XPO, Inc. 10-Q

Item 1. Financial Statements. XPO, Inc. Condensed Consolidated Balance Sheets (Unaudited) June 30, December 31, (In millions, except per share data) 2025 2024 ASSETS Current assets Cash and cash equivalents $ 225 $ 246 Accounts receivable, net of allowances of $ 46 and $ 50 , respectively 1,132 977 Other current assets 265 283 Total current assets 1,623 1,505 Long-term assets Property and equipment, net of $ 2,219 and $ 2,019 in accumulated depreciation, respectively 3,646 3,402 Operating lease assets 756 727 Goodwill 1,553 1,461 Identifiable intangible assets, net of $ 552 and $ 499 in accumulated amortization, respectively 340 361 Other long-term assets 214 254 Total long-term assets 6,510 6,206 Total assets $ 8,133 $ 7,712 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $ 498 $ 477 Accrued expenses 777 708 Short-term borrowings and current maturities of long-term debt 63 62 Short-term operating lease liabilities 148 127 Other current liabilities 113 46 Total current liabilities 1,599 1,420 Long-term liabilities Long-term debt 3,344 3,325 Deferred tax liability 383 393 Employee benefit obligations 85 85 Long-term operating lease liabilities 612 603 Other long-term liabilities 329 283 Total long-term liabilities 4,753 4,690 Stockholders’ equity Common stock, $ 0.001 par value; 300 shares authorized; 118 and 117 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively — — Additional paid-in capital 1,233 1,274 Retained earnings 747 572 Accumulated other comprehensive loss ( 199 ) ( 246 ) Total equity 1,781 1,601 Total liabilities and equity $ 8,133 $ 7,712 Amounts may not add due to rounding. See accompanying notes to condensed consolidated financial statements. 1 Table of Contents XPO, Inc. Condensed Consolidated Statements of Income (Unaudited) Three Months Ended June 30, Six Months Ended June 30, (In millions, except per share data) 2025 2024 2025 2024 Revenue $ 2,080 $ 2,079 $ 4,034 $ 4,097 Salaries, wages and employee benefits 871 854 1,703 1,688 Purchased transportation 426 436 826 874 Fuel, operating expenses and supplies 384 402 777 814 Operating taxes and licenses 21 21 40 40 Insurance and claims 40 33 75 71 Gains on sales of property and equipment ( 1 ) ( 4 ) ( 3 ) ( 5 ) Depreciation and amortization expense 131 122 254 239 Legal matter ( 2 ) — ( 13 ) — Transaction and integration costs 3 12 6 26 Restructuring costs 8 6 20 14 Operating income 198 197 349 335 Other income ( 2 ) ( 6 ) ( 3 ) ( 16 ) Debt extinguishment loss — — 5 — Interest expense 56 56 112 114 Income before income tax provision (benefit) 143 147 234 237 Income tax provision (benefit) 37 ( 3 ) 59 20 Net income $ 106 $ 150 $ 175 $ 217 Earnings per share data Basic earnings per share $ 0.90 $ 1.29 $ 1.49 $ 1.87 Diluted earnings per share $ 0.89 $ 1.25 $ 1.47 $ 1.81 Weighted-average common shares outstanding Basic weighted-average common shares outstanding 118 116 118 116 Diluted weighted-average common shares outstanding 119 120 119 120 Amounts may not add due to rounding. See accompanying notes to condensed consolidated financial statements. 2 Table of Contents XPO, Inc. Condensed Consolidated Statements of Comprehensive Income (Unaudited) Three Months Ended June 30, Six Months Ended June 30, (In millions) 2025 2024 2025 2024 Net income $ 106 $ 150 $ 175 $ 217 Other comprehensive income (loss), net of tax Foreign currency translation gain (loss), net of tax effect of $ 14 , $( 4 ), $ 20 and $( 7 ) $ 29 $ ( 3 ) $ 47 $ ( 9 ) Unrealized gain (loss) on financial assets/liabilities designated as hedging instruments, net of tax effect of $ — , $( 1 ), $ — and $( 1 ) — — ( 1 ) 1 Other comprehensive income (loss) 29 ( 3 ) 46 ( 8 ) Comprehensive income $ 135 $ 147 $ 222 $ 209 Amounts may not add due to rounding. See accompanying notes to condensed consolidated financial statements. 3 Table of Contents XPO, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) Six Months Ended June 30, (In millions) 2025 2024 Cash flows from operating activities Net income $ 175 $ 217 Adjustments to reconcile net income to net cash from operating activities Depreciation and amortization 254 239 Stock compensation expense 31 42 Accretion of debt 5 5 Deferred tax expense 6 25 Gains on sales of property and equipment ( 3 ) ( 5 ) Other 14 6 Changes in assets and liabilities Accounts receivable ( 124 ) ( 135 ) Other assets 26 ( 67 ) Accounts payable ( 22 ) 14 Accrued expenses and other liabilities 26 13 Net cash provided by operating activities 389 355 Cash flows from investing activities Payment for purchases of property and equipment ( 395 ) ( 496 ) Proceeds from sale of property and equipment 12 13 Net cash used in investing activities ( 382 ) ( 483 ) Cash flows from financing activities Repayment of debt and finance leases ( 36 ) ( 39 ) Payment for debt issuance costs ( 3 ) ( 4 ) Repurchase of common stock ( 10 ) — Change in bank overdrafts 22 27 Payment for tax withholdings for restricted shares ( 48 ) ( 17 ) Other 2 ( 1 ) Net cash used in financing activities ( 74 ) ( 35 ) Effect of exchange rates on cash, cash equivalents and restricted cash 2 — Net decrease in cash, cash equivalents and restricted cash ( 65 ) ( 162 ) Cash, cash equivalents and restricted cash, beginning of period 298 419 Cash, cash equivalents and restricted cash, end of period $ 233 $ 256 Supplemental disclosure of cash flow information Leased assets obtained in exchange for new operating lease liabilities $ 100 $ 144 Leased assets obtained in exchange for new finance lease liabilities 26 31 Cash paid for interest 117 101 Cash paid for income taxes, net of refunds 31 32 Amounts may not add due to rounding. See accompanying notes to condensed consolidated financial statements. 4 Table of Contents XPO, Inc. Condensed Consolidated Statements of Changes in Equity (Unaudited) Common Stock (Shares in thousands, dollars in millions) Shares Amount Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total Equity Balance as of March 31, 2025 117,788 $ — $ 1,227 $ 641 $ ( 228 ) $ 1,640 Net income — — — 106 — 106 Other comprehensive income — — — — 29 29 Exercise and vesting of stock compensation awards 40 — — — — — Tax withholdings related to vesting of stock compensation awards — — ( 2 ) — — ( 2 ) Retirement of common stock ( 83 ) — ( 10 ) — — ( 10 ) Stock compensation expense — — 16 — — 16 Other — — 2 — — 2 Balance as of June 30, 2025 117,745 $ — $ 1,233 $ 747 $ ( 199 ) $ 1,781 Common Stock (Shares in thousands, dollars in millions) Shares Amount Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total Equity Balance as of December 31, 2024 117,174 $ — $ 1,274 $ 572 $ ( 246 ) $ 1,601 Net income — — — 175 — 175 Other comprehensive income — — — — 46 46 Exercise and vesting of stock compensation awards 654 — — — — — Tax withholdings related to vesting of stock compensation awards — — ( 64 ) — — ( 64 ) Retirement of common stock ( 83 ) — ( 10 ) — — ( 10 ) Stock compensation expense — — 31 — — 31 Other — — 2 — — 2 Balance as of June 30, 2025 117,745 $ — $ 1,233 $ 747 $ ( 199 ) $ 1,781 5 Table of Contents Common Stock (Shares in thousands, dollars in millions) Shares Amount Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total Equity Balance as of March 31, 2024 116,312 $ — $ 1,302 $ 252 $ ( 222 ) $ 1,332 Net income — — — 150 — 150 Other comprehensive loss — — — — ( 3 ) ( 3 ) Exercise and vesting of stock compensation awards 32 — — — — — Tax withholdings related to vesting of stock compensation awards — — ( 3 ) — — ( 3 ) Stock compensation expense — — 23 — — 23 Balance as of June 30, 2024 116,344 $ — $ 1,322 $ 402 $ ( 225 ) $ 1,499 Common Stock (Shares in thousands, dollars in millions) Shares Amount Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total Equity Balance as of December 31, 2023 116,073 $ — $ 1,298 $ 185 $ ( 217 ) $ 1,266 Net income — — — 217 — 217 Other comprehensive loss — — — — ( 8 ) ( 8 ) Exercise and vesting of stock compensation awards 271 — — — — — Tax withholdings related to vesting of stock compensation awards — — ( 18 ) — — ( 18 ) Stock compensation expense — — 42 — — 42 Balance as of June 30, 2024 116,344 $ — $ 1,322 $ 402 $ ( 225 ) $ 1,499 Amounts may not add due to rounding. See accompanying notes to condensed consolidated financial statements. 6 Table of Contents XPO, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) 1. Organization, Description of Business and Basis of Presentation XPO, Inc., together with its subsidiaries (“XPO,” “we” or the “Company”), is a leading provider of freight transportation services. We use our proprietary technology to move goods efficiently through our customers’ supply chains in North America and Europe. See Note 2—Segment Reporting for additional information on our operations. Strategic Developments In December 2023, we completed the acquisition of 28 service centers previously operated by Yellow Corporation, purchasing 26 less-than-truckload (“LTL”) service centers and assuming existing leases for two additional locations. This targeted expansion of our network aligns with our commitment to invest in growth capacity in key markets and operate the network more efficiently. The previously announced authorization by our Board of Directors to divest our European business remains in effect. There can be no assurance that the divestiture will occur, or of the terms or timing of a transaction. Basis of Presentation We prepared our Condensed Consolidated Financial Statements in accordance with U.S. generally accepted accounting principles (“GAAP”) and on the same basis as the accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”). The