained above, lower purchased transportation, lower bad debt expense, and lower damage claims.

These items were partially offset by higher salaries, wages and employee benefits and lower fuel surcharge revenue.

Depreciation and amortization expense increased to $82 million in the first quarter of 2024 compared with $68 million for the same period in 2023.

The increase was due to the impact of capital investments, in particular tractors and trailers.

Gross revenue per hundredweight, excluding

fuel surcharges

$ 23.56 $ 21.63 9.0 % $ 23.35 $ 21.34 9.4 %

Percentages presented are calculated using the underlying unrounded amounts.

The year-over-year increase in revenue, excluding fuel surcharge revenue, for both the second quarter and first six months of 2024 reflects higher gross revenue per hundredweight and volume, primarily related to our improvements in service quality.

The increase in yield for both the second quarter and first six months 2024 reflects the benefit of numerous pricing initiatives.

The increase in volume per day for both the second quarter and first six months of 2024 reflects higher shipments per day, partially offset by lower average weight per shipment.

Adjusted EBITDA was $297 million, or 23.3% of revenue, for the second quarter of 2024, compared with $208 million, or 18.3% of revenue, for the same quarter in 2023.

Adjusted EBITDA was $551 million, or 22.1% of revenue, for the first six months of 2024, compared with $390 million, or 17.3% of revenue, for the same period in 2023.

The increase in Adjusted EBITDA as a percentage of revenue in both the second quarter and first six months of 2024 reflects lower purchased transportation, damage claims, fuel costs, maintenance costs and bad debt expense as a percentage of revenue.

Depreciation and amortization expense increased to $86 million in the second quarter of 2024 compared with $71 million for the same quarter in 2023.

Depreciation and amortization expense increased to $168 million in the first six months of 2024 compared with $139 million for the same period in 2023.

The increase in both the second quarter and first six months of 2024 was due to the impact of capital investments, in particular tractors and trailers.

European Transportation 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) 2024 2023 2024 2023 2024 vs.

2023 2024 2023 2024 2023 2024 vs.

Revenue $ 808 $ 781 100.0 % 100.0 % 3.5 % $ 1,605 $ 1,568 100.0 % 100.0 % 2.4 %

Adjusted EBITDA (1)

49 46 6.1 % 6.0 % 6.5 % 87 83 5.4 % 5.3 % 4.8 %

Depreciation and amortization 35 33 4.3 % 4.2 % 6.1 % 70 65 4.4 % 4.1 % 7.7 %

Revenue in our European Transportation segment increased 1.3% to $797 million for the first quarter of 2024, compared with $787 million for the same period in 2023.

Foreign currency movement increased revenue by approximately 2.5 percentage points in the first quarter of 2024.

Revenue was essentially flat during the first quarter of 2024, compared to the same period in 2023, after taking into effect the impact of foreign currency movement.

Adjusted EBITDA was $38 million, or 4.8% of revenue, for the first quarter of 2024, compared with $37 million, or 4.7% of revenue, for the same period in 2023.

(1) Percent of Revenue is calculated using the underlying unrounded amounts.

Revenue in our European Transportation segment increased 3.5% to $808 million for the second quarter of 2024, compared with $781 million for the same quarter in 2023.

Revenue increased 2.4% to $1.61 billion for the first six months of 2024, compared with $1.57 billion for the same period in 2023.

Foreign currency movement did not impact revenue in the second quarter of 2024 and increased revenue by approximately 1.2 percentage points in the first six months of 2024.

The increase in revenue during both periods in 2024, compared to the same periods in 2023, after taking into effect the impact of foreign currency movement, primarily reflects higher yield and volume.

Adjusted EBITDA was $49 million, or 6.1% of revenue, for the second quarter of 2024, compared with $46 million, or 6.0% of revenue, for the same quarter in 2023.

Adjusted EBITDA was $87 million, or 5.4% of revenue, for the first six months of 2024, compared with $83 million, or 5.3% of revenue, for the same period in 2023.

The change in Adjusted EBITDA as a percentage of revenue in both the second quarter and the first six months of 2024 primarily reflects lower fuel costs offset by higher salaries, wages and employee benefits as a percentage of revenue.

