What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-04-30 compared with 2024-10-30 · 121 added, 164 removed, 110 unchanged (72% 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 September 30, 2024, we had approximately 38,000 employees and 611 locations in 17 countries serving approximately 54,000 customers.

As of March 31, 2025, we had approximately 38,000 employees serving approximately 55,000 customers through 606 locations in 17 countries.

Our company has two reportable segments:

North American Less-Than-Truckload (“LTL”), the largest component of our business, and European Transportation.

Our North American LTL segment includes the results of our trailer manufacturing operations.

Our North American LTL segment includes the results of our trailer manufacturing operation.

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

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North American LTL Segment

LTL in North America is a bedrock industry providing a critical service to the economy, with favorable pricing dynamics and an established competitive landscape.

LTL in North America is a bedrock industry providing a critical service to the economy, with secular growth drivers, a favorable pricing environment and an established competitive landscape.

XPO is one of the largest LTL networks in North America, with approximately 9% share of the U.S.

market, estimated to be $52 billion as of December 31, 2023.

We provide approximately 35,000 shippers in North America with critical geographic density and day-definite domestic and cross-border services to approximately 99% of U.S.

zip codes, as well as Mexico, Canada and the Caribbean.

market, estimated to be $53 billion in 2024.

We provide approximately 36,000 shippers with critical geographic density and day-definite domestic services to approximately 99% of U.S.

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

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 September 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.

For the trailing 12 months ended March 31, 2025, our customer-focused organization of truck

drivers, service center teams and sales professionals worked together to move approximately 17 billion pounds of freight through our network.

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

This supports our ongoing investments in our people, network capacity and proprietary technology.

We manage the business to specific objectives, such as high customer service scores for on-time delivery and damage-free freight, the optimal sourcing of linehaul transportation, and the expansion of our service center footprint in strategic markets with long-term demand.

Since implementing our LTL 2.0 growth plan in the fourth quarter of 2021, we have added over 4,400 tractors and 14,700 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 nine months ended September 30, 2024, we produced over 3,600 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 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.

As a leading provider of freight transportation services, our business can be impacted to varying degrees by factors beyond our control.

In 2024, the overall freight environment continues to be recessionary, in large part due to underlying demand trends.

Despite this, we continue to perform well and see growth potential ahead as we continue to expand our business by investing in capacity for the long-term, gaining profitable market share and aligning price with the value we provide to customers.

This supports our ongoing investments in people, network capacity and proprietary technology.

We manage the business to specific objectives, such as on-time delivery and damage-free transport of customer freight, the optimal sourcing of linehaul transportation, and the strategic expansion of our footprint in markets with long-term demand.

Since implementing our growth plan in the fourth quarter of 2021, we have added more than 2,000 net new doors to our network — this includes the acquisition of service centers previously operated by Yellow Corporation (the “Yellow Asset Acquisition”), completed in December 2023.

As of March 31, 2025, we had opened the majority of these acquired locations.

Additionally, we have continued to advance a host of initiatives that are specific to XPO and largely independent of the macroeconomic environment.

Our in-house trailer manufacturing facility and truck driver schools are self-reliant capabilities that are competitively advantageous for us, particularly when industry conditions make it difficult to source equipment or drivers.

In 2024, we produced over 4,400 trailers and continued to invest in training commercial drivers at our XPO driver schools.

Specific to our technology, we believe that we have a large opportunity to drive further growth and profitability in our LTL network through innovation.

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and a top-tier dedicated truckload provider in the U.K., where we also have the largest single-owner LTL network.

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, warehousing and, increasingly, multimodal solutions, such as road-rail and road-short sea combinations that we tailor to customer needs.

We serve an extensive base of customers in 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, full truckload brokerage, warehousing, managed transportation, last mile, freight forwarding and, increasingly, multimodal solutions customized for our customers, such as road-rail and road-short sea combinations.

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

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In our North American LTL business, the caliber of our technology is mission-critical to our success;

it optimizes linehaul, pickup-and-delivery and pricing — the main components of the service we provide.

it optimizes pricing, linehaul, labor planning, pickup-and-delivery and dock operations — the main components of the service we provide.

We have been investing in proprietary artificial intelligence (“AI”) technology and have identified a number of high-impact applications where intelligent automation and better decision-making can directly enhance profitability.