interim reporting requirements of Form 10-Q allow certain information and note disclosures normally included in annual consolidated financial statements to be condensed or omitted. These Condensed Consolidated Financial Statements should be read in conjunction with the 2024 Form 10-K. The Condensed Consolidated Financial Statements are not audited but reflect all adjustments that are of a normal recurring nature and are necessary for a fair presentation of the financial condition, operating results and cash flows for the interim periods presented. Operating results for the three and six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. Within our Condensed Consolidated Financial Statements and the accompanying notes, certain amounts may not add due to the use of rounded numbers. Unless otherwise indicated, percentages presented are calculated from the underlying numbers in millions. Restricted Cash As of June 30, 2025 and December 31, 2024, our restricted cash included in Other long-term assets on our Condensed Consolidated Balance Sheets was $ 8 million and $ 53 million, respectively. Our restricted cash balance as of December 31, 2024 included approximately $ 47 million of proceeds received from the sale of a service center in our North American LTL segment in December 2024. In January 2025, the proceeds from this sale were used to purchase four new service centers that were previously leased. Trade Receivables Securitization and Factoring Programs We sell certain of our trade accounts receivable on a non-recourse basis to third-party financial institutions under factoring agreements. We also sell trade accounts receivable under a securitization program for our European transportation business. We use trade receivables securitization and factoring programs to help manage our cash flows and offset the impact of extended payment terms for some of our customers. 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. The weighted average interest rate was 4.80 % as of June 30, 2025. The program expires in July 2026. 7 Table of Contents Information related to the trade receivables sold was as follows: Three Months Ended June 30, Six Months Ended June 30, (In millions) 2025 2024 2025 2024 Securitization programs Receivables sold in period $ 495 $ 449 $ 920 $ 899 Cash consideration 495 449 920 899 Factoring programs Receivables sold in period 14 20 37 41 Cash consideration 13 20 35 41 Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The levels of inputs used to measure fair value are: • Level 1—Quoted prices for identical instruments in active markets; • Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets; and • Level 3—Valuations based on inputs that are unobservable, generally utilizing pricing models or other valuation techniques that reflect management’s judgment and estimates. We base our fair value estimates on market assumptions and available information. The carrying values of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and current maturities of long-term debt approximated their fair values as of June 30, 2025 and December 31, 2024 due to their short-term nature and/or being receivable or payable on demand. The Level 1 cash equivalents include money market funds valued using quoted prices in active markets and a cash deposit for the securitization program. The fair value hierarchy of cash equivalents was as follows: (In millions) Carrying Value Fair Value Level 1 June 30, 2025 $ 196 $ 196 $ 196 December 31, 2024 205 205 205 We measure Level 1 equity investments at fair value on a recurring basis using quoted prices in active markets. We have no equity investments as of June 30, 2025 and, as of December 31, 2024, the value of our equity investment, reflected within Other current assets on our Condensed Consolidated Balance Sheets, was not material. During the first quarter of 2024, we recognized a gain on equity investments of $ 3 million in Other income on our Condensed Consolidated Statements of Income. There was no material gain on equity investments in the second quarter of 2024 or in 2025. For information on the fair value hierarchy of our derivative instruments and financial liabilities, see Note 5—Derivative Instruments and Note 6—Debt, respectively. Accounting Pronouncements Issued but Not Yet Effective In November 2024, the Financial Accounting Standards Board (“FASB”) issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40).” The ASU requires new tabular disclosures disaggregating prescribed expense categories within relevant income statement captions. In addition, the ASU requires disclosure of the total amount of selling expenses and, in annual periods, an entity’s definition of selling expenses, among other disclosure requirements. This ASU is effective for annual periods beginning in 2027, and for interim periods beginning January 1, 2028. Early adoption is permitted. We are currently evaluating the impact of the new standard, which is limited to financial statement disclosures. 