Liquidity and Capital Resources

Our cash and cash equivalents balance was $229 million as of March 31, 2024, compared to $412 million as of December 31, 2023.

Our cash and cash equivalents balance was $250 million as of June 30, 2024, compared to $412 million as of December 31, 2023.

Our principal existing sources of cash are:

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and (iii) proceeds from the issuance of other debt.

As of March 31, 2024, we have $564 million available to draw under our ABL Facility, based on a borrowing base of $565 million and outstanding letters of credit of less than $1 million.

Additionally, we have a $200 million uncommitted secured evergreen letter of credit facility, under which we had issued $138 million in aggregate face amount of letters of credit as of March 31, 2024.

As of March 31, 2024, we had approximately $793 million of total liquidity.

As of June 30, 2024, we have $586 million available to draw under our ABL Facility, based on a borrowing base of $587 million and outstanding letters of credit of less than $1 million.

Additionally, we have a $200 million uncommitted secured evergreen letter of credit facility, under which we had issued $137 million in aggregate face amount of letters of credit as of June 30, 2024.

As of June 30, 2024, we had approximately $836 million of total liquidity.

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

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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 $216 million as of March 31, 2024).

As of March 31, 2024, the maximum amount available under the program was utilized.

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 $214 million as of June 30, 2024).

As of June 30, 2024, €6 million (approximately $6 million) was available under the program.

Under the securitization program, we service the receivables we sell on behalf of the purchasers.

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Term Loan Facility

The applicable interest rate for the two tranches of the term loan facility approximated 7.32% as of March 31, 2024.

In 2015, we entered into a Term Loan Credit Agreement that provided for a single borrowing of $1.6 billion, which was subsequently amended to increase the principal balance to $2.0 billion and to extend the maturity date to February 2025 (the “Existing Term Loan Facility”).

In the second quarter of 2023, we amended the Term Loan Credit Agreement to obtain $700 million of new term loans (the “New Term Loan Facility”) having substantially similar terms as the Existing Term Loan Facility, except with respect to maturity date, issue price, interest rate, prepayment premiums in connection with certain voluntary prepayments and certain other provisions.

The New Term Loan Facility was issued at 99.5% of the face amount and will mature in May 2028.

In the same period, we used net proceeds from the New Term Loan Facility, the Senior Secured Notes due 2028 (as defined below) and the Senior Notes due 2031 (as defined below), together with cash on hand, to repay $2.0 billion of outstanding principal under the Existing Term Loan Facility and to pay related fees, expenses and accrued interest.

We recorded a debt extinguishment loss of $23 million in the second quarter 2023 due to this repayment.

In the fourth quarter of 2023, we entered into an incremental amendment to the Term Loan Credit Agreement to obtain $400 million of incremental term loans (the “Incremental Term Loans”).

The Incremental Term Loans are a new tranche of loans under the Term Loan Credit Agreement and will mature in February 2031.

The applicable interest rate for the two tranches of the term loan facility approximated 7.34% as of June 30, 2024.

Senior Notes Due 2028 and 2031

In the second quarter of 2023, we completed private placements of $830 million aggregate principal amount of senior secured notes due 2028 (the “Senior Secured Notes due 2028”) and $450 million aggregate principal amount of senior notes due 2031 (the “Senior Notes due 2031”).

The Senior Secured Notes due 2028 mature in June 2028 and bear interest at a rate of 6.25% per annum.

The Senior Notes due 2031 mature in June 2031 and bear interest at a rate of 7.125% per annum.

Interest is payable semi-annually in cash in arrears and commenced December 1, 2023.

These notes were issued at par and were used to repay our Existing Term Loan Facility as described above.

Loan Covenants and Compliance

As of March 31, 2024, we were in compliance with the covenants and other provisions of our debt agreements.

As of June 30, 2024, 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) 2024 2023

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Net cash used in financing activities from continuing operations (35) (36)

During the three months ended March 31, 2024, we generated cash from operating activities from continuing operations of $145 million.

