XPO, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Consolidated Financial Statements Page No. Report of Independent Registered Public Accounting Firm 44 Consolidated Balance Sheets as of December 31, 2025 and 2024 47 Consolidated Statements of Income for the Years Ended December 31, 2025, 2024 and 2023 48 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2025, 2024 and 2023 49 Consolidated Statements of Cash Flows for the Years Ended December 31, 2025, 2024 and 2023 50 Consolidated Statements of Changes in Equity for the Years Ended December 31, 2025, 2024 and 2023 52 Notes to Consolidated Financial Statements 54 43 Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors XPO, Inc.: Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting We have audited the accompanying consolidated balance sheets of XPO, Inc. and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, cash flows, and changes in equity for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Basis for Opinions The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. 44 Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which they relate. Liabilities for self-insured claims As discussed in Note 2 to the consolidated financial statements, the Company uses a combination of self-insurance programs and purchased insurance to provide for the costs of vehicular, and workers’ compensation claims (self-insured claims). The Company records estimates of the undiscounted liability associated with claims incurred as of the balance sheet date, including estimates of claims incurred but not reported, by considering historical cost experience, demographic and severity factors, and judgments about current and expected levels of cost per claim and retention levels. These liabilities are recorded within accrued liabilities and other long-term liabilities as of December 31, 2025. We identified the assessment of the estimated liabilities for self-insured claims as a critical audit matter. The evaluation of the uncertainty in the amounts that will ultimately be paid to settle these claims required subjective auditor judgment. Assumptions that may affect the estimated liability of claims include the consideration of historical cost experience, severity factors, and judgments about current and expected levels of cost per claims that have uncertainty related to future occurrences or events and conditions. Additionally, the Company’s liabilities for self-insured claims included estimates for expenses of claims that have been incurred but have not been reported, and specialized skills were needed to evaluate the actuarial methods and assumptions used to make these estimates. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s self-insurance process. This included controls over the assumptions used in estimating the liabilities for self-insured claims. In addition, for a sample of claims, we compared the Company’s estimates of liabilities for individual self-insured claims to current available information, which included legal claims, incident and case reports, current and historical cost experience, or other evidence. We involved an actuarial professional with specialized skills and knowledge, who assisted in: • comparing the Company’s actuarial reserving methodologies with accepted actuarial methods and procedures • evaluating assumptions used in determining the liability, including expected level of cost per claim, in relation to recent historical loss payment trends and demographic and severity factors 45 • developing an independent expected range of liabilities, including liabilities for claims that have been incurred but have not been recorded, based on actuarial methodologies • comparing the Company’s recorded liability to the independently developed liability range. /s/ KPMG LLP We have served as the Company’s auditor since 2011. New York, New York February 5, 2026 46 XPO, Inc. Consolidated Balance Sheets December 31, (In millions, except per share data) 2025 2024 ASSETS Current assets Cash and cash equivalents $ 310 $ 246 Accounts receivable, net of allowances of $ 40 and $ 50 , respectively 1,035 977 Other current assets 285 283 Total current assets 1,630 1,505 Long-term assets Property and equipment, net of $ 2,360 and $ 2,019 in accumulated depreciation, respectively 3,664 3,402 Operating lease assets 777 727 Goodwill 1,547 1,461 Identifiable intangible assets, net of $ 580 and $ 499 in accumulated amortization, respectively 311 361 Other long-term assets 265 254 Total long-term assets 6,564 6,206 Total assets $ 8,194 $ 7,712 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $ 455 $ 477 Accrued expenses 760 708 Short-term borrowings and current maturities of long-term debt 60 62 Short-term operating lease liabilities 166 127 Other current liabilities 113 46 Total current liabilities 1,555 1,420 Long-term liabilities Long-term debt 3,253 3,325 Deferred tax liability 482 393 Employee benefit obligations 86 85 Long-term operating lease liabilities 611 603 Other long-term liabilities 345 283 Total long-term liabilities 4,778 4,690 Stockholders’ equity Common stock, $ 0.001 par value; 300 shares authorized; 117 shares issued and outstanding as of December 31, 2025 and 2024, respectively — — Additional paid-in capital 1,160 1,274 Retained earnings 888 572 Accumulated other comprehensive loss ( 187 ) ( 246 ) Total equity 1,861 1,601 Total liabilities and equity $ 8,194 $ 7,712 Amounts may not add due to rounding. See accompanying notes to consolidated financial statements. 47 XPO, Inc. Consolidated Statements of Income Years Ended December 31, (In millions, except per share data) 2025 2024 2023 Revenue $ 8,157 $ 8,072 $ 7,744 Salaries, wages and employee benefits 3,424 3,377 3,159 Purchased transportation 1,662 1,701 1,760 Fuel, operating expenses and supplies 1,571 1,589 1,623 Operating taxes and licenses 83 80 60 Insurance and claims 167 134 167 Gains on sales of property and equipment ( 17 ) ( 40 ) ( 5 ) Depreciation and amortization expense 521 490 432 Pre-Con-way acquisition environmental matter 35 — — Legal matters ( 13 ) — 8 Transaction and integration costs 8 53 58 Restructuring costs 59 27 44 Operating income 656 660 438 Other income ( 6 ) ( 37 ) ( 15 ) Debt extinguishment loss 6 — 25 Interest expense 219 223 168 Income from continuing operations before income tax provision 437 473 260 Income tax provision 121 86 68 Income from continuing operations 316 387 192 Loss from discontinued operations, net of taxes — — ( 3 ) Net income $ 316 $ 387 $ 189 Net income (loss) Continuing operations $ 316 $ 387 $ 192 Discontinued operations — — ( 3 ) Net income $ 316 $ 387 $ 189 Earnings (loss) per share data Basic earnings per share from continuing operations $ 2.69 $ 3.33 $ 1.66 Basic loss per share from discontinued operations — — ( 0.02 ) Basic earnings per share $ 2.69 $ 3.33 $ 1.64 Diluted earnings per share from continuing operations $ 2.64 $ 3.23 $ 1.62 Diluted loss per share from discontinued operations — — ( 0.02 ) Diluted earnings per share $ 2.64 $ 3.23 $ 1.60 Weighted-average common shares outstanding Basic weighted-average common shares outstanding 118 116 116 Diluted weighted-average common shares outstanding 119 120 118 Amounts may not add due to rounding. See accompanying notes to consolidated financial statements. 48 XPO, Inc. Consolidated Statements of Comprehensive Income Years Ended December 31, (In millions) 2025 2024 2023 Net income $ 316 $ 387 $ 189 Other comprehensive income (loss), net of tax Foreign currency translation gain (loss), net of tax effect of $ 19 , $( 9 ) and $ 12 $ 39 $ ( 16 ) $ 28 Unrealized gain (loss) on financial assets/liabilities designated as hedging instruments, net of tax effect of $ 0 , $ 0 and $ 1 ( 1 ) 2 — Defined benefit plans adjustment, net of tax effect of $( 6 ), $ 5 and $ 9 21 ( 15 ) ( 23 ) Other comprehensive income (loss) 59 ( 29 ) 5 Comprehensive income $ 375 $ 359 $ 194 Amounts may not add due to rounding. See accompanying notes to consolidated financial statements. 49 XPO, Inc. Consolidated Statements of Cash Flows Years Ended December 31, (In millions) 2025 2024 2023 Cash flows from operating activities of continuing operations Net income $ 316 $ 387 $ 189 Loss from discontinued operations, net of taxes — — ( 3 ) Income from continuing operations 316 387 192 Adjustments to reconcile income from continuing operations to net cash from operating activities Depreciation and amortization 521 490 432 Stock compensation expense 77 87 78 Accretion of debt 10 11 11 Deferred tax expense 99 57 31 Gains on sales of property and equipment ( 17 ) ( 40 ) ( 5 ) Other 24 11 54 Changes in assets and liabilities Accounts receivable ( 47 ) ( 47 ) ( 46 ) Other assets ( 38 ) ( 106 ) ( 9 ) Accounts payable ( 22 ) ( 8 ) ( 48 ) Accrued expenses and other liabilities 62 ( 33 ) 4 Net cash provided by operating activities from continuing operations 986 808 694 Cash flows from investing activities of continuing operations Payment for purchases of property and equipment ( 657 ) ( 789 ) ( 1,533 ) Proceeds from sale of property and equipment 41 75 29 Proceeds from settlement of cross currency swaps — — 2 Proceeds from sale of investment — 12 — Net cash used in investing activities from continuing operations ( 616 ) ( 702 ) ( 1,502 ) Cash flows from financing activities of continuing operations Proceeds from issuance of debt — — 2,962 Repurchase of debt ( 115 ) — ( 2,117 ) Repayment of debt and finance leases ( 73 ) ( 82 ) ( 71 ) Payment of debt issuance costs ( 3 ) ( 4 ) ( 27 ) Repurchase of common stock ( 125 ) — — Change in bank overdrafts 23 ( 9 ) 34 Payment for tax withholdings for restricted shares ( 50 ) ( 129 ) ( 19 ) Other 4 ( 1 ) ( 1 ) Net cash provided by (used in) financing activities from continuing operations ( 339 ) ( 226 ) 761 50 XPO, Inc. Consolidated Statements of Cash Flows (continued) Years Ended December 31, (In millions) 2025 2024 2023 Cash flows from discontinued operations Operating activities of discontinued operations — — ( 12 ) Investing activities of discontinued operations — — 3 Financing activities of discontinued operations — — — Net cash used in discontinued operations — — ( 9 ) Effect of exchange rates on cash, cash equivalents and restricted cash ( 1 ) — 5 Net increase (decrease) in cash, cash equivalents and restricted cash 31 ( 120 ) ( 51 ) Cash, cash equivalents and restricted cash, beginning of year 298 419 470 Cash, cash equivalents and restricted cash, end of year $ 330 $ 298 $ 419 Supplemental disclosure of cash flow information from continuing operations: Cash paid for interest 229 223 185 Amounts may not add due to rounding. See accompanying notes to consolidated financial statements. 