8 Table of Contents In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The ASU modifies income tax disclosures by requiring (i) consistent categories and greater disaggregation of information in the rate reconciliations and (ii) the disclosure of income taxes paid disaggregated by jurisdiction, among other requirements. This ASU is effective for annual periods beginning in 2025, and should be applied on a prospective basis, with the option to apply retrospectively. Early adoption is permitted. We are currently evaluating the impact of the new standard, which is limited to financial statement disclosures. The company expects to adopt the guidance as of the effective date. 2. Segment Reporting We are organized into two reportable segments: North American LTL, the largest component of our business, and European Transportation. In our North American LTL segment, we provide shippers with geographic density and day-definite domestic and cross-border services to the U.S., as well as Mexico, Canada and the Caribbean. Our North American LTL segment also includes the results of our trailer manufacturing operation. In our European Transportation segment, we serve an extensive base of customers within the consumer, trade and industrial markets. We offer dedicated truckload, LTL, full truckload brokerage, warehousing, managed transportation, last mile, freight forwarding and multimodal solutions, such as road-rail and road-short sea combinations. Corporate includes corporate headquarters costs for executive officers and certain legal and financial functions, and other costs and credits not attributed to our reportable segments. Our chief operating decision maker (“CODM”) is our chief executive officer. Our CODM regularly reviews financial information at the operating segment level to allocate resources to the segments and to assess their performance. We include items directly attributable to a segment, and those that can be allocated on a reasonable basis, including corporate costs, in segment results reported to the CODM. We do not provide asset information by segment to the CODM. 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. Our CODM uses adjusted EBITDA to allocate resources, including property and equipment and financial or capital resources, to the segments and to assess their performance by monitoring budget-to-actual and year-over-year variances. 9 Table of Contents The following tables present revenue and significant segment expenses that are included within adjusted EBITDA: Three Months Ended June 30, 2025 (In millions) North American LTL European Transportation Corporate (1) Total Revenue $ 1,240 $ 841 $ — $ 2,080 Salaries, wages and employee benefits 643 224 4 871 Purchased transportation 32 394 — 426 Fuel, operating expenses and supplies 222 163 — 384 Operating taxes and licenses 17 4 — 21 Insurance and claims 25 15 — 40 (Gains) losses on sales of property and equipment 2 ( 3 ) — ( 1 ) Pension (income) expense ( 2 ) — — ( 1 ) Adjusted EBITDA $ 300 $ 44 $ ( 4 ) $ 340 Three Months Ended June 30, 2024 (In millions) North American LTL European Transportation Corporate (1) Total Revenue $ 1,272 $ 808 $ — $ 2,079 Salaries, wages and employee benefits 639 212 3 854 Purchased transportation 68 368 — 436 Fuel, operating expenses and supplies 236 165 — 402 Operating taxes and licenses 16 4 — 21 Insurance and claims 20 13 — 33 (Gains) losses on sales of property and equipment 1 ( 5 ) — ( 4 ) Pension (income) expense ( 6 ) — — ( 6 ) Adjusted EBITDA $ 297 $ 49 $ ( 3 ) $ 343 Six Months Ended June 30, 2025 (In millions) North American LTL European Transportation Corporate (1) Total Revenue $ 2,412 $ 1,622 $ — $ 4,034 Salaries, wages and employee benefits 1,259 436 8 1,703 Purchased transportation 69 757 — 826 Fuel, operating expenses and supplies 454 324 — 777 Operating taxes and licenses 33 7 — 40 Insurance and claims 49 26 — 75 (Gains) losses on sales of property and equipment 2 ( 5 ) — ( 3 ) Pension (income) expense ( 3 ) — — ( 3 ) Adjusted EBITDA $ 550 $ 76 $ ( 8 ) $ 618 Six Months Ended June 30, 2024 (In millions) North American LTL European Transportation Corporate (1) Total Revenue $ 2,493 $ 1,605 $ — $ 4,097 Salaries, wages and employee benefits 1,252 428 8 1,688 Purchased transportation 146 728 — 874 Fuel, operating expenses and supplies 479 335 — 814 Operating taxes and licenses 32 8 — 40 Insurance and claims 41 27 3 71 (Gains) losses on sales of property and equipment 3 ( 9 ) — ( 5 ) Pension (income) expense ( 13 ) — — ( 12 ) Other (income) expense — — ( 3 ) ( 3 ) Adjusted EBITDA $ 551 $ 87 $ ( 8 ) $ 631 (1) Primarily represents unallocated corporate costs, as well as investment income of approximately $ 3 million within Other (income) expense in the first quarter of 2024. 