During the six months ended June 30, 2024, we generated cash from operating activities from continuing operations of $355 million.

We used cash during the period primarily to:

2 unchanged sentences

and (iii) make payments of $17 million related to tax withholding obligations in connection with the vesting of restricted shares.

During the three months ended March 31, 2023, we generated cash from operating activities from continuing operations of $76 million.

During the six months ended June 30, 2023, we:

(i) generated cash from operating activities from continuing operations of $207 million;

and (ii) received net proceeds of $2.0 billion from the issuance of debt.

We used cash during this period primarily to:

(i) purchase property and equipment of $355 million;

(ii) make payments on debt and finance leases of $16 million;

and (iii) make payments of $12 million related to tax withholding obligations in connection with the vesting of restricted shares.

Cash flows from operating activities from continuing operations for the three months ended March 31, 2024 increased by $69 million, compared with the same period in 2023.

and (ii) repurchase our Existing Term Loan Facility for $2.0 billion.

Cash flows from operating activities from continuing operations for the six months ended June 30, 2024 increased by $148 million, compared with the same period in 2023.

The increase primarily reflects:

(i) higher income from continuing operations of $50 million and (ii) the impact of operating assets and liabilities utilizing $68 million of cash in the first three months of 2024, compared with utilizing $79 million during the same period in 2023.

Investing activities from continuing operations used $299 million of cash in the three months ended March 31, 2024 and $216 million of cash in the three months ended March 31, 2023.

During the three months ended March 31, 2024, we used $306 million to purchase property and equipment, as compared to a $224 million usage of cash in the same period in 2023.

(i) higher income from continuing operations of $169 million;

(ii) higher non-cash depreciation and amortization of $31 million, that is added back in the determination of operating cash flows and (iii) higher non-cash deferred tax expense of $31 million, that is also added back in the determination of operating cash flows.

These items were partially offset by the impact of operating assets and liabilities utilizing $175 million of cash in the first six months of 2024, compared with utilizing $125 million during the same period in 2023.

Investing activities from continuing operations used $483 million of cash in the six months ended June 30, 2024 and $342 million of cash in the six months ended June 30, 2023.

During the six months ended June 30, 2024, we used $496 million to purchase property and equipment, as compared to a $355 million usage of cash in the same period in 2023.

The increase reflects our continued investment to support our long-term growth targets.

Financing activities from continuing operations used $29 million of cash in the three months ended March 31, 2024 and $10 million of cash in the three months ended March 31, 2023.

The primary uses of cash from financing activities in each of the first three months of 2024 and 2023 were $21 million and $16 million, respectively, used to repay borrowings, primarily related to finance lease obligations, and $15 million and $12 million, respectively, to make payments for tax withholdings on restricted shares.

The primary source of cash from financing activities during the first three months of 2024 was $11 million of proceeds from bank overdrafts, as compared to $19 million in the same period of 2023.

There were no material changes to our December 31, 2023 contractual obligations during the three months ended March 31, 2024.

We anticipate full year gross capital expenditures to be between $700 million and $800 million in 2024, funded by cash on hand and available liquidity.

Financing activities from continuing operations used $35 million of cash in the six months ended June 30, 2024 and $36 million of cash in the six months ended June 30, 2023.

The primary use of cash from financing activities during the first six months of 2024 was $39 million used to repay borrowings, primarily related to finance lease obligations, and $17 million to make payments for tax withholdings on restricted shares.

The primary uses of cash from financing activities during the first six months of 2023 was $2.0 billion used to repay our Existing Term Loan Facility.

The primary source of cash from financing activities during the first six months of 2024 was $27 million of proceeds from bank overdrafts.

The primary source of cash from financing activities during the first six months of 2023 was $2.0 billion of net proceeds from the issuance of debt.

There were no material changes to our December 31, 2023 contractual obligations during the six months ended June 30, 2024.

We anticipate full year gross capital expenditures to be between $700 million and $800 million in 2024, funded by cash on hand, cash generated from operations and available liquidity.

This includes capital expenditures to integrate the service centers acquired in the Yellow Asset Acquisition into our network.

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