XPO, Inc. 10-Q

Item 1. Financial Statements. XPO, Inc. Condensed Consolidated Balance Sheets (Unaudited) September 30, December 31, (In millions, except per share data) 2025 2024 ASSETS Current assets Cash and cash equivalents $ 335 $ 246 Accounts receivable, net of allowances of $ 42 and $ 50 , respectively 1,103 977 Other current assets 262 283 Total current assets 1,699 1,505 Long-term assets Property and equipment, net of $ 2,287 and $ 2,019 in accumulated depreciation, respectively 3,642 3,402 Operating lease assets 762 727 Goodwill 1,546 1,461 Identifiable intangible assets, net of $ 565 and $ 499 in accumulated amortization, respectively 325 361 Other long-term assets 214 254 Total long-term assets 6,489 6,206 Total assets $ 8,189 $ 7,712 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $ 465 $ 477 Accrued expenses 816 708 Short-term borrowings and current maturities of long-term debt 125 62 Short-term operating lease liabilities 152 127 Other current liabilities 110 46 Total current liabilities 1,667 1,420 Long-term liabilities Long-term debt 3,222 3,325 Deferred tax liability 449 393 Employee benefit obligations 84 85 Long-term operating lease liabilities 611 603 Other long-term liabilities 338 283 Total long-term liabilities 4,704 4,690 Stockholders’ equity Common stock, $ 0.001 par value; 300 shares authorized; 117 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively — — Additional paid-in capital 1,196 1,274 Retained earnings 829 572 Accumulated other comprehensive loss ( 208 ) ( 246 ) Total equity 1,817 1,601 Total liabilities and equity $ 8,189 $ 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 September 30, Nine Months Ended September 30, (In millions, except per share data) 2025 2024 2025 2024 Revenue $ 2,111 $ 2,053 $ 6,146 $ 6,150 Salaries, wages and employee benefits 876 852 2,579 2,541 Purchased transportation 424 430 1,250 1,303 Fuel, operating expenses and supplies 406 399 1,183 1,213 Operating taxes and licenses 21 21 61 61 Insurance and claims 43 33 118 105 (Gains) losses on sales of property and equipment 1 — ( 2 ) ( 5 ) Depreciation and amortization expense 134 126 388 365 Pre-Con-way acquisition environmental matter 35 — 35 — Legal matter — — ( 13 ) — Transaction and integration costs 1 13 7 39 Restructuring costs 6 3 26 17 Operating income 164 176 513 511 Other income ( 2 ) ( 15 ) ( 4 ) ( 31 ) Debt extinguishment loss — — 5 — Interest expense 54 56 166 170 Income before income tax provision 112 135 346 372 Income tax provision 30 40 89 60 Net income $ 82 $ 95 $ 257 $ 312 Earnings per share data Basic earnings per share $ 0.69 $ 0.81 $ 2.18 $ 2.68 Diluted earnings per share $ 0.68 $ 0.79 $ 2.15 $ 2.60 Weighted-average common shares outstanding Basic weighted-average common shares outstanding 118 116 118 116 Diluted weighted-average common shares outstanding 120 120 120 120 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 September 30, Nine Months Ended September 30, (In millions) 2025 2024 2025 2024 Net income $ 82 $ 95 $ 257 $ 312 Other comprehensive income (loss), net of tax Foreign currency translation gain (loss), net of tax effect of $( 1 ), $ 8 , $ 19 and $ 1 $ ( 9 ) $ 30 $ 39 $ 20 Unrealized gain (loss) on financial assets/liabilities designated as hedging instruments, net of tax effect of $ 0 , $ 1 , $ 0 and $ 0 — — ( 1 ) 1 Other comprehensive income (loss) ( 9 ) 29 38 21 Comprehensive income $ 73 $ 124 $ 294 $ 333 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) Nine Months Ended September 30, (In millions) 2025 2024 Cash flows from operating activities Net income $ 257 $ 312 Adjustments to reconcile net income to net cash from operating activities Depreciation and amortization 388 365 Stock compensation expense 46 64 Accretion of debt 8 8 Deferred tax expense 72 39 Gains on sales of property and equipment ( 2 ) ( 5 ) Other 19 — Changes in assets and liabilities Accounts receivable ( 106 ) ( 87 ) Other assets 18 ( 71 ) Accounts payable ( 14 ) ( 29 ) Accrued expenses and other liabilities 76 21 Net cash provided by operating activities 760 619 Cash flows from investing activities Payment for purchases of property and equipment ( 551 ) ( 623 ) Proceeds from sale of property and equipment 18 17 Proceeds from sale of investment — 8 Net cash used in investing activities ( 532 ) ( 598 ) Cash flows from financing activities Repurchase of debt ( 50 ) — Repayment of debt and finance leases ( 56 ) ( 64 ) Payment for debt issuance costs ( 3 ) ( 4 ) Repurchase of common stock ( 57 ) — Change in bank overdrafts 24 32 Payment for tax withholdings for restricted shares ( 47 ) ( 21 ) Other 3 ( 1 ) Net cash used in financing activities ( 185 ) ( 59 ) Effect of exchange rates on cash, cash equivalents