10 Table of Contents The following table presents adjusted EBITDA by segment and provides a reconciliation to consolidated net income: Three Months Ended June 30, Six Months Ended June 30, (In millions) 2025 2024 2025 2024 Adjusted EBITDA North American LTL $ 300 $ 297 $ 550 $ 551 European Transportation 44 49 76 87 Corporate ( 4 ) ( 3 ) ( 8 ) ( 8 ) Total Adjusted EBITDA 340 343 618 631 Less: Debt extinguishment loss — — 5 — Interest expense 56 56 112 114 Income tax provision (benefit) 37 ( 3 ) 59 20 Depreciation and amortization expense 131 122 254 239 Legal matter (1) ( 2 ) — ( 13 ) — Transaction and integration costs 3 12 6 26 Restructuring costs 8 6 20 14 Net Income $ 106 $ 150 $ 175 $ 217 (1) 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. The following table presents depreciation and amortization expense by segment: Three Months Ended June 30, Six Months Ended June 30, (In millions) 2025 2024 2025 2024 Depreciation and amortization expense North American LTL $ 96 $ 86 $ 185 $ 168 European Transportation 34 35 67 70 Corporate 1 1 2 2 Total $ 131 $ 122 $ 254 $ 239 As of June 30, 2025 and December 31, 2024, we held long-lived tangible assets outside of the U.S., including right of use assets, of $ 789 million and $ 715 million, respectively. 11 Table of Contents 3. Revenue Recognition Disaggregation of Revenues Our revenue disaggregated by geographic area based on sales office location was as follows: Three Months Ended June 30, 2025 (In millions) North American LTL European Transportation Total Revenue United States $ 1,212 $ — $ 1,212 North America (excluding United States) 27 — 27 France — 336 336 United Kingdom — 281 281 Europe (excluding France and United Kingdom) — 224 224 Total $ 1,240 $ 841 $ 2,080 Three Months Ended June 30, 2024 (In millions) North American LTL European Transportation Total Revenue United States $ 1,244 $ — $ 1,244 North America (excluding United States) 28 — 28 France — 331 331 United Kingdom — 254 254 Europe (excluding France and United Kingdom) — 222 222 Total $ 1,272 $ 808 $ 2,079 Six Months Ended June 30, 2025 (In millions) North American LTL European Transportation Total Revenue United States $ 2,358 $ — $ 2,358 North America (excluding United States) 54 — 54 France — 650 650 United Kingdom — 539 539 Europe (excluding France and United Kingdom) — 433 433 Total $ 2,412 $ 1,622 $ 4,034 Six Months Ended June 30, 2024 (In millions) North American LTL European Transportation Total Revenue United States $ 2,438 $ — $ 2,438 North America (excluding United States) 55 — 55 France — 664 664 United Kingdom — 497 497 Europe (excluding France and United Kingdom) — 443 443 Total $ 2,493 $ 1,605 $ 4,097 12 Table of Contents 4. Restructuring Charges We engage in restructuring actions as part of our ongoing efforts to best use our resources and infrastructure. These actions generally include severance and facility-related costs, including impairment of lease assets, as well as contract termination costs, and are intended to improve our efficiency and profitability. Our restructuring-related activity was as follows: Six Months Ended June 30, 2025 (In millions) Reserve Balance as of December 31, 2024 Charges Incurred Payments Reserve Balance as of June 30, 2025 Severance North American LTL $ 3 $ 4 $ ( 2 ) $ 4 European Transportation 1 9 ( 7 ) 4 Corporate 1 5 ( 2 ) 5 Total $ 5 $ 18 $ ( 11 ) $ 12 In addition to the severance charges noted in the table above, we recorded non-cash charges in our European Transportation segment of $ 2 million during the first six months of 2025. We expect that the majority of the cash outlays related to the severance charges incurred in the first six months of 2025 will be completed within 12 months. 5. Derivative Instruments In the normal course of business, we are exposed to risks arising from business operations and economic factors, including fluctuations in interest rates and foreign currencies. We use derivative instruments to manage the volatility related to these exposures. The objective of these derivative instruments is to reduce fluctuations in our earnings and cash flows associated with changes in foreign currency exchange rates and interest rates. These financial instruments are not used for trading or other speculative purposes. Historically, we have not incurred, and do not expect to incur in the future, any losses as a result of counterparty default. The fair value of our derivative instruments and the related notional amounts were as follows: June 30, 2025 Derivative Assets Derivative Liabilities (In millions) Notional