51 XPO, Inc. Consolidated Statements of Changes in Equity For the Years Ended December 31, 2025, 2024 and 2023 Common Stock (Shares in thousands, dollars in millions) Shares Amount Additional Paid-In Capital Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Loss Total Equity Balance as of December 31, 2022 115,435 $ — $ 1,238 $ ( 4 ) $ ( 222 ) $ 1,012 Net income — — — 189 — 189 Other comprehensive income — — — — 5 5 Exercise and vesting of stock compensation awards 638 — — — — — Tax withholdings related to vesting of stock compensation awards — — ( 20 ) — — ( 20 ) Stock compensation expense — — 78 — — 78 Other — — 2 — — 2 Balance as of December 31, 2023 116,073 $ — $ 1,298 $ 185 $ ( 217 ) $ 1,266 Net income — — — 387 — 387 Other comprehensive loss — — — — ( 29 ) ( 29 ) Exercise and vesting of stock compensation awards 1,101 — — — — — Tax withholdings related to vesting of stock compensation awards — — ( 110 ) — — ( 110 ) Stock compensation expense — — 87 — — 87 Balance as of December 31, 2024 117,174 $ — $ 1,274 $ 572 $ ( 246 ) $ 1,601 52 XPO, Inc. Consolidated Statements of Changes in Equity (continued) For the Years Ended December 31, 2025, 2024 and 2023 Common Stock (Shares in thousands, dollars in millions) Shares Amount Additional Paid-In Capital Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Loss Total Equity Balance as of December 31, 2024 117,174 $ — $ 1,274 $ 572 $ ( 246 ) $ 1,601 Net income — — — 316 — 316 Other comprehensive income — — — — 59 59 Exercise and vesting of stock compensation awards 734 — — — — — Tax withholdings related to vesting of stock compensation awards — — ( 70 ) — — ( 70 ) Retirement of common stock ( 954 ) — ( 125 ) — — ( 125 ) Stock compensation expense — — 77 — — 77 Other — — 4 — — 4 Balance as of December 31, 2025 116,954 $ — $ 1,160 $ 888 $ ( 187 ) $ 1,861 Amounts may not add due to rounding. See accompanying notes to consolidated financial statements. 53 XPO, Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025, 2024 and 2023 1. Description of Business and Basis of Presentation Nature of Operations 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 3—Segment Reporting and Geographic Information for additional information on our operations. Basis of Presentation We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”), which requires us to make estimates and assumptions that impact the amounts reported and disclosed in our consolidated financial statements and the accompanying notes. We prepared these estimates based on the most current and best available information, but actual results could differ materially from these estimates and assumptions. Within our 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. Consolidation Our consolidated financial statements include the accounts of XPO, our wholly-owned subsidiaries, and our majority-owned subsidiaries and variable interest entity (“VIE”) where we are the primary beneficiary. We have eliminated intercompany accounts and transactions. To determine if we are a primary beneficiary of a VIE, we evaluate whether we are able to direct the activities that significantly impact the VIE’s economic performance, including whether we control the operations of each VIE and whether we can operate the VIE under our brand or policies. Investors in the VIE only have recourse to the assets owned by the VIE and not to our general credit. We do not have implicit support arrangements with the VIE. We consolidate the VIE, which is comprised of the special purpose entity related to the European trade securitization program discussed below. We have a controlling financial interest in entities generally when we own a majority of the voting interest. 2. Significant Accounting Policies Revenue Recognition We recognize revenue when we transfer control of promised products or services to customers in an amount equal to the consideration we expect to receive for those products or services. Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when the performance obligation is satisfied. 54 We generate revenue by providing less-than-truckload and other transportation services for our customers. Additional services may be provided to our customers under their transportation contracts, including unloading and other incidental services. The transaction price is based on the consideration specified in the customer’s contract. A performance obligation is created when a customer under a transportation contract submits a bill of lading for the transport of goods from origin to destination. These performance obligations are satisfied as the shipments move from origin to destination. We recognize transportation revenue proportionally as a shipment moves from origin to destination and the related costs are recognized as incurred. Some of our customer contracts contain our promise to stand ready to provide transportation services. For these contracts, we recognize revenue on a straight-line basis over the term of the contract because the pattern of benefit to the customer, and our efforts to fulfill the contract, are generally distributed evenly throughout the period. Performance obligations are generally short-term, with transit times usually less than one week. Generally, customers are billed on shipment of the freight or on a monthly basis and make payment according to approved payment terms. When we do not control the specific services, we recognize revenue as the difference between the amount the customer pays us for the service less the amount we are charged by third parties who provide the service. Generally, we can adjust our pricing based on contractual provisions related to achieving agreed-upon performance metrics, changes in volumes, services and market conditions. Revenue relating to these pricing adjustments is estimated and included in the consideration if it is probable that a significant revenue reversal will not occur in the future. The estimate of variable consideration is determined by the expected value or most likely amount method and factors in current, past and forecasted experience with the customer. Customers are billed based on terms specified in the revenue contract and they pay us according to approved payment terms. Contract Costs We expense the incremental costs of obtaining contracts when incurred if the amortization period of the assets is one year or less. These costs are included in Salaries, wages and employee benefits on our Consolidated Statements of Income. Cash, Cash Equivalents and Restricted Cash We consider all highly liquid investments with an original maturity of three months or less on the date of purchase to be cash equivalents. As of December 31, 2025, 2024 and 2023, our restricted cash included in Other long-term assets on our Consolidated Balance Sheets was $ 20 million, $ 53 million and $ 7 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 that was used to purchase four new service centers in January 2025 that were previously leased. Accounts Receivable and Allowance for Credit Losses We record accounts receivable at the contractual amount and we record an allowance for credit losses for the amount we estimate we may not collect. In determining the allowance for credit losses, we consider historical collection experience, the age of the accounts receivable balances, the credit quality and risk of our customers, any specific customer collection issues, current economic conditions, and other factors that may impact our customers’ ability to pay. We write off accounts receivable balances once the receivables are no longer deemed collectible. 55 The roll-forward of the allowance for credit losses was as follows: Years Ended December 31, (In millions) 2025 2024 2023 Beginning balance $ 50 $ 45 $ 43 Provision charged to expense 26 21 33 Write-offs, less recoveries, and other adjustments ( 37 ) ( 16 ) ( 31 ) Ending balance $ 40 $ 50 $ 45 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 account for these transactions as sales of receivables and present cash proceeds as cash provided by operating activities in the Consolidated Statements of Cash Flows. 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. Under the trade receivables securitization program, a wholly-owned bankruptcy-remote special purpose entity of XPO sells trade receivables that originate with wholly-owned subsidiaries to unaffiliated entities. The program contains financial covenants customary for this type of arrangement, including maintaining a defined average days sales outstanding ratio. In January 2026, the program was amended to extend the maturity date through March 2029. We account for transfers under our securitization and factoring arrangements as sales because we sell full title and ownership in the underlying receivables and control of the receivables is considered transferred. For these transfers, the receivables are removed from our Consolidated Balance Sheets at the date of transfer. 