and restricted cash ( 1 ) 5 Net increase (decrease) in cash, cash equivalents and restricted cash 42 ( 33 ) Cash, cash equivalents and restricted cash, beginning of period 298 419 Cash, cash equivalents and restricted cash, end of period $ 341 $ 385 Supplemental disclosure of cash flow information Unsettled repurchase of common stock $ ( 3 ) $ — Leased assets obtained in exchange for new operating lease liabilities 155 175 Leased assets obtained in exchange for new finance lease liabilities 34 62 Cash paid for interest 158 148 Cash paid (received) for income taxes, net of refunds ( 11 ) 71 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 June 30, 2025 117,745 $ — $ 1,233 $ 747 $ ( 199 ) $ 1,781 Net income — — — 82 — 82 Other comprehensive loss — — — — ( 9 ) ( 9 ) Exercise and vesting of stock compensation awards 26 — — — — — Tax withholdings related to vesting of stock compensation awards — — ( 2 ) — — ( 2 ) Retirement of common stock ( 388 ) — ( 50 ) — — ( 50 ) Stock compensation expense — — 16 — — 16 Balance as of September 30, 2025 117,384 $ — $ 1,196 $ 829 $ ( 208 ) $ 1,817 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 — — — 257 — 257 Other comprehensive income — — — — 38 38 Exercise and vesting of stock compensation awards 681 — — — — — Tax withholdings related to vesting of stock compensation awards — — ( 66 ) — — ( 66 ) Retirement of common stock ( 471 ) — ( 60 ) — — ( 60 ) Stock compensation expense — — 46 — — 46 Other — — 2 — — 2 Balance as of September 30, 2025 117,384 $ — $ 1,196 $ 829 $ ( 208 ) $ 1,817 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 June 30, 2024 116,344 $ — $ 1,322 $ 402 $ ( 225 ) $ 1,499 Net income — — — 95 — 95 Other comprehensive income — — — — 29 29 Exercise and vesting of stock compensation awards 57 — — — — — Tax withholdings related to vesting of stock compensation awards — — ( 4 ) — — ( 4 ) Stock compensation expense — — 22 — — 22 Balance as of September 30, 2024 116,401 $ — $ 1,340 $ 496 $ ( 195 ) $ 1,641 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 — — — 312 — 312 Other comprehensive income — — — — 21 21 Exercise and vesting of stock compensation awards 328 — — — — — Tax withholdings related to vesting of stock compensation awards — — ( 22 ) — — ( 22 ) Stock compensation expense — — 64 — — 64 Balance as of September 30, 2024 116,401 $ — $ 1,340 $ 496 $ ( 195 ) $ 1,641 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 nine months ended September 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 September 30, 2025 and December 31, 2024, our restricted cash included in Other long-term assets on our Condensed Consolidated Balance Sheets was $ 5 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 $ 235 million as of September 30, 2025). As of September 30, 2025, € 1 million (approximately $ 1 million) was available under the program. The weighted average interest rate was 3.95 % as of September 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 September 30, Nine Months Ended September 30, (In millions) 2025 2024 2025 2024 Securitization programs Receivables sold in period $ 487 $ 440 $ 1,407 $ 1,339 Cash consideration 487 440 1,407 1,339 Factoring programs Receivables sold in period 15 20 52 61 Cash consideration 14 20 49 61 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 September 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 September 30, 2025 $ 304 $ 304 $ 304 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 September 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 three and nine months ended September 30, 2024, we recognized a gain on equity investments of $ 9 million and $ 13 million, respectively, in Other income on our Condensed Consolidated Statements of Income. There was no material gain on equity investments 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 September 2025, the Financial Accounting Standards Board (“FASB”) issued ASU 2025-06, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40).” The ASU updates the guidance on accounting for internal-use software costs by (i) removing all references to software development stages, and (ii) requiring that an entity capitalize software costs when both management has authorized and committed to funding the software project, and it is probable that the project will be completed and the software will be used to perform the function intended. This ASU is effective for annual and interim periods beginning in 2028. Early adoption is permitted. We are currently evaluating the impact of the new standard. 