UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2022~~2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from____________to____________

Commission File Number: 001-32172

XPO, ~~Logistics,~~ Inc.

(Exact name of registrant as specified in its charter)


Delaware		03-0450326
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
Five American Lane
Greenwich,	CT	06831
(Address of principal executive offices)		(Zip Code)

(855) 976-6951

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.001 per share

XPO

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August ~~2, 2022,~~1, 2023, there were ~~115,039,684~~115,967,170 shares of the registrant’s common stock, par value $0.001 per share, outstanding.

XPO, ~~Logistics,~~ Inc.

Quarterly Report on Form 10-Q

For the Quarterly Period Ended June 30, ~~2022~~2023

Table of Contents


			Page No.
Part I—Financial Information
Item 1. Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets			1
Condensed Consolidated Statements of Income			2
Condensed Consolidated Statements of Comprehensive Income			3
Condensed Consolidated Statements of Cash Flows			4
Condensed Consolidated Statements of Changes in Equity			65
Notes to Condensed Consolidated Financial Statements			87
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			2219
Item 3. Quantitative and Qualitative Disclosures About Market Risk			3328
Item 4. Controls and Procedures			3328
Part II—Other Information
Item 1. Legal Proceedings			3328
Item 1A. Risk Factors			3328
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			3328
Item 3. Defaults Upon Senior Securities			3329
Item 4. Mine Safety Disclosures			3329
Item 5. Other Information			3329
Item 6. Exhibits			3429
Signatures			3531

Table of Contents

Part I—Financial Information

Item 1. Financial Statements.

XPO, ~~Logistics,~~ Inc.

Condensed Consolidated Balance Sheets

(Unaudited)


		June 30,		December 31,			June 30,		December 31,
(In millions, except per share data)	(In millions, except per share data)	2022		2021		(In millions, except per share data)	2023		2022
ASSETS	ASSETS					ASSETS
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	436	$	260	Cash and cash equivalents	$	290	$	460
Accounts receivable, net of allowances of $47 and $47, respectively		2,190		2,105
Accounts receivable, net of allowances of $46 and $43, respectively						Accounts receivable, net of allowances of $46 and $43, respectively	1,008		954
Other current assets	Other current assets	271		286		Other current assets	224		199
Current assets of discontinued operations	Current assets of discontinued operations	19		26		Current assets of discontinued operations	—		17
Total current assets	Total current assets	2,916		2,677		Total current assets	1,522		1,630
Long-term assets	Long-term assets					Long-term assets
Property and equipment, net of $1,823 and $1,828 in accumulated depreciation, respectively		1,799		1,808
Property and equipment, net of $1,795 and $1,679 in accumulated depreciation, respectively						Property and equipment, net of $1,795 and $1,679 in accumulated depreciation, respectively	2,037		1,832
Operating lease assets	Operating lease assets	832		908		Operating lease assets	704		719
Goodwill	Goodwill	2,284		2,479		Goodwill	1,493		1,472
Identifiable intangible assets, net of $589 and $612 in accumulated amortization, respectively		522		580
Identifiable intangible assets, net of $423 and $392 in accumulated amortization, respectively						Identifiable intangible assets, net of $423 and $392 in accumulated amortization, respectively	383		407
Other long-term assets	Other long-term assets	287		255		Other long-term assets	213		209

Total long-term assets	Total long-term assets	5,724		6,030		Total long-term assets	4,830		4,639
Total assets	Total assets	$	8,640	$	8,707	Total assets	$	6,352	$	6,269
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities	Current liabilities					Current liabilities
Accounts payable	Accounts payable	$	1,153	$	1,110	Accounts payable	$	464	$	521
Accrued expenses	Accrued expenses	1,106		1,107		Accrued expenses	800		774
Short-term borrowings and current maturities of long-term debt	Short-term borrowings and current maturities of long-term debt	55		58		Short-term borrowings and current maturities of long-term debt	66		59
Short-term operating lease liabilities	Short-term operating lease liabilities	142		170		Short-term operating lease liabilities	110		107
Other current liabilities	Other current liabilities	159		69		Other current liabilities	93		30
Current liabilities of discontinued operations	Current liabilities of discontinued operations	19		24		Current liabilities of discontinued operations	—		16
Total current liabilities	Total current liabilities	2,634		2,538		Total current liabilities	1,533		1,507
Long-term liabilities	Long-term liabilities					Long-term liabilities
Long-term debt	Long-term debt	2,857		3,514		Long-term debt	2,452		2,473
Deferred tax liability	Deferred tax liability	325		316		Deferred tax liability	301		319
Employee benefit obligations	Employee benefit obligations	118		122		Employee benefit obligations	91		93
Long-term operating lease liabilities	Long-term operating lease liabilities	689		752		Long-term operating lease liabilities	592		606
Other long-term liabilities	Other long-term liabilities	310		327		Other long-term liabilities	264		259

Total long-term liabilities	Total long-term liabilities	4,299		5,031		Total long-term liabilities	3,700		3,750
Stockholders’ equity	Stockholders’ equity					Stockholders’ equity

Common stock, $0.001 par value; 300 shares authorized; 115 shares issued and outstanding as of June 30, 2022 and December 31, 2021		—		—
Common stock, $0.001 par value; 300 shares authorized; 116 and 115 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively						Common stock, $0.001 par value; 300 shares authorized; 116 and 115 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively	—		—
Additional paid-in capital	Additional paid-in capital	1,187		1,179		Additional paid-in capital	1,268		1,238
Retained earnings		672		43
Retained earnings (accumulated deficit)						Retained earnings (accumulated deficit)	43		(4)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(152)		(84)		Accumulated other comprehensive loss	(192)		(222)

Total equity	Total equity	1,707		1,138		Total equity	1,119		1,012
Total liabilities and equity	Total liabilities and equity	$	8,640	$	8,707	Total liabilities and equity	$	6,352	$	6,269

See accompanying notes to condensed consolidated financial statements.

Table of Contents

XPO, ~~Logistics,~~ Inc.

Condensed Consolidated Statements of Income

(Unaudited)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
(In millions, except per share data)	(In millions, except per share data)	2022		2021		2022		2021		(In millions, except per share data)	2023		2022		2023		2022
Revenue	Revenue	$	3,232	$	3,186	$	6,705	$	6,175	Revenue	$	1,917	$	2,047	$	3,824	$	3,941
Cost of transportation and services (exclusive of depreciation and amortization)		2,153		2,186		4,590		4,239
Direct operating expense (exclusive of depreciation and amortization)		365		358		750		692
Sales, general and administrative expense		324		324		668		662
Salaries, wages and employee benefits										Salaries, wages and employee benefits	783		752		1,545		1,477
Purchased transportation										Purchased transportation	444		525		901		1,035
Fuel, operating expenses and supplies										Fuel, operating expenses and supplies	390		434		817		852
Operating taxes and licenses										Operating taxes and licenses	15		13		30		29
Insurance and claims										Insurance and claims	46		48		90		104
Gains on sales of property and equipment										Gains on sales of property and equipment	(2)		(1)		(5)		(2)
Depreciation and amortization expense	Depreciation and amortization expense	115		120		231		239		Depreciation and amortization expense	107		96		208		190
(Gain) loss on sale of business		16		—		(434)		—

Transaction and integration costs	Transaction and integration costs	25		6		35		11		Transaction and integration costs	17		7		39		14
Restructuring costs	Restructuring costs	4		1		10		2		Restructuring costs	10		2		34		8
Operating income	Operating income	230		191		855		330		Operating income	107		171		165		234
Other income	Other income	(15)		(10)		(29)		(26)		Other income	(3)		(13)		(8)		(27)
Debt extinguishment loss	Debt extinguishment loss	26		—		26		8		Debt extinguishment loss	23		26		23		26
Interest expense	Interest expense	31		58		68		123		Interest expense	43		31		85		68
Income from continuing operations before income tax provision	Income from continuing operations before income tax provision	188		143		790		225		Income from continuing operations before income tax provision	44		127		65		167
Income tax provision	Income tax provision	47		30		160		49		Income tax provision	13		31		17		39
Income from continuing operations	Income from continuing operations	141		113		630		176		Income from continuing operations	31		96		48		128
Income (loss) from discontinued operations, net of taxes	Income (loss) from discontinued operations, net of taxes	—		45		(1)		100		Income (loss) from discontinued operations, net of taxes	2		45		(1)		501
Net income		141		158		629		276

Net income from discontinued operations attributable to noncontrolling interests		—		(2)		—		(5)

Net income attributable to XPO	Net income attributable to XPO	$	141	$	156	$	629	$	271	Net income attributable to XPO	$	33	$	141	$	47	$	629

Net income (loss) attributable to common shareholders	Net income (loss) attributable to common shareholders									Net income (loss) attributable to common shareholders
Continuing operations	Continuing operations	$	141	$	113	$	630	$	176	Continuing operations	$	31	$	96	$	48	$	128
Discontinued operations	Discontinued operations	—		43		(1)		95		Discontinued operations	2		45		(1)		501
Net income attributable to common shareholders	Net income attributable to common shareholders	$	141	$	156	$	629	$	271	Net income attributable to common shareholders	$	33	$	141	$	47	$	629

Earnings (loss) per share data	Earnings (loss) per share data									Earnings (loss) per share data
Basic earnings per share from continuing operations	Basic earnings per share from continuing operations	$	1.23	$	1.01	$	5.49	$	1.61	Basic earnings per share from continuing operations	$	0.27	$	0.83	$	0.42	$	1.12
Basic earnings (loss) per share from discontinued operations	Basic earnings (loss) per share from discontinued operations	—		0.38		(0.01)		0.87		Basic earnings (loss) per share from discontinued operations	0.01		0.40		(0.01)		4.36
Basic earnings per share attributable to common shareholders	Basic earnings per share attributable to common shareholders	$	1.23	$	1.39	$	5.48	$	2.48	Basic earnings per share attributable to common shareholders	$	0.28	$	1.23	$	0.41	$	5.48
Diluted earnings per share from continuing operations	Diluted earnings per share from continuing operations	$	1.22	$	1.00	$	5.45	$	1.56	Diluted earnings per share from continuing operations	$	0.27	$	0.83	$	0.41	$	1.11
Diluted earnings (loss) per share from discontinued operations	Diluted earnings (loss) per share from discontinued operations	—		0.38		(0.01)		0.84		Diluted earnings (loss) per share from discontinued operations	0.01		0.39		(0.01)		4.33
Diluted earnings per share attributable to common shareholders	Diluted earnings per share attributable to common shareholders	$	1.22	$	1.38	$	5.44	$	2.40	Diluted earnings per share attributable to common shareholders	$	0.28	$	1.22	$	0.40	$	5.44

Weighted-average common shares outstanding	Weighted-average common shares outstanding									Weighted-average common shares outstanding
Basic weighted-average common shares outstanding	Basic weighted-average common shares outstanding	115		112		115		109		Basic weighted-average common shares outstanding	116		115		116		115
Diluted weighted-average common shares outstanding	Diluted weighted-average common shares outstanding	116		113		116		113		Diluted weighted-average common shares outstanding	118		116		117		116

See accompanying notes to condensed consolidated financial statements.

Table of Contents

XPO, ~~Logistics,~~ Inc.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	(In millions)	2022		2021		2022		2021		(In millions)	2023		2022		2023		2022
Net income	Net income	$	141	$	158	$	629	$	276	Net income	$	33	$	141	$	47	$	629

Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax									Other comprehensive income (loss), net of tax
Foreign currency translation gain (loss), net of tax effect of $(9), $3, $(11) and $(3)		$	(46)	$	15	$	(72)	$	(27)
Unrealized gain on financial assets/liabilities designated as hedging instruments, net of tax effect of $(1), $—, $(1) and $—		3		—		4		—
Foreign currency translation gain (loss), net of tax effect of $2, $(9), $10 and $(11)										Foreign currency translation gain (loss), net of tax effect of $2, $(9), $10 and $(11)	$	14	$	(46)	$	27	$	(72)
Unrealized gain on financial assets/liabilities designated as hedging instruments, net of tax effect of $—, $(1), $1 and $(1)										Unrealized gain on financial assets/liabilities designated as hedging instruments, net of tax effect of $—, $(1), $1 and $(1)	1		3		3		4

Other comprehensive income (loss)	Other comprehensive income (loss)	(43)		15		(68)		(27)		Other comprehensive income (loss)	15		(43)		30		(68)
Comprehensive income		$	98	$	173	$	561	$	249
Less: Comprehensive income attributable to noncontrolling interests		—		5		—		3

Comprehensive income attributable to XPO	Comprehensive income attributable to XPO	$	98	$	168	$	561	$	246	Comprehensive income attributable to XPO	$	48	$	98	$	77	$	561

See accompanying notes to condensed consolidated financial statements.

Table of Contents

XPO, ~~Logistics,~~ Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)
Six Months Ended June 30,
(In millions) 2022 2021
Cash flows from operating activities of continuing operations
Net income $ 629 $ 276
Income (loss) from discontinued operations, net of taxes (1) 100
Income from continuing operations 630 176
Adjustments to reconcile income from continuing operations to net cash from
operating activities
Depreciation, amortization and net lease activity 231 239
Stock compensation expense 18 13
Accretion of debt 8 10
Deferred tax expense 6 10
Debt extinguishment loss 26 8
Gain on sale of business (434) —
Gains on sales of property and equipment (2) (30)
Other 17 11
Changes in assets and liabilities
Accounts receivable (382) (223)
Other assets 57 (45)
Accounts payable 203 19
Accrued expenses and other liabilities 21 120
Net cash provided by operating activities from continuing operations 399 308
Cash flows from investing activities of continuing operations
Proceeds from sale of business 705 —
Payment for purchases of property and equipment (267) (135)
Proceeds from sale of property and equipment 7 60
Proceeds from settlement of cross currency swaps 19 —
Net cash provided by (used in) investing activities from continuing operations 464 (75)
Cash flows from financing activities of continuing operations
Repayment of borrowings related to securitization program — (24)
Repurchase of debt (651) (1,200)
Proceeds from borrowings on ABL facility 275 —
Repayment of borrowings on ABL facility (275) (200)
Repayment of debt and finance leases (32) (43)
Payment for debt issuance costs — (5)
Change in bank overdrafts 25 —
Payment for tax withholdings for restricted shares (13) (22)
Other (2) 5
Net cash used in financing activities from continuing operations (673) (1,489)


	Six Months Ended June 30,
(In millions)	2023		2022
Cash flows from operating activities of continuing operations
Net income	$	47	$	629
Income (loss) from discontinued operations, net of taxes	(1)		501
Income from continuing operations	48		128
Adjustments to reconcile income from continuing operations to net cash from operating activities
Depreciation, amortization and net lease activity	208		190
Stock compensation expense	41		14
Accretion of debt	7		8
Deferred tax expense (benefit)	(6)		22


Gains on sales of property and equipment	(5)		(2)
Other	39		37
Changes in assets and liabilities
Accounts receivable	(64)		(241)
Other assets	(31)		(38)
Accounts payable	(57)		72
Accrued expenses and other liabilities	27		167
Net cash provided by operating activities from continuing operations	207		357
Cash flows from investing activities of continuing operations

Payment for purchases of property and equipment	(355)		(242)
Proceeds from sale of property and equipment	13		7
Proceeds from settlement of cross currency swaps	—		19

Net cash used in investing activities from continuing operations	(342)		(216)
Cash flows from financing activities of continuing operations
Proceeds from issuance of debt	1,977		—

Repurchase of debt	(2,003)		(651)
Proceeds from borrowings on ABL facility	—		275
Repayment of borrowings on ABL facility	—		(275)
Repayment of debt and finance leases	(35)		(32)
Payment for debt issuance costs	(15)		—


Change in bank overdrafts	51		25
Payment for tax withholdings for restricted shares	(12)		(13)

Other	1		(2)
Net cash used in financing activities from continuing operations	(36)		(673)

Cash flows from discontinued operations
Operating activities of discontinued operations	(8)		39
Investing activities of discontinued operations	1		680

Net cash provided by (used in) discontinued operations	(7)		719
Effect of exchange rates on cash, cash equivalents and restricted cash	5		(14)
Net increase (decrease) in cash, cash equivalents and restricted cash	(173)		173
Cash, cash equivalents and restricted cash, beginning of period	470		273
Cash, cash equivalents and restricted cash, end of period	297		446
Less: Cash, cash equivalents and restricted cash of discontinued operations, end of period	—		212
Cash, cash equivalents and restricted cash of continued operations, end of period	$	297	$	234
Supplemental disclosure of cash flow information

Leased assets obtained in exchange for new operating lease liabilities	$	46	$	72
Leased assets obtained in exchange for new finance lease liabilities	36		10
Cash paid for interest	90		73
Cash paid for income taxes	18		71

~~Table of Contents~~

Six Months Ended June 30,
(In millions) 2022 2021
Cash flows from discontinued operations
Operating activities of discontinued operations (3) 231
Investing activities of discontinued operations — (70)
Financing activities of discontinued operations — (159)
Net cash provided by (used in) discontinued operations (3) 2
Effect of exchange rates on cash, cash equivalents and restricted cash (14) 1
Net increase (decrease) in cash, cash equivalents and restricted cash 173 (1,253)
Cash, cash equivalents and restricted cash, beginning of period 273 2,065
Cash, cash equivalents and restricted cash, end of period 446 812
Less: Cash, cash equivalents and restricted cash of discontinued operations, end of
period
— 318
Cash, cash equivalents and restricted cash of continued operations, end of period $ 446 $ 494
Supplemental disclosure of cash flow information
Leased assets obtained in exchange for new operating lease liabilities $ 114 $ 111
Leased assets obtained in exchange for new finance lease liabilities 10 31
Cash paid for interest 73 133
Cash paid for income taxes 74 43

See accompanying notes to condensed consolidated financial statements.