Amount Balance Sheet Caption Fair Value Balance Sheet Caption Fair Value Derivatives designated as hedges Cross-currency swap agreements $ 284 Other current assets $ — Other current liabilities $ ( 34 ) Cross-currency swap agreements 369 Other long-term assets — Other long-term liabilities ( 48 ) Interest rate swaps 550 Other long-term assets — Other long-term liabilities ( 1 ) Total $ — $ ( 82 ) December 31, 2024 Derivative Assets Derivative Liabilities (In millions) Notional Amount Balance Sheet Caption Fair Value Balance Sheet Caption Fair Value Derivatives designated as hedges Cross-currency swap agreements $ 652 Other long-term assets $ 7 Other long-term liabilities $ ( 5 ) Interest rate swaps 200 Other current assets — Other current liabilities — Total $ 7 $ ( 5 ) 13 Table of Contents The derivatives are classified as Level 2 within the fair value hierarchy. The derivatives are valued using inputs other than quoted prices, such as foreign exchange rates and yield curves. The effect of derivative and nonderivative instruments designated as hedges on our Condensed Consolidated Statements of Income was as follows: Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) on Derivatives Amount of Gain Reclassified from AOCI into Net Income Amount of Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing) Three Months Ended June 30, (In millions) 2025 2024 2025 2024 2025 2024 Derivatives designated as cash flow hedges Interest rate swaps — — — — — — Derivatives designated as net investment hedges Cross-currency swap agreements ( 59 ) 5 — — 3 2 Total $ ( 59 ) $ 5 $ — $ — $ 3 $ 2 Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) on Derivatives Amount of Gain Reclassified from AOCI into Net Income Amount of Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing) Six Months Ended June 30, (In millions) 2025 2024 2025 2024 2025 2024 Derivatives designated as cash flow hedges Interest rate swaps $ ( 1 ) $ 2 $ — $ 1 $ — $ — Derivatives designated as net investment hedges Cross-currency swap agreements ( 84 ) 18 — — 5 5 Total $ ( 85 ) $ 21 $ — $ 1 $ 5 $ 5 Cross-Currency Swap Agreements We enter into cross-currency swap agreements to manage the foreign currency exchange risk related to our international operations by effectively converting our fixed-rate USD-denominated debt, including the associated interest payments, to fixed-rate, euro (“EUR”)-denominated debt. The risk management objective of these transactions is to manage foreign currency risk relating to net investments in subsidiaries denominated in foreign currencies and reduce the variability in the functional currency equivalent cash flows of this debt. During the term of the swap contracts, we receive interest on a quarterly basis from the counterparties based on USD fixed interest rates, and we pay interest, also on a quarterly basis, to the counterparties based on EUR fixed interest rates. At maturity, we will repay the original principal amount in EUR and receive the principal amount in USD. These agreements expire at various dates through 2027. We designated these cross-currency swaps as qualifying hedging instruments and account for them as net investment hedges. We apply the simplified method of assessing the effectiveness of our net investment hedging relationships. Under this method, for each reporting period, the change in the fair value of the cross-currency swaps is initially recognized in Accumulated other comprehensive income (“AOCI”). The change in the fair value due to foreign exchange remains in AOCI and the initial component excluded from effectiveness testing will initially remain in AOCI and then will be reclassified from AOCI to Interest expense each period in a systematic manner. Cash flows related to the periodic exchange of interest payments for these net investment hedges are included in Cash flows from operating activities on our Condensed Consolidated Statements of Cash Flows. 14 Table of Contents Interest Rate Hedging We execute short-term interest rate swaps to mitigate variability in forecasted interest payments on our Senior Secured Term Loan Credit Agreement (the “Term Loan Credit Agreement”). The interest rate swaps convert floating-rate interest payments into fixed rate interest payments. We designated the interest rate swaps as qualifying hedging instruments and account for these derivatives as cash flow hedges. In the second quarter of 2025, we extended our outstanding interest rate swaps through the fourth quarter of 2026. We record gains and losses resulting from fair value adjustments to the designated portion of interest rate swaps in AOCI and reclassify them to Interest expense on the dates that interest payments accrue. Cash flows related to the interest rate swaps are included in Cash flows from operating activities on our Condensed Consolidated Statements of Cash Flows. 