What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2026-02-05 compared with 2025-02-07 · 125 added, 138 removed, 227 unchanged (54% of the section changed)

1 unchanged sentence

XPO is a leading provider of freight transportation services, with company-specific avenues for value creation.

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

We use our proprietary technology to move goods efficiently through supply chains for approximately 55,000 customers in North America and Europe.

Our company has two reportable segments:

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

North American Less-Than-Truckload (“LTL”), the largest component of our business;

and European Transportation.

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

1 unchanged sentence

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

Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 for a discussion of our financial condition and results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022.

Strategic Developments

XPO has operated solely as an asset-based LTL service provider in North America since November 2022, when we completed the spin-off of RXO, Inc.

This followed the completion of two additional components of our strategic plan:

the spin-off of GXO Logistics, Inc.

(“GXO”) in August 2021, and the sale of our North American intermodal operation in March 2022.

In December 2023, we completed the Yellow Asset Acquisition, purchasing 26 LTL service centers and assuming existing leases for two additional locations.

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.

The historical results of operations and financial positions of RXO and our intermodal operation are presented as discontinued operations during the periods presented and, as such, have been excluded from both continuing operations and segment results.

We completed the sale of our intermodal operation for cash proceeds of approximately $705 million, net of cash disposed.

The pre-tax gain on the sale was $430 million, net of transaction costs and working capital adjustments, and was included in Income from discontinued operations, net of taxes, for the year ended December 31, 2022.

Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, for a discussion of our financial condition and results of operations for full year 2024, compared with full year 2023.

Impacts of Notable External Conditions

1 unchanged sentence

The overall freight environment continues to be recessionary, due to a mix of macroeconomic pressures on supply and demand.

Importantly, we see growth potential ahead in our major markets, and we intend to continue expanding the business by investing in capacity for the long-term, gaining profitable market share, and aligning price with the value we provide.

Examples of macroeconomic factors that can affect our results are volatility in interest rates and economic inflation, which may have a negative impact on certain of our operating costs, such as salaries, wages and employee benefits, fuel, purchased transportation and insurance.

We mitigate these impacts with mechanisms in our customer contracts, including fuel surcharge clauses and general rate increases.

Examples of supply chain constraints that may affect our results include potentially higher tariffs on goods produced outside the United States, and the increasing reluctance of shippers to route goods through areas with regional conflict.

Regarding the war between Russia and Ukraine and the unrest in the Middle East, we have no direct exposure to these geographies.

We cannot predict how future macroeconomic conditions, supply chain constraints or global conflicts, if any, may adversely affect our results of operations.

Importantly, we see significant growth potential ahead in our major markets, and we intend to continue expanding our business by investing in capacity for the long-term, gaining profitable market share and aligning price with the value we provide.

Examples of factors that may affect our results include elevated interest rates;

economic inflation, which may have a negative effect on certain of our operating costs, such as salaries, wages and employee benefits, fuel and insurance;

uncertainty regarding the impacts of tariffs imposed, revoked or reciprocated between the U.S.

and its trading partners, including impacts on import costs, export competitiveness and end-market demand for our customers’ products;

and the ongoing reluctance of some shippers to route goods through areas unsettled by conflict.

We mitigate inflationary pressure with mechanisms in our customer contracts, including fuel surcharge clauses and general rate increases;

and we believe that U.S.

demand for LTL services may increase when interest rates decrease or tariff uncertainties subside, as both dynamics historically correlate to a rebound in industrial activity.

We cannot predict how future macroeconomic conditions, supply chain constraints or conflicts may adversely affect our results of operations.