Table of Contents

XPO, ~~Logistics,~~ Inc.

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

Series A Preferred Stock Common Stock
(Shares in thousands, dollars in millions) Shares Amount Shares Amount Additional Paid-In Capital Retained Earnings Accumulated Other
Comprehensive Loss Total XPO Stockholders' Equity Non-controlling Interests Total Equity
Balance as of March 31, 2022 — $ — 114,982 $ — $ 1,176 $ 531 $ (109) $ 1,598 $ — $ 1,598
Net income — — — — — 141 — 141 — 141
Other comprehensive loss — — — — — — (43) (43) — (43)
Exercise and vesting of stock compensation awards — — 51 — — — — — — —
Tax withholdings related to vesting of stock compensation awards — — — — (1) — — (1) — (1)
Stock compensation expense — — — — 10 — — 10 — 10
Other — — — — 2 — — 2 — 2
Balance as of June 30, 2022 — $ — 115,033 $ — $ 1,187 $ 672 $ (152) $ 1,707 $ — $ 1,707
Series A Preferred Stock Common Stock
(Shares in thousands, dollars in millions) Shares Amount Shares Amount Additional Paid-In Capital Retained Earnings Accumulated Other
Comprehensive Loss Total XPO Stockholders' Equity Non-controlling Interests Total Equity
Balance as of December 31, 2021 — $ — 114,737 $ — $ 1,179 $ 43 $ (84) $ 1,138 $ — $ 1,138
Net income — — — — — 629 — 629 — 629
Other comprehensive loss — — — — — — (68) (68) — (68)
Exercise and vesting of stock compensation awards — — 296 — — — — — — —
Tax withholdings related to vesting of stock compensation awards — — — — (13) — — (13) — (13)
Stock compensation expense — — — — 18 — — 18 — 18
Other — — — — 3 — — 3 — 3
Balance as of June 30, 2022 — $ — 115,033 $ — $ 1,187 $ 672 $ (152) $ 1,707 $ — $ 1,707


	Common Stock
(Shares in thousands, dollars in millions)		Shares	Amount		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Equity
Balance as of March 31, 2023		115,750	$	—	$	1,252	$	10	$	(207)	$	1,055
Net income		—	—		—		33		—		33
Other comprehensive income		—	—		—		—		15		15

Exercise and vesting of stock compensation awards		189	—		—		—		—		—
Tax withholdings related to vesting of stock compensation awards		—	—		(4)		—		—		(4)



Stock compensation expense		—	—		19		—		—		19
Other		—	—		1		—		—		1
Balance as of June 30, 2023		115,939	$	—	$	1,268	$	43	$	(192)	$	1,119



	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		—	—		—		47		—		47
Other comprehensive income		—	—		—		—		30		30

Exercise and vesting of stock compensation awards		504	—		—		—		—		—
Tax withholdings related to vesting of stock compensation awards		—	—		(12)		—		—		(12)





Stock compensation expense		—	—		41		—		—		41
Other		—	—		1		—		—		1
Balance as of June 30, 2023		115,939	$	—	$	1,268	$	43	$	(192)	$	1,119

Table of Contents

XPO, ~~Logistics,~~ Inc.

Condensed Consolidated Statements of Changes in Equity (continued)

(Unaudited)
Series A Preferred Stock Common Stock
(Shares in thousands, dollars in millions) Shares Amount Shares Amount Additional Paid-In Capital Retained Earnings Accumulated Other
Comprehensive Loss Total XPO Stockholders' Equity Non-controlling Interests Total Equity
Balance as of March 31, 2021 — $ — 111,676 $ — $ 1,988 $ 983 $ (195) $ 2,776 $ 138 $ 2,914
Net income — — — — — 156 — 156 2 158
Other comprehensive income — — — — — — 12 12 3 15
Exercise and vesting of stock compensation awards — — 44 — — — — — — —
Tax withholdings related to vesting of stock compensation awards — — — — (1) — — (1) — (1)
Conversion of preferred stock to common stock — — 6 — — — — — — —
Purchase of noncontrolling interests — — — — (34) — — (34) (100) (134)
Dividend declared — — — — — — — — (3) (3)
Stock compensation expense — — — — 15 — — 15 — 15
Other — — — — 3 — — 3 — 3
Balance as of June 30, 2021 — $ — 111,726 $ — $ 1,971 $ 1,139 $ (183) $ 2,927 $ 40 $ 2,967
Series A Preferred Stock Common Stock
(Shares in thousands, dollars in millions) Shares Amount Shares Amount Additional Paid-In Capital Retained Earnings Accumulated Other
Comprehensive Loss Total XPO Stockholders' Equity Non-controlling Interests Total Equity
Balance as of December 31, 2020 1 $ 1 102,052 $ — $ 1,998 $ 868 $ (158) $ 2,709 $ 140 $ 2,849
Net income — — — — — 271 — 271 5 276
Other comprehensive loss — — — — — — (25) (25) (2) (27)
Exercise and vesting of stock compensation awards — — 314 — — — — — — —
Tax withholdings related to vesting of stock compensation awards — — — — (22) — — (22) — (22)
Conversion of preferred stock to common stock (1) (1) 145 — 1 — — — — —
Purchase of noncontrolling interests — — — — (34) — — (34) (100) (134)
Dividend declared — — — — — — — — (3) (3)
Exercise of warrants — — 9,215 — — — — — — —
Stock compensation expense — — — — 25 — — 25 — 25
Other — — — — 3 — — 3 — 3
Balance as of June 30, 2021 — $ — 111,726 $ — $ 1,971 $ 1,139 $ (183) $ 2,927 $ 40 $ 2,967


	Common Stock
(Shares in thousands, dollars in millions)		Shares	Amount		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Equity
Balance as of March 31, 2022		114,982	$	—	$	1,176	$	531	$	(109)	$	1,598
Net income		—	—		—		141		—		141
Other comprehensive loss		—	—		—		—		(43)		(43)

Exercise and vesting of stock compensation awards		51	—		—		—		—		—
Tax withholdings related to vesting of stock compensation awards		—	—		(1)		—		—		(1)



Stock compensation expense		—	—		10		—		—		10
Other		—	—		2		—		—		2
Balance as of June 30, 2022		115,033	$	—	$	1,187	$	672	$	(152)	$	1,707


	Common Stock
(Shares in thousands, dollars in millions)		Shares	Amount		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Equity
Balance as of December 31, 2021		114,737	$	—	$	1,179	$	43	$	(84)	$	1,138
Net income		—	—		—		629		—		629
Other comprehensive loss		—	—		—		—		(68)		(68)

Exercise and vesting of stock compensation awards		296	—		—		—		—		—
Tax withholdings related to vesting of stock compensation awards		—	—		(13)		—		—		(13)





Stock compensation expense		—	—		18		—		—		18
Other		—	—		3		—		—		3
Balance as of June 30, 2022		115,033	$	—	$	1,187	$	672	$	(152)	$	1,707

See accompanying notes to condensed consolidated financial statements.

Table of Contents

XPO, ~~Logistics,~~ Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Organization, Description of Business and Basis of Presentation

XPO, ~~Logistics,~~ Inc., together with its subsidiaries (“~~XPO”~~XPO,” “we” or ~~“we”~~the “Company”), is a leading provider of freight transportation services. We use our proprietary technology to move goods efficiently through our customers’ supply chains ~~primarily by providing less-than-truckload (“LTL”)~~in North America and ~~truck brokerage services.~~Europe. See Note 4—3—Segment Reporting for additional information on our operations.

2022 ~~Planned~~ RXO Spin-Off and Intermodal Sale

On ~~March 8,~~November 1, 2022, we ~~announced that our Board of Directors approved a strategic plan to pursue~~completed the spin-off of RXO, Inc. (“RXO”), our tech-enabled brokered transportation platform ~~in North America~~ as a publicly traded company. In addition, the Board of Directors authorized 2 divestitures: our North American intermodal operation, which we sold in March 2022, and the divestiture of our European business. For further information on the sale of our intermodal operation, see Note 3—Divestiture.

~~The spin-off to XPO shareholders, if completed as planned, will result in 2 independent, publicly traded companies. The spin-off~~ company will be RXO, Inc. (“RXO”) and will be comprised of our asset-light core truck brokerage business and complementary brokered services for managed transportation, last mile logistics and global forwarding. The remaining company, XPO, will be a pure-play provider of asset-based LTL service in North America. The planned spin-off transaction, which is intended to be tax-free to XPO and our shareholders for U.S. federal income tax purposes, will result in XPO shareholders owning stock in both XPO and RXO. In connection with the transaction, it is anticipated that a portion of XPO’s outstanding debt will be repaid using proceeds from debt incurred by RXO.

We currently expect to complete the RXO spin-off transaction in the fourth quarter of 2022, subject to various conditions, including the effectiveness of a Form 10 registration statement, receipt of a tax opinion from counsel, the refinancing of XPO’s debt on terms satisfactory to our Board of Directors, and final approval by the Board of Directors, among other requirements.

~~There can be no assurance that any strategic transaction will occur, or if one or more do occur, of the terms or timing.~~

~~2021 Spin-Off of the Logistics Segment~~

~~On August 2, 2021, we completed the spin-off of our logistics segment as GXO Logistics, Inc. (“GXO”~~(the “RXO spin-off”). The historical results of operations and the financial positions of RXO and our ~~logistics segment~~intermodal operation, which was sold in March 2022, are presented as discontinued operations in our Condensed Consolidated Financial Statements. For information on our discontinued operations, see Note 2—Discontinued Operations.

Basis of Presentation

We prepared our Condensed Consolidated Financial Statements in accordance with U.S. generally accepted accounting principles (“GAAP”) and on the same basis as the accounting policies described in our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 (the ~~“2021~~“2022 Form 10-K”). The interim reporting requirements of Form 10-Q allow certain information and note disclosures normally included in annual consolidated financial statements to be condensed or omitted. These Condensed Consolidated Financial Statements should be read in conjunction with the ~~2021~~2022 Form 10-K.

The Condensed Consolidated Financial Statements are not audited but reflect all adjustments that are of a normal recurring nature and are necessary for a fair presentation of the financial condition, operating results and cash flows for the interim periods presented. Operating results for the three and six months ended June 30, ~~2022~~2023 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2022.~~2023.

In the first quarter of 2023, we made certain changes to our financial reporting to increase transparency and improve comparability. Specifically, we changed the expense captions within Operating income in the Condensed Consolidated Statements of Income to reflect the nature of the expense. The change to natural expense classification had no impact on consolidated Revenues or Operating income. We have recast prior period amounts to conform to the current ~~period’s~~year’s presentation.

~~Table of Contents~~

Restricted Cash

As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, our restricted cash included in Other long-term assets on our Condensed Consolidated Balance Sheets was $7 million and $10 ~~million.~~million, respectively.

Trade Receivables Securitization and Factoring Programs

We sell certain of our trade accounts receivable on a non-recourse basis to third-party financial institutions under factoring agreements. We also sell trade accounts receivable under a securitization program for our ~~securitization program.~~European transportation business. We use trade receivables securitization and factoring programs to help manage our cash flows and offset the impact of extended payment terms for some of our customers.

The maximum amount of net cash proceeds available at any one time under our securitization program, inclusive of any unsecured borrowings, is €200 million (approximately ~~$210~~$218 million as of June 30, ~~2022)~~2023). As of June 30, ~~2022, less than €1~~2023, €5 million ~~(less than $1~~(approximately $5 million) was available under the ~~program, subject to having sufficient receivables available to sell and with consideration to amounts previously sold.~~program. The weighted average interest rate was ~~0.78%~~4.41% as of June 30, ~~2022. Charges for commitment fees, which are based on a percentage~~2023. The program expires in July 2026.

Table of ~~available amounts, and charges for administrative fees were not material to our results of operations for the three and six months ended June 30, 2022 and 2021.~~Contents

Information related to the trade receivables sold was as follows:

Three Months Ended June 30, Six Months Ended June 30,
(In millions) 2022
2021 (1)
2022
2021 (1)
Securitization programs
Receivables sold in period $ 458 $ 408 $ 905 $ 755
Cash consideration 458 408 905 755
Factoring programs
Receivables sold in period 33 13 60 29
Cash consideration 33 13 60 29

~~(1) Information for the three and six months ended June 30, 2021 exclude the logistics segment.~~


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2023		2022		2023		2022
Securitization programs
Receivables sold in period	$	470	$	458	$	910	$	905
Cash consideration	470		458		910		905

Factoring programs
Receivables sold in period	34		23		58		44
Cash consideration	34		23		58		44

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The levels of inputs used to measure fair value are:

•Level 1—Quoted prices for identical instruments in active markets;

•Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets; and

•Level 3—Valuations based on inputs that are unobservable, generally utilizing pricing models or other valuation techniques that reflect management’s judgment and estimates.

We base our fair value estimates on market assumptions and available information. The carrying values of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and current maturities of long-term debt approximated their fair values as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022 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. ~~Our derivative instruments are classified as Level 2 and are valued using inputs other than quoted prices, such as foreign exchange rates and yield curves.~~ For information on the fair value hierarchy of our derivative instruments, see Note 7—6—Derivative Instruments; and for further information on financial liabilities, see Note 8—7—Debt.

~~Table of Contents~~

The fair value hierarchy of cash equivalents was as follows:

(In millions) Carrying Value Fair Value Level 1
June 30, 2022 $ 377 $ 377 $ 377
December 31, 2021 181 181 181


(In millions)	Carrying Value		Fair Value		Level 1
June 30, 2023	$	231	$	231	$	231
December 31, 2022	402		402		402

Adoption of New Accounting ~~Standard~~

~~In November 2021, the Financial Accounting~~ Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance.” The ASU increases the transparency surrounding government assistance by requiring annual disclosure of: (i) the types of assistance received; (ii) an entity’s accounting for the assistance; and (iii) the effect of the assistance on the entity’s financial statements. We adopted this standard on January 1, 2022, on a prospective basis. The adoption did not have a material impact on our financial statement disclosures.

~~Accounting Pronouncement Issued but Not Yet Effective~~

In March 2020, the FASB issued ASU 2020-04, “Reference rate reform (Topic 848)—: Facilitation of the effects of reference rate reform on financial reporting.” The ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform. The amendments apply only to contracts and hedging relationships that reference London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform. The amendments are elective and are effective upon ~~issuance through~~issuance. In December 2022, the FASB issued ASU 2022-06, “Reference rate reform (Topic 848): Deferral of the sunset date of Topic 848” which defers the expiration date for Topic 848 from December 31, ~~2022.~~2022 until December 31, 2024. At December 31, 2022, our revolving loan credit agreement (the “ABL Facility”) and senior secured term loan credit agreement, as amended (the “Existing Term Loan Facility”), provided for an interest rate based on LIBOR. In 2023, we amended the terms of our ABL Facility and Existing Term Loan Facility, including transitioning the interest rate from LIBOR to other base rates. See Note 7—Debt for further information. We ~~intend to apply this guidance if~~do not expect the modifications of ~~contracts that include LIBOR occur. Adoption of the standard is not expected~~these facilities to have a material impact on our consolidated financial statements.

Table of Contents

2. Discontinued Operations

As discussed above, the results of RXO and intermodal are presented as discontinued operations.

The following table summarizes the ~~financial~~ results of operations from discontinued ~~operations of GXO:~~operations:

Three Months Ended June 30, Six Months Ended June 30,
(In millions) 2021 2021
Revenue $ 1,881 $ 3,699
Direct operating expense (exclusive of depreciation and amortization) 1,557 3,071
Sales, general and administrative expense 160 310
Depreciation and amortization expense 85 158
Transaction and other operating costs 25 42
Operating income 54 118
Other income (12) (23)
Interest expense 5 9
Income from discontinued operations before income tax provision 61 132
Income tax provision 16 32
Net income from discontinued operations, net of taxes 45 100
Net income from discontinued operations attributable to noncontrolling
interests
(2) (5)
Net income from discontinued operations attributable to GXO $ 43 $ 95


	Three Months Ended June 30,		Six Months Ended June 30,
(In millions)	2022		2022
Revenue	$	1,227	$	2,872
Salaries, wages and employee benefits	151		315
Purchased transportation	879		2,100
Fuel, operating expenses and supplies	76		191
Operating taxes and licenses	1		2
Insurance and claims	4		13
Depreciation and amortization expense	19		41
(Gain) loss on sale of business	16		(434)
Transaction and other operating costs	21		23
Operating income	60		621



Income tax provision	15		120


Net income from discontinued operations attributable to discontinued operations	$	45	$	501

No costs related to the GXO spin-off were incurred for the three months ended June 30, 2022. For the six months ended June 30, 2022, we incurred costs of approximately $4 million related to the GXO spin-off. For the three and six months ended June 30, ~~2021,~~2023, we incurred ~~costs of~~ approximately ~~$30~~$16 million and ~~$43~~$40 million, respectively, of costs related to the ~~GXO~~RXO spin-off, of which ~~$27~~$0 million and ~~$39~~$4 million, respectively, are reflected within income (loss) from discontinued operations in our Condensed Consolidated Statements of Income. For the three and six months ended June 30, 2022, we incurred approximately $18 million and $21 million, respectively, of costs related to the RXO spin-off, of which $17 million and $20 million, respectively, are reflected within income (loss) from discontinued operations in our Condensed Consolidated Statements of Income.