6. Debt June 30, 2025 December 31, 2024 (In millions) Principal Balance Carrying Value Principal Balance Carrying Value Term loan facility $ 1,100 $ 1,092 $ 1,100 $ 1,089 6.25 % senior secured notes due 2028 830 824 830 823 7.125 % senior notes due 2031 450 446 450 445 7.125 % senior notes due 2032 585 577 585 576 6.70 % senior debentures due 2034 300 227 300 225 Finance leases, asset financing and other 242 242 228 228 Total debt 3,507 3,408 3,493 3,387 Short-term borrowings and current maturities of long-term debt 63 63 62 62 Long-term debt $ 3,444 $ 3,344 $ 3,431 $ 3,325 The fair value of our debt and classification in the fair value hierarchy was as follows: (In millions) Fair Value Level 1 Level 2 June 30, 2025 $ 3,593 $ 2,246 $ 1,346 December 31, 2024 3,541 2,223 1,318 We valued Level 1 debt using quoted prices in active markets. We valued Level 2 debt using bid evaluation pricing models or quoted prices of securities with similar characteristics. Revolving Credit Facility In February 2025, we terminated our Second Amended and Restated Revolving Credit Agreement, as amended (the “ABL Facility”), 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”), of which $ 200 million is available for issuances of letters of credit. The maturity date of the Revolving Credit Facility is April 30, 2030. 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. Our borrowings under the Revolving Credit Facility bear interest at a rate equal to: (a) for loans denominated in U.S. Dollars, Term Secured Overnight Financing Rate (“SOFR”) or the Base Rate and (b) for loans denominated in Canadian Dollars, Term Canadian Overnight Repo Rate (“CORRA”) or the Canadian base rate plus (i) in the case of base rate loans, an applicable rate ranging from 0.25 % to 1.00 % or, (ii) in the case of Term SOFR or Term CORRA loans, an applicable rate ranging from 1.25 % to 2.00 %, which is determined based on our Consolidated Total Net Leverage Ratio (as defined in the Revolving Credit Agreement). In addition, we are required to pay an unused 15 Table of Contents commitment fee of between 0.20 % and 0.30 % on the undrawn commitments under the Revolving Credit Facility, determined based on our Consolidated Total Net Leverage Ratio. The Revolving Credit Facility is secured by a lien on substantially all of our assets and the assets of our guarantors, with certain exceptions, and contains representations and warranties, affirmative and negative covenants, and events of default customary for agreements of this nature. Security interests and certain covenants under the Revolving Credit Agreement will release, terminate or be amended upon, among other things, the Company’s achievement of investment grade ratings from at least two rating agencies. As of June 30, 2025, we were in compliance with the Revolving Credit Facility’s financial covenants. Letters of Credit Facility As of June 30, 2025, we had issued $ 133 million in aggregate face amount of letters of credit under our $ 200 million uncommitted secured evergreen letter of credit facility. Term Loan Facility 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 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 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 6.08 % as of June 30, 2025. 7. Stockholders’ Equity 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. 16 Table of Contents 8. Income Taxes 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. During the second quarter of 2024, the Company executed a legal entity reorganization in our European Transportation business that resulted in a one-time tax benefit of $ 41 million in the second quarter of 2024. 9. Earnings per Share The computations of basic and diluted earnings per share were as follows: Three Months Ended June 30, Six Months Ended June 30, (In millions, except per share data) 2025 2024 2025 2024 Net income $ 106 $ 150 $ 175 $ 217 Basic weighted-average common shares 118 116 118 116 Dilutive effect of stock-based awards 2 4 2 4 Diluted weighted-average common shares 119 120 119 120 Basic earnings per share $ 0.90 $ 1.29 $ 1.49 $ 1.87 Diluted earnings per share $ 0.89 $ 1.25 $ 1.47 $ 1.81 10. Commitments and Contingencies We are involved, and expect to continue to be involved, in numerous proceedings arising out of the conduct of our business. These proceedings may include claims for property damage or personal injury incurred in connection with the transportation of freight, cargo damage or loss, environmental liability, commercial disputes, insurance coverage disputes and employment-related claims, including claims involving asserted breaches of employee restrictive covenants. We establish accruals for specific legal proceedings when