We see artificial intelligence playing a major role in how we operate, compete, and create value over the long term.

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 September 30, 2024, we moved approximately 18 billion pounds of freight 820 million miles, including moving linehaul freight an average of 2.6 million miles a day.

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

Our proprietary bypass models make recommendations to enhance trailer utilization, assimilating massive amounts of data and taking volume, density, and freight dimensions into account.

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.

For the trailing 12 months ended March 31, 2025, we moved approximately 17 billion pounds of freight 800 million miles, including moving linehaul freight an average of 2.6 million miles a day.

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

Our proprietary optimization models analyze massive amounts of data including volume, capacity, and dimensions and generate instructions to maximize trailer utilization, reduce cost, and enhance service.

We use our real-time visualization tools to drive efficiencies with pickups and deliveries and developed a robust pricing platform for contractual account management.

Consolidated Summary Financial Table

Three Months Ended September 30, Percent of Revenue Change Nine Months Ended September 30, Percent of Revenue Change

Three Months Ended March 31, Percent of Revenue Change

(Dollars in millions) 2025

2025 2024 2025 vs.

2024 2023 2024 vs.

Revenue $ 1,954 $ 2,018 100.0 % 100.0 % (3.2) %

Salaries, wages and employee

852 809 41.5 % 40.9 % 5.3 % 2,541 2,354 41.3 % 40.6 % 7.9 %

Salaries, wages and employee benefits 832 834 42.6 % 41.3 % (0.2) %

Purchased transportation 399 438 20.4 % 21.7 % (8.9) %

Fuel, operating expenses and

399 406 19.4 % 20.5 % (1.7) % 1,213 1,223 19.7 % 21.1 % (0.8) %

Fuel, operating expenses and supplies 393 413 20.1 % 20.5 % (4.8) %

Operating taxes and licenses 19 19 1.0 % 0.9 % — %

Insurance and claims 35 38 1.8 % 1.9 % (7.9) %

(Gains) losses on sales of

property and equipment

— 1 — % 0.1 % (100.0) % (5) (4) (0.1) % (0.1) % 25.0 %

Depreciation and amortization

126 110 6.1 % 5.6 % 14.5 % 365 318 5.9 % 5.5 % 14.8 %

Gains on sales of property and equipment (2) (2) (0.1) % (0.1) % — %

Depreciation and amortization expense 123 117 6.3 % 5.8 % 5.1 %

Legal matter (11) — (0.6) % — % NM

Transaction and integration costs 3 14 0.2 % 0.7 % (78.6) %

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Other income (1) (10) (0.1) % (0.5) % (90.0) %

Debt extinguishment loss — — — % — % — % — 23 — % 0.4 % (100.0) %

Debt extinguishment loss 5 — 0.3 % — % NM

Interest expense 56 58 2.9 % 2.9 % (3.4) %

Income from continuing

operations before income tax provision

135 117 6.6 % 5.9 % 15.4 % 372 182 6.0 % 3.1 % 104.4 %

Income before income tax provision 91 90 4.7 % 4.5 % 1.1 %

Income tax provision 22 23 1.1 % 1.1 % (4.3) %

Income from continuing

95 86 4.6 % 4.3 % 10.5 % 312 134 5.1 % 2.3 % 132.8 %

Loss from discontinued

operations, net of taxes

— (2) — % (0.1) % (100.0) % — (3) — % (0.1) % (100.0) %

Net income $ 69 $ 67 3.5 % 3.3 % 3.0 %

Three and Nine Months Ended September 30, 2024 Compared with Three and Nine Months Ended September 30, 2023

Our consolidated revenue for the third quarter of 2024 increased 3.7% to $2.1 billion, compared with the same quarter in 2023.

Our consolidated revenue for the first nine months of 2024 increased 6.0% to $6.2 billion, compared with the same period in 2023.

The increase in both periods reflects growth in both of our reportable segments, partially offset by a decline in fuel surcharge revenue in our North American LTL segment.

Foreign currency movement did not impact revenue in the third quarter of 2024 and increased revenue by approximately 0.3 percentage points in the first nine months of 2024.

NM - Not meaningful.

Three Months Ended March 31, 2025 Compared with Three Months Ended March 31, 2024

Our consolidated revenue for the first quarter of 2025 decreased 3.2% to $1.95 billion, compared with the same period in 2024.