~~Table of Contents~~

In accordance with a separation and distribution agreement, GXO has agreed to indemnify XPO for payments XPO makes with respect to certain self-insurance matters that were incurred by the logistics segment prior to the spin-off and remain obligations of XPO. The receivable and accrued expense for these matters was approximately $19 million each as of June 30, 2022 and approximately $23 million and $21 million, respectively, as of December 31, 2021.

3. ~~Divestiture~~

In March 2022, we sold our North American intermodal operation for cash proceeds of approximately $705 million, net of cash disposed and subject to customary post-closing working capital adjustments that remain ongoing. We recorded a $450 million pre-tax gain on the sale, net of transaction costs, during the first quarter of 2022. During the second quarter of 2022, we recognized a working capital adjustment of $16 million, which reduced the gain initially recognized in the first quarter of 2022. We agreed to provide certain specified customary transition services for a period not exceeding 12 months from the sale. The intermodal operation generated revenue of $1.2 billion and operating income of $53 million for the year ended December 31, 2021. The intermodal operation was included in our Brokerage and Other Services segment through the date of the sale.

4. Segment Reporting

We are organized into 2two reportable segments: ~~(i)~~ North American ~~LTL;~~Less-Than-Truckload (“LTL”), the largest component of our business, and ~~(ii) Brokerage and Other Services.~~European Transportation.

In our asset-based North American LTL segment, we provide ~~our customers~~shippers with geographic density and day-definite ~~regional, national~~domestic and cross-border services to the U.S., as well as Mexico, Canada and the Caribbean. Our North American LTL ~~freight services.~~segment also includes the results of our trailer manufacturing operations.

In our ~~asset-light Brokerage~~European Transportation segment, we serve a large base of customers with consumer, trade and ~~Other Services segment, our core~~industrial markets. We offer dedicated truckload, LTL, truck brokerage, ~~business places shippers’ freight with qualified independent carriers using our XPO Connect~~® ~~technology platform. Truck brokerage is the largest component of the segment, which also includes complementary brokered transportation services for~~ managed transportation, last mile, ~~logistics~~freight forwarding and ~~global forwarding. In addition, our European business is reported in this segment,~~multimodal solutions, such as road-rail and ~~our North American intermodal operation was included in the segment through its date of sale in March 2022.~~

Some of our operating units provide services to our other operating units outside of their reportable segment. Billings for such services are based on negotiated rates and are reflected as revenues of the billing segment. We adjust these rates from time to time based on market conditions. We eliminate intersegment revenues and expenses in our consolidated results.road-short sea combinations.

Corporate includes corporate headquarters costs for executive officers and certain legal and financial functions, and other costs and credits not attributed to our ~~reporting~~reportable segments.

Our chief operating decision maker (“CODM”) regularly reviews financial information at the operating segment level to allocate resources to the segments and to assess their performance. We include items directly attributable to a segment, and those that can be allocated on a reasonable basis, 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~~Adjusted EBITDA”), which we define as ~~net~~ income from continuing operations ~~attributable to common shareholders~~ before debt extinguishment loss, interest expense, income tax, depreciation and amortization expense, ~~(gain) loss on sale of business,~~ transaction and integration costs, restructuring costs and other adjustments. Segment Adjusted EBITDA has historically reflected an allocation of corporate costs. In the first quarter of 2023, we began allocating incremental corporate costs from Corporate to North American LTL. Prior periods have been recast to reflect these incremental allocations, which approximate $80 million annually.

119

Table of Contents

Selected financial data for our segments is as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	(in millions)	2022		2021		2022		2021		(in millions)	2023		2022		2023		2022
Revenue	Revenue									Revenue
North American LTL	North American LTL	$	1,239	$	1,081	$	2,344	$	2,043	North American LTL	$	1,136	$	1,240	$	2,256	$	2,347
Brokerage and Other Services		2,067		2,161		4,499		4,232
Eliminations		(74)		(56)		(138)		(100)
European Transportation										European Transportation	781		807		1,568		1,594
Total	Total	$	3,232	$	3,186	$	6,705	$	6,175	Total	$	1,917	$	2,047	$	3,824	$	3,941

Adjusted EBITDA	Adjusted EBITDA									Adjusted EBITDA
North American LTL	North American LTL	$	294	$	258	$	499	$	472	North American LTL	$	208	$	274	$	390	$	460
Brokerage and Other Services		152		130		316		255
European Transportation										European Transportation	46		49		83		87
Corporate	Corporate	(41)		(58)		(89)		(118)		Corporate	(10)		(34)		(19)		(74)
Total adjusted EBITDA		405		330		726		609
Total Adjusted EBITDA										Total Adjusted EBITDA	244		289		454		473
Less:	Less:									Less:
Debt extinguishment loss	Debt extinguishment loss	26		—		26		8		Debt extinguishment loss	23		26		23		26
Interest expense	Interest expense	31		58		68		123		Interest expense	43		31		85		68
Income tax provision	Income tax provision	47		30		160		49		Income tax provision	13		31		17		39
Depreciation and amortization expense	Depreciation and amortization expense	115		120		231		239		Depreciation and amortization expense	107		96		208		190
Unrealized loss on foreign currency option and forward contracts		—		2		—		1
(Gain) loss on sale of business		16		—		(434)		—

Transaction and integration costs (1)	Transaction and integration costs (1)	25		6		35		11		Transaction and integration costs (1)	17		7		39		14
Restructuring costs (2)	Restructuring costs (2)	4		1		10		2		Restructuring costs (2)	10		2		34		8
Net income from continuing operations attributable to common shareholders		$	141	$	113	$	630	$	176
Income from continuing operations										Income from continuing operations	$	31	$	96	$	48	$	128

Depreciation and amortization expense	Depreciation and amortization expense									Depreciation and amortization expense
North American LTL	North American LTL	$	60	$	57	$	115	$	112	North American LTL	$	71	59		$	139	$	115
Brokerage and Other Services		54		60		114		120
European Transportation										European Transportation	33		32		65		65
Corporate	Corporate	1		3		2		7		Corporate	3		5		4		10
Total	Total	$	115	$	120	$	231	$	239	Total	$	107	$	96	$	208	$	190

(1) Transaction and integration costs for the periods ended June 30, ~~2022~~2023 are primarily comprised of stock-based compensation and ~~2021~~retention awards for certain employees related to strategic initiatives. Transaction and integration costs for the periods ended June 30, 2022 are primarily comprised of third-party professional fees related to strategic initiatives ~~including the spin-offs and other divestment activities,~~ as well as retention awards paid to certain employees. Transaction and integration costs for the three months ended June 30, 2023 and 2022 ~~and 2021~~ include $2$0 million and $—$2 million, respectively, related to our North American LTL segment, $1$0 million and $2$1 million, respectively, related to our ~~Brokerage and Other Services~~European Transportation segment, and ~~$22~~$17 million and $4 million, respectively, related to Corporate. Transaction and integration costs for the six months ended June 30, 2023 and 2022 ~~and 2021~~ include $2$0 million and $—$2 million, respectively, related to our North American LTL segment, $3$1 million and $3 million, respectively, related to our ~~Brokerage and Other Services~~European Transportation segment, and ~~$30~~$38 million and $8$9 million, respectively, related to Corporate.

(2) See Note 6—5— Restructuring Charges for further information on our restructuring actions.

Table of Contents

4. Revenue Recognition

Disaggregation of Revenues

Our revenue disaggregated by geographic area based on sales office location was as follows:


	Three Months Ended June 30, 2023
(In millions)	North American LTL		European Transportation		Total
Revenue
United States	$	1,112	$	—	$	1,112
North America (excluding United States)	24		—		24
France	—		331		331
United Kingdom	—		226		226
Europe (excluding France and United Kingdom)	—		224		224

Total	$	1,136	$	781	$	1,917


	Three Months Ended June 30, 2022
(In millions)	North American LTL		European Transportation		Total
Revenue
United States	$	1,213	$	—	$	1,213
North America (excluding United States)	27		—		27
France	—		352		352
United Kingdom	—		224		224
Europe (excluding France and United Kingdom)	—		231		231

Total	$	1,240	$	807	$	2,047


	Six Months Ended June 30, 2023
(In millions)	North American LTL		European Transportation		Total
Revenue
United States	$	2,209	$	—	$	2,209
North America (excluding United States)	47		—		47
France	—		671		671
United Kingdom	—		450		450
Europe (excluding France and United Kingdom)	—		447		447

Total	$	2,256	$	1,568	$	3,824


	Six Months Ended June 30, 2022
(In millions)	North American LTL		European Transportation		Total
Revenue
United States	$	2,297	$	—	$	2,297
North America (excluding United States)	50		—		50
France	—		704		704
United Kingdom	—		449		449
Europe (excluding France and United Kingdom)	—		441		441

Total	$	2,347	$	1,594	$	3,941

1211

Table of Contents

5. ~~Revenue Recognition~~

~~Disaggregation of Revenues~~

~~We disaggregate our revenue by geographic area and service offering. Our revenue disaggregated by geographical area, based on sales office location, was as follows:~~

Three Months Ended June 30, 2022
(In millions) North American LTL Brokerage and Other Services Eliminations Total
Revenue
United States $ 1,212 $ 1,141 $ (74) $ 2,279
North America (excluding United States) 27 102 — 129
France — 352 — 352
United Kingdom — 224 — 224
Europe (excluding France and United Kingdom) — 231 — 231
Other — 17 — 17
Total $ 1,239 $ 2,067 $ (74) $ 3,232

Three Months Ended June 30, 2021
(In millions) North American LTL Brokerage and Other Services Eliminations Total
Revenue
United States $ 1,057 $ 1,276 $ (56) $ 2,277
North America (excluding United States) 24 70 — 94
France — 352 — 352
United Kingdom — 222 — 222
Europe (excluding France and United Kingdom) — 215 — 215
Other — 26 — 26
Total $ 1,081 $ 2,161 $ (56) $ 3,186

Six Months Ended June 30, 2022
(In millions) North American LTL Brokerage and Other Services Eliminations Total
Revenue
United States $ 2,294 $ 2,660 $ (138) $ 4,816
North America (excluding United States) 50 203 — 253
France — 704 — 704
United Kingdom — 449 — 449
Europe (excluding France and United Kingdom) — 441 — 441
Other — 42 — 42
Total $ 2,344 $ 4,499 $ (138) $ 6,705

~~Table of Contents~~

Six Months Ended June 30, 2021
(In millions) North American LTL Brokerage and Other Services Eliminations Total
Revenue
United States $ 1,997 $ 2,497 $ (100) $ 4,394
North America (excluding United States) 46 139 — 185
France — 694 — 694
United Kingdom — 431 — 431
Europe (excluding France and United Kingdom) — 428 — 428
Other — 43 — 43
Total $ 2,043 $ 4,232 $ (100) $ 6,175

~~Our revenue disaggregated by service offering was as follows:~~

Three Months Ended June 30, Six Months Ended June 30,
(In millions) 2022 2021 2022 2021
North America
LTL (1)
$ 1,275 $ 1,098 $ 2,408 $ 2,074
Truck brokerage 755 607 1,579 1,203
Last mile 274 269 520 515
Other brokerage (2)
199 486 750 939
Total North America 2,503 2,460 5,257 4,731
Europe 807 791 1,594 1,554
Eliminations (78) (65) (146) (110)
Total $ 3,232 $ 3,186 $ 6,705 $ 6,175

~~(1) LTL revenue is before intercompany eliminations and includes revenue from our trailer manufacturing business.~~

(2) Other brokerage includes expedite, freight forwarding and managed transportation services, and intermodal through its date of sale in March 2022. For further information, see Note 3—Divestiture. Freight forwarding includes operations conducted outside of North America but managed by our North American entities.

~~Performance Obligations~~

Remaining performance obligations represent firm contracts for which services have not been performed and future revenue recognition is expected. As permitted in determining the remaining performance obligation, we omit obligations that: (i) have original expected durations of one year or less; or (ii) contain variable consideration. On June 30, 2022, the fixed consideration component of our remaining performance obligation was approximately $139 million, and we expect approximately 91% of that amount to be recognized over the next three years and the remainder thereafter. We estimate remaining performance obligations at a point in time; actual amounts may differ from these estimates due to changes in foreign currency exchange rates and contract revisions or terminations.

6. Restructuring Charges

We engage in restructuring actions as part of our ongoing efforts to best use our resources and infrastructure, including actions in connection with spin-offs and other divestment activities. These actions generally include severance and facility-related costs, including impairment of ~~operating~~ lease assets, as well as contract termination costs, and are intended to improve our efficiency and ~~profitability going forward.~~

~~Table of Contents~~

profitability.

Our restructuring-related activity was as follows:

Six Months Ended June 30, 2022
(In millions) Reserve Balance
as of
December 31, 2021 Charges Incurred Payments Reserve Balance
as of
June 30, 2022
Severance
Brokerage and Other Services $ 6 $ 4 $ (6) $ 4
Corporate 7 1 (4) 4
Total severance 13 5 (10) 8
Facilities
Brokerage and Other Services 2 1 (1) 2
Total facilities 2 1 (1) 2
Contract termination
North American LTL — 3 (3) —
Brokerage and Other Services — 1 — 1
Total contract termination — 4 (3) 1
Total $ 15 $ 10 $ (14) $ 11


			Six Months Ended June 30, 2023
(In millions)	Reserve Balance as of December 31, 2022		Charges Incurred		Payments		Foreign Exchange and Other		Reserve Balance as of June 30, 2023
Severance
North American LTL	$	2	$	4	$	(2)	$	—	$	4
European Transportation	1		8		(6)		—		3
Corporate	19		16		(19)		(1)		15









Total	$	22	$	28	$	(27)	$	(1)	$	22

In addition to the severance charges noted in the table above, we recorded a non-cash lease impairment charge of $6 million in our North American LTL segment in the first quarter of 2023.

We expect that the majority of the cash outlays related to the severance charges incurred in the first six months of ~~2022~~2023 will be completed within 12 months.

7.6. Derivative Instruments

In the normal course of business, we are exposed to risks arising from business operations and economic factors, including fluctuations in interest rates and foreign currencies. We use derivative instruments to manage the volatility related to these exposures. The objective of these derivative instruments is to reduce fluctuations in our earnings and cash flows associated with changes in foreign currency exchange rates and interest rates. These financial instruments are not used for trading or other speculative purposes. Historically, we have not incurred, and do not expect to incur in the future, any losses as a result of counterparty default.

The fair value of our derivative instruments and the related notional amounts were as follows:


		June 30, 2022									June 30, 2023
				Derivative Assets			Derivative Liabilities						Derivative Assets			Derivative Liabilities
(In millions)	(In millions)	Notional Amount		Balance Sheet Caption	Fair Value		Balance Sheet Caption	Fair Value		(In millions)	Notional Amount		Balance Sheet Caption	Fair Value		Balance Sheet Caption	Fair Value
Derivatives designated as hedges	Derivatives designated as hedges									Derivatives designated as hedges
Cross-currency swap agreements	Cross-currency swap agreements	$	343	Other current assets	$	8	Other current liabilities	$	—	Cross-currency swap agreements	$	663	Other current assets	$	1	Other current liabilities	$	(24)
Cross-currency swap agreements		89		Other long-term assets	6		Other long-term liabilities	—

Interest rate swaps	Interest rate swaps	2,003		Other current assets	4		Other current liabilities	—		Interest rate swaps	700		Other current assets	2		Other current liabilities	—

Total	Total				$	18		$	—	Total				$	3		$	(24)

1512

Table of Contents


		December 31, 2021									December 31, 2022
				Derivative Assets			Derivative Liabilities						Derivative Assets			Derivative Liabilities
(In millions)	(In millions)	Notional Amount		Balance Sheet Caption	Fair Value		Balance Sheet Caption	Fair Value		(In millions)	Notional Amount		Balance Sheet Caption	Fair Value		Balance Sheet Caption	Fair Value
Derivatives designated as hedges	Derivatives designated as hedges									Derivatives designated as hedges
Cross-currency swap agreements	Cross-currency swap agreements	$	362	Other current assets	$	—	Other current liabilities	$	(4)	Cross-currency swap agreements	$	332	Other current assets	$	—	Other current liabilities	$	(11)
Cross-currency swap agreements	Cross-currency swap agreements	110		Other long-term assets	—		Other long-term liabilities	—		Cross-currency swap agreements	68		Other long-term assets	3		Other long-term liabilities	—
Interest rate swaps	Interest rate swaps	2,003		Other current assets	—		Other current liabilities	—		Interest rate swaps	1,882		Other current assets	—		Other current liabilities	(1)

Total	Total				$	—		$	(4)	Total				$	3		$	(12)

The derivatives are classified as Level 2 within the fair value hierarchy. The derivatives are valued using inputs other than quoted prices, such as foreign exchange rates and yield curves.

The effect of derivative and nonderivative instruments designated as hedges on our Condensed Consolidated Statements of Income was as follows:


		Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) on Derivatives				Amount of Loss Reclassified from AOCI into Net Income				Amount of Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)					Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) on Derivatives				Amount of Gain Reclassified from AOCI into Net Income				Amount of Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)
		Three Months Ended June 30,													Three Months Ended June 30,
(In millions)	(In millions)	2022		2021		2022		2021		2022		2021		(In millions)	2023		2022		2023		2022		2023		2022
Derivatives designated as cash flow hedges	Derivatives designated as cash flow hedges													Derivatives designated as cash flow hedges
Cross-currency swap agreements		$	—	$	(2)	$	—	$	(2)	$	—	$	—

Interest rate swaps	Interest rate swaps	4		—		—		—		—		—		Interest rate swaps	1		4		1		—		—		—
Derivatives designated as net investment hedges	Derivatives designated as net investment hedges													Derivatives designated as net investment hedges
Cross-currency swap agreements	Cross-currency swap agreements	28		(13)		—		—		2		2		Cross-currency swap agreements	(3)		28		—		—		2		2
Total	Total	$	32	$	(15)	$	—	$	(2)	$	2	$	2	Total	$	(2)	$	32	$	1	$	—	$	2	$	2


		Amount of Gain Recognized in Other Comprehensive Income (Loss) on Derivatives				Amount of Gain Reclassified from AOCI into Net Income				Amount of Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)					Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) on Derivatives				Amount of Gain Reclassified from AOCI into Net Income				Amount of Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)
		Six Months Ended June 30,													Six Months Ended June 30,
(In millions)	(In millions)	2022		2021		2022		2021		2022		2021		(In millions)	2023		2022		2023		2022		2023		2022
Derivatives designated as cash flow hedges	Derivatives designated as cash flow hedges													Derivatives designated as cash flow hedges
Cross-currency swap agreements		$	—	$	4	$	—	$	4	$	—	$	—

Interest rate swaps	Interest rate swaps	5		—		—		—		—		—		Interest rate swaps	2		5		1		—		—		—
Derivatives designated as net investment hedges	Derivatives designated as net investment hedges													Derivatives designated as net investment hedges
Cross-currency swap agreements	Cross-currency swap agreements	37		35		—		—		4		5		Cross-currency swap agreements	(13)		37		—		—		4		4
Total	Total	$	42	$	39	$	—	$	4	$	4	$	5	Total	$	(11)	$	42	$	1	$	—	$	4	$	4

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.

1613

Table of Contents

During the term of the swap contracts, we will receive interest ~~either~~ on a quarterly ~~or semi-annual~~ basis from the counterparties based on USD fixed interest rates, and we will pay interest, also on a quarterly ~~or semi-annual~~ 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 2024.

We designated these cross-currency swaps as qualifying hedging instruments and account for them as net investment hedges. We apply the simplified method of assessing the effectiveness of our net investment hedging relationships. Under this method, for each reporting period, the change in the fair value of the cross-currency swaps is initially recognized in Accumulated other comprehensive income (“AOCI”). The change in the fair value due to foreign exchange remains in AOCI and the initial component excluded from effectiveness testing will initially remain in AOCI and then will be reclassified from AOCI to Interest expense each period in a systematic manner. Cash flows related to the periodic exchange of interest payments for these net investment hedges are included in Cash flows from operating activities of continuing operations on our Condensed Consolidated Statements of Cash Flows.

In the second quarter of 2022, we received approximately $19 million related to the settlement of certain cross currency swaps that matured during the quarter. The proceeds were included in Cash flows from investing activities of continuing operations on our Condensed Consolidated Statements of Cash Flows.

Prior to the spin-off of GXO in 2021, we held cross-currency swap agreements to manage the related foreign currency exposure from intercompany loans. We designated these cross-currency swaps as qualifying hedging instruments and accounted for them as cash flow hedges. Gains and losses resulting from the change in the fair value of the cross-currency swaps was initially recognized in AOCI and reclassified to Other income on our Condensed Consolidated Statements of Income to offset the foreign exchange impact in earnings created by settling intercompany loans. Cash flows related to these cash flow hedges was included in Cash flows from operating activities of continuing operations on our Condensed Consolidated Statements of Cash Flows. These swaps were re-designated as net investment hedges in the third quarter of 2021.

Interest Rate Hedging

We execute short-term interest rate swaps to mitigate variability in forecasted interest payments on our Senior Secured Term Loan Credit ~~Agreement (the “Term Loan Credit Agreement”).~~Agreement. The interest rate swaps convert floating-rate interest payments into fixed rate interest payments. We designated the interest rate swaps as qualifying hedging instruments and account for these derivatives as cash flow hedges. The outstanding interest rate ~~swaps mature~~swap matures in ~~the fourth quarter of 2022.~~November 2023.

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 Condensed Consolidated Statements of Cash Flows.

8.7. Debt

June 30, 2022 December 31, 2021
(In millions) Principal Balance Carrying Value Principal Balance Carrying Value
Term loan facilities $ 2,003 $ 1,976 $ 2,003 $ 1,977
6.25% senior notes due 2025 520 516 1,150 1,141
6.70% senior debentures due 2034 300 215 300 214
Finance leases, asset financing and other 205 205 240 240
Total debt 3,028 2,912 3,693 3,572
Short-term borrowings and current maturities of long-term debt 55 55 58 58
Long-term debt $ 2,973 $ 2,857 $ 3,635 $ 3,514

~~Table of Contents~~


	June 30, 2023				December 31, 2022
(In millions)	Principal Balance		Carrying Value		Principal Balance		Carrying Value

Term loan facility	$	700	$	692	$	2,003	$	1,981
6.25% senior notes due 2025	112		112		112		111
6.25% senior secured notes due 2028	830		820		—		—
7.125% senior notes due 2031	450		445		—		—
6.70% senior debentures due 2034	300		219		300		217

Finance leases, asset financing and other	230		230		223		223
Total debt	2,622		2,518		2,638		2,532
Short-term borrowings and current maturities of long-term debt	66		66		59		59
Long-term debt	$	2,556	$	2,452	$	2,579	$	2,473

The fair value of our debt and classification in the fair value hierarchy was as follows:

(In millions) Fair Value Level 1 Level 2
June 30, 2022 $ 2,927 $ 799 $ 2,128
December 31, 2021 3,811 1,571 2,240


(In millions)	Fair Value		Level 1		Level 2
June 30, 2023	$	2,616	$	1,691	$	925
December 31, 2022	2,601		392		2,209

We valued Level 1 debt using quoted prices in active markets. We valued Level 2 debt using bid evaluation pricing models or quoted prices of securities with similar characteristics. ~~The fair value~~

Table 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.Contents

ABL Facility

As of June 30, ~~2022,~~2023, our borrowing base was ~~$1 billion~~$513 million and our availability under our revolving loan credit agreement (the “ABL Facility”) was ~~$995~~$512 million after considering outstanding letters of credit of $5less than $1 million. As of June 30, ~~2022,~~2023, we were in compliance with the ABL Facility’s financial covenants.

In February 2023, we amended our ABL Facility to, among other things: (i) extend the maturity date to April 30, 2026 (subject, in certain circumstances, to a springing maturity if more than $250 million of our existing term loan debt or certain refinancings thereof remain outstanding 91 days prior to their respective maturity dates); (ii) replace LIBOR-based benchmark rates applicable to loans outstanding with Secured Overnight Financing Rate-based rates; (iii) reduce the sublimit for issuance of letters of credit to $200 million; (iv) reduce the sublimit for borrowings in Canadian Dollars to $50 million; (v) exclude real property from the collateral securing the obligations and (vi) make certain other changes to the covenants and other provisions therein. The aggregate commitment of all lenders under the amended ABL Facility remains $600 million.

Letters of Credit Facility

As of June 30, ~~2022,~~2023, we had issued ~~$185~~$141 million in aggregate face amount of letters of credit under our $200 million uncommitted secured evergreen letter of credit facility.

Term Loan ~~Facilities~~Facility

In ~~the first quarter of 2021,~~2015, we ~~amended our~~entered into a Term Loan Credit Agreement that provided for a single borrowing of $1.6 billion, which was subsequently amended to increase the principal balance to $2.0 billion and to extend the maturity date to February 2025 (the “Existing Term Loan Facility”).

In May 2023, we amended the Term Loan Credit Agreement to obtain $700 million of new term loans (the “New Term Loan Facility”) having substantially similar terms as the Existing Term Loan Facility, except with respect to maturity date, issue price, interest rate, prepayment premiums in connection with certain voluntary prepayments and certain other provisions. The New Term Loan Facility was issued at 99.5% of the face amount and will mature on May 24, 2028.

The New Term Loan Facility will bear interest at a rate per annum equal to, at our option, either (a) a Term Secured Overnight Financing (“SOFR”) rate (subject to a 0.00% floor) or (b) a base rate (subject to a 0.00% floor), in each case, plus an applicable margin of 2.00% for Term SOFR loans or 1.00% for base rate loans. The interest rate was 7.09% as of June 30, 2023.

In the second quarter of 2023, we used net proceeds from the New Term Loan Facility and new Senior Notes, as described below, together with cash on hand, to repay $2.0 billion of outstanding principal under the Existing Term Loan Facility and to pay related fees, expenses and accrued interest. We recorded a debt extinguishment loss of $3$23 million in the ~~first six months~~second quarter of ~~2021.~~2023.

Senior Notes Due 2028 and 2031

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” and together with the Senior Secured Notes due 2028, the “Senior Notes”). 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 on the Senior Notes is payable semi-annually in cash in arrears, commencing December 1, 2023. The Senior Notes were issued at par and were used to repay our ~~term loan facility was 2.87%~~Existing Term Loan Facility as described above.

The Senior Notes are guaranteed by each of ~~June 30, 2022.~~our direct and indirect wholly-owned restricted subsidiaries (other than certain excluded subsidiaries) that are obligors under, or guarantee obligations under, our existing secured ABL Facility or the Term Loan Credit Agreement (or certain replacements thereof) or guarantee certain of our other indebtedness.

Table of Contents

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 Term Loan Credit Agreement (subject to permitted liens and certain other exceptions). The Senior Notes due 2031 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 Notes Due 2025

In ~~April~~the second quarter of 2022, we redeemed $630 million of the then $1.15 billion outstanding principal amount of our 6.25% senior notes due ~~2025.~~2025 (“Senior Notes due 2025”). The redemption price for the notes was 100% of the principal amount plus a premium, as defined in the indenture, of approximately $21 million and accrued and unpaid interest. We paid for the redemption using available liquidity. We recorded a debt extinguishment loss of $26 million in the second quarter of 2022 due to this redemption.

~~Senior Notes Due 2022~~

In January 2021, we redeemed our outstanding 6.50% senior notes due 2022. The redemption price for the notes was 100% of the principal amount, plus accrued and unpaid interest. We paid for the redemption with available cash. We recorded a debt extinguishment loss of $5 million in the first six months of 2021 due to this redemption.

~~9. Stockholders’ Equity~~

~~Series A Convertible Perpetual Preferred Stock and Warrants~~

~~Commencing in~~ the fourth quarter of ~~2020, holders~~2022, we repurchased an additional $408 million of the outstanding principal amount of our ~~convertible preferred stock and warrants exchanged their holdings for our common stock or~~Senior Notes due 2025 in a combination of our common stock and cash. These exchanges were intended to simplify our equity capital structure, including in contemplation of the spin-off of our logistics segment. In the first quarter of 2021, 975 preferred shares were exchanged, and we issued approximately 139 thousand shares of common stock. In the second quarter of 2021, the remaining 40 preferred shares were exchanged, and we issued 5,714 shares of common stock. With respect to the warrants, in the first quarter of 2021, 9.8 million warrants were exchanged, and we issued 9.2 million shares of common stock. The warrants exchanged included holdings of Jacobs Private Equity, LLC, an entity controlled by the Company’s chairman and chief executive officer. Subsequent to the exchange in the second quarter of 2021, there are no shares of preferred stock or warrants outstanding.

~~Table of Contents~~

~~Share Repurchases~~

In February 2019, our Board of Directors authorized repurchases of up to $1.5 billion of our common stock. Our share repurchase authorization permits us to purchase shares in both the open market and in private transactions, with the timing and number of shares dependent on a variety of factors, including price, general business conditions, market conditions, alternative investment opportunities and funding considerations. We are not obligated to repurchase any specific number of shares and may suspend or discontinue the program at any time.

~~There have been no share repurchases since the first quarter of 2020. Our remaining share repurchase authorization was $503 million as of June 30, 2022.~~cash tender offer.

~~10.~~8. Earnings (Loss) per Share

The computations of basic and diluted earnings per share were as follows:


			Three Months Ended June 30,				Six Months Ended June 30,						Three Months Ended June 30,				Six Months Ended June 30,
(In millions, except per share data)	(In millions, except per share data)		2022		2021		2022		2021		(In millions, except per share data)		2023		2022		2023		2022

Net income from continuing operations attributable to common shares	Net income from continuing operations attributable to common shares		$	141	$	113	$	630	$	176	Net income from continuing operations attributable to common shares		$	31	$	96	$	48	$	128

Net income (loss) from discontinued operations, net of amounts attributable to noncontrolling interest	Net income (loss) from discontinued operations, net of amounts attributable to noncontrolling interest		—		43		(1)		95		Net income (loss) from discontinued operations, net of amounts attributable to noncontrolling interest		2		45		(1)		501

Net income attributable to common shares, basic	Net income attributable to common shares, basic		$	141	$	156	$	629	$	271	Net income attributable to common shares, basic		$	33	$	141	$	47	$	629

Basic weighted-average common shares	Basic weighted-average common shares		115		112		115		109		Basic weighted-average common shares		116		115		116		115
		Dilutive effect of stock-based awards and warrants	1		1		1		4			Dilutive effect of stock-based awards	2		1		1		1
Diluted weighted-average common shares	Diluted weighted-average common shares		116		113		116		113		Diluted weighted-average common shares		118		116		117		116

Basic earnings from continuing operations per share	Basic earnings from continuing operations per share		$	1.23	$	1.01	$	5.49	$	1.61	Basic earnings from continuing operations per share		$	0.27	$	0.83	$	0.42	$	1.12
Basic earnings (loss) from discontinued operations per share	Basic earnings (loss) from discontinued operations per share		—		0.38		(0.01)		0.87		Basic earnings (loss) from discontinued operations per share		0.01		0.40		(0.01)		4.36
Basic earnings per share	Basic earnings per share		$	1.23	$	1.39	$	5.48	$	2.48	Basic earnings per share		$	0.28	$	1.23	$	0.41	$	5.48

Diluted earnings from continuing operations per share	Diluted earnings from continuing operations per share		$	1.22	$	1.00	$	5.45	$	1.56	Diluted earnings from continuing operations per share		$	0.27	$	0.83	$	0.41	$	1.11
Diluted earnings (loss) from discontinued operations per share	Diluted earnings (loss) from discontinued operations per share		—		0.38		(0.01)		0.84		Diluted earnings (loss) from discontinued operations per share		0.01		0.39		(0.01)		4.33
Diluted earnings per share	Diluted earnings per share		$	1.22	$	1.38	$	5.44	$	2.40	Diluted earnings per share		$	0.28	$	1.22	$	0.40	$	5.44

~~11.~~

Table of Contents

9. Commitments and Contingencies

We are involved, and ~~will~~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, environmental liability, commercial disputes, insurance coverage disputes and employment-related claims, including claims involving asserted breaches of employee restrictive covenants. These matters also include several class action and collective action cases involving claims that the contract carriers with which we contract for performance of delivery services, or their delivery workers, should be treated as employees, rather than independent contractors (“misclassification claims”) and may seek substantial monetary damages (including claims for unpaid wages, overtime, unreimbursed business expenses, deductions from wages, penalties and other items), injunctive relief, or both.

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 accruals for loss contingencies 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

~~Table of Contents~~

reasonably be considered to be 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. ~~The liability and excess umbrella insurance policies generally do not cover the misclassification claims described in this note.~~ 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.

~~Shareholder Litigation~~

~~On December 14, 2018, a putative class action captioned~~ ~~Labul v. XPO Logistics, Inc. et al.~~, was filed in the U.S. District Court for the District of Connecticut against us and some of our current and former executives, alleging violations of Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 10b-5 thereunder, and Section 20(a) of the Exchange Act, based on alleged material misstatements and omissions in our public filings with the U.S. Securities and Exchange Commission. On June 3, 2019, lead plaintiffs Local 817 IBT Pension Fund, Local 272 Labor-Management Pension Fund, and Local 282 Pension Trust Fund and Local 282 Welfare Trust Fund (together, the “Pension Funds”) filed a consolidated class action complaint. Defendants moved to dismiss the consolidated class action complaint on August 2, 2019. On November 4, 2019, the Court dismissed the consolidated class action complaint without prejudice to the filing of an amended complaint. The Pension Funds, on January 3, 2020, filed a first amended consolidated class action complaint against us and a current executive. Defendants moved to dismiss the first amended consolidated class action complaint on March 3, 2020. On March 19, 2021, the Court dismissed the first amended consolidated class action complaint with prejudice and closed the case. On April 29, 2021, the Pension Funds filed a notice of appeal. On June 30, 2022, the U.S. Court of Appeals for the Second Circuit affirmed the district court’s dismissal with prejudice of the first amended consolidated compliant. The Pension Funds did not petition for rehearing of the appellate decision by the July 14, 2022 deadline. The Pension Funds’ deadline to petition the U.S. Supreme Court for review is September 28, 2022. If the Pension Funds do not file such petition by that date, the case will be concluded.

~~Also, on May 13, 2019, Adriana Jez filed a purported shareholder derivative action captioned~~ ~~Jez v. Jacobs, et al.~~, (the “Jez complaint”) in the U.S. District Court for the District of Delaware, alleging breaches of fiduciary duty, unjust enrichment, waste of corporate assets, and violations of the Exchange Act against some of our current and former directors and officers, with the company as a nominal defendant. The Jez complaint was later consolidated with similar derivative complaints filed by purported shareholders Erin Candler and Kevin Rose under the caption ~~In re XPO Logistics, Inc. Derivative Litigation.~~ On December 12, 2019, the Court ordered plaintiffs to designate an operative complaint or file an amended complaint within 45 days. On January 27, 2020, plaintiffs designated the Jez complaint as the operative complaint in the consolidated cases. Defendants moved to dismiss the operative complaint on February 26, 2020. Rather than file a brief in opposition, on March 27, 2020, plaintiffs moved for leave to file a further amended complaint and to stay briefing on defendants’ motions to dismiss. The Court granted plaintiffs’ motion on July 6, 2020. On April 14, 2021, the Court issued an order staying proceedings pending resolution of an appeal in the Labul action. Plaintiffs stipulated that they would dismiss the shareholder derivative action with prejudice if the Labul dismissal was affirmed on appeal, including any petitions for rehearing. The Labul dismissal was affirmed on appeal on June 30, 2022, and the deadline for a rehearing petition passed on July 14, 2022. On July 26, 2022, the Court issued an order dismissing the Jez case with prejudice.

~~Table of Contents~~

Insurance Contribution Litigation

In April 2012, Allianz Global Risks US Insurance Company sued 18eighteen insurance companies in a case captioned Allianz Global Risks US Ins. Co. v. ACE Property & Casualty Ins. Co., et al., Multnomah County Circuit Court (Case No. 1204-04552). Allianz Global Risks US Ins. Co. (“Allianz”) sought contribution on environmental and product liability claims that Allianz agreed to defend and indemnify on behalf of its insured, Daimler Trucks North America (“DTNA”). Defendants had insured Freightliner’s assets, which DTNA acquired in 1981. Con-way, Freightliner’s former parent company, intervened. We acquired Con-way in 2015. Con-way and Freightliner had self-insured under fronting agreements with defendant insurers ACE, Westport, and General. Under those agreements, Con-way agreed to indemnify the fronting carriers for damages assessed under the fronting policies. Con-way’s captive insurer, Centron, was also a named defendant. After a seven-week jury trial in 2014, the jury found that Con-way and the fronting insurers never intended that the insurers defend or indemnify any claims against Freightliner. In June 2015, Allianz appealed to the Oregon Court of Appeals. In May 2019, the Oregon Court of Appeals upheld the jury verdict. In September 2019, Allianz appealed to the Oregon Supreme Court. In March 2021, the Oregon Supreme Court reversed the jury verdict, holding that it was an error to allow the jury to decide how the parties intended the fronting policies to operate, and also holding that the trial court improperly instructed the jury concerning one of the pollution exclusions at issue. In July of 2021, the matter was remanded to the trial court for further proceedings consistent with the Oregon Supreme Court’s decision. ~~There is no date yet set for~~The trial court recently decided the ~~next stages of the proceeding. The parties have filed~~parties’ cross-motions for summary judgment, ~~concerning~~leaving open the ~~interpretation of certain of the fronting policies, which are yet to be decided. Following summary judgment, we anticipate a jury~~pollution exclusion and allocation issues. The trial on the pollution exclusion ~~then a bench~~issue is scheduled to take place in the spring of 2024, and the trial on allocation of defense costs among the ~~subject~~applicable insurance ~~policies.~~policies is set for the fall of 2024. We have accrued an immaterial amount for the potential exposure associated with Centron in the bench trial regarding allocation. As any losses that may arise in connection with the fronting policies issued by defendant insurers ACE, Westport, and General are not reasonably estimable at this time, no liability has been accrued in the accompanying interim consolidated financial statements for those potential exposures.

2117

Table of Contents

California Environmental Matters

In August 2022, the Company received a letter from the San Bernardino County District Attorney’s Office, 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. The Company has met with the County attorneys and the Los Angeles City Attorney on multiple occasions. We are assessing the allegations and the underlying facts, and continue to engage with the County and Los Angeles City Attorneys to address the alleged violations. No discussion of potential monetary sanctions or settlement amount has occurred to date, nor can we reasonably estimate potential costs at this time.

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q and other written reports and oral statements we make from time to time contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. In some cases, forward-looking statements can be identified by the use of forward-looking terms such as “anticipate,” “estimate,” “believe,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “should,” “will,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target,” “trajectory” or the negative of these terms or other comparable terms. However, the absence of these words does not mean that the statements are not forward-looking. These forward-looking statements are based on certain assumptions and analyses made by the ~~company~~Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions that may cause actual future results, levels of activity, performance or achievements to be materially different from ~~any~~our expected future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause or contribute to a material difference include those discussed below and the risks discussed in the ~~company’s~~Company’s other filings with the Securities and Exchange Commission (the “SEC”). All forward-looking statements set forth in this Quarterly Report are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by the ~~company~~Company will be realized or, even if substantially realized, that they will have the expected consequence to or effects on the ~~company~~Company or its business or operations. The following discussion should be read in conjunction with the ~~company’s~~Company’s unaudited Condensed Consolidated Financial Statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q, and with the audited consolidated financial statements and related notes thereto included in the ~~2021~~Annual Report on Form ~~10-K.~~10-K for the year ended December 31, 2022 (the “2022 Form 10-K”). Forward-looking statements set forth in this Quarterly Report on Form 10-Q speak only as of the date hereof, and we do not undertake any obligation to update forward-looking statements to reflect subsequent events or circumstances, changes in expectations or the occurrence of unanticipated events, except to the extent required by law.

Executive Summary

XPO, ~~Logistics,~~ Inc., together with its subsidiaries (“XPO,” “we” or ~~“we”~~the “Company”), is a leading provider of freight transportation ~~services.~~services with company-specific avenues for value creation. We use our proprietary technology to move goods efficiently through our customers’ supply chains ~~primarily by providing less-than-truckload (“LTL”)~~in North America and ~~truck brokerage services. These two core lines~~Europe. As of ~~business generated the majority of our 2021 revenue~~June 30, 2023, we had approximately 37,000 employees and ~~operating income.~~562 locations in 17 countries serving approximately 49,000 customers.

Our company has two reportable ~~segments — (i)~~segments: North American Less-Than-Truckload (“LTL”), the largest component of our business, and European Transportation. Our North American LTL ~~and (ii) Brokerage and Other Services — and within each~~ segment we are a leading provider in vast, fragmented transportation sectors with growing penetration. As of June 30, 2022, we had over 43,000 employees and 749 locations in 20 countries serving approximately 50,000 multinational, national, regional and local customers. We believe that our substantial exposure to secular industry growth trends, our first-mover advantage as an innovator, our blue-chip customer relationships and our company-specific avenues for value creation are compelling competitive advantages.

~~2022 Planned RXO Spin-Off~~

~~On March 8, 2022, we announced that our Board of Directors approved a strategic plan to pursue~~includes the ~~spin-off~~results of our ~~tech-enabled brokered transportation platform~~trailer manufacturing operations.

North American Less-Than-Truckload Segment

LTL in North America is a bedrock industry providing a critical service to the economy, with favorable pricing dynamics and a stable competitive landscape. We have one of the largest LTL networks in North America, with approximately 8% share of the $59 billion U.S. market as ~~a publicly traded company. In addition, the Board~~ of ~~Directors authorized two divestitures: our North American intermodal operation, which we sold in March 2022, and the divestiture~~December 31, 2022.

One of our ~~European business.~~

LTL competitors recently ceased operations. The ~~spin-off~~impact of this development on our operations and financial performance is uncertain and difficult to ~~XPO shareholders, if completed as planned, will result in two independent, publicly traded companies with simplified~~predict. We believe it could have both positive and challenging effects on our business, ~~models~~operations, and ~~clearly delineated value propositions. The spin-off company will be RXO, Inc. (“RXO”)~~future financial performance. It is uncertain how the freight volume and will be comprised of our asset-light core truck brokerage business and complementary brokered services for managed transportation, last mile logistics and global forwarding. The remaining company, XPO, will be the third largest pure-play provider of asset-based LTL service in North America. The planned spin-off transaction, which is intended to be tax-free to XPO and our shareholders for U.S. federal income tax purposes, will

2219

Table of Contents

~~result in XPO shareholders owning stock in both XPO~~customers that had been handled and ~~RXO. In connection with the transaction, it is anticipated that a portion of XPO’s outstanding debt~~served by this competitor will be ~~repaid using proceeds from debt incurred by RXO.~~

We currently expect to complete the RXO spin-off transaction in the fourth quarter of 2022, subject to various conditions, including the effectiveness of a Form 10 registration statement, receipt of a tax opinion from counsel, the refinancing of XPO’s debt on terms satisfactory to our Board of Directors, and final approvalabsorbed by the ~~Board~~remaining market participants.

Our LTL sales and service professionals and network of ~~Directors, among other requirements.~~

~~There can be no assurance that any strategic transaction will occur, or if one or more do occur, of the terms or timing.~~

~~2022 Divestiture of North American Intermodal~~

In March 2022, we sold our North American intermodal operation for cash proceeds of approximately $705 million, net of cash disposed and subject to customary post-closing working capital adjustments that remain ongoing. We recorded a $450 million pre-tax gain on the sale, net of transaction costs, during the first quarter of 2022. During the second quarter of 2022, we recognized a working capital adjustment of $16 million, which reduced the gain initially recognized in the first quarter of 2022. We agreed to provide certain specified customary transition services for a period not exceeding 12 months from the sale. The intermodal operation was included in our Brokerage and Other Services segment through the date of the sale.

~~2021 Spin-Off of the Logistics Segment~~

On August 2, 2021, we completed the spin-off of our logistics segment as GXO Logistics, Inc. (“GXO”). The historical results of our logistics segment are presented as discontinued operations in our Condensed Consolidated Financial Statements. For information on our discontinued operations, see Note 2—Discontinued Operations.

~~North American Less-Than-Truckload Segment~~

~~XPO has one of the largest networks of~~drivers, tractors, trailers and terminals ~~in the North American LTL industry, with~~serve approximately ~~8% share of a $51 billion U.S. market. The LTL industry~~29,000 customers in North ~~America has favorable fundamentals,~~America. We provide shippers with substantial barriers to entry, durable end-market demand, secular tailwinds and strong pricing dynamics. XPO delivered approximately 18 billion pounds of freight during 2021. Once the planned RXO spin-off is complete, we will be the third largest pure-play provider of LTL transportation in North America.

~~We serve approximately 25,000 customers with~~critical geographic density and day-definite ~~regional, national~~domestic and cross-border services ~~that reach~~to approximately 99% of U.S. zip codes, as well as ~~cross-border service to~~ Mexico, Canada and the Caribbean. ~~Our~~Together, our capacity ~~gives~~and reach give us the ability to manage large freight volumes ~~more~~ efficiently and balance our network to leverage fixed costs. For the trailing 12 months ended June 30, 2023, we delivered approximately 18 billion pounds of freight.

Importantly, our LTL business historically has generated a high return on invested capital and robust free cash flow. This ~~allows us to further develop~~supports our ongoing investments in the expansion of our network capacity and the enhancement of our proprietary ~~technology and invest in numerous other growth and optimization initiatives.~~technology. We are managing the business to specific objectives, such as high customer service scores for on-time delivery and damage-free freight, the optimal sourcing of linehaul transportation, and the addition of 900 net new doors to our ~~network~~terminal footprint by the first quarter of 2024 from an October 2021 ~~to year-end 2023. From October 31,~~baseline. Since implementing our LTL 2.0 growth plan in the fourth quarter of 2021, ~~through June 30, 2022,~~ we added ~~five new~~six terminals to our network, representing ~~345~~473 net new doors.

Additionally, we are continuing to execute on a host of ~~idiosyncratic~~ initiatives that are ~~XPO-specific~~specific to XPO and largely independent of the macroeconomic environment. ~~The ongoing deployment of our proprietary LTL technology encompasses multiple levers for value creation unique to our company. As other examples, we added a second production line~~We produced 4,705 trailers at our in-house trailer manufacturing facility in ~~January and doubled our output run-rate.~~2022, nearly doubling the 2021 output. Our goal is to produce more than 6,000 trailers in 2023. We are also investing in expanding the ~~next generation~~number of ~~truck~~ drivers trained at our 130 commercial driver schools. Our in-house ~~training~~trailer manufacturing and driver schools ~~and targeting~~are examples of idiosyncratic, self-reliant capabilities that are advantageous to ~~train twice as many~~XPO, particularly when industry constraints on equipment or drivers ~~in 2022 as in 2021.~~exist.

~~Table of Contents~~

Specific to our technology, we believe we have a large opportunity to drive further ~~improve the~~growth and profitability ofin our LTL network through ~~innovation, beyond~~innovation. For further information, see the ~~large gain~~“Technology and Sustainability” section below.

European Transportation Segment

XPO has a unique pan-European transportation platform with leading positions in ~~operating margin achieved to date. We use intelligent route-building to move~~key geographies: we are the #1 full truckload broker and the #1 pallet network (LTL) provider in France; the #1 full truckload broker and the #1 LTL ~~freight across North America,~~provider in Iberia (Spain and ~~proprietary visualization tools to help reduce the cost of pickups and deliveries. Our XPO Smart~~® productivity tools are installed in our cross-dock operations, and we recently deployed new cost models and tracking capabilities. Our largest opportunity is related to our proprietary pricing technology, which includes automated, dynamic pricing for local accountsPortugal); and a ~~new pricing platform utilized by our pricing experts for larger accounts.~~

~~Brokerage and Other Services Segment~~

~~XPO is the fourth largest~~top-tier dedicated truckload ~~transportation broker~~provider in the ~~U.S.~~ U.K., where we also have the largest single-owner LTL network. We serve a large base of customers within the consumer, trade and industrial markets, including many sector leaders that have long-tenured relationships with us.

Our ~~asset-light~~range of services in Europe encompasses dedicated truckload, LTL, truck brokerage, ~~business places shippers’~~managed transportation, last mile, freight ~~with qualified independent carriers using~~forwarding and, increasingly, multimodal solutions, such as road-rail and road-short sea combinations that we tailor to customer needs. Our operators use our ~~XPO Connect~~® technology platform. We price this service on either a contract or a spot basis, with 73% of our revenue in the second quarter of 2022 derived from customer contracts, and we operate with a variable cost structure that adjusts quickly to market changes. We derive our revenue from diversified industry verticals, and we have many long-standing, blue-chip customer relationships — on average, our top 10 customers have a 15-year tenure with us.

Our truck brokerage business has a long track record of generating top-line growth and margin expansion, a high return on invested capital and strong free cash flow. Notable factors driving our performance include our access to massive truckload capacity for shippers through our carrier relationships, our strong management expertise, our company-specific avenues for value creation led by our cutting-edge technology, and favorable industry tailwinds.

Broker penetration of for-hire truckload transportation has doubled in the last 15 years, and is still less than 25%. We have approximately 4% share of the $88 billion U.S. brokered truckload industry, giving us a long runway for revenue growth — the total addressable for-hire trucking market in 2021 was estimated to be approximately $400 billion. Demand for truckload capacity in the e-commerce and omnichannel retail sectors continues to be robust, and more and more shippers are outsourcing to brokers, while increasingly preferring brokers like XPO that offer digital capabilities.

As of June 30, 2022, we had relationships with approximately 98,000 independent truckload carriers in North America, representing more than one and a half million trucks. These relationships enable us to serve high demand without taking on high fixed costs. Even though we don’t own the trucks or employ the drivers that transport our customers’ freight, shippers view us as a highly reliable core carrier due to our operational excellence and reliability.

~~Our~~proprietary XPO Connect® ~~brokerage platform is another major differentiator for~~technology to manage these services within our ~~business, together with our pricing technology,~~digital ecosystem in Europe.

Technology and Sustainability

One of the ways in which we ~~believe can unlock incremental profitable growth well beyond~~deliver superior service to our ~~current levels.~~ customers is by empowering our employees with technology. Our industry is evolving, and customers want to de-risk their supply chains by forming relationships with reliable service providers that have invested in innovation.

We ~~bring together seasoned transportation experts~~have built a highly scalable ecosystem on the cloud that deploys our software consistently across our operating footprint. In our North American LTL business, the caliber of our technology is mission-critical to our success; it optimizes linehaul, pickup-and-delivery and ~~master technologists to transform truck brokerage through digitization, making~~pricing — the ~~process more productive for shippers, carriers and our company. Through July 2022, cumulative truck driver downloads~~main components of the ~~mobile app for XPO Connect~~® ~~were over 800,000.~~

~~The impact~~service we provide. An LTL network of ~~XPO Connect~~® ~~is pervasive throughout~~ our ~~brokerage operations. As~~scale has hundreds of thousands of activities underway at any given time, all managed on our technology. For the trailing 12 months ended June 30, ~~2022, approximately 80%~~2023, we moved 18 billion pounds of freight 778 million miles, including moving linehaul freight an average of 2.5 million miles a day.

With intelligent route-building, we can reduce empty miles in our ~~truck brokerage orders in North America were created or covered digitally. From 2013 through 2021, the compound annual growth rate (“CAGR”)~~linehaul network, improve load factor and mitigate cargo damage. Our proprietary bypass models make recommendations to enhance trailer utilization, assimilating massive amounts of ~~our truck brokerage revenue was 27.4% — approximately three times the U.S. brokered truckload industry CAGR of 9.6% — in part because larger customers communicate digitally with XPO Connect~~® ~~through APIs~~data and ~~other integrations,~~taking volume, density, and ~~our automation makes our brokerage team more efficient at tendering loads.~~

Our Brokerage and Other Services segment also includes asset-light, complementary brokered services for managed transportation, including expedited ground and air charter capabilities, last mile logistics for heavy goods and global forwarding, all of whichfreight dimensions into account. We use our ~~technology. Our European business is also reported within this segment.~~

visualization tools to reduce costs with pickups and deliveries, and we developed piece-level tracking to identify

2420

Table of Contents

~~Technology~~individual pallets to enhance shipment loading and ~~Sustainability~~

~~Our proprietary technology is~~visibility. We also developed a ~~major competitive advantage~~robust pricing platform for ~~us across our service lines. Our company has been investing in transportation automation, data science~~contractual account management and ~~digitization~~automated, dynamic pricing for more than a decade, well ahead of the industry curve, to innovate how goods move through supply chains. We believe that we are well-positioned to satisfy customer demands for faster, more efficient supply chains with greater visibility, while enhancing revenue and profitability.local accounts.

Importantly, our technology also helps our company ~~and customers~~ meet ~~our respective~~its environmental, social and governance (“ESG”) goals, such as a reduction in ~~the~~our carbon footprint, ~~of certain supply chain operations.~~and can help our customers meet their own goals. For a detailed discussion of our philosophy relating to innovation and ESG matters, see the ~~Executive~~Company Overview included in our ~~2021~~2022 Form 10-K, as well as our current Sustainability Report at sustainability.xpo.com.

~~Impacts of COVID-19 and Other Notable External Conditions~~

As a leading provider of freight transportation services, our business can be impacted to varying degrees by factors beyond our control. The COVID-19 pandemic that emerged in 2020 affected, and may continue to affect, economic activity broadly and customer sectors served by our industry. Labor shortages, particularly a shortage of truck drivers and dockworkers, and equipment shortages continue to present challenges to many transportation-related industries. Additionally, disruptions in supply chains for industrial materials and supplies, such as semiconductor chips, have impacted some of the end-market activities that create demand for our services. We cannot predict how long these dynamics will last, or whether future challenges, if any, will adversely affect our results of operations. To date, the totality of the actions we have taken during the pandemic, and continue to take in the recovery, have mitigated the impact on our profitability relative to the impact on our revenue and volumes, while our strong liquidity and disciplined capital management enable us to continue to invest in growth initiatives.

Additionally, economic inflation can have a negative impact on our operating costs. A prolonged period of inflation could cause interest rates, fuel, wages and other costs to continue to increase, which would adversely affect our results of operations unless our pricing to our customers correspondingly increases. For the three and six months ended June 30, 2022, a combination of growing demand for freight transportation services, the ongoing truck driver shortage and rising fuel prices resulted in higher transportation procurement costs; these costs were offset by mechanisms in our customer contracts, including fuel surcharge clauses and general rate increases. An economic recession could depress customer demand for transportation services and adversely affect our results of operations.

Regarding the war between Russia and Ukraine, we have no direct exposure to those geographies. We cannot predict how global supply chain activities or the economy at large may be impacted by a prolonged war in Ukraine or sanctions imposed in response to the war, or whether future conflicts, if any, may adversely affect our results of operations.

~~Table of Contents~~

Consolidated Summary Financial Table

Three Months Ended June 30, Percent of Revenue Change Six Months Ended June 30, Percent of Revenue Change
(Dollars in millions) 2022 2021 2022 2021 2022 vs. 2021 2022 2021 2022 2021 2022 vs. 2021
Revenue $ 3,232 $ 3,186 100.0 % 100.0 % 1.4 % $ 6,705 $ 6,175 100.0 % 100.0 % 8.6 %
Cost of transportation and services
(exclusive of depreciation and amortization)
2,153 2,186 66.6 % 68.6 % (1.5) % 4,590 4,239 68.5 % 68.6 % 8.3 %
Direct operating expense (exclusive of
depreciation and amortization)
365 358 11.3 % 11.2 % 2.0 % 750 692 11.2 % 11.2 % 8.4 %
Sales, general and administrative
expense
324 324 10.0 % 10.2 % — % 668 662 10.0 % 10.7 % 0.9 %
Depreciation and amortization expense 115 120 3.6 % 3.8 % (4.2) % 231 239 3.4 % 3.9 % (3.3) %
(Gain) loss on sale of business 16 — 0.5 % — % NM (434) — (6.5) % — % NM
Transaction and integration costs 25 6 0.8 % 0.2 % 316.7 % 35 11 0.5 % 0.2 % 218.2 %
Restructuring costs 4 1 0.1 % — % 300.0 % 10 2 0.1 % — % 400.0 %
Operating income 230 191 7.1 % 6.0 % 20.4 % 855 330 12.8 % 5.3 % 159.1 %
Other income (15) (10) (0.5) % (0.3) % 50.0 % (29) (26) (0.4) % (0.4) % 11.5 %
Debt extinguishment loss 26 — 0.8 % — % NM 26 8 0.4 % 0.1 % 225.0 %
Interest expense 31 58 1.0 % 1.8 % (46.6) % 68 123 1.0 % 2.0 % (44.7) %
Income from continuing operations
before income tax provision
188 143 5.8 % 4.5 % 31.5 % 790 225 11.8 % 3.6 % 251.1 %
Income tax provision 47 30 1.5 % 0.9 % 56.7 % 160 49 2.4 % 0.8 % 226.5 %
Income from continuing operations 141 113 4.4 % 3.5 % 24.8 % 630 176 9.4 % 2.9 % 258.0 %
Income (loss) from discontinued
operations, net of taxes
— 45 — % 1.4 % NM (1) 100 — % 1.6 % NM
Net income $ 141 $ 158 4.4 % 5.0 % (10.8) % $ 629 $ 276 9.4 % 4.5 % 127.9 %


	Three Months Ended June 30,				Percent of Revenue				Change		Six Months Ended June 30,				Percent of Revenue				Change
(Dollars in millions)	2023		2022		2023		2022		2023 vs. 2022		2023		2022		2023		2022		2023 vs. 2022
Revenue	$	1,917	$	2,047	100.0	%	100.0	%	(6.4)	%	$	3,824	$	3,941	100.0	%	100.0	%	(3.0)	%
Salaries, wages and employee benefits	783		752		40.8	%	36.7	%	4.1	%	1,545		1,477		40.4	%	37.5	%	4.6	%
Purchased transportation	444		525		23.2	%	25.6	%	(15.4)	%	901		1,035		23.6	%	26.3	%	(12.9)	%
Fuel, operating expenses and supplies	390		434		20.3	%	21.2	%	(10.1)	%	817		852		21.4	%	21.6	%	(4.1)	%
Operating taxes and licenses	15		13		0.8	%	0.6	%	15.4	%	30		29		0.8	%	0.7	%	3.4	%
Insurance and claims	46		48		2.4	%	2.3	%	(4.2)	%	90		104		2.4	%	2.6	%	(13.5)	%
Gains on sales of property and equipment	(2)		(1)		(0.1)	%	—	%	100.0	%	(5)		(2)		(0.1)	%	(0.1)	%	150.0	%
Depreciation and amortization expense	107		96		5.6	%	4.7	%	11.5	%	208		190		5.4	%	4.8	%	9.5	%

Transaction and integration costs	17		7		0.9	%	0.3	%	142.9	%	39		14		1.0	%	0.4	%	178.6	%
Restructuring costs	10		2		0.5	%	0.1	%	400.0	%	34		8		0.9	%	0.2	%	325.0	%
Operating income	107		171		5.6	%	8.4	%	(37.4)	%	165		234		4.3	%	5.9	%	(29.5)	%
Other income	(3)		(13)		(0.2)	%	(0.6)	%	(76.9)	%	(8)		(27)		(0.2)	%	(0.7)	%	(70.4)	%
Debt extinguishment loss	23		26		1.2	%	1.3	%	(11.5)	%	23		26		0.6	%	0.7	%	(11.5)	%
Interest expense	43		31		2.2	%	1.5	%	38.7	%	85		68		2.2	%	1.7	%	25.0	%
Income from continuing operations before income tax provision	44		127		2.3	%	6.2	%	(65.4)	%	65		167		1.7	%	4.2	%	(61.1)	%
Income tax provision	13		31		0.7	%	1.5	%	(58.1)	%	17		39		0.4	%	1.0	%	(56.4)	%
Income from continuing operations	31		96		1.6	%	4.7	%	(67.7)	%	48		128		1.3	%	3.2	%	(62.5)	%
Income (loss) from discontinued operations, net of taxes	2		45		0.1	%	2.2	%	(95.6)	%	(1)		501		—	%	12.7	%	(100.2)	%
Net income	$	33	$	141	1.7	%	6.9	%	(76.6)	%	$	47	$	629	1.2	%	16.0	%	(92.5)	%

~~NM - Not meaningful~~

Three and Six Months Ended June 30, ~~2022~~2023 Compared with Three and Six Months Ended June 30, ~~2021~~2022

~~Revenue~~Our consolidated revenue for the second quarter of ~~2022 increased 1.4%~~2023 decreased 6.4% to ~~$3.2~~$1.9 billion, compared with the same quarter in ~~2021. Revenue~~2022. Our consolidated revenue for the first six months of ~~2022 increased 8.6%~~2023 decreased 3.0% to ~~$6.7~~$3.8 billion, compared with the same period in 2021. Revenue in the second quarter and first six months of 2022 compared to the same periods in 2021 reflects growth in our LTL segment and our North American truck brokerage operation, and includes the impact of increased revenue from fuel surcharges.2022. The ~~increase~~decrease in both periods ~~was partially offset by the sale of our North American intermodal operation~~reflects a decline in ~~March 2022, which reduced~~fuel surcharge revenue, ~~growth~~due primarily to lower diesel prices. Foreign currency movement increased revenue by approximately ~~8.4~~0.6 percentage points in the second quarter of ~~2022~~2023 and ~~2.8~~decreased revenue by approximately 0.9 percentage points in the first six months of ~~2022. Additionally, foreign currency movement reduced revenue by approximately 2.3 percentage points in the second quarter of 2022 and 1.7 percentage points in the first six months of 2022.~~

Cost of transportation and services (exclusive of depreciation and amortization) includes the cost of providing or procuring freight transportation for XPO customers and salaries paid to employee drivers in our LTL and truck brokerage businesses.2023.

2621

Table of Contents

~~Cost of transportation~~Salaries, wages and ~~services (exclusive of depreciation~~employee benefits includes compensation-related costs for our employees, including salaries, wages, healthcare-related costs and ~~amortization)~~payroll taxes, and covers drivers and dockworkers, operations and facility workers and employees in support roles and other positions. Salaries, wages and employee benefits for the second quarter of ~~2022~~2023 was ~~$2.2 billion,~~$783 million, or ~~66.6%~~40.8% of revenue, compared with ~~$2.2 billion,~~$752 million, or ~~68.6%~~36.7% of revenue, for the same quarter in ~~2021. Cost of transportation~~2022. Salaries, wages and ~~services (exclusive of depreciation and amortization)~~employee benefits for the first six months of ~~2022~~2023 was ~~$4.6~~$1.55 billion, or ~~68.5%~~40.4% of revenue, compared with ~~$4.2~~$1.48 billion, or ~~68.6%~~37.5% of revenue, for the same period in ~~2021.~~2022. The year-over-year increase as a percentage of revenue in both periods primarily reflects the impact of inflation on our cost base and the insourcing of a greater proportion of linehaul from third-party transportation providers, partially offset by lower headcount during the second quarter of 2023.

Purchased transportation includes costs of procuring third-party freight transportation. Purchased transportation for the second quarter of 2023 was $444 million, or 23.2% of revenue, compared with $525 million, or 25.6% of revenue, for the same quarter in 2022. Purchased transportation for the first six months of 2023 was $901 million, or 23.6% of revenue, compared with $1.0 billion, or 26.3% of revenue, for the same period in 2022. The year-over-year decrease as a percentage of revenue in both periods primarily reflects lower rates paid to third-party providers for purchased transportation miles and the ~~sale~~insourcing of ~~our intermodal operation. Additionally impacting the decrease as~~ a ~~percentage~~greater proportion of ~~revenue in the second quarter of 2022 was lower~~linehaul from third-party transportation ~~costs, which were partially offset by higher fuel costs. For the six-month period, higher fuel costs as a percentage of revenue were partially offset by lower compensation costs.~~providers.

~~Direct~~Fuel, operating expenses ~~(exclusive~~and supplies includes the cost of ~~depreciation~~fuel purchased for use in our vehicles as well as related taxes, maintenance and ~~amortization) are comprised of both fixed~~lease costs for our equipment, including tractors and ~~variable expenses and include operating~~trailers, costs related to operating our ~~LTL service centers. Direct operating expenses (exclusive of depreciation~~owned and ~~amortization) consist mainly of personnel costs, facility and equipment expenses, such as rent, utilities, equipment maintenance and repair, costs of materials and supplies,~~leased facilities, bad debt expense, third-party professional fees, information technology expenses and ~~gains~~supplies expense. Fuel, operating expenses and ~~losses on sales of property and equipment.~~

~~Direct operating expense (exclusive of depreciation and amortization)~~supplies for the second quarter of ~~2022~~2023 was ~~$365~~$390 million, or ~~11.3%~~20.3% of revenue, compared with ~~$358~~$434 million, or ~~11.2%~~21.2% of revenue, for the same quarter in ~~2021. Direct~~2022. Fuel, operating ~~expense (exclusive of depreciation~~expenses and ~~amortization)~~supplies for the first six months of ~~2022~~2023 was ~~$750~~$817 million, or ~~11.2%~~21.4% of revenue, compared with ~~$692~~$852 million, or ~~11.2%~~21.6% of revenue, for the same period in ~~2021.~~2022. The ~~increase in direct operating expense~~year-over-year decrease in both periods primarily reflects lower gains on sales of property and equipment and higher compensation costs. Direct operating expense for the second quarters of 2022 and 2021 included $2 million and $7 million, respectively, and the first six months of 2022 and 2021 included $2 million and $30 million, respectively, of gains on sales of property and equipment. As a percentage of revenue, direct operating expense for the six-month period reflects the lower gains on sales of property and equipmentfuel costs, partially offset by ~~the leveraging of compensation~~higher lease costs ~~across a larger revenue base.~~

~~Sales, general~~ and administrative expense (“SG&A”) primarily consists of salaries and commissions for the sales function, salary and benefit costs for executive and certain administration functions, professional fees, facility costs, bad debt ~~expense~~expense.

Operating taxes and ~~legal costs.~~

~~SG&A~~licenses includes tax expenses related to our vehicles and our owned and leased facilities as well as license expenses to operate our vehicles. Operating taxes and licenses for the second quarter of ~~2022~~2023 was ~~$324~~$15 million, ~~or 10.0% of revenue,~~ compared with ~~$324~~$13 million ~~or 10.2% of revenue,~~ for the same quarter in ~~2021. SG&A~~2022. Operating taxes and licenses for the first six months of ~~2022~~2023 was ~~$668~~$30 million, ~~or 10.0% of revenue,~~ compared with ~~$662~~$29 million ~~or 10.7% of revenue,~~ for the same period in ~~2021. Higher compensation~~2022.

Insurance and claims includes costs ~~were offset by lower third-party professional~~related to vehicular and ~~consulting fees in~~cargo claims for both purchased insurance and self-insurance programs. Insurance and claims for the second quarter of 2023 was $46 million, compared with $48 million for the same quarter in 2022. ~~For~~Insurance and claims for the ~~six-month~~first six months of 2023 was $90 million, compared with $104 million for the same period ~~higher compensation, travel and entertainment and insurance costs were partially offset by lower third-party professional and consulting fees. As a percentage of revenue, the~~in 2022. The year-over-year decrease in both periods ~~was primarily driven by~~reflects lower third-party professional and consulting fees. Additionally, the year-over-year decrease as a percentage of revenue in the six-month period reflects the leveraging of compensation costs across a larger revenue base.cargo insurance expense due to improved operating performance related to damaged shipments.

Depreciation and amortization expense for the second quarter of ~~2022~~2023 was ~~$115~~$107 million, compared with ~~$120~~$96 million for the same quarter in ~~2021.~~2022. Depreciation and amortization expense for the first six months of ~~2022~~2023 was ~~$231~~$208 million, compared with ~~$239~~$190 million for the same period in ~~2021.~~2022. The ~~decrease~~year-over-year increase in both periods ~~reflected~~reflects the ~~sale~~impact of ~~our intermodal operation.~~

(Gain) loss on sale of business was a gain of $434 million, net of transaction costs, for the first six months of 2022 as we sold our intermodal operation during the first quarter of 2022. During the second quarter of 2022, we recognized a working capital ~~adjustment of $16 million, which decreased the gain initially recognized~~investments, in ~~the first quarter of 2022. For more information, see Note 3—Divestiture to our Condensed Consolidated Financial Statements.~~particular tractors and trailers.

Transaction and integration costs for the second quarter of ~~2022~~2023 were ~~$25~~$17 million, compared with $6$7 million for the same quarter in ~~2021.~~2022. Transaction and integration costs for the first six months of ~~2022~~2023 were ~~$35~~$39 million, compared with ~~$11~~$14 million for the same period in ~~2021.~~2022. Transaction and integration costs for the second quarter and first six months of 2023 are primarily comprised of stock-based compensation and retention awards for certain employees related to strategic initiatives. Transaction and integration costs for the second quarter and first six months of 2022 ~~and 2021~~ are primarily comprised of third-party professional fees related to strategic initiatives ~~including the spin-offs and other divestment activities,~~ as well as retention awards paid to certain employees.

~~Table of Contents~~

We expect to incur additional transaction and integration costs related to stock-based compensation in 2023 and 2024.

Restructuring costs for the second quarter of ~~2022 were $4 million, compared with $1 million for the same quarter in 2021. Restructuring costs for the first six months of 2022~~2023 were $10 million, compared with $2 million for the same quarter in 2022. Restructuring costs for the first six months of 2023 were $34 million, compared with $8 million for the same period in ~~2021.~~2022. We engage in restructuring actions as part of our ongoing efforts to best use our resources and infrastructure, including actions in connection with spin-offs and other divestment activities. For more information, see Note 6—5—Restructuring Charges to our Condensed Consolidated Financial Statements. ~~We may incur incremental restructuring costs in 2022 in connection with the planned spin-off~~

Table of ~~our North American brokered transportation platform or for other reasons; however, we are currently unable to reasonably estimate these costs.~~Contents

Other income primarily consists of pension income. Other income for the second quarter of ~~2022~~2023 was ~~$15~~$3 million, compared with ~~$10~~$13 million for the same quarter in ~~2021.~~2022. Other income for the first six months of ~~2022~~2023 was ~~$29~~$8 million, compared with ~~$26~~$27 million for the same period in ~~2021.~~2022. The ~~increase~~year-over-year decrease in both periods isreflects lower net periodic pension income in 2023 primarily ~~related~~due to a rise in interest rates and a lower ~~foreign currency losses in~~expected return on plan assets.

Debt extinguishment loss was $23 million for the second quarter and first six months of ~~2022.~~

~~Debt extinguishment loss was~~2023 and $26 million for the second quarter and first six months of ~~2022 and $8 million for the first six months of 2021. There was no debt extinguishment loss in~~2022. In the second quarter of ~~2021.~~2023, we refinanced our Existing Term Loan Facility (as defined below) and wrote-off $12 million of debt issuance costs related to debt extinguished. Additionally, we expensed $11 million of new debt issuance costs related to the portion of the New Term Loan Facility and Senior Notes (both as defined below) accounted for as a modification. In the second quarter of 2022, we redeemed a portion of our outstanding 6.25% senior notes due 2025 (“Senior Notes due 2025”) and wrote-off related debt issuance costs. In the first six months of 2021, we redeemed our outstanding senior notes due 2022 and wrote-off related debt issuance costs, as well as incurred costs related to the amendment of our Senior Secured Term Loan Credit Agreement (the “Term Loan Credit Agreement”).

Interest expense ~~decreased~~increased to $43 million for the second quarter of 2023 from $31 million for the second quarter of ~~2022 from $58~~2022. Interest expense increased to $85 million for the ~~second quarter~~first six months of ~~2021. Interest expense decreased to~~2023 from $68 million for the first six months of ~~2022 from $123 million for~~2022. The increase in both periods is primarily due to higher floating interest rates, partially offset by the ~~first six months~~impact of ~~2021. The decrease~~the redemption of $1.1 billion of our Senior Notes due 2025 in ~~interest expense reflects lower average total indebtedness in the second quarter and first six months of~~ 2022.

Our effective income tax rates were ~~24.8%~~28.8% and ~~20.9%~~24.5% for the second quarter of ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~20.2%~~25.4% and ~~21.7%~~23.3% for the first six months of ~~2022~~2023 and ~~2021,~~2022, respectively. The effective tax rates for the second quarter and six-month periods of ~~2022~~2023 and ~~2021~~2022 were based on forecasted full-year effective tax rates, adjusted for discrete items that occurred within the periods presented. The increase in our effective income tax rate for the second quarter of 2023 compared to the same quarter of 2022 was primarily driven by forecasted non-deductible executive compensation expense, partially offset by a tax benefit of $1 million from return to provision adjustments. The primary ~~items~~item impacting the effective tax rate for the second quarter of 2022 ~~compared to the same quarter in 2021 included a reduction in tax expense of $4 million from the sale of our intermodal operation and~~was a tax benefit of $1 million from stock-based compensation.

The ~~primary items impacting the~~increase in our effective income tax rate for the ~~second quarter~~first six months of ~~2021 were a tax benefit of $5 million from changes~~2023 compared to the same period in ~~reserves for uncertain tax positions~~2022 was primarily driven by forecasted non-deductible executive compensation expense, partially offset by ~~a tax expense of~~ $2 million of discrete tax benefits from ~~return to provision adjustments.~~

revaluing deferred state taxes. The primary ~~items~~item impacting the effective tax rate for the first six months of 2022 compared to the same period in 2021 included a tax expense of $74 million from the sale of our intermodal operation, which resulted in a reduction to our effective tax rate due to the book gain exceeding the tax gain, as well aswas a tax benefit of $3 million from stock-based compensation. The primary items impacting the effective tax rate for the first six months of 2021 were tax benefits of $5 million from changes in reserves for uncertain tax positions and $3 million from stock-based compensation, partially offset by a tax expense of $4 million from return to provision adjustments.

~~Table of Contents~~

Segment Financial Results

Our chief operating decision maker (“CODM”) regularly reviews financial information at the operating segment level to allocate resources to the segments and to assess their performance. Our CODM evaluates segment profit (loss) based on adjusted earnings before interest, taxes, depreciation and amortization (“~~adjusted~~Adjusted EBITDA”), which we define as ~~net~~ income from continuing operations ~~attributable to common shareholders~~ before debt extinguishment loss, interest expense, income tax, depreciation and amortization expense, ~~(gain) loss on sale of business,~~ transaction and integration costs, restructuring costs and other adjustments. Segment Adjusted EBITDA has historically reflected an allocation of corporate costs. In the first quarter of 2023, we began allocating incremental corporate costs from Corporate to North American LTL. Prior periods have been recast to reflect these incremental allocations, which approximate $80 million annually. See Note 4—3—Segment Reporting to our Condensed Consolidated Financial Statements for further information and a reconciliation of ~~adjusted~~Adjusted EBITDA to ~~Net income~~Income from continuing ~~operations attributable to common shareholders.~~operations.

Table of Contents

North American Less-Than-Truckload Segment


		Three Months Ended June 30,				Percent of Revenue				Change		Six Months Ended June 30,				Percent of Revenue				Change			Three Months Ended June 30,				Percent of Revenue				Change		Six Months Ended June 30,				Percent of Revenue				Change
(Dollars in millions)	(Dollars in millions)	2022		2021		2022		2021		2022 vs. 2021		2022		2021		2022		2021		2022 vs. 2021		(Dollars in millions)	2023		2022		2023		2022		2023 vs. 2022		2023		2022		2023		2022		2023 vs. 2022
Revenue	Revenue	$	1,239	$	1,081	100.0	%	100.0	%	14.6	%	$	2,344	$	2,043	100.0	%	100.0	%	14.7	%	Revenue	$	1,136	$	1,240	100.0	%	100.0	%	(8.4)	%	$	2,256	$	2,347	100.0	%	100.0	%	(3.9)	%
Adjusted EBITDA	Adjusted EBITDA	294		258		23.7	%	23.9	%	14.0	%	499		472		21.3	%	23.1	%	5.7	%	Adjusted EBITDA	208		274		18.3	%	22.1	%	(24.1)	%	390		460		17.3	%	19.6	%	(15.2)	%
Depreciation and amortization expense		60		57		4.8	%	5.3	%	5.3	%	115		112		4.9	%	5.5	%	2.7	%
Depreciation and amortization																						Depreciation and amortization	71		59		6.3	%	4.8	%	20.3	%	139		115		6.2	%	4.9	%	20.9	%

Revenue in our North American LTL segment ~~increased 14.6%~~decreased 8.4% to ~~$1.2~~$1.14 billion for the second quarter of ~~2022,~~2023, compared with ~~$1.1~~$1.24 billion for the same quarter in ~~2021.~~2022. Revenue ~~increased 14.7%~~decreased 3.9% to ~~$2.3~~$2.26 billion for the first six months of ~~2022,~~2023, compared with ~~$2.0~~$2.35 billion for the same period in ~~2021.~~2022. The decrease in revenue for both periods reflects a decline in fuel surcharge revenue, primarily driven by lower diesel prices. Revenue included fuel surcharge revenue of ~~$291~~$196 million and ~~$164~~$291 million, respectively, for the second quarters of 2023 and 2022, and ~~2021,~~$413 million and $498 ~~million and $299~~ million, respectively, for the first six months of ~~2022~~2023 and ~~2021.~~2022.

We evaluate the revenue performance of our LTL business using several commonly used metrics, including volume (weight per day in pounds) and yield, which is a commonly used measure of LTL pricing trends. We measure yield using gross revenue per hundredweight, excluding fuel surcharges. Impacts on yield can include weight per shipment and length of haul, among other ~~factors.~~factors, while impacts on volume can include shipments per day and weight per shipment. The following table summarizes our key revenue metrics:


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended June 30,						Six Months Ended June 30,
		2022		2021		Change %		2022		2021		Change %			2023		2022		Change %		2023		2022		Change %
Pounds per day (thousands)	Pounds per day (thousands)	72,333		76,520		(5.5)	%	71,250		73,636		(3.2)	%	Pounds per day (thousands)	70,290		72,333		(2.8)	%	69,587		71,250		(2.3)	%

Shipments per day														Shipments per day	51,220		50,274		1.9	%	50,159		49,316		1.7	%

Average weight per shipment (in pounds)														Average weight per shipment (in pounds)	1,372		1,439		(4.7)	%	1,387		1,445		(4.0)	%

Gross revenue per hundredweight, excluding fuel surcharges	Gross revenue per hundredweight, excluding fuel surcharges	$	21.34	$	19.29	10.6	%	$	21.05	$	19.20	9.6	%	Gross revenue per hundredweight, excluding fuel surcharges	$	21.63	$	21.34	1.4	%	$	21.34	$	21.05	1.4	%

The year-over-year ~~increases~~decrease in revenue, excluding fuel surcharge revenue, for both the second quarter and first six months of ~~2022 reflect~~2023 reflects lower volume, primarily due to a soft industry environment for freight transportation, largely offset by an increase in gross revenue per hundredweight. The decrease in ~~weight~~volume per day for both the second quarter and first six months of 2023 reflects lower ~~shipments~~average weight per ~~day. The impact of lower shipments per day in the first six months of 2022 was~~shipment, partially offset by higher shipments per day. In the month of July 2023, as compared to July 2022, weight per ~~shipment.~~day and shipments per day increased 4.2% and 8.8%, respectively, reflecting, in part, the impact of recent industry disruption.

Adjusted EBITDA was ~~$294~~$208 million, or ~~23.7%~~18.3% of revenue, for the second quarter of ~~2022,~~2023, compared with ~~$258 million,~~$274, or ~~23.9%~~22.1% of revenue, for the same quarter in ~~2021.~~2022. Adjusted EBITDA was ~~$499~~$390 million, or ~~21.3%~~17.3% of revenue, for the first six months of ~~2022,~~2023, compared with ~~$472~~$460 million, or ~~23.1%~~19.6% of revenue, for the same period in ~~2021.~~2022. The decrease in Adjusted EBITDA ~~for~~in both the second quarter and first six months of ~~2021 included $5~~2023 reflected lower revenue, driven by the dynamics explained above, higher salaries, wages and employee benefits, primarily due to cost inflation, and to a lesser extent, lower pension income. These items were partially offset by lower purchased transportation, primarily due to lower rates paid to third-party providers for purchased transportation miles and the insourcing of a greater proportion of linehaul from third-party transportation providers, and lower fuel costs, in addition to lower headcount during the second quarter of 2023.

Depreciation and amortization expense increased to $71 million in the second quarter of 2023 compared with $59 million for the same quarter in 2022. Depreciation and ~~$22~~amortization expense increased to $139 million in the first six months of ~~gains from real estate transactions, respectively. There were no gains from real estate transactions~~2023 compared with $115 million for the same period in 2022. The increase in both the second quarter and first six months of ~~2022. Additionally, adjusted EBITDA~~2023 was due to the impact of capital investments, in ~~both periods of 2022 reflects higher revenue, partially offset by increased fuel~~particular tractors and ~~compensation costs and purchased transportation costs from higher highway subservice costs per mile.~~trailers.

2924

Table of Contents

~~Brokerage and Other Services~~European Transportation Segment


		Three Months Ended June 30,				Percent of Revenue				Change		Six Months Ended June 30,				Percent of Revenue				Change			Three Months Ended June 30,				Percent of Revenue				Change		Six Months Ended June 30,				Percent of Revenue				Change
(Dollars in millions)	(Dollars in millions)	2022		2021		2022		2021		2022 vs. 2021		2022		2021		2022		2021		2022 vs. 2021		(Dollars in millions)	2023		2022		2023		2022		2023 vs. 2022		2023		2022		2023		2022		2023 vs. 2022
Revenue	Revenue	$	2,067	$	2,161	100.0	%	100.0	%	(4.3)	%	$	4,499	$	4,232	100.0	%	100.0	%	6.3	%	Revenue	$	781	$	807	100.0	%	100.0	%	(3.2)	%	$	1,568	$	1,594	100.0	%	100.0	%	(1.6)	%
Adjusted EBITDA	Adjusted EBITDA	152		130		7.4	%	6.0	%	16.9	%	316		255		7.0	%	6.0	%	23.9	%	Adjusted EBITDA	46		49		6.0	%	6.0	%	(6.1)	%	83		87		5.3	%	5.4	%	(4.6)	%
Depreciation and amortization expense		54		60		2.6	%	2.8	%	(10.0)	%	114		120		2.5	%	2.8	%	(5.0)	%
Depreciation and amortization																						Depreciation and amortization	33		32		4.2	%	4.0	%	3.1	%	65		65		4.1	%	4.1	%	—	%

Revenue in our ~~Brokerage and Other Services~~European Transportation segment decreased ~~4.3%~~3.2% to ~~$2.1 billion~~$781 million for the second quarter of ~~2022,~~2023, compared with ~~$2.2 billion~~$807 million for the same quarter in ~~2021. The decrease~~2022. Revenue decreased 1.6% to $1.57 billion for the first six months of 2023, compared with $1.59 billion for the same period in ~~revenue was due to the sale of our North American intermodal operation in March 2022, which impacted~~2022. Foreign currency movement increased revenue by approximately 12.3 percentage points. Revenue in the second quarter of 2022 benefited from an increase in North American truck brokerage loads, facilitated by our digital platform, as well as strong pricing across the segment. Foreign currency movement reduced revenue by approximately 3.41.5 percentage points in the second quarter of ~~2022.~~

Revenue increased 6.3% to $4.5 billion for the first six months of 2022, compared with $4.2 billion for the same period in 2021. Revenue in the first six months of 2022 compared to the same period in 2021 benefited from an increase in North American truck brokerage loads, as well as strong pricing across the segment. The increase was partially offset by the sale of our intermodal operation, which reduced2023 and decreased revenue ~~growth~~ by approximately ~~4.1~~2.2 percentage points in the first six months of ~~2022. Foreign~~2023. The decrease in revenue for the second quarter of 2023 compared to 2022, after taking into effect the impact of foreign currency movement, ~~reduced~~primarily reflects a decline in fuel surcharge revenue ~~by approximately 2.6 percentage points in~~due to lower diesel prices. Revenue for the first six months of ~~2022.~~2023 increased compared to 2022 after taking into effect the impact of foreign currency movement, primarily reflecting price increases to cover cost inflation as well as higher volume.

Adjusted EBITDA was ~~$152~~$46 million, or ~~7.4%~~6.0% of revenue, for the second quarter of ~~2022,~~2023, compared with ~~$130~~$49 million, or 6.0% of revenue, for the same quarter in ~~2021.~~2022. Adjusted EBITDA was ~~$316~~$83 million, or ~~7.0%~~5.3% of revenue, for the first six months of ~~2022,~~2023, compared with ~~$255~~$87 million, or ~~6.0%~~5.4% of revenue, for the same period in ~~2021.~~2022. The ~~increases were~~decrease in Adjusted EBITDA in both periods was primarily driven by lower fuel revenue, higher ~~revenue in North American truck brokerage~~salaries, wages and ~~other brokerage services, partially~~employee benefits due to the impact of cost inflation, and higher lease costs. These items were almost entirely offset by ~~higher third-party~~lower purchased transportation, fuel and ~~compensation costs and by the sale of our intermodal operation.~~temporary labor costs.

Liquidity and Capital Resources

Our cash and cash equivalents balance was ~~$436~~$290 million as of June 30, ~~2022,~~2023, compared to ~~$260~~$460 million as of December 31, ~~2021.~~2022. Our principal existing sources of cash are: (i) cash generated from operations; (ii) borrowings available under our Second Amended and Restated Revolving Loan Credit Agreement, as amended (the “ABL Facility”); (iii) proceeds from the issuance of other debt; and (iv) proceeds from divestiture activities. As of June 30, ~~2022,~~2023, we have ~~$995~~$512 million available to draw under our ABL Facility, based on a borrowing base of ~~$1 billion~~$513 million and outstanding letters of credit of $5less than $1 million. Additionally, we have a $200 million uncommitted secured evergreen letter of credit facility, under which we had issued ~~$185~~$141 million in aggregate face amount of letters of credit as of June 30, ~~2022.~~2023.

In February 2023, we amended our existing ABL Facility. See Note 7—Debt to our Condensed Consolidated Financial Statements for further information.

As of June 30, ~~2022,~~2023, we had approximately ~~$1.4 billion~~$802 million of total liquidity. We continually evaluate our liquidity requirements in light of our operating needs, growth initiatives and capital resources. We believe that our existing liquidity and sources of capital are sufficient to support our operations over the next 12 months.

Trade Receivables Securitization and Factoring Programs

We sell certain of our trade accounts receivable on a non-recourse basis to third-party financial institutions under factoring agreements. We also sell trade accounts receivable under ~~our~~a securitization program ~~co-arranged by two banks (the “Purchasers”).~~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. For more information, see Note 1—Organization, Description of Business and Basis of Presentation to our Condensed Consolidated Financial Statements.

Table of Contents

~~Table of Contents~~

~~less than €1~~2023, €5 million ~~(less than $1~~(approximately $5 million) was available under the ~~program, subject to having sufficient receivables available to sell and with consideration to amounts previously sold.~~

program. Under the securitization program, we service the receivables we sell on behalf of the ~~Purchasers, which gives us visibility into the timing of customer payments.~~purchasers. The benefit to our cash flow includes the difference between the cash consideration and the amount we collected as a servicer on behalf of the Purchasers. In the first six months of 2022 and 2021, we collected cash as servicer of $885 million and $753 million, respectively.program expires in July 2026.

Term Loan ~~Facilities~~Facility

Senior Notes Due 2028 and 2031

Senior Notes Due 2025

In ~~April~~the second quarter of 2022, we redeemed $630 million of the then $1.15 billion outstanding principal amount of our ~~6.25% senior notes~~Senior Notes due 2025. The redemption price for the notes was 100% of the principal amount plus a premium, as defined in the indenture, of approximately $21 million and accrued and unpaid interest. We paid for the redemption using available liquidity. We recorded a debt extinguishment loss of $26 million in the second quarter of 2022 due to this redemption.

~~Senior Notes Due 2022~~

~~Preferred Stock and Warrant Exchanges~~

~~Commencing in~~ the fourth quarter of ~~2020, holders~~2022, we repurchased an additional $408 million of the outstanding principal amount of our ~~convertible preferred stock and warrants exchanged their holdings for our common stock or~~Senior Notes due 2025 in a combination of our common stock and cash. These exchanges were intended to simplify our equity capital structure, including in contemplation of the spin-off of our logistics segment. In the first quarter of 2021, 975 preferred shares were exchanged, and we issued approximately 139 thousand shares of common stock. In the second quarter of 2021, the remaining 40 preferred shares were exchanged, and we issued 5,714 shares of common stock. With respect to the warrants, in the first quarter of 2021, 9.8 million warrants were exchanged, and we issued 9.2 million shares of common stock. Subsequent to the exchange in the second quarter of 2021, there are no shares of preferred stock or warrants outstanding.

~~Share Repurchases~~

~~There have been no share repurchases since the first quarter of 2020. Our remaining share repurchase authorization was $503 million as of June 30, 2022.~~cash tender offer.

Loan Covenants and Compliance

As of June 30, ~~2022,~~2023, we were in compliance with the covenants and other provisions of our debt agreements. Any failure to comply with any material provision or covenant of these agreements could have a material adverse effect on our liquidity and operations.

3126

Table of Contents

Sources and Uses of Cash


		Six Months Ended June 30,					Six Months Ended June 30,
(In millions)	(In millions)	2022		2021		(In millions)	2023		2022
Net cash provided by operating activities from continuing operations	Net cash provided by operating activities from continuing operations	$	399	$	308	Net cash provided by operating activities from continuing operations	$	207	$	357
Net cash provided by (used in) investing activities from continuing operations		464		(75)
Net cash used in investing activities from continuing operations						Net cash used in investing activities from continuing operations	(342)		(216)
Net cash used in financing activities from continuing operations	Net cash used in financing activities from continuing operations	(673)		(1,489)		Net cash used in financing activities from continuing operations	(36)		(673)

During the six months ended June 30, ~~2022,~~2023, we: (i) generated cash from operating activities from continuing operations of ~~$399~~$207 million; and (ii) ~~generated~~received net proceeds of $2.0 billion from the ~~sale~~issuance of debt. We used cash during this period primarily to: (i) purchase property and equipment of $355 million; and (ii) repurchase our ~~North American intermodal operation~~Existing Term Loan Facility for $2.0 billion.

During the six months ended June 30, 2022, we generated cash from operating activities from continuing operations of ~~$705~~$357 million. We used cash during this period primarily to: (i) purchase property and equipment of ~~$267~~$242 million; and (ii) redeem a portion of our ~~senior notes~~Senior Notes due 2025 for $651 ~~million.~~

During the six months ended June 30, 2021, we: (i) generated cash from operating activities from continuing operations of $308 million; and (ii) generated proceeds from sales of property and equipment of $60 million. We used cash during this period primarily to: (i) purchase property and equipment of $135 million; (ii) redeem our senior notes due 2022 for $1.2 billion; and (iii) repay our ABL Facility borrowings of $200 million.

Cash flows from operating activities from continuing operations for the six months ended June 30, ~~2022 increased~~2023 decreased by ~~$91~~$150 million, compared with the same period in ~~2021.~~2022. The ~~increase~~decrease reflects ~~higher income from continuing operations of $455 million for the six months ended June 30, 2022, compared with the same period in 2021, and~~ the impact of operating assets and liabilities utilizing ~~$102~~$125 million of cash in the first six months of ~~2022,~~2023, compared with utilizing ~~$129~~$40 million during the same period in ~~2021. Partially offsetting these impacts was a $434~~2022, and $80 million ~~gain on sale~~ of ~~business recognized during~~lower income from continuing operations for the six months ended June 30, 2023, compared with the same period in 2022. Within operating assets and liabilities, for the six months ended June 30, 2023, compared with the same period in 2022: (i) accrued expenses and other liabilities generated $140 million less cash primarily due to the accrual of a tax obligation related to the sale of our intermodal operation in the first quarter of 2022; and (ii) accounts payable ~~generated $184~~utilized $129 million more cash ~~while~~primarily due to the timing of payments. Partially offsetting these items, accounts receivable utilized ~~$159~~$177 million ~~more~~less cash in the first six months of ~~2022,~~2023 as compared ~~with~~to the same period in ~~2021,~~2022 primarily as a result of ~~higher revenues and timing of payments~~a lower sequential increase in ~~the 2022 period.~~revenues.

Investing activities from continuing operations ~~generated $464~~used $342 million of cash in the six months ended June 30, ~~2022~~2023 and ~~used $75~~$216 million of cash in the six months ended June 30, ~~2021.~~2022. During the six months ended June 30, ~~2022,~~2023, we ~~received $705 million of cash from the sale of our intermodal operation, net of cash disposed, and~~ used ~~$267~~$355 million to purchase property and ~~equipment. During~~equipment, as compared to a $242 million usage of cash in the same period in 2022. The increase reflects our continued investment, primarily in tractors and trailers, to support our long-term growth targets.

Financing activities from continuing operations used $36 million of cash in the six months ended June 30, ~~2021, we used $135 million of cash to purchase property~~2023 and ~~equipment and received $60 million from sales of property and equipment.~~

~~Financing activities from continuing operations used~~ $673 million of cash in the six months ended June 30, ~~2022 and $1.5 billion~~2022. The primary uses of cash from financing activities in each of the first six months ~~ended June 30, 2021.~~of 2023 and 2022 were $2.0 billion and $651 million, respectively, used to repay our Existing Term Loan Facility and redeem a portion of our Senior Notes due 2025. The primary ~~uses~~source of cash from financing activities during the first six months of ~~2022 were $651 million used to redeem~~2023 was $2.0 billion of net proceeds from the issuance of debt.

As a ~~portion~~result of the ~~senior notes due~~debt transactions that occurred during the second quarter, as of June 30, 2023, we had $2.4 billion total outstanding principal amount of debt, excluding finance leases. We have $112 million of debt maturing in 2025 and $32 million used to repay borrowings. The primary uses of cash from financing activities during the six months ended June 30, 2021 were $1.2 billion used to redeem the senior notes due 2022, $200 million used to repay borrowings underno other significant debt maturities until 2028. Interest on our ABL ~~Facility~~ and ~~$43 million used to repay our debt and finance leases.~~

~~Except for the redemption of a portion of~~term loan facility are variable, while interest on our senior notes ~~due 2025~~are at fixed rates. As of June 30, 2023, future interest payments associated with our debt aggregate approximately $1.0 billion and are estimated based on the principal amount of debt and applicable interest rates as ~~described above, there~~of that date. For further information on our debt facilities and maturities, see Note 7—Debt to our Condensed Consolidated Financial Statements.

There were no other material changes to our December 31, ~~2021~~2022 contractual obligations during the six months ended June 30, ~~2022.~~2023. We anticipate full year ~~net~~gross capital expenditures to be between ~~$425~~$500 million and ~~$475~~$600 million in ~~2022 (without giving effect to the planned spin-off~~2023, funded by cash on hand and ~~divestiture of our European business).~~available liquidity.

New Accounting Standards

Information related to new accounting standards is included in Note 1—Organization, Description of Business and Basis of Presentation to our Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

3227

Table of Contents

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

We are exposed to market risk related to changes in interest rates, foreign currency exchange rates and commodity prices. As a result of the debt transactions that occurred during the second quarter, exposure to changes in interest rates on our term loan facility and fixed rate debt are as follows:

Term Loan Facility. As of June 30, 2023, we had an aggregate principal amount outstanding of $700 million on our term loan facility. The interest rate fluctuates based on SOFR or a Base Rate, as defined in the agreement, plus an applicable margin. Assuming an average annual aggregate principal amount outstanding of $700 million, a hypothetical 1% increase in the interest rate would have increased our annual interest expense by $7 million. Additionally, we utilize short-term interest rate swaps to mitigate variability in forecasted interest payments on our term loan facility. The interest rate swaps convert floating-rate interest payments into fixed rate interest payments.

Fixed Rate Debt. As of June 30, 2023, we had $1.7 billion of fair value of indebtedness (excluding finance leases and asset financings) that bears interest at fixed rates. A 1% decrease in market interest rates as of June 30, 2023 would increase the fair value of our fixed-rate indebtedness by approximately 5%. For additional information concerning our debt, see Note 7—Debt to our Condensed Consolidated Financial Statements.

There have been no other material changes to our quantitative and qualitative disclosures about market risk related to our continuing operations during the six months ended June 30, ~~2022,~~2023, as compared with the quantitative and qualitative disclosures about market risk described in our ~~Annual Report on~~2022 Form ~~10-K for the year ended December 31, 2021.~~10-K.

Item 4. Controls and Procedures.

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of June 30, ~~2022.~~2023. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of June 30, ~~2022,~~2023, such that the information required to be included in our Securities and Exchange Commission (“SEC”) reports is: (i) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to the Company, including our consolidated subsidiaries; and (ii) accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There have not been any changes in our internal control over financial reporting during the quarter ended June 30, ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II—Other Information

Item 1. Legal Proceedings.

For information related to our legal proceedings, refer to “Legal Proceedings” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 and Note ~~11—~~9—Commitments and Contingencies of Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q.

Item 1A. Risk Factors.

There are no material changes to the risk factors previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2021, except as disclosed in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended March 31,~~ 2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Table of Contents

Item 3. Defaults upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

~~Table of Contents~~

Item 6. Exhibits.


Exhibit Number						Description

~~10.1+~~4.1						~~Amendment No. 3~~Indenture, dated May 24, 2023, by and among XPO, Inc., the guarantors party thereto from time to ~~the~~ ~~XPO Logistics, Inc.~~ ~~2016Omnibus Incentive Compensation~~time and U.S. Bank Trust Company, National Association, as trustee and notes collateral agent (incorporated herein by reference to ~~Annex B~~Exhibit 4.1 to the registrant’s ~~definitive proxy statement~~Current Report on ~~Schedule 14A~~Form 8-K filed with the SEC on ~~April 18, 2022)~~May 25, 2023).

~~10.2~~4.2						Indenture, dated May 24, 2023, by and among XPO, Inc., the guarantors party thereto from time to time and U.S. Bank Trust Company, National Association, as trustee (incorporated herein by reference to Exhibit 4.2 to the registrant’s Current Report on Form 8-K filed with the SEC on May 25, 2023).

10.1+						Offer Letter, dated April 17, 2023, between the registrant and David Bates (incorporated herein by reference to Exhibit 10.6 to the registrant’s Quarterly Report on Form 10-Q filed with the SEC on May 4, 2023).

10.2+						Change in Control and Severance Agreement, dated April 17, 2023, between the registrant and David Bates (incorporated herein by reference to Exhibit 10.7 to the registrant’s Quarterly Report on Form 10-Q filed with the SEC on May 4, 2023).

10.3						Refinancing Amendment (Amendment No. 78 to Senior Secured Term Loan Credit Agreement ), dated ~~June 10, 2022,~~May 24, 2023, by and among XPO, Inc., the ~~registrant and certain~~ subsidiaries signatory thereto, as guarantors, the lenders party thereto and Morgan Stanley Senior Funding, Inc., as administrative agent (incorporated herein by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on ~~June 13, 2022)~~May 25, 2023).

~~31.1~~ 10.4+*						Offer Letter, dated July 19, 2023, between the registrant and Kyle Wismans.

10.5+*						Change in Control and Severance Agreement, dated July 19, 2023, between the registrant and Kyle Wismans.

31.1*						Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 3 0 , ~~2022.~~2023.

31.2 31.2						Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 3 0 , ~~2022.~~2023.

32.1 32.1						Certification of the Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 3 0 , ~~2022.~~2023.

32.2 32.2						Certification of the Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 3 0 , ~~2022.~~2023.

Table of Contents


Exhibit Number						Description

101.INS *						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH *						XBRL Taxonomy Extension Schema.

101.CAL *						XBRL Taxonomy Extension Calculation Linkbase.

101.DEF *						XBRL Taxonomy Extension Definition Linkbase.

101.LAB *						XBRL Taxonomy Extension Label Linkbase.

101.PRE *						XBRL Taxonomy Extension Presentation Linkbase.

104 *						Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).


*						Filed herewith.
**						Furnished herewith.
+						This exhibit is a management contract or compensatory plan or arrangement.

3430

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			XPO, ~~LOGISTICS,~~ INC.

By:			/s/ ~~Brad Jacobs~~Mario Harik
			~~Brad Jacobs~~Mario Harik
			Chief Executive Officer
			(Principal Executive Officer)

By:			/s/ ~~Ravi Tulsyan~~Carl D. Anderson II
			~~Ravi Tulsyan~~Carl D. Anderson II
			Chief Financial Officer
			(Principal Financial Officer)

Date: August ~~8, 2022~~4, 2023

3531


	Series A Preferred Stock			Common Stock
(Shares in thousands, dollars in millions)	Shares	Amount		Shares	Amount		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total XPO Stockholders' Equity		Non-controlling Interests		Total Equity
Balance as of March 31, 2022	—	$	—	114,982	$	—	$	1,176	$	531	$	(109)	$	1,598	$	—	$	1,598
Net income	—	—		—	—		—		141		—		141		—		141
Other comprehensive loss	—	—		—	—		—		—		(43)		(43)		—		(43)

Exercise and vesting of stock compensation awards	—	—		51	—		—		—		—		—		—		—
Tax withholdings related to vesting of stock compensation awards	—	—		—	—		(1)		—		—		(1)		—		(1)



Stock compensation expense	—	—		—	—		10		—		—		10		—		10
Other	—	—		—	—		2		—		—		2		—		2
Balance as of June 30, 2022	—	$	—	115,033	$	—	$	1,187	$	672	$	(152)	$	1,707	$	—	$	1,707


	Three Months Ended June 30, 2021
(In millions)	North American LTL		Brokerage and Other Services		Eliminations		Total
Revenue
United States	$	1,057	$	1,276	$	(56)	$	2,277
North America (excluding United States)	24		70		—		94
France	—		352		—		352
United Kingdom	—		222		—		222
Europe (excluding France and United Kingdom)	—		215		—		215
Other	—		26		—		26
Total	$	1,081	$	2,161	$	(56)	$	3,186


	Six Months Ended June 30, 2021
(In millions)	North American LTL		Brokerage and Other Services		Eliminations		Total
Revenue
United States	$	1,997	$	2,497	$	(100)	$	4,394
North America (excluding United States)	46		139		—		185
France	—		694		—		694
United Kingdom	—		431		—		431
Europe (excluding France and United Kingdom)	—		428		—		428
Other	—		43		—		43
Total	$	2,043	$	4,232	$	(100)	$	6,175


			Six Months Ended June 30, 2022
(In millions)	Reserve Balance as of December 31, 2021		Charges Incurred		Payments		Reserve Balance as of June 30, 2022
Severance

Brokerage and Other Services	$	6	$	4	$	(6)	$	4
Corporate	7		1		(4)		4
Total severance	13		5		(10)		8
Facilities

Brokerage and Other Services	2		1		(1)		2
Total facilities	2		1		(1)		2
Contract termination
North American LTL	—		3		(3)		—
Brokerage and Other Services	—		1		—		1
Total contract termination	—		4		(3)		1
Total	$	15	$	10	$	(14)	$	11