8 Table of Contents In July 2025, the FASB issued ASU 2025-05, “Financial Instruments – Credit Losses (Topic 326).” In developing forecasts as part of estimating expected credit losses, the ASU allows entities to elect a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. This ASU is effective for annual and interim periods beginning in 2026. Early adoption is permitted. We do not expect the new standard to have a material impact on our financial statements. In November 2024, the 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. 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 plan to update our income tax financial statement disclosures to comply with the new standard 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, 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 September 30, 2025 (In millions) North American LTL European Transportation Corporate (1) Total Revenue $ 1,255 $ 857 $ — $ 2,111 Salaries, wages and employee benefits 648 224 4 876 Purchased transportation 30 394 — 424 Fuel, operating expenses and supplies 225 180 — 406 Operating taxes and licenses 17 4 — 21 Insurance and claims 27 16 — 43 (Gains) losses on sales of property and equipment 2 ( 1 ) — 1 Pension (income) expense ( 2 ) — — ( 1 ) Adjusted EBITDA $ 308 $ 38 $ ( 4 ) $ 342 Three Months Ended September 30, 2024 (In millions) North American LTL European Transportation Corporate (1) Total Revenue $ 1,251 $ 803 $ — $ 2,053 Salaries, wages and employee benefits 642 206 4 852 Purchased transportation 58 372 — 430 Fuel, operating expenses and supplies 231 168 — 399 Operating taxes and licenses 17 4 — 21 Insurance and claims 21 12 — 33 (Gains) losses on sales of property and equipment 3 ( 4 ) — — Pension (income) expense ( 6 ) — — ( 6 ) Other (income) expense — 1 ( 9 ) ( 9 ) Adjusted EBITDA $ 284 $ 44 $ 5 $ 333 Nine Months Ended September 30, 2025 (In millions) North American LTL European Transportation Corporate (1) Total Revenue $ 3,667 $ 2,479 $ — $ 6,146 Salaries, wages and employee benefits 1,907 660 12 2,579 Purchased transportation 99 1,151 — 1,250 Fuel, operating expenses and supplies 679 505 — 1,183 Operating taxes and licenses 50 11 — 61 Insurance and claims 77 42 — 118 (Gains) losses on sales of property and equipment 4 ( 6 ) — ( 2 ) Pension (income) expense ( 5 ) — — ( 4 ) Other (income) expense — 1 ( 1 ) — Adjusted EBITDA $ 857 $ 115 $ ( 12 ) $ 960 10 Table of Contents Nine Months Ended September 30, 2024 (In millions) North American LTL European Transportation Corporate (1) Total Revenue $ 3,743 $ 2,407 $ — $ 6,150 Salaries, wages and employee benefits 1,894 634 13 2,541 Purchased transportation 204 1,100 — 1,303 Fuel, operating expenses and supplies 710 503 — 1,213 Operating taxes and licenses 49 12 — 61 Insurance and claims 63 39 3 105 (Gains) losses on sales of property and equipment 7 ( 12 ) — ( 5 ) Pension (income) expense ( 19 ) — — ( 19 ) Other (income) expense — 1 ( 13 ) ( 12 ) Adjusted EBITDA $ 836 $ 131 $ ( 3 ) $ 964 (1) Primarily represents unallocated corporate costs, as well as investment income of approximately $ 9 million and $ 13 million, respectively, within Other (income) expense for the three and nine months ended September 30, 2024. The following table presents adjusted EBITDA by segment and provides a reconciliation to consolidated net income: Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2025 2024 2025 2024 Adjusted EBITDA North American LTL $ 308 $ 284 $ 857 $ 836 European Transportation 38 44 115 131 Corporate ( 4 ) 5 ( 12 ) ( 3 ) Total Adjusted EBITDA 342 333 960 964 Less: Debt extinguishment loss — — 5 — Interest expense 54 56 166 170 Income tax provision 30 40 89 60 Depreciation and amortization expense 134 126 388 365 Pre-Con-way acquisition environmental matter (1) 35 — 35 — Legal matter (2) — — ( 13 ) — Transaction and integration costs 1 13 7 39 Restructuring costs 6 3 26 17 Net Income $ 82 $ 95 $ 257 $ 312 (1) Relates to environmental and product liability claims involving a former subsidiary of Con-way, which was sold prior to XPO's acquisition of Con-way in 2015. (2) 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. 11 Table of Contents The following table presents depreciation and amortization expense by segment: Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2025 2024 2025 2024 Depreciation and amortization expense North American LTL $ 98 $ 89 $ 283 $ 257 European Transportation 35 36 101 106 Corporate 1 1 3 3 Total $ 134 $ 126 $ 388 $ 365 As of September 30, 2025 and December 31, 2024, we held long-lived tangible assets outside of the U.S., including right of use assets, of $ 793 million and $ 715 million, respectively. 