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). As of December 31, 2025, the maximum amount available under the program was utilized. The weighted average interest rate was 3.90 % as of December 31, 2025. Information related to the trade receivables sold was as follows: Years Ended December 31, (In millions) 2025 2024 2023 Securitization programs Receivables sold in period $ 1,881 $ 1,762 $ 1,815 Cash consideration 1,881 1,762 1,815 Factoring programs Receivables sold in period 70 79 103 Cash consideration 67 78 103 Property and Equipment We generally record property and equipment at cost, or in the case of property and equipment acquired in a business combination, at fair value at the date of acquisition. Maintenance and repair expenditures are charged to expense as incurred. For internally-developed computer software, all costs incurred during planning and evaluation are expensed as incurred. Costs incurred during the application development stage are capitalized and included in property and equipment. Capitalized software also includes the fair value of acquired internal-use technology. 56 We compute depreciation expense on a straight-line basis over the estimated useful lives of the assets as follows: Classification Estimated Useful Life Buildings and leasehold improvements Term of lease to 40 years Vehicles, tractors and trailers 3 to 14 years Machinery and equipment 3 to 10 years Computer software and equipment 1 to 5 years Leases We determine if an arrangement is a lease at inception. We recognize operating lease right-of-use assets and liabilities at the lease commencement date based on the estimated present value of the lease payments over the lease term. As most of our leases do not provide an implicit rate, we use incremental borrowing rates based on the information available at commencement date to determine the present value of future lease payments. This rate is determined from a hypothetical yield curve that takes into consideration market yield levels of our relevant debt outstanding as well as the corresponding index that matches our credit rating, and then adjusts as if the borrowings were collateralized. We include options to extend or terminate a lease in the lease term when we are reasonably certain to exercise such options. We exclude variable lease payments (such as payments not based on an index or reimbursements of lessor costs) from our initial measurement of the lease liability. We recognize leases with an initial term of 12 months or less as lease expense over the lease term and those leases are not recorded on our Consolidated Balance Sheets. We account for lease and non-lease components within a contract as a single lease component for our real estate leases. For additional information on our leases, see Note 7—Leases. Asset Retirement Obligations A liability for an asset retirement obligation is recorded in the period in which it is incurred. When an asset retirement obligation liability is initially recorded, we capitalize the cost by increasing the carrying amount of the related long-lived asset. For each subsequent period, the liability is increased for accretion expense and the capitalized cost is depreciated over the useful life of the related asset. Goodwill We measure goodwill as the excess of consideration transferred over the fair value of net assets acquired in business combinations. We allocate goodwill to our reporting units for the purpose of impairment testing. We evaluate goodwill for impairment annually as of August 31, or more frequently if an event or circumstance indicates an impairment loss may have been incurred. We measure goodwill impairment, if any, at the amount a reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill. Our reporting units are our operating segments or one level below our operating segments for which discrete financial information is prepared and regularly reviewed by segment management. Accounting guidance allows entities to perform a qualitative assessment (a “step-zero” test) before performing a quantitative analysis. If an entity determines that it is not more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the entity does not need to perform a quantitative analysis for that reporting unit. 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 no t 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. 57 For our 2024 annual goodwill assessment, we performed a step-zero qualitative analysis for two 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 no t recognize any goodwill impairment. For our other three reporting units, we performed a quantitative analysis using a combination of income and market approaches. All reporting units had fair values in excess of their carrying values, resulting in no impairment of goodwill. For our 2023 annual goodwill assessment, we performed a step-zero qualitative analysis for our five reporting units. 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 no t recognize any goodwill impairment. 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. We use our internal forecasts to estimate future cash flows and include an estimate of long-term future growth rates based on our most recent views of the long-term outlook for our business. 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. Intangible Assets Our intangible assets subject to amortization consist primarily of customer relationships and favorable leases. We review long-lived assets to be held-and-used, including tangible assets and intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. An asset is considered to be impaired if the sum of the undiscounted expected future cash flows over the remaining useful life of a long-lived asset group is less than its carrying amount. An impairment loss is measured as the amount by which the carrying amount of the asset group exceeds the fair value of the asset. We estimate fair value using the expected future cash flows discounted at a rate commensurate with the risks associated with the recovery of the asset. We amortize intangible assets on a straight-line basis or on a basis consistent with the pattern in which the economic benefits are realized. The estimated useful life for intangible assets at December 31, 2025 is 14 to 25 years. Accrued Expenses The components of accrued expenses as of December 31, 2025 and 2024 are as follows: As of December 31, (In millions) 2025 2024 Accrued salaries and wages $ 244 $ 273 Accrued transportation and facility charges 218 184 Accrued insurance claims 109 88 Accrued taxes 106 93 Other accrued expenses 83 70 Total accrued expenses $ 760 $ 708 Self-Insurance 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, 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 58 current and expected levels of cost per claim and retention levels. Changes in these assumptions and factors can impact actual costs paid to settle the claims and those amounts may be different than our estimates. Advertising Costs Advertising costs are expensed as incurred. Stockholders’ Equity Shares purchased under our share repurchase program are retired upon settlement. We charge any excess of cost over par value to Additional paid-in capital if a balance is present. If Additional paid-in capital is fully depleted, any remaining excess of cost over par value will be charged to Retained earnings. Accumulated Other Comprehensive Income (Loss) The components of and changes in accumulated other comprehensive income (loss) (“AOCI”), net of tax, for the years ended December 31, 2025 and 2024, are as follows: (In millions) Foreign Currency Translation Adjustments Derivative Hedges Defined Benefit Plans Liability AOCI Attributable to XPO As of December 31, 2023 $ ( 91 ) $ ( 2 ) $ ( 124 ) $ ( 217 ) Other comprehensive income (loss) ( 7 ) 3 ( 16 ) ( 20 ) Amounts reclassified from AOCI ( 9 ) ( 1 ) 1 ( 9 ) Net current period other comprehensive income (loss) ( 16 ) 2 ( 15 ) ( 29 ) As of December 31, 2024 ( 107 ) — ( 139 ) ( 246 ) Other comprehensive income 49 1 18 68 Amounts reclassified from AOCI ( 10 ) ( 2 ) 3 ( 9 ) Net current period other comprehensive income (loss) 39 ( 1 ) 21 59 As of December 31, 2025 $ ( 68 ) $ ( 1 ) $ ( 118 ) $ ( 187 ) Income Taxes We account for income taxes using the asset and liability method on a legal entity and jurisdictional basis, under which we recognize the amount of taxes payable or refundable for the current year and deferred tax assets and liabilities for the future tax consequences of events that have been recognized in our financial statements or tax returns. Our calculation relies on several factors, including pre-tax earnings, differences between tax laws and accounting rules, statutory tax rates, tax credits, uncertain tax positions, and valuation allowances. We use judgment and estimates in evaluating our tax positions. Evaluating our tax positions would include but not be limited to our tax positions on internal restructuring transactions as well as the spin-offs of RXO and GXO. Valuation allowances are established when, in our judgment, it is more likely than not that our deferred tax assets will not be realized based on all available evidence. We record Global Intangible Low-Taxed Income (“GILTI”) tax as a period cost. As of December 31, 2025 and 2024, our income tax receivable included in Other current assets on our Consolidated Balance Sheets was $ 53 million and $ 77 million, respectively. Our tax returns are subject to examination by U.S. Federal, state and foreign taxing jurisdictions. We regularly assess the potential outcomes of these examinations and any future examinations for the current or prior years. We recognize tax benefits from uncertain tax positions only if (based on the technical merits of the position) it is more likely than not that the tax positions will be sustained on examination by the tax authority. We adjust these tax liabilities, including related interest and penalties, based on the current facts and circumstances. We report tax-related interest and penalties as a component of income tax expense. 