Consolidated Summary Financial Results

9 unchanged sentences

Depreciation and amortization expense 521 490 6.4 % 6.1 %

Goodwill impairment — — — % — %

Litigation matter — 8 — % 0.1 %

Pre-Con-way acquisition environmental matter 35 — 0.4 % — %

Legal matters (13) — (0.2) % — %

Transaction and integration costs 8 53 0.1 % 0.7 %

4 unchanged sentences

Interest expense 219 223 2.7 % 2.8 %

Income from continuing operations before income tax

473 260 5.9 % 3.4 %

Income before income tax provision 437 473 5.4 % 5.9 %

Income tax provision 121 86 1.5 % 1.1 %

Income from continuing operations 387 192 4.8 % 2.5 %

Income (loss) from discontinued operations, net of taxes — (3) — % — %

Net income $ 316 $ 387 3.9 % 4.8 %

1 unchanged sentence

Our consolidated revenue for 2025 increased by 1.1% to $8.2 billion, compared with 2024.

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

Foreign currency movement increased revenue by approximately 1.4 percentage points in 2025.

After taking into effect the impact of foreign currency movements, revenue was essentially flat compared with 2024.

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

Salaries, wages and employee benefits in 2025 was $3.42 billion, or 42.0% of revenue, compared with $3.38 billion, or 41.8% of revenue, in 2024.

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

The year-over-year increase as a percentage of revenue primarily reflects higher costs due to the insourcing of a greater proportion of linehaul from third-party transportation providers in our North American LTL segment and wage inflation.

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

Purchased transportation in 2025 was $1.66 billion, or 20.4% of revenue, compared with $1.70 billion, or 21.1% of revenue, 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 and, to a lesser extent, lower rates paid to third-party providers for purchased transportation miles in our North American LTL segment, partially offset by higher purchased transportation in our European Transportation segment.

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, 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 was $1.57 billion in 2025, or 19.3% of revenue, compared with $1.59 billion, or 19.7% of revenue, in 2024.

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

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

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

Operating taxes and licenses in 2025 was $83 million, compared with $80 million in 2024.

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

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

Insurance and claims in 2025 was $167 million, compared with $134 million in 2024.

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

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

Gains on sales of property and equipment in 2025 was $17 million, compared with $40 million in 2024.

The year-over-year increase primarily reflects $34 million in gains on real estate transactions in our North American LTL segment in 2024 from a planned service center relocation with no comparable gains in 2023.

The year-over-year decrease primarily reflects lower gains on real estate transactions in our North American LTL segment in 2025 compared with 2024.

Depreciation and amortization expense in 2025 was $521 million, compared with $490 million in 2024.

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

Litigation matter was $8 million in 2023, with no comparable expense in 2024.

See Note 18—Commitments and Contingencies to our Consolidated Financial Statements for further information.

The year-over-year increase reflects the impact of capital investments in property, tractors and trailers in our North American LTL segment.

Pre-Con-way acquisition environmental matter for 2025 was a charge of $35 million, with no comparable charges in 2024.

This matter relates to environmental and product liability claims involving truck and part manufacturing plants of a former subsidiary of Con-way, which they sold in 1981 long before XPO's acquisition of Con-way in 2015.

The matter is solely related to a legacy Con-way truck manufacturing business and is unrelated to the operations of our North American LTL segment.

Legal matters was a gain of $13 million in 2025, with no comparable gain in 2024.

The gain recognized in 2025 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 in 2025 were $8 million, compared with $53 million in 2024.

Transaction and integration costs for 2024 and 2023 are primarily comprised of stock-based compensation for certain employees related to strategic initiatives, as well as retention awards for certain employees related to strategic initiatives in 2023.

Stock-based compensation costs related to our previously announced strategic initiatives concluded in the fourth quarter of 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 in 2025 were $59 million, compared with $27 million in 2024.

We engage in restructuring actions as part of our ongoing efforts to best use our resources and infrastructure, including actions in connection with spin-offs and divestment activities.

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

In 2025, restructuring costs primarily reflect share-based compensation in Corporate, and severance and related charges incurred in connection with headcount reduction initiatives in our European Transportation segment.

In 2024, restructuring costs primarily related to headcount reduction initiatives in our European Transportation segment.

For more information, see Note 5—Restructuring Charges to our Consolidated Financial Statements.

1 unchanged sentence

Other income for 2025 was $6 million, compared with $37 million in 2024.

The year-over-year increase reflects $13 million of investment income in 2024 in Corporate on a past investment in a private company that was sold during the year, compared with no investment income in 2023, as well as an increase in net periodic pension income in 2024.