3. Revenue Recognition Disaggregation of Revenues Our revenue disaggregated by geographic area based on sales office location was as follows: Three Months Ended September 30, 2025 (In millions) North American LTL European Transportation Total Revenue United States $ 1,228 $ — $ 1,228 North America (excluding United States) 27 — 27 France — 331 331 United Kingdom — 305 305 Europe (excluding France and United Kingdom) — 220 220 Total $ 1,255 $ 857 $ 2,111 Three Months Ended September 30, 2024 (In millions) North American LTL European Transportation Total Revenue United States $ 1,224 $ — $ 1,224 North America (excluding United States) 27 — 27 France — 320 320 United Kingdom — 269 269 Europe (excluding France and United Kingdom) — 214 214 Total $ 1,251 $ 803 $ 2,053 12 Table of Contents Nine Months Ended September 30, 2025 (In millions) North American LTL European Transportation Total Revenue United States $ 3,586 $ — $ 3,586 North America (excluding United States) 81 — 81 France — 981 981 United Kingdom — 845 845 Europe (excluding France and United Kingdom) — 653 653 Total $ 3,667 $ 2,479 $ 6,146 Nine Months Ended September 30, 2024 (In millions) North American LTL European Transportation Total Revenue United States $ 3,662 $ — $ 3,662 North America (excluding United States) 81 — 81 France — 984 984 United Kingdom — 766 766 Europe (excluding France and United Kingdom) — 657 657 Total $ 3,743 $ 2,407 $ 6,150 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: Nine Months Ended September 30, 2025 (In millions) Reserve Balance as of December 31, 2024 Charges Incurred Payments Reserve Balance as of September 30, 2025 Severance North American LTL $ 3 $ 4 $ ( 4 ) $ 2 European Transportation 1 13 ( 8 ) 6 Corporate 1 5 ( 3 ) 4 Total $ 5 $ 22 $ ( 16 ) $ 11 In addition to the severance charges noted in the table above, we recorded non-cash charges in our European Transportation segment of $ 4 million during the first nine months of 2025. We expect that the majority of the cash outlays related to the severance charges incurred in the first nine months of 2025 will be completed within 12 months. 13 Table of Contents 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: September 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 $ ( 32 ) Cross-currency swap agreements 369 Other long-term assets — Other long-term liabilities ( 45 ) Interest rate swaps 550 Other long-term assets — Other long-term liabilities ( 1 ) Total $ — $ ( 78 ) 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 ) 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 September 30, (In millions) 2025 2024 2025 2024 2025 2024 Derivatives designated as cash flow hedges Interest rate swaps — ( 1 ) 1 — — — Derivatives designated as net investment hedges Cross-currency swap agreements 5 ( 23 ) — — 3 2 Total $ 4 $ ( 24 ) $ 1 $ — $ 3 $ 2 14 Table of Contents Amount of 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) Nine Months Ended September 30, (In millions) 2025 2024 2025 2024 2025 2024 Derivatives designated as cash flow hedges Interest rate swaps $ ( 1 ) $ 1 $ 1 $ 1 $ — $ — Derivatives designated as net investment hedges Cross-currency swap agreements ( 79 ) ( 5 ) — — 8 7 Total $ ( 80 ) $ ( 4 ) $ 1 $ 1 $ 8 $ 7 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. 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. Our outstanding interest rate swaps mature in 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. 15 Table of Contents 6. Debt September 30, 2025 December 31, 2024 (In millions) Principal Balance Carrying Value Principal Balance Carrying Value Term loan facility $ 1,050 $ 1,043 $ 1,100 $ 1,089 6.25 % senior secured notes due 2028 830 825 830 823 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 300 229 300 225 Finance leases, asset financing and other 228 228 228 228 Total debt 3,443 3,346 3,493 3,387 Short-term borrowings and current maturities of long-term debt 125 125 62 62 Long-term debt $ 3,318 $ 3,222 $ 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 September 30, 2025 $ 3,537 $ 2,253 $ 1,284 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 September 30, 2025, we have approximately $ 600 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 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 September 30, 2025, we were in compliance with the Revolving Credit Facility’s financial covenants. Letters of Credit Facility As of September 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. 16 Table of Contents 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. 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. In September 2025, we gave notice to repay an additional $ 65 million of outstanding principal under the Refinancing Term Loan B-2 Facility to occur in October 2025. As a result, as of September 30, 2025, we classified $ 65 million of the Refinancing Term Loan B-2 Facility within Short-term borrowings and current maturities of long-term debt. In October 2025, we used cash on hand to repay $ 65 million of outstanding principal under this loan. 