59 Foreign Currency Translation and Transactions The assets and liabilities of our foreign subsidiaries that use their local currency as their functional currency are translated to U.S. dollars (“USD”) using the exchange rate prevailing at each balance sheet date, with balance sheet currency translation adjustments recorded in AOCI on our Consolidated Balance Sheets. The assets and liabilities of our foreign subsidiaries whose local currency is not their functional currency are remeasured from their local currency to their functional currency and then translated to USD. The results of operations of our foreign subsidiaries are translated to USD using average exchange rates prevailing for each period presented. We convert foreign currency transactions recognized on our Consolidated Statements of Income to USD by applying the exchange rate prevailing on the date of the transaction. Gains and losses arising from foreign currency transactions and the effects of remeasuring monetary assets and liabilities are recorded in Other income on our Consolidated Statements of Income. 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 December 31, 2025 and 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 December 31, 2025 $ 285 $ 285 $ 285 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 December 31, 2025, and, as of December 31, 2024, the value of our equity investment, reflected within Other current assets on our Consolidated Balance Sheets, was no t material. During the year ended December 31, 2024, we recognized a gain on equity investments of $ 13 million in Other income on our Consolidated Statements of Income, while there was no material gain on equity investments in 2025. For information on the fair value hierarchy of our derivative instruments, financial liabilities and defined benefit pension plan assets, see Note 10—Derivative Instruments, Note 11—Debt and Note 12—Employee Benefit Plans, respectively. Derivative Instruments We record all derivative instruments on our Consolidated Balance Sheets as assets or liabilities at fair value. Our accounting treatment for changes in the fair value of derivative instruments depends on whether the instruments have been designated and qualify as part of a hedging relationship and on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, we must designate the derivative 60 based on the exposure being hedged and assess, both at the hedge’s inception and on an ongoing basis, whether the designated derivative instruments are highly effective in offsetting changes in earnings and cash flows of the hedged items. When a derivative instrument is determined not to be highly effective as a hedge or the underlying hedged transaction is no longer probable, hedge accounting is discontinued prospectively. We link cash flow hedges to specific forecasted transactions or variability of cash flow to be paid. The gain or loss resulting from fair value adjustments on cash flow hedges are recorded in AOCI on our Consolidated Balance Sheets until the hedged item is recognized in earnings and is presented in the same income statement line item as the earnings effect of the hedged item. The gains and losses on the net investment hedges are recorded as cumulative translation adjustments in AOCI to the extent that the instruments are effective in hedging the designated risk. Gains and losses on cash flow hedges and net investment hedges representing hedge components excluded from the assessment of effectiveness will be amortized into Interest expense on our Consolidated Statements of Income in a systematic manner. Defined Benefit Pension Plans We calculate defined benefit pension plan obligations using various actuarial assumptions and methodologies. Assumptions include discount rates, inflation rates, expected long-term rate of return on plan assets, mortality rates, and other factors. The assumptions used in recording the projected benefit obligation and fair value of plan assets represent our best estimates based on available information regarding historical experience and factors that may cause future expectations to differ. Our obligation and future expense amounts could be materially impacted by differences in actual experience or changes in assumptions. The impact of plan amendments, actuarial gains and losses and prior-service costs are recorded in AOCI and are generally amortized as a component of net periodic benefit cost over the remaining service period of the active employees covered by the defined benefit pension plans. Unamortized gains and losses are amortized only to the extent they exceed 10% of the higher of the fair value of plan assets or the projected benefit obligation of the respective plan. Stock-Based Compensation We account for stock-based compensation based on the equity instrument’s grant date fair value. For grants of restricted stock units (“RSUs”) subject to service-based or performance-based vesting conditions only, we establish the fair value based on the market price on the date of the grant. For grants of RSUs subject to market-based vesting conditions, we establish the fair value using the Monte Carlo simulation lattice model. We determined the fair value of our stock-based awards based on our stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. We account for forfeitures as they occur. We recognize the grant date fair value of equity awards as compensation cost over the requisite service period. We recognize expense for our performance-based restricted stock units (“PSUs”) over the awards’ requisite service period based on the number of awards expected to vest with consideration to the actual and expected financial results. We do not recognize expense until achievement of the performance targets for a PSU award is considered probable. Adoption of New Accounting Standard 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. We early adopted this standard in the fourth quarter of 2025, and it did not have a material impact on our financial statements. In December 2023, the Financial Accounting Standards Board (“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. We adopted this standard on a 61 retrospective basis for the 2025 annual period. The impact is limited to financial statement disclosures. See Note 15 —Income Taxes. Accounting Pronouncements Issued but Not Yet Effective In December 2025, the FASB issued ASU 2025-10, “Government Grants (Topic 832) – Accounting for Government Grants Received by Business Entities.” This ASU provides recognition, measurement and presentation guidance for government grants received by business entities and is effective for annual and interim periods beginning in 2029. Early adoption is permitted. We are currently evaluating the impact of the new standard. In September 2025, the 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. 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. 62 3. Segment Reporting and Geographic Information 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. 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 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. 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. 63 The following tables present revenue and significant segment expenses that are included within adjusted EBITDA: Year Ended December 31, 2025 (in millions) North American LTL European Transportation Corporate (1) Total Revenue $ 4,832 $ 3,324 $ — $ 8,157 Salaries, wages and employee benefits 2,520 888 15 3,424 Purchased transportation 123 1,539 — 1,662 Fuel, operating expenses and supplies 885 686 1 1,571 Operating taxes and licenses 67 17 — 83 Insurance and claims 111 55 1 167 Gains on sales of property and equipment ( 9 ) ( 8 ) — ( 17 ) Pension (income) expense ( 6 ) 1 — ( 6 ) Other (income) expense — 1 ( 1 ) — Adjusted EBITDA $ 1,142 $ 147 $ ( 16 ) $ 1,272 Year Ended December 31, 2024 (in millions) North American LTL European Transportation Corporate (1) Total Revenue $ 4,899 $ 3,173 $ — $ 8,072 Salaries, wages and employee benefits 2,515 846 16 3,377 Purchased transportation 248 1,454 — 1,701 Fuel, operating expenses and supplies 928 661 — 1,589 Operating taxes and licenses 65 15 — 80 Insurance and claims 80 51 3 134 Gains on sales of property and equipment ( 27 ) ( 14 ) — ( 40 ) Pension (income) expense ( 25 ) 1 — ( 25 ) Other (income) expense — 1 ( 12 ) ( 12 ) Adjusted EBITDA $ 1,115 $ 158 $ ( 7 ) $ 1,266 Year Ended December 31, 2023 (in millions) North American LTL European Transportation Corporate (1) Total Revenue $ 4,671 $ 3,073 $ — $ 7,744 Salaries, wages and employee benefits 2,346 795 18 3,159 Purchased transportation 366 1,394 — 1,760 Fuel, operating expenses and supplies 956 661 6 1,623 Operating taxes and licenses 48 12 — 60 Insurance and claims 102 59 6 167 (Gains) losses on sales of property and equipment 8 ( 13 ) — ( 5 ) Pension (income) expense ( 17 ) — — ( 17 ) Other (income) expense ( 2 ) 2 1 1 Adjusted EBITDA $ 864 $ 163 $ ( 31 ) $ 996 (1) Primarily represents unallocated corporate costs, as well as investment income of approximately $ 13 million within Other (income) expense in 2024. 64 The following table presents adjusted EBITDA by segment and provides a reconciliation to consolidated income from continuing operations: Years Ended December 31, (in millions) 2025 2024 2023 Adjusted EBITDA North American LTL $ 1,142 $ 1,115 $ 864 European Transportation 147 158 163 Corporate ( 16 ) ( 7 ) ( 31 ) Total Adjusted EBITDA 1,272 1,266 996 Less: Debt extinguishment loss 6 — 25 Interest expense 219 223 168 Income tax provision 121 86 68 Depreciation and amortization expense 521 490 432 Pre-Con-way acquisition environmental matter (1) 35 — — Legal matters (2) ( 13 ) — 8 Transaction and integration costs 8 53 58 Restructuring costs 59 27 44 Other — — 1 Income from continuing operations $ 316 $ 387 $ 192 (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) 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. For 2023, see Note 17— Commitments and Contingencies for further information on the California Environmental Matters. The following table presents depreciation and amortization expense by segment: Years Ended December 31, (in millions) 2025 2024 2023 Depreciation and amortization expense North American LTL $ 381 $ 346 $ 291 European Transportation 136 140 136 Corporate 4 4 5 Total $ 521 $ 490 $ 432 As of December 31, 2025 and 2024, we held long-lived tangible assets outside of the U.S., including right of use assets, of $ 844 million and $ 715 million, respectively. 