Debt extinguishment loss was $0 million in 2024, compared with $25 million in 2023.

The debt extinguishment loss in 2023 related to the refinancing of our Existing Term Loan Facility (as defined below) and the redemption of our outstanding 6.25% senior notes due 2025 (“Senior Notes due 2025”).

Interest expense for 2024 increased 32.7% to $223 million, from $168 million in 2023.

The increase is primarily due to the debt issuance in the fourth quarter of 2023 to finance the Yellow Asset Acquisition.

The year-over-year decrease reflects a $19 million decline in pension income and a $13 million decline in investment income related to the sale of a past investment in a private company in 2024.

Debt extinguishment loss was $6 million in 2025, which related to the refinancing of our term loan facility in the first quarter of 2025.

There was no debt extinguishment loss in 2024.

Interest expense for 2025 decreased 1.8% to $219 million, from $223 million in 2024.

The decrease is primarily due to a reduction in our debt coupled with lower interest rates on our variable rate debt, partially offset by lower interest income.

We anticipate interest expense to be between $205 million and $215 million in 2026.

Our consolidated income from continuing operations before income taxes in 2024 was $473 million, compared with $260 million in 2023.

The increase was primarily driven by higher operating income partially offset by higher interest expense.

Our consolidated income before income tax provision in 2025 was $437 million, compared with $473 million in 2024.

The decrease was primarily driven by lower other income and operating income.

With respect to our U.S.

operations, income from continuing operations before income taxes was

income of $486 million in 2024, compared with income of $286 million in 2023.

The increase was primarily due to higher revenue, lower purchased transportation and higher gains on real estate transactions, partially offset by higher salaries, wages and employee benefits, depreciation and amortization and interest expense.

operations, income before income tax provision was $456 million in 2025, compared with income of $486 million in 2024.

The decrease was primarily due to lower revenue, higher insurance and claims, lower gains on real estate transactions, higher depreciation and amortization, higher costs related to legal matters, higher restructuring costs, and lower other income, partially offset by lower purchased transportation and lower transaction and integration costs.

With respect to our non-U.S.

operations, loss from continuing operations before income taxes was $13 million in 2024, compared with a loss of $26 million in 2023.

The decrease in the loss is primarily due to higher revenue, partially offset by higher purchased transportation and salaries, wages and employee benefits in 2024.

operations, loss before income tax provision was $19 million in 2025, compared

with a loss of $13 million in 2024.

The increase in the loss is primarily due to higher purchased transportation, salaries, wages and employee benefits, and restructuring costs, partially offset by higher revenue and a gain on legal matters in 2025.

Our effective income tax rates were 27.8% and 18.1% in 2025 and 2024, respectively.

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

The increase in our effective income tax rate for 2025 compared to 2024 was primarily driven by a one-time tax benefit of $41 million associated with the legal entity reorganization in our European Transportation business that occurred in the second quarter of 2024, partially offset by $6 million in U.S.

foreign tax credits recognized in 2025.

For 2025, our effective tax rate was impacted by $12 million from non-deductible compensation and $12 million from losses for which no tax benefit can be recognized partially offset by $6 million in U.S.

foreign tax credits.

For 2024, our effective tax rate was impacted by $49 million of discrete tax benefits, the largest of which was a $41 million benefit from the legal entity reorganization in our European Transportation business, offset by $16 million from non-deductible compensation and $9 million from losses for which no tax benefit can be recognized.

For 2023, our effective tax rate was impacted by $15 million from non-deductible compensation partially offset by $9 million of discrete tax benefits, the largest of which was a $4 million benefit from changes in reserves for uncertain tax positions.

We expect the legal entity reorganization in our European Transportation business to generate a net cash refund of approximately $45 million, to be received primarily in 2025.

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

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

We expect to receive the remaining $3 million cash refund in 2026.

Segment Financial Results

Our 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 from continuing operations before debt extinguishment loss, interest expense, income tax provision, depreciation and amortization expense, goodwill impairment charges, litigation matters, transaction and integration costs, restructuring costs and other adjustments.