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 5.88 % as of September 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. We retire common shares that we repurchase upon settlement. 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 third quarter of 2025, we repurchased 388 thousand shares of common stock with an aggregate value of $ 50 million at an average price of $ 128.86 per share. In the first nine months of 2025, we repurchased 471 thousand shares of common stock with an aggregate value of $ 60 million at an average price of $ 127.37 per share. The share repurchases were funded by cash on hand. As of September 30, 2025, our remaining share repurchase authorization was $ 690 million. 8. Income Taxes In July 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 recognized the effects of the legislation during the third quarter for the provisions currently enacted, which increased our deferred tax liability. We anticipate that the legislation will reduce our federal income tax liability and related tax payments for current and future years but will not have a significant impact on our annual effective tax rate. 17 Table of Contents 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 ($ 40 million for the nine months ended September 30, 2024). In 2024, we made tax payments of $ 7 million related to the legal entity reorganization and, in the third quarter of 2025, we received a cash refund of approximately $ 49 million. We expect to receive an additional $ 3 million cash refund in the fourth quarter of 2025 or early 2026. 9. Earnings per Share The computations of basic and diluted earnings per share were as follows: Three Months Ended September 30, Nine Months Ended September 30, (In millions, except per share data) 2025 2024 2025 2024 Net income $ 82 $ 95 $ 257 $ 312 Basic weighted-average common shares 118 116 118 116 Dilutive effect of stock-based awards 2 4 2 4 Diluted weighted-average common shares 120 120 120 120 Basic earnings per share $ 0.69 $ 0.81 $ 2.18 $ 2.68 Diluted earnings per share $ 0.68 $ 0.79 $ 2.15 $ 2.60 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. 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. 18 Table of Contents Insurance Contribution Litigation We have been engaged in litigation 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) since we acquired Con-way in 2015. In April 2012, prior to the acquisition, Allianz Global Risks US Ins. Co. (“Allianz”) filed suit against eighteen insurance companies seeking contribution on environmental and product liability claims that Allianz agreed to defend and indemnify on behalf of its insured, Daimler Trucks North America (“DTNA”). These claims involved truck and part manufacturing plants of Freightliner, a former subsidiary of Con-way, which Con-way sold to DTNA in 1981. The defendants had insured Freightliner’s assets and Con-way and Freightliner had self-insured under fronting agreements with three of the 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. In connection with the acquisition of Con-way, we became responsible for any potential liability of Con-way related to this matter. After a seven-week jury trial in 2014, the jury found that Con-way and the fronting insurers never intended that the fronting 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 application of certain policy pollution exclusions. 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 and determined that the fronting policies do provide coverage for the environmental and product liability claims. The pollution exclusion and allocation issues remained open. The trial on the pollution exclusion issue took place in October 2024, where the jury issued a favorable verdict, finding that the pollution exclusion applied to the General policy over several years for which Allianz seeks contribution. The trial addressing legal and factual issues relating to the allocation of defense and indemnity costs among the applicable insurance policies took place during the first half of 2025 and final hearings on allocation took place in early October 2025. While the court has not entered a final judgment, we revised our estimate for our share of the liability associated with this matter and recognized a charge of approximately $ 35 million in the third quarter of 2025. The additional charge we recognized includes an allocation of defense and indemnity costs already incurred by Allianz as well as an estimate of future allocated defense and indemnity costs. This matter is solely related to a legacy Con-way truck manufacturing business and is unrelated to our current Less-than-Truckload operations. 19 Table of Contents