it is considered probable that a loss has been incurred and the amount of the loss can be reasonably estimated. We review and adjust, as appropriate, accruals for loss contingencies at least quarterly and as additional information becomes available. If a loss is not both probable and reasonably estimable, or if an exposure to loss exists in excess of the amount accrued, we assess whether there is at least a reasonable possibility that a loss, or additional loss, may have been incurred. If there is a reasonable possibility that a loss, or additional loss, may have been incurred, we disclose the estimate of the possible loss or range of loss if it is material and an estimate can be made, or disclose that such an estimate cannot be made. The determination as to whether a loss can be considered reasonably possible or probable is based on our assessment, together with legal counsel, regarding the ultimate outcome of the matter. We believe that we have adequately accrued for the potential impact of loss contingencies that are probable and reasonably estimable. We do not believe that the ultimate resolution of any matters to which we are presently a party will have a material adverse effect on our results of operations, financial condition or cash flows. However, the results of these matters cannot be predicted with certainty, and an unfavorable resolution of one or more of these matters could have a material adverse effect on our financial condition, results of operations or cash flows. Legal costs incurred related to these matters are expensed as incurred. 17 Table of Contents We carry liability and excess umbrella insurance policies that we deem sufficient to cover potential legal claims arising in the normal course of conducting our operations as a transportation company. In the event we are required to satisfy a legal claim outside the scope of the coverage provided by insurance, our financial condition, results of operations or cash flows could be negatively impacted. Insurance Contribution Litigation In April 2012, Allianz Global Risks US Insurance Company sued eighteen insurance companies in a case captioned Allianz Global Risks US Ins. Co. v. ACE Property & Casualty Ins. Co., et al., Multnomah County Circuit Court (Case No. 1204-04552). Allianz Global Risks US Ins. Co. (“Allianz”) sought contribution on environmental and product liability claims that Allianz agreed to defend and indemnify on behalf of its insured, Daimler Trucks North America (“DTNA”). Defendants had insured Freightliner’s assets, which DTNA acquired in 1981. Con-way, Freightliner’s former parent company, intervened. We acquired Con-way in 2015. Con-way and Freightliner had self-insured under fronting agreements with defendant insurers ACE, Westport, and General. Under those agreements, Con-way agreed to indemnify the fronting carriers for damages assessed under the fronting policies. Con-way’s captive insurer, Centron, was also a named defendant. After a seven-week jury trial in 2014, the jury found that Con-way and the fronting insurers never intended that the insurers defend or indemnify any claims against Freightliner. In June 2015, Allianz appealed to the Oregon Court of Appeals. In May 2019, the Oregon Court of Appeals upheld the jury verdict. In September 2019, Allianz appealed to the Oregon Supreme Court. In March 2021, the Oregon Supreme Court reversed the jury verdict, holding that it was an error to allow the jury to decide how the parties intended the fronting policies to operate, and also holding that the trial court improperly instructed the jury concerning one of the pollution exclusions at issue. In July 2021, the matter was remanded to the trial court for further proceedings consistent with the Oregon Supreme Court’s decision. In June 2023, the trial court decided the parties’ cross-motions for summary judgment, leaving open the pollution exclusion and allocation issues. The trial on the pollution exclusion issue took place in October 2024 where the jury issued a favorable verdict for the Company, finding that the pollution exclusion applied to the General policy over several years for which Allianz seeks contribution. The trial on allocation of defense and indemnity costs among the applicable insurance policies took place during the first half of 2025, with final hearings on allocation currently scheduled for October 2025. We have accrued an immaterial amount for the potential exposure associated with ultimate allocation to the relevant policies; however, any losses that may arise in connection with the fronting policies issued by defendant insurers ACE, Westport, and General are not reasonably estimable at this time. 11. Subsequent Events 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. 18 Table of Contents