The decrease in revenue in the first quarter of 2025 compared to the same period in 2024 reflects declines in both of our reportable segments, further explained below.

Foreign currency movement decreased revenue by approximately 1.4 percentage points in the first quarter of 2025.

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 third quarter of 2024 was $852 million, or 41.5% of revenue, compared with $809 million, or 40.9% of revenue, for the same quarter in 2023.

Salaries, wages and employee benefits for the first nine months of 2024 was $2.5 billion, or 41.3% of revenue, compared with $2.4 billion, or 40.6% of revenue, for the same period in

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

Salaries, wages and employee benefits for the first quarter of 2025 was $832 million, or 42.6% of revenue, compared with $834 million, or 41.3% of revenue, for the same period in 2024.

The year-over-year increase as a percentage of revenue primarily reflects the insourcing of a greater proportion of linehaul from third-party transportation providers, partially offset by lower incentive compensation and savings from restructuring actions.

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

Purchased transportation for the third quarter of 2024 was $430 million, or 20.9% of revenue, compared with $437 million, or 22.1% of revenue, for the same quarter in 2023.

Purchased transportation for the first nine months of 2024 was $1.30 billion, or 21.2% of revenue, compared with $1.34 billion, or 23.1% 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, partially offset by higher purchased transportation in our European Transportation segment.

Purchased transportation for the first quarter of 2025 was $399 million, or 20.4% of revenue, compared with $438 million, or 21.7% of revenue, for the same period in 2024.

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 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 third quarter of 2024 was $399 million, or 19.4% of revenue, compared with $406 million, or 20.5% of revenue, for the same quarter in 2023.

Fuel, operating expenses and supplies for the first nine months of 2024 was $1.21 billion, or 19.7% of revenue, compared with $1.22 billion, or 21.1% 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.

Fuel, operating expenses and supplies for the first quarter of 2025 was $393 million, or 20.1% of revenue, compared with $413 million, or 20.5% of revenue, for the same period in 2024.

The year-over-year decrease as a percentage of revenue primarily reflects lower fuel costs.

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 third quarter of 2024 was $21 million, compared with $15 million for the same quarter in 2023.

Operating taxes and licenses for the first nine months of 2024 was $61 million, compared with $45 million for the same period in 2023.

The year-over-year increase in both periods primarily reflects property taxes on service centers acquired in the Yellow Asset Acquisition.

Operating taxes and licenses for the first quarter of 2025 was $19 million, compared with $19 million for the same period in 2024.

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

Insurance and claims for the third quarter of 2024 was $33 million, compared with $39 million for the same quarter in 2023.

Insurance and claims for the first nine months of 2024 was $105 million, compared with $129 million for the same period in 2023.

The year-over-year decrease in both periods reflects lower expense due to improved damage frequency, partially offset by higher vehicular insurance costs.

(Gains) losses on sales of property and equipment for the third quarter of 2024 was $0 million, compared with a loss of $1 million for the same quarter in 2023.

(Gains) losses on sales of property and equipment in the first nine months of 2024 was a gain of $5 million, compared with a gain of $4 million for the same period in 2023.

Depreciation and amortization expense for the third quarter of 2024 was $126 million, compared with $110 million for the same quarter in 2023.

Depreciation and amortization expense for the first nine months of 2024 was $365 million, compared with $318 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, as well as service centers acquired in the Yellow Asset Acquisition.

Transaction and integration costs for the third quarter of 2024 were $13 million, compared with $8 million for the same quarter in 2023.

Transaction and integration costs for the first nine months of 2024 were $39 million, compared with $47 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.

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

Restructuring costs for the third quarter of 2024 were $3 million, compared with $1 million for the same quarter in 2023.

Restructuring costs for the first nine months of 2024 were $17 million, compared with $35 million for the same period in 2023.

Insurance and claims for the first quarter of 2025 was $35 million, compared with $38 million for the same period in 2024.

The year-over-year decrease primarily reflects lower costs in our European Transportation segment, partially offset by higher vehicular insurance costs in our North American LTL segment.

Depreciation and amortization expense for the first quarter of 2025 was $123 million, compared with $117 million for the same period in 2024.

The year-over-year increase reflects the impact of capital investments, in particular service centers acquired in the Yellow Asset Acquisition, as well as tractors and trailers.