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 from continuing operations before debt extinguishment loss, interest expense, income tax provision, depreciation and amortization expense, legal matters, transaction and integration costs, restructuring costs and other adjustments.

Segment adjusted EBITDA includes an allocation of corporate costs.

9 unchanged sentences

Year Ended December 31, 2025 Compared with Year Ended December 31, 2024

Revenue in our North American LTL segment increased 4.9% to $4.9 billion in 2024, compared with $4.7 billion in 2023.

Revenue in our North American LTL segment decreased 1.4% to $4.8 billion in 2025, compared with $4.9 billion in 2024.

Revenue included fuel surcharge revenue of $731 million and $785 million, respectively, for the years ended December 31, 2025 and 2024.

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

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.

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

We evaluate the revenue performance of our LTL business using several commonly used metrics, including tonnage (weight per day in pounds) and yield, which is a commonly used measure of LTL pricing trends.

We measure yield using gross revenue per hundredweight, excluding fuel surcharges.

Impacts on yield can include weight per shipment and length of haul, among other factors, while impacts on volume can include shipments per day and weight per shipment.

Impacts on yield can include weight per shipment and length of haul, among other factors, while impacts on tonnage can include shipments per day and weight per shipment.

The following table summarizes our key revenue metrics:

6 unchanged sentences

Percentages presented are calculated using the underlying unrounded amounts.

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

The decrease in volume per day reflects lower average weight per shipment partially offset by higher shipments per day.

In the month of January 2025, weight per day decreased 8.5%, as compared with January 2024, attributable to a year-over-year decrease of 6.0% in shipments per day and a decrease of 2.7% in weight per shipment.

Adjusted EBITDA was $1,115 million in 2024, compared with $864 million in 2023.

Adjusted EBITDA included gains from real estate transactions of $34 million for the year ended December 31, 2024 with no comparable gains in 2023.

Excluding these gains, the increase in adjusted EBITDA reflected higher revenue, excluding fuel surcharge revenue, driven by the pricing and volume dynamics explained above, and lower purchased transportation, damage claims, fuel costs, maintenance costs, and bad debt expense.

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

Depreciation and amortization expense increased to $346 million in 2024 compared with $291 million in 2023 due to the impact of capital investments, in particular tractors and trailers, as well as service centers acquired in the Yellow Asset Acquisition.

The year-over-year decrease in revenue for 2025, excluding fuel surcharge revenue, reflects lower tonnage, almost entirely offset by higher yield, primarily related to our improvements in service quality and the benefit of numerous pricing initiatives.

The decrease in tonnage per day reflects lower shipments per day and lower average weight per shipment.

Adjusted EBITDA was $1.14 billion in 2025, compared with $1.12 billion in 2024.

Adjusted EBITDA included gains from real estate transactions of $15 million for the year ended December 31, 2025 and $34 million in 2024.

Excluding these gains, the increase in adjusted EBITDA reflected higher yield, lower purchased transportation, productivity improvements and lower maintenance costs, partially offset by lower tonnage, lower fuel surcharge revenue, wage inflation, higher vehicular insurance costs and lower pension income.

Depreciation and amortization expense increased to $381 million in 2025 compared with $346 million in 2024 due to the impact of capital investments in property, tractors and trailers.

European Transportation Segment

9 unchanged sentences

Foreign currency movement increased revenue by approximately 3.6 percentage points in 2025.

The increase in revenue compared to 2023, after taking into effect the impact of foreign currency movement, primarily reflects higher yield.

Adjusted EBITDA was $147 million in 2025, compared with $158 million in 2024.

The decrease in adjusted EBITDA was primarily driven by higher purchased transportation, salaries, wages and employee benefits and lease and facility costs.

These items were 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 increased to $140 million in 2024 compared with $136 million in 2023 primarily due to the impact of capital investments.

The decrease in adjusted EBITDA was primarily driven by higher purchased transportation and salaries, wages and employee benefits, partially offset by higher revenue.