65 4. Revenue Recognition Disaggregation of Revenues Our revenue disaggregated by geographic area based on sales office location was as follows: Year Ended December 31, 2025 (In millions) North American LTL European Transportation Total Revenue United States $ 4,726 $ — $ 4,726 North America (excluding United States) 106 — 106 France — 1,305 1,305 United Kingdom — 1,142 1,142 Europe (excluding France and United Kingdom) — 877 877 Total $ 4,832 $ 3,324 $ 8,157 Year Ended December 31, 2024 (In millions) North American LTL European Transportation Total Revenue United States $ 4,792 $ — $ 4,792 North America (excluding United States) 107 — 107 France — 1,277 1,277 United Kingdom — 1,023 1,023 Europe (excluding France and United Kingdom) — 873 873 Total $ 4,899 $ 3,173 $ 8,072 Year Ended December 31, 2023 (In millions) North American LTL European Transportation Total Revenue United States $ 4,572 $ — $ 4,572 North America (excluding United States) 99 — 99 France — 1,291 1,291 United Kingdom — 905 905 Europe (excluding France and United Kingdom) — 877 877 Total $ 4,671 $ 3,073 $ 7,744 66 5. Restructuring Charges We engage in restructuring actions as part of our ongoing efforts to best use our resources and infrastructure. These actions primarily relate to business optimization initiatives and 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: Year Ended December 31, 2025 (In millions) Reserve Balance as of December 31, 2024 Charges Incurred Payments Foreign Exchange and Other Reserve Balance as of December 31, 2025 Severance North American LTL $ 3 $ 4 $ ( 5 ) $ — $ 1 European Transportation 1 21 ( 19 ) — 3 Corporate 1 10 ( 4 ) — 7 Total $ 5 $ 35 $ ( 28 ) $ ( 1 ) $ 11 In addition to the severance charges noted in the table above, we recorded restructuring-related charges in our North American LTL segment, European Transportation segment and Corporate of $ 1 million, $ 6 million and $ 16 million, respectively, during 2025, which are primarily non-cash. We expect that the majority of the cash outlays related to the severance charges incurred in 2025 will be completed within 12 months. Year Ended December 31, 2024 (In millions) Reserve Balance as of December 31, 2023 Charges Incurred Payments Foreign Exchange and Other Reserve Balance as of December 31, 2024 Severance North American LTL $ 2 $ 3 $ ( 3 ) $ 1 $ 3 European Transportation 1 16 ( 16 ) — 1 Corporate 8 2 ( 8 ) ( 1 ) 1 Total $ 11 $ 21 $ ( 27 ) $ — $ 5 In addition to the severance charges noted in the table above, we recorded non-cash charges in our North American LTL segment, European Transportation segment and Corporate of $ 4 million, $ 1 million and $ 1 million, respectively, during 2024. 67 6. Property and Equipment December 31, (In millions) 2025 2024 Property and equipment Land $ 920 $ 879 Buildings and leasehold improvements 1,017 874 Vehicles, tractors and trailers 3,033 2,746 Machinery and equipment 330 291 Computer software and equipment 724 633 6,024 5,422 Less: accumulated depreciation and amortization ( 2,360 ) ( 2,019 ) Total property and equipment, net $ 3,664 $ 3,402 Net book value of capitalized internally-developed software included in property and equipment, net $ 100 $ 112 Depreciation of property and equipment and amortization of computer software was $ 467 million, $ 432 million and $ 376 million for the years ended December 31, 2025, 2024 and 2023, respectively. 7. Leases Most of our leases are real estate leases. In addition, we lease trucks, trailers and material handling equipment. The components of our lease expense were as follows: Years Ended December 31, (In millions) 2025 2024 2023 Operating lease cost $ 225 $ 213 $ 199 Short-term lease cost 38 39 47 Variable lease cost 25 33 27 Total operating lease cost $ 288 $ 285 $ 273 Finance lease cost: Amortization of leased assets $ 60 $ 61 $ 59 Interest on lease liabilities 8 8 6 Total finance lease cost $ 68 $ 69 $ 65 Total lease cost $ 356 $ 354 $ 338 68 Supplemental balance sheet information related to leases was as follows: December 31, (In millions) 2025 2024 Operating leases: Operating lease assets $ 777 $ 727 Short-term operating lease liabilities $ 166 $ 127 Operating lease liabilities 611 603 Total operating lease liabilities $ 777 $ 730 Finance leases: Property and equipment, gross $ 471 $ 408 Accumulated depreciation ( 235 ) ( 205 ) Property and equipment, net $ 236 $ 203 Short-term borrowings and current maturities of long-term debt $ 54 $ 52 Long-term debt 195 158 Total finance lease liabilities $ 248 $ 210 Weighted-average remaining lease term: Operating leases 6 years 7 years Finance leases 7 years 8 years Weighted-average discount rate: Operating leases 5.46 % 5.47 % Finance leases 3.88 % 3.69 % Supplemental cash flow information related to leases was as follows: Years Ended December 31, (In millions) 2025 2024 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 247 $ 216 $ 201 Operating cash flows for finance leases 8 8 6 Financing cash flows for finance leases 63 72 68 Leased assets obtained in exchange for new lease obligations: Operating leases 220 207 118 Finance leases 80 47 94 Net operating lease activity, including the reduction of the operating lease asset and the accretion of the operating lease liability, are reflected in operating activities on our Consolidated Statements of Cash Flows. 69 Maturities of lease liabilities as of December 31, 2025 were as follows: (In millions) Finance Leases Operating Leases 2026 $ 62 $ 204 2027 59 188 2028 46 145 2029 36 105 2030 28 78 Thereafter 63 220 Total lease payments 294 941 Less: interest ( 45 ) ( 163 ) Present value of lease liabilities $ 248 $ 777 As of December 31, 2025, we had additional operating leases that have not yet commenced with future undiscounted lease payments of $ 75 million. These operating leases will commence in 2026 with initial lease terms of 4 years to 15 years. 8. Goodwill (In millions) North American LTL European Transportation (1) Total Goodwill as of December 31, 2023 $ 726 $ 772 $ 1,498 Impact of foreign exchange translation — ( 37 ) ( 37 ) Goodwill as of December 31, 2024 726 735 1,461 Impact of foreign exchange translation — 85 85 Goodwill as of December 31, 2025 $ 726 $ 820 $ 1,547 (1) European Transportation goodwill balances presented above are net of $ 64 million accumulated impairment losses. As described in Note 2—Significant Accounting Policies, we recorded no impairment losses in 2025, 2024 and 2023. 9. Intangible Assets December 31, 2025 December 31, 2024 (In millions) Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Definite-lived intangibles Customer relationships $ 825 $ 574 $ 795 $ 497 Favorable leases 65 5 65 3 Total $ 891 $ 580 $ 860 $ 499 We did no t recognize any impairment of our identified intangible assets in 2025, 2024 and 2023. 70 Estimated future amortization expense for amortizable intangible assets for the next five years is as follows: (In millions) 2026 2027 2028 2029 2030 Thereafter Estimated amortization expense $ 59 $ 59 $ 46 $ 36 $ 36 $ 75 Actual amounts of amortization expense may differ from estimated amounts due to changes in foreign currency exchange rates, additional intangible asset acquisitions, future impairment of intangible assets, accelerated amortization of intangible assets and other events. Intangible asset amortization expense was $ 58 million, $ 57 million and $ 54 million for the years ended December 31, 2025, 2024 and 2023, respectively. 10. 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: December 31, 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 liabilities — Other long-term liabilities ( 44 ) Interest rate swaps 550 Other current assets — Other current liabilities ( 2 ) 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. 71 The effect of derivative and nonderivative instruments designated as hedges on our Consolidated Statements of Income was as follows: Amount of Gain (Loss) Recognized in Other Comprehensive 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) Years Ended December 31, (In millions) 2025 2024 2023 2025 2024 2023 2025 2024 2023 Derivatives designated as cash flow hedges Interest rate swaps $ ( 2 ) $ 2 $ ( 1 ) $ 2 $ 1 $ 3 $ — $ — $ — Derivatives designated as net investment hedges Cross-currency swap agreements ( 79 ) 36 ( 21 ) — — — 10 9 9 Total $ ( 81 ) $ 38 $ ( 22 ) $ 2 $ 1 $ 3 $ 10 $ 9 $ 9 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 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 of continuing operations on our Consolidated Statements of Cash Flows. During 2023, we received approximately $ 2 million related to cross-currency swaps that were settled during the period. The fair value adjustments related to these swaps remain in AOCI and partially offset foreign currency translation adjustment losses on our net investments in foreign subsidiaries. The proceeds were included in Cash flows from investing activities of continuing operations on our Consolidated Statements of Cash Flows. Interest Rate Hedging We execute short-term interest rate swaps to mitigate variability in forecasted interest payments on our Refinancing Term Loan Facilities (defined below). 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 of continuing operations on our Consolidated Statements of Cash Flows. 72 11. Debt December 31, 2025 December 31, 2024 (In millions) Principal Balance Carrying Value Principal Balance Carrying Value Term loan facility $ 985 $ 978 $ 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 300 230 300 225 Finance leases, asset financing and other 257 257 228 228 Total debt 3,407 3,313 3,493 3,387 Short-term borrowings and current maturities of long-term debt 60 60 62 62 Long-term debt $ 3,347 $ 3,253 $ 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 December 31, 2025 $ 3,499 $ 2,254 $ 1,246 December 31, 2024 3,541 2,223 1,318 We valued Level 1 debt using quoted prices in active markets and Level 2 debt using bid evaluation pricing models. The fair value of the asset financing arrangements approximates carrying value as the debt is primarily issued at a floating rate, the debt may be prepaid at any time at par without penalty, and the remaining life of the debt is short-term in nature. Our principal payment obligations on debt (excluding finance leases and asset financing) for the next five years and thereafter was as follows: (In millions) 2026 2027 2028 2029 2030 Thereafter Principal payments on debt $ — $ — $ 1,415 $ — $ — $ 1,735 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 December 31, 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. 