What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-07-31 compared with 2025-04-30 · 133 added, 84 removed, 147 unchanged (60% 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, 2025, we had approximately 38,000 employees serving approximately 55,000 customers through 606 locations in 17 countries.

As of June 30, 2025, we had approximately 38,000 employees serving approximately 55,000 customers through 608 locations in 17 countries.

Our company has two reportable segments:

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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, 2025, our customer-focused organization of truck

For the trailing 12 months ended June 30, 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.

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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.

As of June 30, 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.

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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, 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.

For the trailing 12 months ended June 30, 2025, we moved approximately 17 billion pounds of freight 785 million miles, including moving linehaul freight an average of 2.5 million miles a day.

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

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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) 2025

2025 2024 2025 vs.

Revenue $ 2,080 $ 2,079 100.0 % 100.0 % — % $ 4,034 $ 4,097 100.0 % 100.0 % (1.5) %

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

Salaries, wages and employee

871 854 41.9 % 41.1 % 2.0 % 1,703 1,688 42.2 % 41.2 % 0.9 %

Purchased transportation 426 436 20.5 % 21.0 % (2.3) % 826 874 20.5 % 21.3 % (5.5) %

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

Fuel, operating expenses and

384 402 18.5 % 19.3 % (4.5) % 777 814 19.3 % 19.9 % (4.5) %

Operating taxes and licenses 21 21 1.0 % 1.0 % — % 40 40 1.0 % 1.0 % — %

Insurance and claims 40 33 1.9 % 1.6 % 21.2 % 75 71 1.9 % 1.7 % 5.6 %

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

Gains on sales of property and

(1) (4) — % (0.2) % (75.0) % (3) (5) (0.1) % (0.1) % (40.0) %

Depreciation and amortization

131 122 6.3 % 5.9 % 7.4 % 254 239 6.3 % 5.8 % 6.3 %

Legal matter (2) — (0.1) % — % NM (13) — (0.3) % — % NM

Transaction and integration costs 3 12 0.1 % 0.6 % (75.0) % 6 26 0.1 % 0.6 % (76.9) %

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Interest expense 56 56 2.7 % 2.7 % — % 112 114 2.8 % 2.8 % (1.8) %

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 before income tax

provision (benefit)

143 147 6.9 % 7.1 % (2.7) % 234 237 5.8 % 5.8 % (1.3) %

Income tax provision (benefit) 37 (3) 1.8 % (0.1) % NM 59 20 1.5 % 0.5 % 195.0 %

Net income $ 106 $ 150 5.1 % 7.2 % (29.3) % $ 175 $ 217 4.3 % 5.3 % (19.4) %

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.

Three and Six Months Ended June 30, 2025 Compared with Three and Six Months Ended June 30, 2024

Our consolidated revenue for the second quarter of 2025 remained flat at $2.1 billion, compared with the same quarter in 2024.

Our consolidated revenue for the first six months of 2025 decreased 1.5% to $4.0 billion, compared with the same period in 2024.

Foreign currency movement increased revenue by approximately 2.0 percentage points in the second quarter of 2025 and by approximately 0.3 percentage points in the first six months of 2025.

After taking into effect the impact of foreign currency movements, the decrease in revenue in both periods primarily relates to our North American LTL segment, driven by lower fuel surcharge revenue and lower shipments per day and average weight per shipment.

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 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.

Salaries, wages and employee benefits for the second quarter of 2025 was $871 million, or 41.9% of revenue, compared with $854 million, or 41.1% of revenue, for the same quarter in 2024.

Salaries, wages and employee benefits for the first six months of 2025 was $1.70 billion, or 42.2% of revenue, compared with $1.69 billion, or 41.2% of revenue, for the same period in 2024.

The year-over-year increase as a percentage of revenue in both periods primarily reflects the insourcing of a greater proportion of linehaul from third-party transportation providers in our North American LTL segment and wage inflation, partially offset by savings from restructuring actions.

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

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.