Legal matter for the first quarter of 2025 was a gain of $11 million, which reflects the settlement of claims against certain truck manufacturers related to purchases by our European Transportation segment covering periods prior to our acquisition of Norbert Dentressangle SA in 2015.

Transaction and integration costs for the first quarter of 2025 were $3 million, compared with $14 million for the same period in 2024.

The year-over-year decrease primarily relates to no further stock-based compensation costs in the current year for certain employees related to strategic initiatives.

Restructuring costs for the first quarter of 2025 were $12 million, compared with $8 million for the same period in 2024, which primarily related to restructuring actions in our European Transportation segment.

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 third quarter of 2024 was $15 million, compared with $4 million for the same quarter in 2023.

Other income for the first nine months of 2024 was $31 million, compared with $12 million for the same period in 2023.

The year-over-year increase reflects $9 million of investment income in the third quarter of 2024 and $13 million of investment income in the first nine months of 2024 in Corporate on a past investment in a private company that was sold in the quarter, compared with no investment income in the 2023 periods, as well as an increase in net periodic pension income in both 2024 periods.

Debt extinguishment loss was $23 million for the first nine months of 2023, which related to the refinancing of our Existing Term Loan Facility (as defined below) in the second quarter of 2023.

There was no debt extinguishment loss in the third quarter of 2023 or in 2024.

Interest expense increased to $56 million for the third quarter of 2024, compared with $41 million for the same quarter in 2023.

Interest expense increased to $170 million for the first nine months of 2024, compared with $126 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.

Our effective income tax rates were 29.7% and 27.0% for the third quarter of 2024 and 2023, respectively, and 16.0% and 26.4% for the first nine months of 2024 and 2023, respectively.

The effective income tax rates for the third quarter and nine-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 increase in our effective income tax rate for the third quarter of 2024 compared to the same period in 2023 was primarily driven by losses for which no tax benefit can be recognized and a reduction in the one-time tax benefit initially recognized in the second quarter of 2024 related to the legal entity reorganization in our European Transportation business, partially offset by a decrease in forecasted non-deductible executive compensation expense.

The decrease in our effective income tax rate for the first nine months of 2024 compared to the same period in 2023 was primarily driven by a one-time tax benefit of $40 million associated with the legal entity reorganization in our European Transportation business 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 period 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 cash refund of approximately $45 million, to be received primarily in 2025.

Other income for the first quarter of 2025 was $1 million, compared with $10 million for the same period in 2024.

The year-over-year decrease primarily reflects a $5 million decrease in net periodic pension income and a $3 million decrease in investment income.

Debt extinguishment loss for the first quarter of 2025 was $5 million, with no comparable loss for the same period in 2024.

The debt extinguishment loss in the first quarter of 2025 related to the refinancing of our term loan facility.

Interest expense decreased to $56 million for the first quarter of 2025, compared with $58 million for the same period in 2024.

The decrease is primarily due to lower interest rates on our variable rate debt.

Our effective income tax rates were 24.2% and 25.2% for the first quarters of 2025 and 2024, respectively.

The effective income tax rates for the first quarter of 2025 and 2024 were based on forecasted full-year effective income tax rates, adjusted for discrete items that occurred within the periods presented.

The decrease in our effective income tax rate for the first quarter of 2025 compared to the same period in 2024 was primarily driven by a decrease in losses for which no tax benefit can be recognized and a decrease in forecasted non-deductible executive compensation expense.

In both the first quarter of 2025 and 2024, the effective tax rates were 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 both periods.

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 debt extinguishment loss, interest expense, income tax provision, depreciation and amortization expense, transaction and integration costs, restructuring costs and other adjustments.

For our North American LTL and European Transportation segments, our CODM evaluates segment profit (loss) based on adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”), which we define as income before debt extinguishment loss, interest expense, income tax provision, depreciation and amortization expense, legal matters, transaction and integration costs, restructuring costs and other adjustments.

Segment adjusted EBITDA includes an allocation of corporate costs.

See Note 2—Segment Reporting to our Condensed Consolidated Financial Statements for further information and a reconciliation of Adjusted EBITDA to Income from continuing operations.

See Note 2—Segment Reporting to our Condensed Consolidated Financial Statements for further information and a reconciliation of adjusted EBITDA to Net income.