73 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 December 31, 2025, we were in compliance with the Revolving Credit Facility’s financial covenants. Letters of Credit Facility In 2020, we entered into a $ 200 million uncommitted secured evergreen letter of credit facility. The letter of credit facility had an initial one-year term, which automatically renews with one-year terms until the letter of credit facility terminates. As of December 31, 2025, we have $ 133 million in aggregate face amount of letters of credit outstanding under the facility. Term Loan Facility In February 2025, we amended our Senior Secured Term Loan Credit Agreement (“Amended 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 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. Senior Notes 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. These notes were issued at par. 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. These notes were issued at par. The senior notes are guaranteed by each of our direct and indirect wholly-owned restricted subsidiaries (other than certain excluded subsidiaries) that are obligors under, or guarantee obligations under, our existing secured Revolving Credit Facility or the Amended Term Loan Credit Agreement (or certain replacements thereof) or guarantee certain of our other indebtedness. 74 The Senior Secured Notes due 2028 and the guarantees thereof are secured by substantially all of our assets and our guarantors equally and ratably with the indebtedness under the Amended Term Loan Credit Agreement (subject to permitted liens and certain other exceptions). All other senior notes and the guarantees thereof are unsecured, unsubordinated indebtedness for us and our guarantors. The senior notes contain covenants and events of default customary for notes of this nature. If the Senior Secured Notes due 2028 and the Company are each assigned investment grade ratings from at least two of the major rating agencies and no default has occurred, then certain covenant requirements will permanently cease to be in effect, and the collateral, security interests, and guarantees securing the Senior Secured Notes due 2028 will automatically be released. Senior Debentures In conjunction with a 2015 acquisition, we assumed 6.70 % Senior Debentures due 2034 (the “Senior Debentures”) with an aggregate principal amount of $ 300 million. The Senior Debentures bear interest payable semiannually, in cash in arrears, and mature on May 1, 2034. Including amortization of the fair value adjustment recorded on the acquisition date, interest expense on the Senior Debentures is recognized at an annual effective interest rate of 10.96 %. 12. Employee Benefit Plans Defined Benefit Pension Plans We sponsor both funded and unfunded defined benefit pension plans for some employees in the U.S. These pension plans include qualified plans that are eligible for beneficial treatment under the Internal Revenue Code and non-qualified plans that provide additional benefits for employees who are impacted by limitations on compensation eligible for benefits available under the qualified plans. We also maintain a defined benefit pension plan for one of our foreign subsidiaries that is excluded from the disclosures below due to immateriality. We measure defined benefit pension plan obligations based on the present value of projected future benefit payments for all participants for services rendered to date. The projected benefit obligation is a measure of benefits attributed to service to date, assuming that the plan continues in effect and that estimated future events (including turnover and mortality) occur. We determine the net periodic benefit costs using assumptions regarding the projected benefit obligation and the fair value of plan assets as of the beginning of the year. Net periodic benefit costs are recorded in Other income on our Consolidated Statements of Income. We calculate the funded status of the defined benefit pension plans, which represents the difference between the projected benefit obligation and the fair value of plan assets, on a plan-by-plan basis. Funded Status of Defined Benefit Pension Plans The reconciliation of the changes in the plans’ projected benefit obligations as of December 31 was as follows: (In millions) 2025 2024 Projected benefit obligation at beginning of year $ 1,338 $ 1,466 Interest cost 68 72 Plan amendment — ( 3 ) Actuarial (gain) loss 27 ( 59 ) Benefits paid ( 104 ) ( 137 ) Projected benefit obligation at end of year $ 1,329 $ 1,338 The actuarial loss in 2025 was a result of assumption changes, including a decrease in the discount rate and other assumptions for plan participants. The actuarial gain in 2024 was a result of assumption changes, including an increase in the discount rate and other assumptions for plan participants. 75 The reconciliation of the changes in the fair value of plan assets as of December 31 was as follows: (In millions) 2025 2024 Fair value of plan assets at beginning of year $ 1,392 $ 1,507 Actual return on plan assets 130 17 Employer contributions to non-qualified plans 5 5 Benefits paid ( 104 ) ( 137 ) Fair value of plan assets at end of year $ 1,423 $ 1,392 The funded status of the plans as of December 31 was as follows: (In millions) 2025 2024 Funded status at end of year $ 93 $ 54 Amount recognized in balance sheet: Long-term assets $ 142 $ 104 Current liabilities ( 5 ) ( 5 ) Long-term liabilities ( 44 ) ( 45 ) Net pension asset recognized $ 93 $ 54 Plans with projected and accumulated benefit obligation in excess of plan assets: Projected and accumulated benefit obligation (1) $ 49 $ 50 (1) Relates to our non-qualified plans which are unfunded. The funded status of our qualified plans and non-qualified plans was $ 142 million and $( 49 ) million, respectively, as of December 31, 2025. The actuarial loss included in AOCI that has not yet been recognized in net periodic benefit expense was $ 167 million and $ 195 million as of December 31, 2025 and 2024, respectively. The net periodic benefit cost and amounts recognized in Other comprehensive income (loss) for the years ended December 31 was as follows: (In millions) 2025 2024 2023 Net periodic benefit income: Interest cost $ 68 $ 72 $ 74 Expected return on plan assets ( 77 ) ( 98 ) ( 92 ) Amortization of actuarial loss 3 1 — Net periodic benefit income $ ( 6 ) $ ( 25 ) $ ( 18 ) Amounts recognized in Other comprehensive income (loss): Actuarial loss (gain) $ ( 26 ) $ 23 $ 32 Prior-service cost — ( 3 ) — Amortization of actuarial loss ( 3 ) ( 1 ) — Loss (gain) recognized in Other comprehensive income (loss) $ ( 28 ) $ 19 $ 32 76 The weighted-average assumptions used to determine the net periodic benefit costs and benefit obligations for the year ended December 31 were as follows: Qualified Plans Non-Qualified Plans 2025 2024 2023 2025 2024 2023 Discount rate - net periodic benefit costs 5.33 % 5.08 % 5.36 % 4.99 % - 5.25 % 5.02 % - 5.05 % 5.26 % - 5.33 % Discount rate - benefit obligations 5.40 % 5.63 % 5.15 % 4.60 % - 5.20 % 5.21 % - 5.55 % 4.98 % - 5.12 % Expected long-term rate of return on plan assets 5.75 % 6.75 % 6.40 % No rate of compensation increase was assumed as the plans are frozen to additional participant benefit accruals. We use a full yield curve approach to estimate the interest cost component of net periodic benefit cost by applying specific spot rates along the yield curve used to determine the benefit obligation to each of the underlying projected cash flows based on time until payment. Expected benefit payments for the defined benefit pension plans for the years ended December 31 are summarized below. These estimates are based on assumptions about future events. Actual benefit payments may vary from these estimates. (In millions) 2026 2027 2028 2029 2030 2031-2035 Expected benefit payments $ 110 $ 109 $ 109 $ 108 $ 107 $ 511 Plan Assets We manage the assets in the U.S. plans using a long-term liability-driven investment strategy that seeks to mitigate the funded status volatility by increasing participation in fixed income investments as the plan’s funded status increases. We developed this strategy by analyzing a variety of diversified asset-class combinations with the projected liabilities. Our current investment strategy is to achieve an investment mix of approximately 95 % in fixed income securities and 5 % of investments in equity securities. The fixed income allocation consists primarily of domestic fixed income securities and targets to hedge approximately 100 % of projected liabilities. The target allocations for equity securities includes approximately 60 % in U.S. equities and approximately 40 % in non-U.S. equities. Investments in equity and fixed income securities consist of individual securities held in managed separate accounts and commingled investment funds. Generally, our investment strategy does not include an allocation to cash and cash equivalents, but a cash allocation may arise periodically in response to timing considerations regarding contributions, investments, and the payment of benefits and eligible plan expenses. We periodically evaluate our defined benefit plans’ asset portfolios for significant concentrations of risk. Types of investment concentration risks that are evaluated include concentrations in a single issuer, specific security, asset class, credit rating, duration, industry/sector, currency, foreign country or individual fund manager. As of December 31, 2025, our defined benefit plan assets had no significant concentrations of risk. Our investment policy does not allow investment managers to use market-timing strategies or financial derivative instruments for speculative purposes, but financial derivative instruments are used to manage risk and achieve stated investment objectives for duration, yield curve, credit, foreign exchange and equity exposures. Generally, our investment managers are prohibited from short selling, trading on margin, and trading commodities, warrants or other options, except when acquired as a result of the purchase of another security, or in the case of options, when sold as part of a covered position. The assumption of 5.75 % for the overall expected long-term rate of return on plan assets in 2025 was developed using asset allocation and return expectations. The return expectations are created using long-term historical and expected returns for the various asset classes and current market expectations for inflation, interest rates and economic growth. 