Depreciation and amortization expense decreased to $136 million in 2025 compared with $140 million in 2024.

Liquidity and Capital Resources

1 unchanged sentence

Our principal existing sources of cash are (i) cash generated from operations;

(ii) borrowings available under our Second Amended and Restated Revolving Loan Credit Agreement, as amended (the “ABL Facility”);

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

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

As of December 31, 2024, we have $511 million available to draw under our ABL Facility, based on a borrowing base of $512 million and outstanding letters of credit of less than $1 million.

Commitments under our ABL Facility are $600 million and the maturity date is April 30, 2026.

Additionally, under a credit agreement, we have a $200 million uncommitted secured evergreen letter of credit facility, under which we have issued $137 million in aggregate face amount of letters of credit as of December 31, 2024.

As of December 31, 2025, we have $600 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 have issued $133 million in aggregate face amount of letters of credit as of December 31, 2025.

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

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

See Note 11—Debt to our Consolidated Financial Statements for further information.

As of December 31, 2025, we had approximately $910 million of total liquidity.

5 unchanged sentences

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.

For more information, see Note 2 —Basis of Presentation and Significant Accounting Policies to our Consolidated Financial Statements.

For more information, see Note 2 —Significant Accounting Policies to our 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 $235 million as of December 31, 2025).

1 unchanged sentence

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

The program expires in July 2026.

In January 2026, the program was amended to extend the maturity date through March 2029.

Information related to the trade receivables sold was as follows:

9 unchanged sentences

Term Loan Facility

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

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

The New Term Loan Facility was issued at 99.5% of the face amount and will mature on May 24, 2028.

In the same period, we used net proceeds from the New Term Loan Facility, the Senior Secured Notes due 2028 and the Senior Notes due 2031, as described below, together with cash on hand, to repay $2.0 billion of outstanding principal under the Existing Term Loan Facility, which was scheduled to mature in 2025, and to pay related fees, expenses and accrued interest.

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

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

The Incremental Term Loans were issued under the Term Loan Credit Agreement, having substantially similar terms as the New Term Loan Facility, except with respect to maturity date, issue price, prepayment premiums in connection with certain voluntary prepayments and certain other provisions.

The Incremental Term Loans were issued at par and will mature on February 1, 2031.

Both the New Term Loan Facility and Incremental Term Loans bear interest at a rate per annum equal to, at our option, either (a) a Term SOFR rate (subject to a 0.00% floor) or (b) a base rate (subject to a 0.00% floor), in each case, plus an applicable margin of 2.00% for Term SOFR loans or 1.00% for base rate loans.

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 the second half of 2025, we used cash on hand to repay $115 million of outstanding principal under the Refinancing Term Loan B-2 Facility, which was scheduled to mature in 2028.

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 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 5.4% as of December 31, 2025.

In December 2023, we completed the private placement of $585 million aggregate principal amount of senior notes due 2032 (the “Senior Notes due 2032”), which mature on February 1, 2032 and bear interest at a rate of 7.125% per annum.

Interest is payable semi-annually in cash in arrears, and commenced August 1, 2024.

These notes were issued at par.

In the same period, we used net proceeds from the Incremental Term Loans and the Senior Notes due 2032, together with cash on hand, to finance the Yellow Asset Acquisition, to repay in full the $112 million aggregate principal amount outstanding of our Senior Notes due 2025, and to pay related fees, expenses and accrued interest.

The redemption price for the Senior Notes due 2025 was 101.563% of the principal amount plus accrued and unpaid interest.

We recorded a debt extinguishment loss of $2 million due to this redemption.

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

The Senior Secured Notes due 2028 mature on June 1, 2028 and bear interest at a rate of 6.25% per annum.

The Senior Notes due 2031 mature on June 1, 2031 and bear interest at a rate of 7.125% per annum.

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

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

In November 2022, we repurchased $408 million of the then $520 million outstanding Senior Notes due 2025 in a cash tender offer.

Holders of the Senior Notes due 2025 received total consideration of $1,022.50 per $1,000.00 principal amount of notes tendered and accepted for purchase, plus accrued and unpaid interest.