North American Less-Than-Truckload Segment

Three Months Ended September 30, Percent of Revenue Change Nine Months Ended September 30, Percent of Revenue Change

Three Months Ended March 31, Percent of Revenue Change

(Dollars in millions) 2025 2024 2025 2024 2025 vs.

2023 2024 2023 2024 2023 2024 vs.

Revenue $ 1,172 $ 1,221 100.0 % 100.0 % (4.0) %

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

Revenue in our North American LTL segment increased 1.9% to $1.3 billion for the third quarter of 2024, compared with $1.2 billion for the same quarter in 2023.

Revenue increased 7.4% to $3.7 billion for the first nine months of 2024, compared with $3.5 billion for the same period in 2023.

Revenue included fuel surcharge revenue of $195 million and $223 million, respectively, for the third quarters of 2024 and 2023, and $613 million and $636 million, respectively, for the first nine months of 2024 and 2023.

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

Revenue in our North American LTL segment decreased 4.0% to $1.17 billion for the first quarter of 2025, compared with $1.22 billion for the same period in 2024.

Revenue included fuel surcharge revenue of $178 million and $210 million, respectively, for the first quarters of 2025 and 2024.

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

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 September 30, Nine Months Ended September 30,

2024 2023 Change % 2024 2023 Change %

Three Months Ended March 31,

2025 2024 Change %

Pounds per day (thousands) 65,427 70,709 (7.5) %

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Percentages presented are calculated using the underlying unrounded amounts.

The year-over-year increase in revenue, excluding fuel surcharge revenue, for both the third quarter and first nine months of 2024 reflects higher yield, primarily related to our improvements in service quality and the benefit of numerous pricing initiatives, partially offset by lower volume in the third quarter of 2024.

The decrease in volume per day for the third quarter of 2024 reflects lower shipments per day and average weight per shipment.

Volume per day increased for the first nine months of 2024, reflecting higher shipments per day partially offset by lower average weight per shipment.

Adjusted EBITDA was $284 million, or 22.7% of revenue, for the third quarter of 2024, compared with $241 million, or 19.6% of revenue, for the same quarter in 2023.

Adjusted EBITDA was $836 million, or 22.3% of revenue, for the first nine months of 2024, compared with $631 million, or 18.1% of revenue, for the same period in 2023.

The increase in Adjusted EBITDA as a percentage of revenue in both the third quarter and first nine months of 2024 reflects lower purchased transportation, damage claims, and fuel costs, partially offset by higher salaries, wages and employee benefits and vehicular insurance costs.

Depreciation and amortization expense increased to $89 million in the third quarter of 2024 compared with $75 million for the same quarter in 2023.

Depreciation and amortization expense increased to $257 million in the first nine months of 2024 compared with $214 million for the same period in 2023.

The increase in both the third quarter and first nine months of 2024 was due to the impact of capital investments, in particular tractors and trailers, as well as service centers acquired in the Yellow Asset Acquisition.

The year-over-year decrease in revenue, excluding fuel surcharge revenue, in the first quarter of 2025 reflects lower volume, driven by lower shipments per day and lower average weight per shipment.

These items were partially offset by higher yield, primarily related to our improvements in service quality and the benefit of numerous pricing initiatives.

Adjusted EBITDA was $250 million for the first quarter of 2025, compared with $255 million for the same period in 2024.

The decrease in adjusted EBITDA reflects lower revenue, driven by lower fuel surcharge revenue and volume, and lower pension income.

These items were partially offset by higher yield and lower purchased transportation and fuel costs.

Depreciation and amortization expense increased to $90 million in the first quarter of 2025 compared with $82 million for the same period in 2024.

The increase was due to the impact of capital investments, in particular service centers acquired in the Yellow Asset Acquisition, as well as tractors and trailers.

European Transportation Segment

Three Months Ended September 30, Percent of Revenue Change Nine Months Ended September 30, Percent of Revenue Change

Three Months Ended March 31, Percent of Revenue Change

(Dollars in millions) 2025 2024 2025 2024 2025 vs.

2023 2024 2023 2024 2023 2024 vs.

Revenue $ 782 $ 797 100.0 % 100.0 % (1.9) %

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

Revenue in our European Transportation segment increased 6.8% to $803 million for the third quarter of 2024, compared with $752 million for the same quarter in 2023.