77 The fair values of investments held in the qualified pension plans by major asset category as of December 31, 2025 and 2024, and the percentage that each asset category comprises of total plan assets were as follows: (Dollars in millions) Level 1 Level 2 Not Subject to Leveling (1) Total Percentage of Plan Assets December 31, 2025 Cash and cash equivalents $ 28 $ — $ — $ 28 2.0 % Equity: U.S. — 43 — 43 3.0 % International — 31 — 31 2.2 % Fixed income securities 243 943 119 1,305 91.7 % Derivatives — 16 — 16 1.1 % Total plan assets $ 271 $ 1,033 $ 119 $ 1,423 100.0 % December 31, 2024 Cash and cash equivalents $ 20 $ — $ — $ 20 1.4 % Equity: U.S. large companies — 56 — 56 4.0 % U.S. small companies — 14 — 14 1.0 % International 20 27 7 54 3.9 % Fixed income securities 279 956 6 1,241 89.1 % Derivatives — 8 — 8 0.6 % Total plan assets $ 319 $ 1,059 $ 14 $ 1,392 100.0 % (1) Investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient are not classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented for the total defined benefit pension plan assets. For the periods ended December 31, 2025 and 2024, we had no investments held in the pension plans within Level 3 of the fair value hierarchy. Our common stock was not a plan asset as of December 31, 2025 or 2024. The non-qualified plans are unfunded. Funding Our funding practice is to evaluate our tax and cash position, and the funded status of our plans, in determining our planned contributions. We estimate that we will contribute $ 5 million to our non-qualified plans in 2026 but this could change based on variations in interest rates, asset returns and other factors. Defined Contribution Retirement Plans Our costs for defined contribution retirement plans were $ 59 million, $ 58 million and $ 55 million for the years ended December 31, 2025, 2024 and 2023, respectively. Postretirement Medical Plan We provide health benefits through a postretirement medical plan for eligible employees hired before 1993 (the “Postretirement Plan”). 78 Funded Status of Postretirement Medical Plan The reconciliation of the changes in the plan’s benefit obligation and the determination of the amounts recognized on our Consolidated Balance Sheets were as follows: As of December 31, (In millions) 2025 2024 Projected benefit obligation at beginning of year $ 26 $ 28 Interest cost on projected benefit obligation 1 1 Actuarial gain — ( 1 ) Participant contributions 1 1 Benefits paid ( 3 ) ( 3 ) Projected and accumulated benefit obligation at end of year $ 24 $ 26 Funded status of the plan $ ( 24 ) $ ( 26 ) Amounts recognized in the balance sheet consist of: Current liabilities $ ( 3 ) $ ( 3 ) Long-term liabilities ( 22 ) ( 23 ) Net amount recognized $ ( 24 ) $ ( 26 ) Discount rate assumption as of December 31 5.22 % 5.54 % The amount included in AOCI that has not yet been recognized in net periodic benefit income (expense) was $ 5 million and the net periodic benefit expense was less than $ 1 million for the Postretirement Plan for the year ended December 31, 2025. The amount included in AOCI that has not yet been recognized in net periodic benefit income (expense) was $ 7 million and the net periodic benefit expense was less than $ 1 million for the Postretirement Plan for the year ended December 31, 2024. The discount rates assumptions used to calculate the interest cost were 5.23 % - 5.64 %, 5.04 % - 5.10 % and 5.32 % - 5.41 % for the years ended December 31, 2025, 2024 and 2023, respectively. Expected benefit payments, which reflect expected future service, as appropriate, for the years ended December 31 are summarized below. These estimates are based on assumptions about future events. Actual benefit payments may vary from these estimates. (In millions) 2026 2027 2028 2029 2030 2031-2035 Expected benefit payments $ 3 $ 3 $ 3 $ 2 $ 2 $ 10 13. 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. 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 79 repurchases in 2024 and 2023. As of December 31, 2025, our remaining share repurchase authorization was $ 625 million. 14. Stock-Based Compensation We grant various types of stock-based compensation awards to directors, officers and key employees under our 2016 incentive plan. These awards have included stock options, restricted stock, restricted stock units, performance-based units, cash incentive awards and other equity-related awards (collectively, “Awards”). The 2016 incentive plan authorizes the issuance of up to 11.4 million shares of our common stock as Awards. The 2016 incentive plan will terminate on May 18, 2032, unless terminated earlier by our Board of Directors. As of December 31, 2025, approximately 2.6 million shares of our common stock were available for the grant of Awards under the 2016 incentive plan. Our stock-based compensation expense is recorded in Salaries, wages and employee benefits, Transaction and integration costs or Restructuring costs on our Consolidated Statements of Income: Years ended December 31, (In millions) 2025 2024 2023 Restricted stock and restricted stock units $ 47 $ 55 $ 52 Performance-based restricted stock units 29 32 26 Total stock-based compensation expense $ 77 $ 87 $ 78 Tax benefit on stock-based compensation $ ( 12 ) $ ( 13 ) $ ( 1 ) Restricted Stock Units and Performance-Based Restricted Stock Units We grant RSUs and PSUs to our key employees, officers and directors with various vesting requirements. RSUs generally vest based on the passage of time (service conditions) and PSUs generally vest based on the achievement of our financial targets (performance conditions). PSUs may also be subject to stock price (market conditions), employment and other non-financial conditions. The holders of the RSUs and PSUs do not have the rights of a stockholder and do not have voting rights until the shares are issued and delivered in settlement of the awards. Upon vesting, we generally withhold a portion of the shares of our common stock to satisfy the employee’s minimum tax withholdings. Cash paid for tax withholdings is reflected in financing activities on our Consolidated Statements of Cash Flows. We estimate the fair value of PSUs subject to market-based vesting conditions using a Monte Carlo simulation lattice model, utilizing several key assumptions, including expected Company and peer company share price volatility, correlation coefficients between peers and the Company, the risk-free rate of return and other award design features. For 2025 PSU grants, we assumed share price volatility of 47.58 % and a risk-free rate of return of 3.89 %. 80 A summary of RSU and PSU award activity for the year ended December 31, 2025 is presented below: RSUs PSUs Number of RSUs Weighted-Average Grant Date Fair Value Number of PSUs Weighted-Average Grant Date Fair Value Outstanding as of December 31, 2024 (1) 846,678 $ 58.10 1,404,436 $ 54.77 Granted 236,149 114.31 284,825 120.38 Net adjustment for performance condition achieved (2) — — 205,823 33.74 Vested (3) ( 491,100 ) 53.37 ( 730,651 ) 36.49 Forfeited and canceled ( 60,780 ) 73.94 ( 10,986 ) 100.63 Outstanding as of December 31, 2025 (1) 530,947 $ 85.66 1,153,447 $ 78.37 (1) With respect to our PSUs, the outstanding balance reflects the number of shares to be issued based on the performance target. (2) Represents an adjustment in the number of PSUs granted based on the final performance achieved upon vesting, generally ranging from 0 % to 200 % of target. (3) The number of RSUs and PSUs vested includes the portion withheld to satisfy employee tax withholdings. The weighted-average grant date fair value of RSUs granted during the years 2025, 2024 and 2023 was $ 114.31 , $ 117.94 and $ 38.65 , respectively. The weighted-average grant date fair value of PSUs granted during the years 2025, 2024 and 2023 was $ 120.38 , $ 117.81 and $ 44.07 , respectively. The total fair value of RSUs that vested during 2025, 2024 and 2023 was $ 56 million, $ 244 million and $ 23 million, respectively. All of the outstanding RSUs as of December 31, 2025 vest subject to service conditions. The total fair value of PSUs that vested during 2025, 2024 and 2023 was $ 105 million, $ 3 million and $ 27 million, respectively. Of the outstanding PSUs as of December 31, 2025, 107,468 vest subject to service and performance conditions, 907,615 vest subject to service and a combination of market or performance conditions and 138,364 vest subject to service and market conditions. As of December 31, 2025, unrecognized compensation cost related to non-vested RSUs and PSUs of $ 70 million is anticipated to be recognized over a weighted-average period of approximately 1.82 years. Employee Stock Purchase Plan During the first quarter of 2023, the Compensation and Human Capital Committee of the Board of Directors approved the suspension of our previous employee stock purchase plan, effective after the completion of the March 2023 offering