We paid for the tender using cash received from RXO in connection with its spin-off.

We recorded a debt extinguishment loss of $13 million due to this repurchase in the fourth quarter of 2022.

In April 2022, we redeemed $630 million of the then $1.15 billion outstanding principal amount of the Senior Notes due 2025.

The redemption price for the notes was 100% of the principal amount plus a premium, as defined in the indenture, of approximately $21 million and accrued and unpaid interest.

We paid for the redemption using available liquidity.

We recorded a debt extinguishment loss of $26 million due to this redemption in 2022.

Share Repurchases

In February 2019, our Board of Directors authorized repurchases of up to $1.5 billion of our common stock.

Our share 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 conditions, market conditions, alternative investment opportunities and funding considerations.

We are not obligated to repurchase any specific number of shares and may suspend or discontinue the program at any time.

There were no share repurchases in 2024, 2023 or 2022.

Our remaining share repurchase authorization as of December 31, 2024 is $503 million.

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.

During 2025, we repurchased 954 thousand shares of common stock with an aggregate value of $125 million at an average price of $130.96 per share.

The share repurchases were funded by cash on hand.

There were no share repurchases in 2024 and 2023.

As of December 31, 2025, our remaining share repurchase authorization was $625 million.

Loan Covenants and Compliance

12 unchanged sentences

(i) purchase property and equipment of $657 million;

(ii) make payments of $129 million related to tax withholding obligations in connection with the vesting of restricted shares and (iii) make payments on debt and finance leases of $82 million.

(ii) repurchase common stock of $125 million;

(iii) repay $115 million of outstanding principal under the Refinancing Term Loan B-2 Facility;

(iv) make payments on debt and finance leases of $73 million;

and (v) make net payments of $50 million related to tax withholding obligations in connection with the vesting of restricted shares.

During 2024, we:

(i) generated cash from operating activities from continuing operations of $694 million and (ii) received net proceeds of $3.0 billion from the issuance of debt.

(i) generated cash from operating activities from continuing operations of $808 million and (ii) generated proceeds from sales of property and equipment of $75 million.

We used cash during this period primarily to:

(i) purchase property and equipment of $1.5 billion;

(ii) repay our Existing Term Loan Facility for $2.0 billion and (iii) redeem our Senior Notes due 2025 for $114 million.

(i) purchase property and equipment of $789 million;

(ii) make payments of $129 million related to tax withholding obligations in connection with the vesting of restricted shares;

and (iii) make payments on debt and finance leases of $82 million.

Cash flows from operating activities from continuing operations for 2025 increased by $178 million compared with 2024.

The increase in 2025 compared with 2024 reflects:

(i) higher income from continuing operations of $195 million and (ii) higher non-cash depreciation and amortization of $58 million, that is added back in the determination of operating cash flows.

These items were partially offset by:

(i) the impact of operating assets and liabilities utilizing $194 million of cash in 2024, compared with utilizing $99 million in 2023 and (ii) higher gains on sales of property and equipment of $35 million in 2024 compared with 2023, that is subtracted in the determination of operating cash flows.

(i) the impact of operating assets and liabilities utilizing $45 million of cash in 2025, compared with utilizing $194 million in 2024;

(ii) higher deferred tax expense of $42 million, that is added back in the determination of operating cash flows;

(iii) higher non-cash depreciation and

amortization of $31 million, that is added back in the determination of operating cash flows;

and (iv) lower gains on sales of property and equipment of $23 million, that is subtracted in the determination of operating cash flows.

These items were partially offset by lower net income of $71 million.

As of December 31, 2025, we had $941 million of operating lease and related interest payment obligations, of which $204 million is due within the next twelve months.

4 unchanged sentences

Investing activities from continuing operations used $616 million of cash in 2025 compared with $702 million used in 2024.

During 2024, we used $789 million of cash to purchase property and equipment and received $75 million from sales of property and equipment, including $47 million related to the sale of a service center in our North American LTL segment in December 2024 from a planned service center relocation.