Revenue increased 3.8% to $2.4 billion for the first nine months of 2024, compared with $2.3 billion for the same period in 2023.

Foreign currency movement increased revenue by approximately 0.1 percentage points in the third quarter of 2024 and by approximately 0.9 percentage points in the first nine 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 volume and yield.

Adjusted EBITDA was $44 million, or 5.4% of revenue, for the third quarter of 2024, compared with $44 million, or 5.8% of revenue, for the same quarter in 2023.

Adjusted EBITDA was $131 million, or 5.4% of revenue, for the first nine months of 2024, compared with $127 million, or 5.5% of revenue, for the same period in 2023.

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

Revenue in our European Transportation segment decreased 1.9% to $782 million for the first quarter of 2025, compared with $797 million for the same period in 2024.

Foreign currency movement decreased revenue by approximately 3.4 percentage points in the first quarter of 2025.

The increase in revenue during the first quarter of 2025, compared to the same period in 2024, after taking into effect the impact of foreign currency movement, primarily reflects higher yield, partially offset by lower volume.

Adjusted EBITDA was $32 million for the first quarter of 2025, compared with $38 million for the same period in 2024.

The decrease in adjusted EBITDA was primarily driven by higher purchased transportation, partially offset by the increase in revenue after taking into effect the impact of foreign currency movement, described above, and lower fuel costs and insurance and claims.

Depreciation and amortization expense decreased to $32 million in the first quarter of 2025 compared with $34 million for the same period in 2024.

Liquidity and Capital Resources

Our cash and cash equivalents balance was $378 million as of September 30, 2024, compared to $412 million as of December 31, 2023.

Our cash and cash equivalents balance was $212 million as of March 31, 2025, compared to $246 million as of December 31, 2024.

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”);

(ii) borrowings available under our Revolving Credit Facility (as defined below);

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

As of September 30, 2024, we have $556 million available to draw under our ABL Facility, based on a borrowing base of $557 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 September 30, 2024.

As of September 30, 2024, we had approximately $934 million of total liquidity.

As of March 31, 2025, we have $599 million available to draw under our Revolving Credit Facility, after considering 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 $133 million in aggregate face amount of letters of credit as of March 31, 2025.

In February 2025, we terminated our Second Amended and Restated Revolving Credit Agreement, as amended, and entered into a Revolving Credit Agreement (the “Revolving Credit Agreement”).

The Revolving Credit Agreement provides for revolving credit commitments in an aggregate amount of $600 million (the “Revolving Credit Facility”).

See Note 6—Debt to our Condensed Consolidated Financial Statements for further information.

As of March 31, 2025, we had approximately $811 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 $223 million as of September 30, 2024).

As of September 30, 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 $216 million as of March 31, 2025).

As of March 31, 2025, €1 million (approximately $1 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

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 weighted average interest rate of our term loans was approximately 7.20% as of September 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.

In February 2025, we amended our Senior Secured Term Loan Credit Agreement.

Pursuant to the amendment, the lenders provided the company (a) a term loan B facility in an aggregate principal amount of $700 million, maturing on May 24, 2028 (the “Refinancing Term Loan B-2 Facility”), and (b) a term loan B facility in an aggregate principal amount of $400 million, maturing on February 1, 2031 (the “Refinancing Term Loan B-3 Facility” and together with the Refinancing Term Loan B-2 Facility, the “Refinancing Term Loan Facilities”).

The proceeds of the Refinancing Term Loan Facilities were used to refinance our existing term loans.

We recorded a debt extinguishment loss of $5 million due to this refinancing.

The Refinancing Term Loan Facilities bear interest at a rate per annum equal to, at the Company’s option, either alternate base rate (“ABR”) or Term Secured Overnight Financing Rate (“SOFR”) plus (i) in the case of ABR Loans, 0.75% or, (ii) in the case of Term SOFR Loans, 1.75%, which, in each case after September 30, 2025, shall be reduced by 0.25% upon the achievement of a Consolidated First Lien Net Leverage Ratio (as defined in the Amended Term Loan Credit Agreement) of less than or equal to 1.21 to 1.00.

The Refinancing Term Loan Facilities are secured by a lien on substantially all of our assets and the assets of our guarantors, with certain exceptions.

The amended Term Loan Credit Agreement contains customary mandatory prepayment requirements, representations and warranties, events of default, reporting and other affirmative covenants and negative covenants, including limitations on indebtedness, liens, investments, dividends, repayments of junior financings and asset sales, in each case subject to a number of important exceptions and qualifications.

The weighted average interest rate of our term loans was approximately 6.07% as of March 31, 2025.

Loan Covenants and Compliance

As of September 30, 2024, we were in compliance with the covenants and other provisions of our debt agreements.

As of March 31, 2025, 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

Nine Months Ended September 30,

Three Months Ended March 31,

(In millions) 2025 2024

Net cash provided by operating activities from continuing operations $ 619 $ 443

Net cash used in investing activities from continuing operations (598) (473)

Net cash used in financing activities from continuing operations (59) (72)

During the nine months ended September 30, 2024, we generated cash from operating activities from continuing operations of $619 million.

Net cash provided by operating activities $ 142 $ 145

Net cash used in investing activities (191) (299)

Net cash used in financing activities (30) (29)

During the three months ended March 31, 2025, we generated cash from operating activities of $142 million.

We used cash during the period primarily to:

(i) purchase property and equipment of $199 million and (ii) make net payments of $47 million related to tax withholding obligations in connection with the vesting of restricted shares.

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

We used cash during this period primarily to:

(i) purchase property and equipment of $306 million;

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and (iii) make payments of $15 million related to tax withholding obligations in connection with the vesting of restricted shares

During the nine months ended September 30, 2023, we:

(i) generated cash from operating activities from continuing operations of $443 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 $494 million;

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

Cash flows from operating activities from continuing operations for the nine months ended September 30, 2024 increased by $176 million, compared with the same period in 2023.

The increase primarily reflects:

(i) higher income from continuing operations of $178 million and (ii) higher non-cash depreciation and amortization of $47 million, that is added back in the determination of operating cash flows.

These items were partially offset by the impact of operating assets and liabilities utilizing $166 million of cash in the first nine months of 2024, compared with utilizing $133 million during the same period in 2023.

Investing activities from continuing operations used $598 million of cash in the nine months ended September 30, 2024 and $473 million of cash in the nine months ended September 30, 2023.

During the nine months ended September 30, 2024, we used $623 million to purchase property and equipment, as compared to a $494 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 $59 million of cash in the nine months ended September 30, 2024 and $72 million of cash in the nine months ended September 30, 2023.

The primary use of cash from financing activities during the first nine months of 2024 was $64 million used to repay borrowings, primarily related to finance lease obligations, and $21 million to make payments for tax withholdings on restricted shares.

The primary uses of cash from financing activities during the first nine 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 nine months of 2024 was $32 million of proceeds from bank overdrafts.

The primary source of cash from financing activities during the first nine 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 nine months ended September 30, 2024.

Cash flows from operating activities for the three months ended March 31, 2025 decreased by $3 million, compared with the same period in 2024.

The decrease primarily reflects the impact of operating assets and liabilities utilizing $78 million of cash in the first three months of 2025, compared with utilizing $68 million during the same period in 2024, which was partially offset by higher non-cash depreciation and amortization of $6 million, that is added back in the determination of operating cash flows.

Investing activities used $191 million of cash in the three months ended March 31, 2025 and $299 million of cash in the three months ended March 31, 2024.

During the three months ended March 31, 2025, we used $199 million to purchase property and equipment, as compared to a $306 million usage of cash in the same period in 2024.

The decrease is due to the timing of capital expenditures in 2025 compared to 2024.

Financing activities used $30 million of cash in the three months ended March 31, 2025 and $29 million of cash in the three months ended March 31, 2024.

The primary uses of cash from financing activities during the first three months of 2025 were $47 million to make net payments for tax withholdings on restricted shares and $18 million used to repay borrowings, primarily related to finance lease obligations.

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

The primary source of cash from financing activities during the first three months of 2025 was $38 million of proceeds from bank overdrafts, as compared to $11 million in the same period of 2024.

There were no material changes to our December 31, 2024 contractual obligations during the three months ended March 31, 2025.

We anticipate full year gross capital expenditures to be between $600 million and $700 million in 2025, 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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What changed 10-Q

Item 2. Management’s Discussion and Analysis