period. There was no stock-based compensation expense recognized under this plan as it was non-compensatory. During 2024, the Compensation and Human Capital Committee of the Board of Directors approved the reinstatement of our employee stock purchase plan, with the first offering period commencing on December 1, 2024. Our current employee stock purchase plan offers eligible employees, excluding our executive officers and directors, the right to purchase our common stock using up to 10 % of each employee’s compensation. Shares are purchased at 10 % below fair market value on the last trading day of each six-month offering period. The plan authorized the purchase of up to five million shares of our common stock, which is incremental to the shares authorized under the 2016 incentive plan as discussed above. The plan will terminate in October 2027, unless terminated earlier by our Board of Directors. We recognize stock-based compensation expense related to the plan over the offering period as the plan is compensatory. Compensation expense related to the plan was immaterial in 2025 and 2024. At December 31, 2025 and 2024, approximately four million shares of our common stock were available for purchase under the plan. 81 15. Income Taxes Income (loss) from continuing operations before taxes related to our U.S. and foreign operations was as follows: Years Ended December 31, (In millions) 2025 2024 2023 U.S. $ 456 $ 486 $ 286 Foreign ( 19 ) ( 13 ) ( 26 ) Income from continuing operations before income tax provision $ 437 $ 473 $ 260 The income tax provision is comprised of the following: Years Ended December 31, (In millions) 2025 2024 2023 Current: U.S. Federal $ 2 $ 8 $ 25 State 4 6 6 Foreign 17 15 6 Total current income tax provision (benefit) $ 22 $ 29 $ 37 Deferred: U.S. Federal $ 94 $ 56 $ 38 State 10 7 3 Foreign ( 5 ) ( 6 ) ( 10 ) Total deferred income tax provision $ 99 $ 57 $ 31 Total: U.S. Federal $ 96 $ 64 $ 63 State 14 13 9 Foreign 11 9 ( 4 ) Total income tax provision $ 121 $ 86 $ 68 82 The effective tax rate reconciliations were as follows: Years Ended December 31, (Dollars in millions) 2025 2024 2023 US federal statutory income tax rate $ 92 21.0 % $ 99 21.0 % $ 54 21.0 % Domestic state and local taxes, net of federal effect (1) 11 2.5 11 2.3 7 2.7 Foreign Tax Effects France Changes in valuation allowances 4 1.0 7 1.4 1 0.2 Other 3 0.7 4 0.8 2 0.7 Spain Changes in valuation allowances 8 1.8 — — — — Other ( 2 ) ( 0.4 ) ( 2 ) ( 0.4 ) ( 1 ) ( 0.3 ) Other foreign jurisdictions 3 0.6 3 0.6 ( 1 ) ( 0.3 ) Effect of Cross-Border Tax Laws Global intangible low-taxed income — — 9 1.8 — ( 0.1 ) Other 1 0.2 — — ( 2 ) ( 0.6 ) Nontaxable or Nondeductible Items Non-deductible compensation 11 2.6 15 3.1 13 5.0 Other 1 0.1 — 0.1 1 0.2 Changes in Unrecognized Tax Benefits — — — 0.1 ( 3 ) ( 1.1 ) Tax Credits Foreign Tax Credits ( 6 ) ( 1.4 ) ( 3 ) ( 0.5 ) — — Other ( 2 ) ( 0.5 ) ( 2 ) ( 0.3 ) ( 2 ) ( 0.7 ) Other Adjustments Stock-based compensation ( 5 ) ( 1.1 ) ( 6 ) ( 1.2 ) — ( 0.2 ) Benefit from legal entity reorganization (2) — — ( 50 ) ( 10.5 ) — — Other adjustments 2 0.5 — ( 0.1 ) ( 1 ) ( 0.6 ) Effective tax rate $ 121 27.8 % $ 86 18.1 % $ 68 26.0 % (1) State taxes in California, Wisconsin, Massachusetts, Illinois, Michigan, and Georgia made up the majority (greater than 50%) of the tax effect in this category. (2) 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 2024. The impact of this benefit is reflected in the table within Domestic state and local taxes ($ 3 million benefit), Foreign tax effects ($ 5 million expense), Effect of cross-border laws ($ 9 million expense), Tax credits ($ 2 million benefit), and Other adjustments ($ 50 million benefit). As previously disclosed, we expect 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. 83 Components of the Net Deferred Tax Asset or Liability The tax effects of temporary differences that give rise to significant portions of the deferred tax asset and deferred tax liability were as follows: Years Ended December 31, (In millions) 2025 2024 Deferred tax asset Net operating loss and other tax attribute carryforwards $ 63 $ 33 Accrued expenses 49 75 Other 44 24 Total deferred tax asset 156 132 Valuation allowance ( 54 ) ( 26 ) Total deferred tax asset, net 102 106 Deferred tax liability Intangible assets ( 79 ) ( 80 ) Property and equipment ( 454 ) ( 384 ) Pension and other retirement obligations ( 7 ) — Other ( 31 ) ( 25 ) Total deferred tax liability ( 571 ) ( 489 ) Net deferred tax liability $ ( 470 ) $ ( 382 ) The deferred tax asset and deferred tax liability above are reflected on our Consolidated Balance Sheets as follows: December 31, (In millions) 2025 2024 Other long-term assets $ 12 $ 11 Deferred tax liability ( 482 ) ( 393 ) Net deferred tax liability $ ( 470 ) $ ( 382 ) Operating Loss and Tax Credit Carryforwards Our operating loss and tax credit carryforwards were as follows: December 31, (In millions) Expiration Date 2025 2024 Tax effect (before federal benefit) of state net operating losses Various times starting in 2026 (1) $ 6 $ 5 Federal tax credit carryforwards Various times starting in 2033 2 — State tax credit carryforward Various times starting in 2026 (1) 1 1 Foreign net operating losses available to offset future taxable income Various times starting in 2026 (1) 211 109 (1) Some credits and losses have unlimited carryforward periods. Valuation Allowance We established a valuation allowance for some of our deferred tax assets as it is more likely than not that these assets will not be realized in the foreseeable future. We concluded that the remaining deferred tax assets will more 84 likely than not be realized, though this is not assured, and as such no valuation allowance has been provided on these assets. The balances and activity related to our valuation allowance were as follows: (In millions) Beginning Balance Additions Reductions Ending Balance Year Ended December 31, 2025 $ 26 $ 29 $ ( 1 ) $ 54 Year Ended December 31, 2024 18 9 ( 1 ) 26 Year Ended December 31, 2023 35 1 ( 18 ) 18 Unrecognized Tax Benefits A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: Years Ended December 31, (In millions) 2025 2024 2023 Beginning balance $ 3 $ 4 $ 6 Additions for tax positions of prior years — — 2 Settlements with tax authorities — ( 1 ) — Reductions due to the statute of limitations — — ( 4 ) Ending balance $ 3 $ 3 $ 4 Interest and penalties 3 2 2 Gross unrecognized tax benefits $ 6 $ 5 $ 6 Total unrecognized tax benefits that, if recognized, would impact the effective income tax rate as of the end of the year $ 6 $ 5 $ 6 We are subject to taxation in the United States and various state and foreign jurisdictions. As of December 31, 2025, we have three tax years under examination by the IRS. We have various U.S. state and local examinations and non-U.S. examinations in process. The U.S. federal tax returns after 2021, state and local returns after 2018, and non-U.S. returns after 2016 are open under relevant statutes of limitations and are subject to audit. Cash Paid (Received) for Income Taxes Cash paid (received) for income taxes is comprised of the following: Years Ended December 31, (In millions) 2025 2024 2023 U.S. Federal $ ( 28 ) $ 65 $ 21 U.S. State and Local 9 13 4 Foreign United Kingdom 5 6 3 Canada 4 * 3 France 2 * * Other 5 6 3 Total Foreign 15 12 10 Total cash paid (received) for income taxes, net of refunds $ ( 4 ) $ 90 $ 34 *Jurisdiction below the threshold for separate disclosure for the period presented. Cash paid (received) included in Other. 85 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 in 2025 for the provisions currently enacted, which increased our deferred tax liability and reduced our federal income tax liability and related tax payments for 2025. We anticipate similar impacts in future years with no significant impact on our annual effective tax rate. 16. Earnings (Loss) Per Share Basic earnings per share (“EPS”) is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted EPS is computed on the basis of the weighted-average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include unvested stock-based compensation awards. The computations of basic and diluted earnings per share were as follows: Years Ended December 31, (In millions, except per share data) 2025 2024 2023 Net income from continuing operations $ 316 $ 387 $ 192 Net loss from discontinued operations — — ( 3 ) Net income $ 316 $ 387 $ 189 Basic weighted-average common shares 118 116 116 Dilutive effect of stock-based awards 2 4 2 Diluted weighted-average common shares 119 120 118 Basic earnings from continuing operations per share $ 2.69 $ 3.33 $ 1.66 Basic loss from discontinued operations per share — — ( 0.02 ) Basic earnings per share $ 2.69 $ 3.33 $ 1.64 Diluted earnings from continuing operations per share $ 2.64 $ 3.23 $ 1.62 Diluted loss from discontinued operations per share — — ( 0.02 ) Diluted earnings per share $ 2.64 $ 3.23 $ 1.60 86 17. 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. 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 87 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. California Environmental Matters In August 2022, the Company received a letter from the San Bernardino County District Attorney’s Office (the “County”), written in cooperation with certain other California District Attorneys and the Los Angeles City Attorney, notifying the Company of an investigation into alleged violations with respect to underground storage tanks, hazardous materials, and hazardous waste in California, and offering a meeting. Following meetings between the Company and County attorneys and the Los Angeles City Attorney and an assessment of the allegations and the underlying facts, the Company engaged in negotiations with the County and Los Angeles City Attorneys to address settlement of the alleged violations. The Company previously accrued for this matter, and it was resolved for $ 7.9 million in April 2024. 88 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.