During 2025, we used $657 million of cash to purchase property and equipment and received $41 million from sales of property and equipment.

During 2024, we used $789 million of cash to purchase property and equipment and received $75 million of cash from sales of property and equipment, including $47 million related to the sale of a service center in our North American LTL segment in December 2024 from a planned service center relocation.

In January 2025, the proceeds from this sale were used to purchase four new service centers that were previously leased.

During 2023, we used $1,533 million of cash to purchase property and equipment, including $878 million related to the Yellow Asset Acquisition, and received $29 million of cash from sales of property and equipment.

We anticipate gross capital expenditures to be between $600 million and $700 million in 2025, including the four new service centers referenced above, funded by cash on hand and available liquidity.

Financing activities from continuing operations used $226 million of cash in 2024 compared with $761 million of cash generated in 2023.

We anticipate gross capital expenditures to be between $500 million and $600 million in 2026, funded by cash on hand and available liquidity.

Financing activities from continuing operations used $339 million of cash in 2025 compared with $226 million of cash used in 2024.

The primary uses of cash from financing activities during 2025 were $125 million to repurchase common stock, $115 million to repay outstanding principal under the Refinancing Term Loan B-2 Facility, which was scheduled to mature in 2028, $73 million to repay borrowings, primarily related to finance lease obligations, and $50 million to make net payments for tax withholdings on restricted shares, primarily during the first quarter of 2025.

The primary uses of cash from financing activities during 2024 was $129 million to make payments for tax withholdings on restricted shares, primarily driven by a payment of approximately $85 million for tax withholdings on XPO restricted stock units that vested during December, and $82 million used to repay borrowings, primarily related to finance lease obligations.

The primary source of cash from financing activities during 2023 was $3.0 billion of net proceeds from the issuance of debt.

The primary uses of cash from financing activities during 2023 were $2.1 billion used to repay our Existing Term Loan Facility and redeem the Senior Notes due 2025 and $71 million used to repay other borrowings.

As of December 31, 2025, we had $3.2 billion total outstanding principal amount of debt, excluding finance leases.

We have no significant debt maturities until 2028.

Interest on our ABL and Term Loan facilities is variable, while interest on our senior notes is at fixed rates.

Future interest payments associated with our debt total $1.2 billion at December 31, 2024, with $219 million payable within 12 months, and are estimated based on the principal amount of debt and applicable interest rates as of December 31, 2024.

Interest on our Revolving Credit Facility and the Refinancing Term Loan Facilities is variable, while interest on our senior notes is at fixed rates.

Future interest payments associated with our debt total $947 million at December 31, 2025, with $202 million payable within 12 months, and are estimated based on the principal amount of debt and applicable interest rates as of December 31, 2025.

Additionally, as of December 31, 2025, we have $294 million of finance lease and related interest payment obligations, of which $62 million is due within the next twelve months.

26 unchanged sentences

For the year ended December 31, 2025, our expected return on plan assets was $77 million, compared to the actual return on plan assets of $130 million.

The actual annualized return on plan assets for 2024 was approximately 1%, which was below the expected return on asset assumption for the year due to negative performance in the long duration fixed income market environment, which represented 90% of the portfolio.

The actual annualized return on plan assets for 2025 was approximately 10%, which was above the expected return on asset assumption for the year due to strong equity and fixed income market returns.

An increase or decrease of 25 basis points in the expected return on plan assets would increase or decrease our 2025 pre-tax pension income by approximately $3 million.

12 unchanged sentences

generally accepted accounting principles.

A summary of our significant accounting policies is contained in Note 2—Basis of Presentation and Significant Accounting Policies to our Consolidated Financial Statements.

A summary of our significant accounting policies is contained in Note 2—Significant Accounting Policies to our Consolidated Financial Statements.

The methods, assumptions, and estimates that we use in applying our accounting policies may require us to apply judgments regarding matters that are inherently uncertain and may change based on changing circumstances or changes in our analysis.

12 unchanged sentences

The qualitative assessment includes a review of macroeconomic conditions, industry and market considerations, internal cost factors, and overall financial performance, among other factors.