Purchased transportation for the second quarter of 2025 was $426 million, or 20.5% of revenue, compared with $436 million, or 21.0% of revenue, for the same quarter in 2024.

Purchased transportation for the first six months of 2025 was $826 million, or 20.5% of revenue, compared with $874 million, or 21.3% of revenue, for the same period in 2024.

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 in our North American LTL segment, partially offset by higher purchased transportation in our European Transportation 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 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.

Fuel, operating expenses and supplies for the second quarter of 2025 was $384 million, or 18.5% of revenue, compared with $402 million, or 19.3% of revenue, for the same quarter in 2024.

Fuel, operating expenses and supplies for the first six months of 2025 was $777 million, or 19.3% of revenue, compared with $814 million, or 19.9% of revenue, for the same period in 2024.

The year-over-year decrease as a percentage of revenue in both periods primarily reflects lower fuel and maintenance 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 first quarter of 2025 was $19 million, compared with $19 million for the same period in 2024.

Operating taxes and licenses for the second quarter of 2025 was $21 million, compared with $21 million for the same quarter in 2024.

Operating taxes and licenses for the first six months of 2025 was $40 million, compared with $40 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 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.

Insurance and claims for the second quarter of 2025 was $40 million, compared with $33 million for the same quarter in 2024.

Insurance and claims for the for the first six months of 2025 was $75 million, compared with $71 million for the same period in 2024.

The year-over-year increase in both periods primarily reflects higher vehicular insurance costs in our North American LTL segment.

Gains on sales of property and equipment for the second quarter of 2025 was $1 million, compared with $4 million for the same quarter in 2024.

Gains on sales of property and equipment for the first six months of 2025 was $3 million, compared with $5 million for the same period in 2024.

Depreciation and amortization expense for the second quarter of 2025 was $131 million, compared with $122 million for the same quarter in 2024.

Depreciation and amortization expense for the first six months of 2025 was $254 million, compared with $239 million for the same period in 2024.

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

Legal matter for the second quarter of 2025 and the first six months of 2025 was a gain of $2 million and $13 million, respectively.

There were no comparable gains in 2024.

The gains recognized in 2025 reflect 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 second quarter of 2025 were $3 million, compared with $12 million for the same quarter in 2024.

Transaction and integration costs for the first six months of 2025 were $6 million, compared with $26 million for the same period in 2024.

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

Restructuring costs for the second quarter of 2025 were $8 million, compared with $6 million for the same quarter in 2024.

Restructuring costs for the first six months of 2025 were $20 million, compared with $14 million for the same period in 2024.

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 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.

Other income for the second quarter of 2025 was $2 million, compared with $6 million for the same quarter in 2024.

Other income for the first six months of 2025 was $3 million, compared with $16 million for the same period in 2024.

The year-over-year decrease in both periods primarily reflects a decrease in net periodic pension income, as well as a $3 million decrease in investment income in the first six months of 2025 compared to the same period in 2024.

Debt extinguishment loss was $5 million for the first six months of 2025, which related to the refinancing of our term loan facility in the first quarter of 2025.

There was no debt extinguishment loss in the second quarter of 2025 or in the first six months of 2024.

Interest expense remained flat at $56 million for the second quarter of 2025, compared with the same quarter in 2024.

Interest expense decreased to $112 million for the first six months of 2025, compared with $114 million for the same period in 2024.

The decrease in the first six months of 2025 is primarily due to lower interest rates on our variable rate debt, partially offset by lower interest income.

Our effective income tax rates were 25.9% and (2.0)% for the second quarters of 2025 and 2024, respectively, and 25.3% and 8.3% for the first six months of 2025 and 2024, respectively.

The effective income tax rates for the second quarter and six-month periods 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 year-over-year increase 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, partially offset by a decrease in forecasted non-deductible executive compensation in 2025.

As previously disclosed, we expect the legal entity reorganization in our European Transportation business to generate an aggregate net cash refund of approximately $45 million.

In 2024, we made payments of $7 million, and in July 2025 we received a cash refund of approximately $49 million.

We expect to receive the remaining $3 million cash refund in the second half of 2025 or early 2026.

On July 4, 2025, the One Big Beautiful Bill Act was signed into law.

The legislation includes modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions including 100% bonus depreciation for qualified property placed in service after January 19, 2025, immediate expensing of domestic research and experimental costs, and business interest expense limitations.

We are evaluating the full effects of the legislation on our financial statements, but we anticipate cash tax savings with an immaterial impact on our effective tax rate.

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.

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.

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 (benefit), depreciation and amortization expense, legal matters, 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) 2025 2024 2025 2024 2025 vs.

2024 2025 2024 2025 2024 2025 vs.

Revenue $ 1,240 $ 1,272 100.0 % 100.0 % (2.5) % $ 2,412 $ 2,493 100.0 % 100.0 % (3.2) %

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

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.

Revenue in our North American LTL segment decreased 2.5% to $1.2 billion for the second quarter of 2025, compared with $1.3 billion for the same quarter in 2024.

Revenue decreased 3.2% to $2.4 billion for the first six months of 2025, compared with $2.5 billion for the same period in 2024.

Revenue included fuel surcharge revenue of $183 million and $208 million, respectively, for the second quarters of 2025 and 2024, and $361 million and $418

million, respectively, for the first six months of 2025 and 2024.

The decrease in fuel surcharge revenue for both periods 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 March 31,

2025 2024 Change %

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

2025 2024 Change % 2025 2024 Change %

Pounds per day (thousands) 67,813 72,658 (6.7) % 66,625 71,687 (7.1) %

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Percentages presented are calculated using the underlying unrounded amounts.

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.

The year-over-year decrease in revenue, excluding fuel surcharge revenue, for both the second quarter and first six months of 2025 reflects 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.

Adjusted EBITDA was $300 million for the second quarter of 2025, compared with $297 million for the same quarter in 2024.

Adjusted EBITDA was $550 million for the first six months of 2025, compared with $551 million for the same period in 2024.

The increase in adjusted EBITDA in the second quarter of 2025 reflects higher yield and lower purchased transportation and fuel cost, partially offset by lower fuel surcharge revenue and volume, wage inflation, higher vehicular insurance costs and lower pension income.

The decrease in adjusted EBITDA for the first six months of 2025 reflects lower fuel surcharge revenue and volume, wage inflation, higher vehicular insurance and lower pension income, partially offset by higher yield and lower purchased transportation and fuel cost.

Depreciation and amortization expense increased to $96 million in the second quarter of 2025 compared with $86 million for the same quarter in 2024.

Depreciation and amortization expense increased to $185 million in the first six months of 2025 compared with $168 million for the same period in 2024.

The increase in both the second quarter and first six months of 2025 was due to the impact of capital investments in property, 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) 2025 2024 2025 2024 2025 vs.

2024 2025 2024 2025 2024 2025 vs.

Revenue $ 841 $ 808 100.0 % 100.0 % 4.1 % $ 1,622 $ 1,605 100.0 % 100.0 % 1.1 %

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

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.

Revenue in our European Transportation segment increased 4.1% to $841 million for the second quarter of 2025, compared with $808 million for the same quarter in 2024.

Revenue increased 1.1% to $1.62 billion for the first six months of 2025, compared with $1.61 billion for the same period in 2024.

Foreign currency movement increased revenue by approximately 5.0 percentage points in the second quarter of 2025 and by approximately 0.8 percentage points in the first six months of 2025.

The decrease in revenue for the second quarter of 2025, compared to the same quarter in 2024, after taking into effect the impact of foreign currency movement, primarily reflects lower volume.

Revenue for the first six months of 2025, compared to the same period in 2024, after taking into effect the impact of foreign currency movement, was flat.

Adjusted EBITDA was $44 million for the second quarter of 2025, compared with $49 million for the same quarter in 2024.

Adjusted EBITDA was $76 million for the first six months of 2025, compared with $87 million for the same period in 2024.

The decrease in adjusted EBITDA in both the second quarter and the first six months of 2025 primarily reflects lower volume, as well as higher purchased transportation and salaries wages and employee benefits, partially offset by lower fuel costs.

Depreciation and amortization expense decreased to $34 million in the second quarter of 2025 compared with $35 million for the same quarter in 2024.

Depreciation and amortization expense decreased to $67 million in the first six months of 2025 compared with $70 million for the same period in 2024.

Liquidity and Capital Resources

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

Our cash and cash equivalents balance was $225 million as of June 30, 2025, compared to $246 million as of December 31, 2024.

Our principal existing sources of cash are:

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

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.

As of June 30, 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 June 30, 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”).

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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.

As of June 30, 2025, we had approximately $824 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, 2025).

As of March 31, 2025, €1 million (approximately $1 million) was available under the program.

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 $236 million as of June 30, 2025).

As of June 30, 2025, €1 million (approximately $2 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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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.

We recorded a debt extinguishment loss of $5 million in the first quarter of 2025 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.

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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.

The weighted average interest rate of our term loans was approximately 6.08% as of June 30, 2025.

Share Repurchases

In March 2025, our Board of Directors authorized repurchases of up to $750 million of our common stock.

The repurchase authorization permits us to purchase shares in both the open market and in private transactions, with the timing and number of shares dependent on a variety of factors, including price, general business and market conditions, alternative investment opportunities and funding considerations.

The new share repurchase program has no expiration date and may be utilized over time, with no obligation to repurchase any specific number of shares.

We may suspend or discontinue this program at any time.

This plan replaced our previous share repurchase plan, authorized in February 2019.

In the second quarter of 2025, we repurchased and retired 0.1 million shares of common stock with an aggregate value of $10 million at an average price of $120.41 per share.

The share repurchases were funded by cash on hand.

As of June 30, 2025, our remaining share repurchase authorization was $740 million.

Loan Covenants and Compliance

As of March 31, 2025, we were in compliance with the covenants and other provisions of our debt agreements.

As of June 30, 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

Three Months Ended March 31,

Six Months Ended June 30,

(In millions) 2025 2024

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Net cash used in financing activities (74) (35)

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

During the six months ended June 30, 2025, we generated cash from operating activities of $389 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.

(i) purchase property and equipment of $395 million;

(ii) make net payments of $48 million related to tax withholding obligations in connection with the vesting of restricted shares;

and (iii) make payments on debt and finance leases of $36 million.

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

We used cash during this period primarily to:

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

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.

Cash flows from operating activities for the six months ended June 30, 2025 increased by $34 million, compared with the same period in 2024.

The increase primarily reflects the impact of operating assets and liabilities utilizing $94 million of cash in the first six months of 2025, compared with utilizing $175 million during the same period in 2024, which was partially offset by lower net income of $42 million.

Investing activities used $382 million of cash in the six months ended June 30, 2025 and $483 million of cash in the six months ended June 30, 2024.

During the six months ended June 30, 2025, we used $395 million to purchase property and equipment, as compared to a $496 million usage of cash in the same period in 2024.

The decrease is due to planned reductions in capital expenditures in 2025 compared to 2024.

Financing activities used $74 million of cash in the six months ended June 30, 2025 and $35 million of cash in the six months ended June 30, 2024.

The primary uses of cash from financing activities during the first six months of 2025 were $48 million to make net payments for tax withholdings on restricted shares, primarily during the first quarter of 2025, and $36 million used to repay borrowings, primarily related to finance lease obligations.

The primary uses of cash from financing activities during the first six months of 2024 were $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 source of cash from financing activities during the first six months of 2025 was $22 million of proceeds from bank overdrafts, as compared to $27 million in the same period of 2024.

In July 2025, we used cash on hand to repay $50 million of outstanding principal under the Refinancing Term Loan B-2 Facility, which was scheduled to mature in 2028.

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

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What changed 10-Q

Item 2. Management’s Discussion and Analysis