For our 2025 annual goodwill assessment, we performed a step-zero qualitative analysis for four of our reporting units.

Based on the qualitative assessments performed, we concluded that it was not more-likely-than-not that the fair value of these reporting units was less than their carrying amounts and, therefore, further quantitative analysis was not performed, and we did not recognize any goodwill impairment.

For our other reporting unit, we performed a quantitative analysis using a combination of income and market approaches.

The fair value of the reporting unit exceeded its carrying value, resulting in no impairment of goodwill.

For our 2024 annual goodwill assessment, we performed a step-zero qualitative analysis for two of our reporting units.

4 unchanged sentences

Based on the qualitative assessments performed, we concluded that it was not more-likely-than-not that the fair value of each of our reporting units was less than their carrying amounts and, therefore, further quantitative analysis was not performed, and we did not recognize any goodwill impairment.

Similarly, for our 2022 annual goodwill assessment performed as of August 31, we performed a step-zero qualitative analysis for each of the three reporting units that existed at that time and reached the same conclusion.

However, in the fourth quarter of 2022 and in connection with the RXO spin-off, we performed additional impairment tests because the number of our reporting units increased from three to five to reflect our new internal organization.

Specifically, while our European Transportation business was previously considered a single reporting unit, after the spin-off of RXO, it was determined that the European Transportation business was comprised of four reporting units.

As a result, in the fourth quarter of 2022, we tested each of the four new reporting units for potential impairment.

A quantitative test was performed for each of these four new reporting units using a combination of income and market approaches and we recorded an aggregate impairment charge of $64 million in the fourth quarter of 2022 related to two of these new reporting units.

The income approach of determining fair value is based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate.

The discount rates reflect management’s judgment and are based on a risk adjusted weighted-average cost of capital utilizing industry market data of businesses similar to the reporting units.

Inherent in our preparation of cash flow projections are assumptions and estimates derived from a review of our operating results, business plans, expected growth rates, cost of capital and tax rates.

Inherent in our preparation of cash flow projections are assumptions and estimates derived from a review of

our operating results, business plans, expected growth rates, cost of capital and tax rates.

Our forecasts also reflect expectations concerning future economic conditions, interest rates and other market data.

The market approach of determining fair value is based on comparable market multiples for companies engaged in similar businesses, as well as recent transactions within our industry.

The market approach of determining fair value is generally based on comparable market multiples for companies engaged in similar businesses, as well as recent transactions within our industry.

We believe this approach, which utilizes multiple valuation techniques, yields the most appropriate evidence of fair value.

3 unchanged sentences

We use a combination of self-insurance programs and purchased insurance to provide for the costs of medical, casualty, liability, vehicular, cargo, workers’ compensation, cyber risk and property claims.

We periodically evaluate our level of insurance coverage and adjust our insurance levels based on risk tolerance and premium expense.

We periodically evaluate our level of insurance coverage and adjust our insurance levels based on risk tolerance, premium expense, and insurance availability.

Liabilities for the risks we retain, including estimates of claims incurred but not reported, are not discounted and are estimated, in part, by considering historical cost experience, demographic and severity factors, and judgments about current and expected levels of cost per claim and retention levels.

11 unchanged sentences

We evaluate the recoverability of these future tax deductions and credits by assessing all available evidence, including the reversal of deferred tax liabilities, carrybacks available, and historical and projected pre-tax profits generated by our operations.

Valuation allowances are established when, in management’s judgment, it is more likely than not that our deferred tax assets will not be

Valuation allowances are established when, in management’s judgment, it is more likely than not that our deferred tax assets will not be realized.

In assessing the need for a valuation allowance, management weighs the available positive and negative evidence, including limitations on the use of tax losses and other carryforwards due to changes in ownership, historic information, and projections of future sources of taxable income that include and exclude future reversals of taxable temporary differences.

New Accounting Standards

Information related to new accounting standards is included in Note 2—Basis of Presentation and Significant Accounting Policies.

Information related to new accounting standards is included in Note 2—Significant Accounting Policies.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis