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 March 31, ~~2023~~2024


☐			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, 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 April ~~28, 2023,~~26, 2024, there were ~~115,857,013~~116,330,522 shares of the registrant’s common stock, par value $0.001 per share, outstanding.

XPO, Inc.

Quarterly Report on Form 10-Q

For the Quarterly Period Ended March 31, ~~2023~~2024

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			5
Notes to Condensed Consolidated Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			1516
Item 3. Quantitative and Qualitative Disclosures About Market Risk			2122
Item 4. Controls and Procedures			2223
Part II—Other Information
Item 1. Legal Proceedings			2223
Item 1A. Risk Factors			2223
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			2223
Item 3. Defaults Upon Senior Securities			2223
Item 4. Mine Safety Disclosures			2223
Item 5. Other Information			2223
Item 6. Exhibits			2324
Signatures			2425

Table of Contents

Part I—Financial Information

Item 1. Financial Statements.

XPO, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)


			March 31,		December 31,
		March 31,							March 31,		December 31,
(In millions, except per share data)	(In millions, except per share data)		2023		2022		(In millions, except per share data)	2024		2023
ASSETS	ASSETS
Current assets	Current assets
Current assets
Current assets
Cash and cash equivalents	Cash and cash equivalents		$	309	$	460
Accounts receivable, net of allowances of $48 and $43, respectively			1,019		954
Cash and cash equivalents
Cash and cash equivalents
Accounts receivable, net of allowances of $44 and $45, respectively
Other current assets	Other current assets		221		199
Current assets of discontinued operations			16		17

Total current assets
Total current assets
Total current assets	Total current assets		1,565		1,630
Long-term assets	Long-term assets
Property and equipment, net of $1,743 and $1,679 in accumulated depreciation, respectively			1,978		1,832
Property and equipment, net of $1,892 and $1,853 in accumulated depreciation, respectively
Property and equipment, net of $1,892 and $1,853 in accumulated depreciation, respectively
Property and equipment, net of $1,892 and $1,853 in accumulated depreciation, respectively
Operating lease assets	Operating lease assets		717		719
Goodwill	Goodwill		1,483		1,472
Identifiable intangible assets, net of $407 and $392 in accumulated amortization, respectively			396		407
Identifiable intangible assets, net of $463 and $452 in accumulated amortization, respectively
Other long-term assets	Other long-term assets		209		209

Total long-term assets
Total long-term assets
Total long-term assets	Total long-term assets		4,783		4,639
Total assets	Total assets		$	6,348	$	6,269
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities	Current liabilities
Current liabilities
Current liabilities
Accounts payable
Accounts payable
Accounts payable	Accounts payable		$	505	$	521
Accrued expenses	Accrued expenses		792		774
Short-term borrowings and current maturities of long-term debt	Short-term borrowings and current maturities of long-term debt		66		59
Short-term operating lease liabilities	Short-term operating lease liabilities		110		107
Other current liabilities	Other current liabilities		58		30
Current liabilities of discontinued operations			15		16

Total current liabilities
Total current liabilities
Total current liabilities	Total current liabilities		1,546		1,507
Long-term liabilities	Long-term liabilities
Long-term debt
Long-term debt
Long-term debt	Long-term debt		2,478		2,473
Deferred tax liability	Deferred tax liability		307		319
Employee benefit obligations	Employee benefit obligations		92		93
Long-term operating lease liabilities	Long-term operating lease liabilities		606		606
Other long-term liabilities	Other long-term liabilities		264		259

Total long-term liabilities	Total long-term liabilities		3,747		3,750
Total long-term liabilities
Total long-term liabilities
Stockholders’ equity	Stockholders’ equity

Common stock, $0.001 par value; 300 shares authorized; 116 and 115 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively			—		—
Common stock, $0.001 par value; 300 shares authorized; 116 shares issued and outstanding as of March 31, 2024 and December 31, 2023

Common stock, $0.001 par value; 300 shares authorized; 116 shares issued and outstanding as of March 31, 2024 and December 31, 2023

Common stock, $0.001 par value; 300 shares authorized; 116 shares issued and outstanding as of March 31, 2024 and December 31, 2023
Additional paid-in capital	Additional paid-in capital		1,252		1,238
Retained earnings (accumulated deficit)			10		(4)
Retained earnings
Accumulated other comprehensive loss	Accumulated other comprehensive loss		(207)		(222)

Total equity	Total equity		1,055		1,012

Total equity

Total equity
Total liabilities and equity	Total liabilities and equity		$	6,348	$	6,269

Amounts may not add due to rounding.

See accompanying notes to condensed consolidated financial statements.

Table of Contents

XPO, Inc.

Condensed Consolidated Statements of Income

(Unaudited)


		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
(In millions, except per share data)	(In millions, except per share data)		2023		2022		(In millions, except per share data)	2024	2023
Revenue	Revenue		$	1,907	$	1,894
Salaries, wages and employee benefits	Salaries, wages and employee benefits		762		725
Purchased transportation	Purchased transportation		457		510
Fuel, operating expenses and supplies	Fuel, operating expenses and supplies		427		418
Operating taxes and licenses	Operating taxes and licenses		15		16
Insurance and claims	Insurance and claims		44		56
Gains on sales of property and equipment	Gains on sales of property and equipment		(3)		(1)
Depreciation and amortization expense	Depreciation and amortization expense		101		94

Transaction and integration costs	Transaction and integration costs		22		7
Transaction and integration costs
Transaction and integration costs
Restructuring costs	Restructuring costs		24		6
Operating income	Operating income		58		63
Other income	Other income		(5)		(14)

Interest expense	Interest expense		42		37
Interest expense
Interest expense
Income from continuing operations before income tax provision	Income from continuing operations before income tax provision		21		40
Income tax provision	Income tax provision		4		8
Income from continuing operations	Income from continuing operations		17		32
Income (loss) from discontinued operations, net of taxes			(3)		456
Loss from discontinued operations, net of taxes

Net income attributable to XPO			$	14	$	488
Net income

Net income (loss) attributable to common shareholders

Net income

Net income

Net income (loss)
Net income (loss)
Net income (loss)
Continuing operations
Continuing operations
Continuing operations	Continuing operations		$	17	$	32
Discontinued operations	Discontinued operations		(3)		456
Net income attributable to common shareholders			$	14	$	488
Net income

Earnings (loss) per share data	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
Basic earnings per share from continuing operations	Basic earnings per share from continuing operations		$	0.15	$	0.28
Basic earnings (loss) per share from discontinued operations	Basic earnings (loss) per share from discontinued operations		(0.02)		3.97
Basic earnings per share attributable to common shareholders			$	0.13	$	4.25
Basic earnings per share
Diluted earnings per share from continuing operations	Diluted earnings per share from continuing operations		$	0.15	$	0.28
Diluted earnings (loss) per share from discontinued operations	Diluted earnings (loss) per share from discontinued operations		(0.02)		3.94
Diluted earnings per share attributable to common shareholders			$	0.13	$	4.22
Diluted earnings per share

Weighted-average common shares outstanding	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
Basic weighted-average common shares outstanding	Basic weighted-average common shares outstanding		116		115
Diluted weighted-average common shares outstanding	Diluted weighted-average common shares outstanding		116		116

Amounts may not add due to rounding.

See accompanying notes to condensed consolidated financial statements.

Table of Contents

XPO, Inc.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
(In millions)	(In millions)		2023		2022		(In millions)	2024	2023
Net income	Net income		$	14	$	488

Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax
Foreign currency translation gain (loss), net of tax effect of $8 and $(2)			$	13	$	(26)
Unrealized gain on financial assets/liabilities designated as hedging instruments, net of tax effect of $1 and $—			2		1
Other comprehensive income (loss), net of tax
Other comprehensive income (loss), net of tax
Foreign currency translation gain (loss), net of tax effect of $(3) and $8
Foreign currency translation gain (loss), net of tax effect of $(3) and $8
Foreign currency translation gain (loss), net of tax effect of $(3) and $8
Unrealized gain on financial assets/liabilities designated as hedging instruments, net of tax effect of $— and $1

Other comprehensive income (loss)
Other comprehensive income (loss)
Other comprehensive income (loss)	Other comprehensive income (loss)		15		(25)

Comprehensive income attributable to XPO			$	29	$	463
Comprehensive income

Comprehensive income

Comprehensive income

Amounts may not add due to rounding.

See accompanying notes to condensed consolidated financial statements.

Table of Contents

XPO, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


			Three Months Ended March 31,
		Three Months Ended March 31,								Three Months Ended March 31,
(In millions)	(In millions)		2023		2022		(In millions)	2024	2023
Cash flows from operating activities of continuing operations	Cash flows from operating activities of continuing operations
Net income	Net income		$	14	$	488
Income (loss) from discontinued operations, net of taxes			(3)		456
Net income
Net income
Loss from discontinued operations, net of taxes
Income from continuing operations	Income from continuing operations		17		32
Adjustments to reconcile income from continuing operations to net cash from operating activities	Adjustments to reconcile income from continuing operations to net cash from operating activities
Depreciation, amortization and net lease activity			101		94
Depreciation and amortization
Depreciation and amortization
Depreciation and amortization
Stock compensation expense	Stock compensation expense		22		6
Accretion of debt	Accretion of debt		3		4
Deferred tax expense (benefit)	Deferred tax expense (benefit)		(2)		5

Gains on sales of property and equipment	Gains on sales of property and equipment		(3)		(1)

Gains on sales of property and equipment

Gains on sales of property and equipment
Other	Other		17		6
Changes in assets and liabilities	Changes in assets and liabilities
Accounts receivable
Accounts receivable
Accounts receivable	Accounts receivable		(69)		(154)
Other assets	Other assets		(24)		(37)
Accounts payable	Accounts payable		(8)		117
Accrued expenses and other liabilities	Accrued expenses and other liabilities		22		116
Net cash provided by operating activities from continuing operations	Net cash provided by operating activities from continuing operations		76		188
Cash flows from investing activities of continuing operations	Cash flows from investing activities of continuing operations

Payment for purchases of property and equipment	Payment for purchases of property and equipment		(224)		(123)

Payment for purchases of property and equipment

Payment for purchases of property and equipment
Proceeds from sale of property and equipment	Proceeds from sale of property and equipment		8		3

Net cash used in investing activities from continuing operations

Net cash used in investing activities from continuing operations

Net cash used in investing activities from continuing operations	Net cash used in investing activities from continuing operations		(216)		(120)
Cash flows from financing activities of continuing operations	Cash flows from financing activities of continuing operations

Repayment of debt and finance leases	Repayment of debt and finance leases		(16)		(16)

Repayment of debt and finance leases

Repayment of debt and finance leases
Payment for debt issuance costs

Change in bank overdrafts

Change in bank overdrafts

Change in bank overdrafts	Change in bank overdrafts		19		3
Payment for tax withholdings for restricted shares	Payment for tax withholdings for restricted shares		(12)		(12)

Other	Other		(1)		1
Other
Other
Net cash used in financing activities from continuing operations	Net cash used in financing activities from continuing operations		(10)		(24)

Cash flows from discontinued operations	Cash flows from discontinued operations
Cash flows from discontinued operations
Cash flows from discontinued operations
Operating activities of discontinued operations
Operating activities of discontinued operations
Operating activities of discontinued operations	Operating activities of discontinued operations		(8)		13
Investing activities of discontinued operations	Investing activities of discontinued operations		1		691

Net cash provided by (used in) discontinued operations			(7)		704
Net cash used in discontinued operations
Net cash used in discontinued operations
Net cash used in discontinued operations
Effect of exchange rates on cash, cash equivalents and restricted cash	Effect of exchange rates on cash, cash equivalents and restricted cash		2		(3)
Net increase (decrease) in cash, cash equivalents and restricted cash			(155)		745
Net decrease in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash, beginning of period	Cash, cash equivalents and restricted cash, beginning of period		470		273
Cash, cash equivalents and restricted cash, end of period	Cash, cash equivalents and restricted cash, end of period		315		1,018
Less: Cash, cash equivalents and restricted cash of discontinued operations, end of period			—		50
Cash, cash equivalents and restricted cash of continued operations, end of period			$	315	$	968

Supplemental disclosure of cash flow information	Supplemental disclosure of cash flow information

Supplemental disclosure of cash flow information

Supplemental disclosure of cash flow information

Leased assets obtained in exchange for new operating lease liabilities

Leased assets obtained in exchange for new operating lease liabilities

Leased assets obtained in exchange for new operating lease liabilities	Leased assets obtained in exchange for new operating lease liabilities		$	28	$	22
Leased assets obtained in exchange for new finance lease liabilities	Leased assets obtained in exchange for new finance lease liabilities		19		4
Cash paid for interest	Cash paid for interest		39		13
Cash paid for income taxes	Cash paid for income taxes		3		3

Amounts may not add due to rounding.

See accompanying notes to condensed consolidated financial statements.

Table of Contents

XPO, Inc.

Condensed Consolidated Statements of Changes in Equity

(Unaudited)



	Common Stock
(Shares in thousands, dollars in millions)		Shares	Amount		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Equity
Balance as of December 31, 2023		116,073	$	—	$	1,298	$	185	$	(217)	$	1,266
Net income		—	—		—		67		—		67
Other comprehensive loss		—	—		—		—		(5)		(5)

Exercise and vesting of stock compensation awards		239	—		—		—		—		—
Tax withholdings related to vesting of stock compensation awards		—	—		(15)		—		—		(15)





Stock compensation expense		—	—		19		—		—		19

Balance as of March 31, 2024		116,312	$	—	$	1,302	$	252	$	(222)	$	1,332


	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		—	—		—		14		—		14
Other comprehensive income		—	—		—		—		15		15

Exercise and vesting of stock compensation awards		315	—		—		—		—		—
Tax withholdings related to vesting of stock compensation awards		—	—		(8)		—		—		(8)





Stock compensation expense		—	—		22		—		—		22

Balance as of March 31, 2023		115,750	$	—	$	1,252	$	10	$	(207)	$	1,055

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 — — — 488 — 488
Other comprehensive loss — — — — (25) (25)
Exercise and vesting of stock compensation awards 245 — — — — —
Tax withholdings related to vesting of stock compensation awards — — (12) — — (12)
Stock compensation expense — — 8 — — 8
Other — — 1 — — 1
Balance as of March 31, 2022 114,982 $ — $ 1,176 $ 531 $ (109) $ 1,598

Amounts may not add due to rounding.

See accompanying notes to condensed consolidated financial statements.

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XPO, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Organization, Description of Business and Basis of Presentation

XPO, Inc., together with its subsidiaries (“~~XPO”~~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 in North America and Europe. See Note 3—2—Segment Reporting for additional information on our operations.

~~2022 RXO Spin-Off~~Strategic Developments

In December 2023, we acquired 28 LTL service centers in the U.S. previously operated by Yellow Corporation. In connection with this transaction, we purchased 26 of the service centers and ~~Intermodal Sale~~assumed existing leases for the other two locations. This strategic acquisition of assets aligns with our commitment to invest in expanding our LTL network capacity.

~~On November 1, 2022, we completed~~Our Board of Directors has previously authorized the ~~spin-off~~divestiture of ~~RXO, Inc. (“RXO”),~~ our ~~tech-enabled brokered transportation platform as~~European business. There can be no assurance that the divestiture will occur, or of the terms or timing of a publicly traded company (the “RXO spin-off”). The historical results of operations and the financial positions of RXO and our 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.transaction.

Basis of Presentation

We prepared our Condensed Consolidated Financial Statements in accordance with U.S. generally accepted accounting principles (“GAAP”) and on the same basis as the accounting policies described in our Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023 (the ~~“2022~~“2023 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 ~~2022~~2023 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 months ended March 31, ~~2023~~2024 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2023.~~2024.

~~In the first quarter~~The historical results of ~~2023, we made certain changes to~~operations and financial positions of RXO, Inc., GXO Logistics, Inc. and our ~~financial reporting to increase transparency~~intermodal operation are presented as discontinued operations and, ~~improve comparability. Specifically, we changed the expense captions within Operating income in~~as such, have been excluded from both continuing operations and segment results for all periods presented.

Within the Condensed Consolidated Financial 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~~and associated notes, certain amounts ~~to conform~~may not add due to the ~~current year’s presentation.~~use of rounded numbers. Percentages presented are calculated from the underlying numbers in millions.

Restricted Cash

As of March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, our restricted cash included in Other long-term assets on our Condensed Consolidated Balance Sheets was ~~$6 million and $10 million, respectively.~~$7 million.

Trade Receivables Securitization and Factoring Programs

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

The maximum amount of net cash proceeds available at any one time under our securitization program, inclusive of any unsecured borrowings, is €200 million (approximately ~~$217~~$216 million as of March 31, ~~2023)~~2024). As of March 31, ~~2023,~~2024, the maximum amount available under the program was utilized. The weighted average interest rate was ~~3.41%~~5.41% as of March 31, ~~2023. In May 2023, we entered into an agreement to extend the securitization~~2024. The program ~~which was scheduled to expire~~expires in July ~~2024, through July~~ 2026. ~~The terms and conditions of the extended securitization program are materially consistent with the prior program.~~

Table of Contents

Information related to the trade receivables sold was as follows:

Three Months Ended March 31,

(In millions)

2023

2022

(In millions)

2024

2023

Securitization programs

Receivables sold in period

440

447

Cash consideration

440

447

Factoring programs

Receivables sold in period

Cash consideration

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 March 31, ~~2023~~2024 and December 31, ~~2022~~2023 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. For information on the fair value hierarchy of our derivative instruments, see Note 6—5—Derivative ~~Instruments;~~Instruments and for ~~further~~ information on financial liabilities, see Note 7—6—Debt.

The fair value hierarchy of cash equivalents was as follows:

(In millions) Carrying Value Fair Value Level 1
March 31, 2023 $ 238 $ 238 $ 238
December 31, 2022 402 402 402


(In millions)	Carrying Value		Fair Value		Level 1
March 31, 2024	$	186	$	186	$	186
December 31, 2023	369		369		369

~~Adoption of New~~ Accounting ~~Standard~~Pronouncements Issued but Not Yet Effective

In ~~September 2022,~~December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ~~2022-04, “Liabilities - Supplier Finance Programs (Subtopic 405-50)~~2023-09, “Income Taxes (Topic 740): ~~Disclosure of Supplier Finance Program Obligations.~~Improvements to Income Tax Disclosures.” The ASU ~~increases the transparency surrounding supplier finance programs~~modifies income tax disclosures by requiring (i) consistent categories and greater disaggregation of information in the ~~buyer to disclose information on an~~rate reconciliations and (ii) the disclosure of income taxes paid disaggregated by jurisdiction, among other requirements. This ASU is effective for annual ~~basis about the key terms of the program, the outstanding obligation amounts as of the end of the period, a rollforward of such amounts,~~periods beginning in 2025, and ~~the balance sheet presentation of the related amounts. Additionally, the obligation amount outstanding at the end of the period must~~should be ~~disclosed in interim periods. We adopted this standard on January 1, 2023,~~applied on a prospective ~~basis. The~~basis, with the option to apply retrospectively. Early adoption is permitted. We are currently evaluating the impact of the new standard, which is limited to financial statement ~~disclosures, did not have a material impact on our financial statements.~~

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 anddisclosures.

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~~are effective upon issuance.~~ In ~~December 2022,~~November 2023, the FASB issued ASU ~~2022-06, “Reference rate reform~~2023-07, “Segment Reporting (Topic ~~848)~~280): ~~Deferral~~Improvements to Reportable Segment Disclosures.” The amendments in the ASU increase reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit and loss, and provide new segment disclosure requirements for entities with a single reportable segment, among other disclosure requirements. This ASU is effective on a retrospective basis for annual periods beginning in 2024, and for interim periods beginning January 1, 2025. Early adoption is permitted. We are currently evaluating the impact of the ~~sunset date of Topic 848”~~new standard, which defers the expiration date for Topic 848 from December 31, 2022 until December 31, 2024. At December 31, 2022, our revolving loan credit agreement (the “ABL Facility”) and the senior secured term loan credit agreement, as amended (the “Term Loan Facility”), provide for an interest rate based on LIBOR. In February 2023, we amended the terms of our ABL Facility, including transitioning the interest rate from LIBORis limited to other base rates, and we expect to similarly modify the interest rate basis in the Term Loan Facility in 2023. We do not expect the modifications of these facilities to have a material impact on our consolidated financial ~~statements.~~statement disclosures.

2. ~~Discontinued Operations~~

As discussed above, the results of RXO and intermodal are presented as discontinued operations. In addition, discontinued operations include GXO Logistics, Inc. (“GXO”), our former logistics segment that we spun off in August 2021.

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

~~Three Months Ended March 31,~~

~~(In millions)~~

~~2022~~

~~Revenue~~

~~1,645~~

~~Salaries, wages and employee benefits~~

~~164~~

~~Purchased transportation~~

~~1,221~~

~~Fuel, operating expenses and supplies~~

~~115~~

~~Operating taxes and licenses~~

~~Insurance and claims~~

~~Depreciation and amortization expense~~

~~Gain on sale of business~~

~~(450)~~

~~Transaction and other operating costs~~

~~Operating income~~

~~561~~

~~Income tax provision~~

~~105~~

~~Net income from discontinued operations attributable to discontinued operations~~

~~456~~

For the three months ended March 31, 2023, we incurred approximately $24 million of costs related to the RXO spin-off, of which $4 million are reflected within income (loss) from discontinued operations in our Condensed Consolidated Statements of Income. For the three months ended March 31, 2022, we incurred approximately $4 million of costs related to the GXO spin-off all of which are reflected within income from continuing operations in our Condensed Consolidated Statements of income.

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 reserve for these matters was approximately $16 million and $15 million, respectively, as of March 31, 2023 and approximately $17 million and $16 million, respectively, as of December 31, 2022.

3. Segment Reporting

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

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

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In our European Transportation segment, we serve ~~a large~~an extensive base of customers ~~with~~within the consumer, trade and industrial markets. We offer dedicated truckload, LTL, truck brokerage, managed transportation, last mile, freight forwarding and multimodal solutions, such as road-rail and road-short sea combinations.

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

Our chief operating decision maker (“CODM”) 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 EBITDA”), which we define as income from continuing operations before interest expense, income tax, depreciation and amortization expense, transaction and integration costs, restructuring costs and other adjustments. Segment Adjusted EBITDA ~~has historically reflected~~includes an allocation of corporate costs. ~~In the first quarter~~

Table 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.Contents

Selected financial data for our segments is as follows:


		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
(in millions)	(in millions)		2023		2022		(in millions)	2024	2023
Revenue	Revenue
North American LTL
North American LTL
North American LTL	North American LTL		$	1,120	$	1,107
European Transportation	European Transportation		787		787
Total	Total		$	1,907	$	1,894

Adjusted EBITDA	Adjusted EBITDA
Adjusted EBITDA
Adjusted EBITDA
North American LTL
North American LTL
North American LTL	North American LTL		$	182	$	186
European Transportation	European Transportation		37		38
Corporate	Corporate		(9)		(40)
Total Adjusted EBITDA	Total Adjusted EBITDA		210		184
Less:	Less:

Interest expense	Interest expense		42		37

Interest expense

Interest expense
Income tax provision	Income tax provision		4		8
Depreciation and amortization expense	Depreciation and amortization expense		101		94

Transaction and integration costs (1)

Transaction and integration costs (1)

Transaction and integration costs (1)	Transaction and integration costs (1)		22		7
Restructuring costs (2)	Restructuring costs (2)		24		6

Income from continuing operations
Income from continuing operations
Income from continuing operations	Income from continuing operations		$	17	$	32

Depreciation and amortization expense	Depreciation and amortization expense
Depreciation and amortization expense
Depreciation and amortization expense
North American LTL
North American LTL
North American LTL	North American LTL		$	68	$	56
European Transportation	European Transportation		32		33
Corporate	Corporate		1		5
Total	Total		$	101	$	94

(1) Transaction and integration costs for the first quarter of 2024 and 2023 are primarily comprised of stock-based compensation for certain employees related to strategic initiatives. Transaction and integration costs for the first quarter of 2022 are primarily comprised of third-party professional fees related to strategic initiatives as well as retention awards paid to certain employees. Transaction and integration costs for the three months ended March 31, ~~2023~~2024 and ~~2022~~2023 include $1 million and $2$1 million, respectively, related to our European Transportation segment, and ~~$21~~$13 million and $5$21 million, respectively, related to Corporate.

(2) Restructuring costs for the three months ended March 31, 2024 and 2023 include $0 million and $6 million, respectively, related to our North American LTL segment, $8 million and $7 million, respectively, related to our European Transportation segment, and $0 million and $11 million, respectively, related to Corporate. See Note 5—4— Restructuring Charges for further information on our restructuring actions.

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4.3. Revenue Recognition

Disaggregation of Revenues

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


		Three Months Ended March 31, 2023
		Three Months Ended March 31, 2024
		Three Months Ended March 31, 2024
		Three Months Ended March 31, 2024
(In millions)	(In millions)	North American LTL		European Transportation		Total		(In millions)	North American LTL	European Transportation	Total
Revenue	Revenue
United States
United States
United States	United States	$	1,097	$	—	$	1,097
North America (excluding United States)	North America (excluding United States)	23		—		23
France	France	—		340		340
United Kingdom	United Kingdom	—		224		224
Europe (excluding France and United Kingdom)	Europe (excluding France and United Kingdom)	—		223		223

Total	Total	$	1,120	$	787	$	1,907
Total
Total


	Three Months Ended March 31, 2023
(In millions)	North American LTL		European Transportation		Total
Revenue
United States	$	1,097	$	—	$	1,097
North America (excluding United States)	23		—		23
France	—		340		340
United Kingdom	—		224		224
Europe (excluding France and United Kingdom)	—		223		223

Total	$	1,120	$	787	$	1,907

Three Months Ended March 31, 2022
(In millions) North American LTL European Transportation Total
Revenue
United States $ 1,084 $ — $ 1,084
North America (excluding United States) 23 — 23
France — 352 352
United Kingdom — 225 225
Europe (excluding France and United Kingdom) — 210 210
Total $ 1,107 $ 787 $ 1,894

5.4. 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.~~infrastructure. These actions generally include severance and facility-related costs, including impairment of lease assets, as well as contract termination costs, and are intended to improve our efficiency and profitability.

Our restructuring-related activity was as follows:

Three Months Ended March 31, 2023
(In millions) Reserve Balance
as of
December 31, 2022 Charges Incurred Payments Foreign Exchange and Other Reserve Balance
as of
March 31, 2023
Severance
North American LTL $ 2 $ — $ (1) $ — $ 1
European Transportation 1 7 (2) — 6
Corporate 19 11 (6) (1) 23
Total $ 22 $ 18 $ (9) $ (1) $ 30

~~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.~~

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			Three Months Ended March 31, 2024
(In millions)	Reserve Balance as of December 31, 2023		Charges Incurred		Payments		Reserve Balance as of March 31, 2024
Severance
North American LTL	$	2	$	—	$	(1)	$	1
European Transportation	1		8		(4)		5
Corporate	8		—		(3)		5









Total	$	11	$	8	$	(8)	$	11

We expect that the majority of the cash outlays related to the severance charges incurred in the first three months of ~~2023~~2024 will be completed within 12 months.

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5. Derivative Instruments

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

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

March 31, 2023

Derivative Assets

Derivative Liabilities

March 31, 2024

Derivative Assets

Derivative Liabilities

(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

Cross-currency swap agreements

617

Other current assets

—

Other current liabilities

(21)

Cross-currency swap agreements

Other long-term assets

Other long-term liabilities

—

Interest rate swaps

1,882

Other current assets

—

Other current liabilities

—

Total

(21)

Total

December 31, 2022

Derivative Assets

Derivative Liabilities

December 31, 2023

Derivative Assets

Derivative Liabilities

(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

Cross-currency swap agreements

332

Other current assets

—

Other current liabilities

(11)

Cross-currency swap agreements

Other long-term assets

Other long-term liabilities

—

Cross-currency swap agreements

Interest rate swaps

1,882

Other current assets

—

Other current liabilities

(1)

Interest rate swaps

Total

(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 Loss on Derivatives				Amount of Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)
			Three Months Ended March 31,
			Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) on Derivatives
			Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) on Derivatives
			Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) on Derivatives												Amount of Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)
		Three Months Ended March 31,														Three Months Ended March 31,
(In millions)	(In millions)		2023		2022			2023		2022		(In millions)	2024	2023			2024	2023
Derivatives designated as cash flow hedges	Derivatives designated as cash flow hedges

Interest rate swaps	Interest rate swaps		1		1			—		—

Interest rate swaps

Interest rate swaps
Derivatives designated as net investment hedges	Derivatives designated as net investment hedges
Cross-currency swap agreements	Cross-currency swap agreements		(10)		9			2		1
Cross-currency swap agreements
Cross-currency swap agreements
Total	Total		$	(9)	$	10		$	2	$	1

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Cross-Currency Swap Agreements

We enter into cross-currency swap agreements to manage the foreign currency exchange risk related to our international operations by effectively converting our fixed-rate USD-denominated debt, including the associated interest payments, to fixed-rate, euro (“EUR”)-denominated debt. The risk management objective of these transactions is to manage foreign currency risk relating to net investments in subsidiaries denominated in foreign currencies and reduce the variability in the functional currency equivalent cash flows of this debt.

During the term of the swap contracts, we 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.~~2027.

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

Interest Rate Hedging

We execute short-term interest rate swaps to mitigate variability in forecasted interest payments on our Senior Secured Term Loan Credit ~~Agreement.~~Agreement (the “Term Loan Credit Agreement”). The interest rate swaps convert floating-rate interest payments into fixed rate interest payments. We designated the interest rate swaps as qualifying hedging instruments and account for these derivatives as cash flow hedges. The outstanding interest rate swaps mature on various dates ~~through 2023.~~in 2024 and 2025.

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.

7.6. Debt


			March 31, 2023				December 31, 2022
		March 31, 2024												March 31, 2024			December 31, 2023
(In millions)	(In millions)		Principal Balance		Carrying Value		Principal Balance		Carrying Value		(In millions)	Principal Balance	Carrying Value		Principal Balance	Carrying Value

Term loan facility	Term loan facility		$	2,003	$	1,983	$	2,003	$	1,981
Term loan facility
Term loan facility

6.25% senior notes due 2025			112		112		112		111
6.25% senior secured notes due 2028
6.25% senior secured notes due 2028
6.25% senior secured notes due 2028
7.125% senior notes due 2031
7.125% senior notes due 2032
6.70% senior debentures due 2034	6.70% senior debentures due 2034		300		218		300		217

Finance leases, asset financing and other
Finance leases, asset financing and other
Finance leases, asset financing and other	Finance leases, asset financing and other		231		231		223		223
Total debt	Total debt		2,646		2,544		2,638		2,532
Short-term borrowings and current maturities of long-term debt	Short-term borrowings and current maturities of long-term debt		66		66		59		59
Long-term debt	Long-term debt		$	2,580	$	2,478	$	2,579	$	2,473

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

(In millions) Fair Value Level 1 Level 2
March 31, 2023 $ 2,616 $ 395 $ 2,221
December 31, 2022 2,601 392 2,209


(In millions)	Fair Value		Level 1		Level 2
March 31, 2024	$	3,553	$	2,226	$	1,327
December 31, 2023	3,583		2,235		1,348

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.

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ABL Facility

As of March 31, ~~2023,~~2024, our borrowing base was $565 million and our availability under our ~~revolving loan credit agreement~~Second Amended and Restated Revolving Credit Agreement, as amended (the “ABL Facility”) was ~~$502 million. Outstanding~~$564 million after considering outstanding letters of credit ~~were~~of less than $1 ~~million as of March 31, 2023.~~million. As of March 31, ~~2023,~~2024, we were in compliance with the ABL Facility’s financial covenants.

Letters of Credit Facility

As of March 31, ~~2023,~~2024, we had issued ~~$154~~$138 million in aggregate face amount of letters of credit under our $200 million uncommitted secured evergreen letter of credit facility.

Term Loan Facility

The applicable interest rate ~~on our~~for the two tranches of the term loan facility ~~was 6.45%~~approximated 7.32% as of March 31, ~~2023.~~2024.

8.7. Earnings (Loss) per Share

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


			Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
(In millions, except per share data)	(In millions, except per share data)			2023		2022		(In millions, except per share data)	2024	2023

Net income from continuing operations attributable to common shares				$	17	$	32
Net income from continuing operations

Net income (loss) from discontinued operations, net of amounts attributable to noncontrolling interest				(3)		456

Net income from continuing operations

Net income attributable to common shares, basic				$	14	$	488

Net income from continuing operations

Net loss from discontinued operations

Net loss from discontinued operations

Net loss from discontinued operations

Net income

Net income

Net income

Basic weighted-average common shares	Basic weighted-average common shares			116		115
		Dilutive effect of stock-based awards		—		1
Basic weighted-average common shares
Basic weighted-average common shares
	Dilutive effect of stock-based awards
Diluted weighted-average common shares	Diluted weighted-average common shares			116		116

Basic earnings from continuing operations per share
Basic earnings from continuing operations per share
Basic earnings from continuing operations per share	Basic earnings from continuing operations per share			$	0.15	$	0.28
Basic earnings (loss) from discontinued operations per share	Basic earnings (loss) from discontinued operations per share			(0.02)		3.97
Basic earnings per share	Basic earnings per share			$	0.13	$	4.25

Diluted earnings from continuing operations per share	Diluted earnings from continuing operations per share			$	0.15	$	0.28

Diluted earnings from continuing operations per share

Diluted earnings from continuing operations per share
Diluted earnings (loss) from discontinued operations per share	Diluted earnings (loss) from discontinued operations per share			(0.02)		3.94
Diluted earnings per share	Diluted earnings per share			$	0.13	$	4.22

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8. Commitments and Contingencies

We are involved, and expect to continue to be involved, in numerous proceedings arising out of the conduct of our business. These proceedings may include claims for property damage or personal injury incurred in connection with the transportation of freight, environmental liability, commercial disputes, insurance coverage disputes and employment-related claims, including claims involving asserted breaches of employee restrictive covenants.

We establish accruals for specific legal proceedings when it is considered probable that a loss has been incurred and the amount of the loss can be reasonably estimated. We review and adjust 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 reasonably be considered to be possible or probable is based on our assessment, together with legal counsel, regarding the ultimate outcome of the matter.

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We believe that we have adequately accrued for the potential impact of loss contingencies that are probable and reasonably estimable. We do not believe that the ultimate resolution of any matters to which we are presently a party will have a material adverse effect on our results of operations, financial condition or cash flows. However, the results of these matters cannot be predicted with certainty, and an unfavorable resolution of one or more of these matters could have a material adverse effect on our financial condition, results of operations or cash flows. Legal costs incurred related to these matters are expensed as incurred.

We carry liability and excess umbrella insurance policies that we deem sufficient to cover potential legal claims arising in the normal course of conducting our operations as a transportation company. In the event we are required to satisfy a legal claim outside the scope of the coverage provided by insurance, our financial condition, results of operations or cash flows could be negatively impacted.

Insurance Contribution Litigation

In April 2012, Allianz Global Risks US Insurance Company sued eighteen insurance companies in a case captioned Allianz Global Risks US Ins. Co. v. ACE Property & Casualty Ins. Co., et al., Multnomah County Circuit Court (Case No. 1204-04552). Allianz Global Risks US Ins. Co. (“Allianz”) sought contribution on environmental and product liability claims that Allianz agreed to defend and indemnify on behalf of its insured, Daimler Trucks North America (“DTNA”). Defendants had insured Freightliner’s assets, which DTNA acquired in 1981. Con-way, Freightliner’s former parent company, intervened. We acquired Con-way in 2015. Con-way and Freightliner had self-insured under fronting agreements with defendant insurers ACE, Westport, and General. Under those agreements, Con-way agreed to indemnify the fronting carriers for damages assessed under the fronting policies. Con-way’s captive insurer, Centron, was also a named defendant. After a seven-week jury trial in 2014, the jury found that Con-way and the fronting insurers never intended that the insurers defend or indemnify any claims against Freightliner. In June 2015, Allianz appealed to the Oregon Court of Appeals. In May 2019, the Oregon Court of Appeals upheld the jury verdict. In September 2019, Allianz appealed to the Oregon Supreme Court. In March 2021, the Oregon Supreme Court reversed the jury verdict, holding that it was an error to allow the jury to decide how the parties intended the fronting policies to operate, and also holding that the trial court improperly instructed the jury concerning one of the pollution exclusions at issue. In July 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~~In June 2023, the ~~next stages of~~trial court decided 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 fall of 2024, and the trial on allocation of defense costs among the ~~subject~~applicable insurance ~~policies.~~policies is to take place in early 2025. We have accrued an immaterial amount for the potential exposure associated with ~~Centron in~~ultimate allocation to the ~~bench trial regarding allocation. As~~relevant policies; however, any losses that may arise in connection with the fronting policies issued by defendant insurers ACE, Westport, and General are not reasonably estimable at this ~~time, no liability has been accrued in the accompanying interim consolidated financial statements for those potential exposures.~~time.

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California Environmental Matters

In August 2022, the Company received a letter from the San Bernardino County District Attorney’s Office (the “County”), written in cooperation with certain other California District Attorneys and the Los Angeles City Attorney, notifying the Company of an investigation into alleged violations with respect to underground storage tanks, hazardous materials, and hazardous waste in California, and offering a meeting. ~~On October 20, 2022 and April 6, 2023,~~Following meetings between the Company ~~met with the~~and County ~~Attorneys~~attorneys and the Los Angeles City ~~Attorney. We are assessing~~Attorney and an assessment of the allegations and the underlying facts, ~~and continue to engage~~the Company engaged in negotiations with the County and Los Angeles City Attorneys to address settlement of the alleged violations. ~~No discussion of potential monetary sanctions or settlement amount has occurred to date, nor can we reasonably estimate potential costs at~~The Company previously accrued for this ~~time.~~matter, and it was resolved for $7.9 million in April 2024.

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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 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 other filings with the Securities and Exchange Commission (the “SEC”). All forward-looking statements set forth in this Quarterly Report on Form 10-Q are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequence to or effects on the Company or its business or operations. The following discussion should be read in conjunction with the 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 ~~2022~~Annual Report on Form ~~10-K.~~10-K for the year ended December 31, 2023 (the “2023 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, Inc., together with its subsidiaries (“XPO,” “we” or ~~“we”~~the “Company”), is a leading provider of freight transportation services, with company-specific avenues for value creation. We use our proprietary technology to move goods efficiently through our customers’ supply chains in North America and Europe. As of March 31, ~~2023,~~2024, we had approximately ~~38,000~~39,000 employees and ~~558~~610 locations in 17 countries serving approximately ~~48,000~~52,000 customers.

Our company has two reportable segments: North American Less-Than-Truckload (“LTL”), the largest component of our business, and European Transportation. Our North American LTL segment includes the results of our trailer manufacturing operations.

InWithin the ~~first quarter of 2023, we made~~tables presented, 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~~may not add due to the ~~current year’s presentation. We provided certain unaudited recast financial information for fiscal years 2020, 2021 and 2022~~use of rounded numbers. Percentages presented are calculated from the underlying numbers in ~~a Form 8-K filed with the U.S. Securities and Exchange Commission on April 11, 2023.~~millions.

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

LTL in North America is a bedrock industry providing a critical service to the economy, with favorable pricing dynamics and ~~a stable~~an established competitive landscape. ~~We have~~XPO is one of the largest LTL networks in North America, with approximately 8%9% share of the ~~$59 billion~~ U.S. market, estimated to be $52 billion as of December 31, ~~2022.~~2023.

~~Our LTL sales and service professionals and network~~

Table of ~~drivers, tractors, trailers and terminals serve~~Contents

We provide approximately ~~27,000 customers~~33,000 shippers in North ~~America. We provide shippers~~America with critical geographic density and day-definite domestic and cross-border services to approximately 99% of U.S. zip codes, as well as Mexico, Canada and the Caribbean.

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~~Together, our~~ Our capacity and reach give us the ability to manage large freight volumes efficiently and balance our network to leverage fixed costs. For the trailing 12 months ended March 31, ~~2023, we delivered~~2024, our customer-focused organization of truck drivers, service center teams and sales professionals worked together to move approximately 18 billion pounds of ~~freight.~~freight through our network to its destinations.

Importantly, our LTL business historically has generated a high return on invested capital and robust free cash flow. This supports our ongoing investments in ~~the expansion of~~ our people, network capacity and ~~the enhancement of our~~ proprietary technology. We ~~are managing~~manage 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~~expansion of ~~900 net new doors to~~ our ~~terminal~~service center footprint ~~by the first quarter of 2024 from an October 2021 baseline.~~in strategic markets with long-term demand. Since implementing our LTL 2.0 growth plan in the fourth quarter of 2021, we have added ~~six terminals to our network, representing 369 net new doors.~~over 4,000 tractors and 12,300 trailers.

~~Additionally,~~In 2023, we ~~are continuing to execute a host of initiatives that are specific to XPO and largely independent of the macroeconomic environment. We~~ produced ~~4,705~~over 6,400 trailers at our in-house trailer manufacturing facility, ~~in 2022, nearly doubling the 2021 output. Our~~surpassing our goal ~~is to produce~~of more than 6,000 ~~trailers in 2023. We are also investing in expanding the number of drivers trained at our 130 commercial driver schools.~~trailers. Our in-house trailer manufacturing ~~and driver schools are examples~~is an example of ~~idiosyncratic,~~a self-reliant ~~capabilities~~capability that ~~are~~is competitively advantageous to ~~XPO,~~us, particularly when industry ~~constraints on equipment or drivers exist.~~conditions make it difficult to source equipment.

In December 2023, we completed the acquisition of 28 service centers previously operated by Yellow Corporation (the “Yellow Asset Acquisition”), representing approximately 2,900 doors. We expect the net increase in service centers and doors to be less than the gross number purchased as we look for opportunities to rationalize our existing footprint. This strategic acquisition of assets aligns with our commitment to invest in expanding our LTL network capacity.

As a leading provider of freight transportation services, our business can be impacted to varying degrees by factors beyond our control. In 2024, the overall freight environment continues to be recessionary, in large part due to underlying trends in supply and demand. Despite this, we continue to perform well and see growth potential ahead as we continue to expand our business by investing in capacity for the long-term, gaining profitable market share and aligning price with the value we provide to customers.

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

European Transportation Segment

XPO has a unique pan-European transportation platform with leading positions in key geographies: weWe are the #1 full truckload broker and the #1 pallet network (LTL) provider in France; the #1 full truckload broker and the #1 LTL provider in Iberia (Spain and Portugal); and a top-tier dedicated truckload provider in the U.K., where we also have the largest single-owner LTL network. We serve ~~a large~~an extensive base of customers within the consumer, trade and industrial markets, including many sector leaders that have long-tenured relationships with us.

Our range of freight services in Europe encompasses dedicated truckload, LTL, truck brokerage, managed transportation, last mile, freight forwarding and, increasingly, multimodal solutions, such as road-rail and road-short sea combinations that we tailor to customer needs. Our operators use our proprietary ~~XPO Connect~~®technology to manage these services within our digital ecosystem in Europe.

Technology ~~and Sustainability~~

One of the ways in which we deliver superior service to our 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 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 pricing — the main components of the service we provide. An LTL network of our scale has hundreds of thousands of activities underway at any given time, all managed on our technology. For the trailing 12 months ended March 31, ~~2023,~~2024, we moved approximately 18 billion pounds of freight ~~773~~813 million miles, including moving linehaul freight an average of ~~2.5~~2.6 million miles a day.

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With intelligent route-building, we can reduce empty miles in our linehaul network, improve load factor and mitigate cargo damage. Our proprietary bypass models make recommendations to enhance trailer utilization, assimilating massive amounts of data and taking volume, density, and freight dimensions into account. We use our real-time visualization tools to reduce costs with pickups and deliveries and ~~we developed piece-level tracking to identify individual pallets to enhance shipment loading and visibility. We also~~ developed a robust pricing platform for contractual account management and automated, dynamic pricing for local accounts.

Importantly, our technology also helps our company meet its environmental ~~social and governance (“ESG”)~~ goals ~~such as a reduction in our carbon footprint,~~ and can help our customers meet their own goals. For a detailed discussion of our philosophy relating to innovation and ~~ESG~~environmental matters, ~~see the Company Overview included~~refer to “Business” in our ~~2022~~2023 Form ~~10-K, as well as our current Sustainability Report at~~ ~~sustainability.xpo.com~~.

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~~Impacts of 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 virus that emerged in 2020 affected 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. 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.

Additionally, economic inflation can have a negative impact on our operating costs, such as the rising costs of fleet maintenance, fuel and purchased transportation we experienced in 2022. We mitigate these costs by mechanisms in our customer contracts, including fuel surcharge clauses and general rate increases. In addition, the rise in interest rates increased our cost of capital in 2022. An economic recession could depress customer demand for transportation services.

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.10-K.

Consolidated Summary Financial Table


		Three Months Ended March 31,	Percent of Revenue				Change
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,												Percent of Revenue	Change
(Dollars in millions)	(Dollars in millions)		2023		2022		2023		2022		2023 vs. 2022		(Dollars in millions)			2024			2023				2024					2023					2024 vs. 2023
Revenue	Revenue		$	1,907	$	1,894	100.0	%	100.0	%	0.7	%	Revenue			$	2,018	$	$	1,907	100.0			100.0		%			100.0		%			5.8		%
Salaries, wages and employee benefits	Salaries, wages and employee benefits		762		725		40.0	%	38.3	%	5.1	%	Salaries, wages and employee benefits			834		762		762		41.3			41.3		%			40.0		%			9.4		%
Purchased transportation	Purchased transportation		457		510		24.0	%	26.9	%	(10.4)	%	Purchased transportation			438		457		457		21.7			21.7		%			24.0		%			(4.2)		%
Fuel, operating expenses and supplies	Fuel, operating expenses and supplies		427		418		22.4	%	22.1	%	2.2	%	Fuel, operating expenses and supplies			413		427		427		20.5			20.5		%			22.4		%			(3.3)		%
Operating taxes and licenses	Operating taxes and licenses		15		16		0.8	%	0.8	%	(6.3)	%	Operating taxes and licenses			19		15		15		0.9			0.9		%			0.8		%			26.7		%
Insurance and claims	Insurance and claims		44		56		2.3	%	3.0	%	(21.4)	%	Insurance and claims			38		44		44		1.9			1.9		%			2.3		%			(13.6)		%
Gains on sales of property and equipment	Gains on sales of property and equipment		(3)		(1)		(0.2)	%	(0.1)	%	200.0	%	Gains on sales of property and equipment			(2)		(3)		(3)		(0.1)			(0.1)		%			(0.2)		%			(33.3)		%
Depreciation and amortization expense	Depreciation and amortization expense		101		94		5.3	%	5.0	%	7.4	%	Depreciation and amortization expense			117		101		101		5.8			5.8		%			5.3		%			15.8		%

Transaction and integration costs	Transaction and integration costs		22		7		1.2	%	0.4	%	214.3	%
Transaction and integration costs
Transaction and integration costs																14			22				0.7		%			1.2		%			(36.4)		%
Restructuring costs	Restructuring costs		24		6		1.3	%	0.3	%	300.0	%	Restructuring costs			8		24		24		0.4			0.4		%			1.3		%			(66.7)		%
Operating income	Operating income		58		63		3.0	%	3.3	%	(7.9)	%	Operating income			138		58		58		6.8			6.8		%			3.0		%			137.9		%
Other income	Other income		(5)		(14)		(0.3)	%	(0.7)	%	(64.3)	%	Other income			(10)		(5)		(5)		(0.5)			(0.5)		%			(0.3)		%			100.0		%

Interest expense	Interest expense		42		37		2.2	%	2.0	%	13.5	%
Interest expense
Interest expense																58			42				2.9		%			2.2		%			38.1		%
Income from continuing operations before income tax provision	Income from continuing operations before income tax provision		21		40		1.1	%	2.1	%	(47.5)	%	Income from continuing operations before income tax provision			90		21		21		4.5			4.5		%			1.1		%			328.6		%
Income tax provision	Income tax provision		4		8		0.2	%	0.4	%	(50.0)	%	Income tax provision			23		4		4		1.1			1.1		%			0.2		%			475.0		%
Income from continuing operations	Income from continuing operations		17		32		0.9	%	1.7	%	(46.9)	%	Income from continuing operations			67		17		17		3.3			3.3		%			0.9		%			294.1		%
Income (loss) from discontinued operations, net of taxes			(3)		456		(0.2)	%	24.1	%	(100.7)	%
Loss from discontinued operations, net of taxes													Loss from discontinued operations, net of taxes			—			(3)				—		%			(0.2)		%			(100.0)		%
Net income	Net income		$	14	$	488	0.7	%	25.8	%	(97.1)	%	Net income			$	67	$	$	14	3.3			3.3		%			0.7		%			378.6		%

Three Months Ended March 31, ~~2023~~2024 Compared with Three Months Ended March 31, ~~2022~~2023

Our consolidated revenue for the first quarter of ~~2023~~2024 increased ~~0.7%~~5.8% to ~~$1.9~~$2.0 billion, compared with the same ~~quarter~~period in ~~2022.~~2023. The increase ~~reflects growth~~ in ~~fuel surcharge~~ revenue ~~in our LTL segment, due primarily to higher diesel prices. Foreign currency movement decreased revenue by approximately 2.5 percentage points~~ in the first quarter of ~~2023.~~

~~Table~~2024 compared to the same period in 2023 primarily reflects growth in our North American LTL segment. Foreign currency movement increased revenue by approximately 1.0 percentage point in the first quarter of ~~Contents~~

2024.

Salaries, wages and employee benefits includes compensation-related costs for our employees, including salaries, wages, incentive compensation, healthcare-related costs and payroll taxes, and covers drivers and dockworkers, operations and facility workers and employees in support roles and other positions. Salaries, wages and employee benefits for the first quarter of ~~2023~~2024 was $834 million, or 41.3% of revenue, compared with $762 million, or 40.0% of revenue, ~~compared with $725 million, or 38.3% of revenue,~~ for the same ~~quarter~~period in ~~2022.~~2023. The year-over-year increase as a percentage of revenue primarily reflects the impact of inflation on our cost base, ~~partially offset by lower headcount.~~the insourcing of a greater proportion of linehaul from third-party transportation providers, and higher incentive compensation related to our operating performance. The increase in salaries, wages and employee benefits also reflects higher volumes in both of our segments.

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Purchased transportation includes costs of procuring third-party freight transportation. Purchased transportation for the first quarter of ~~2023~~2024 was $438 million, or 21.7% of revenue, compared with $457 million, or 24.0% of revenue, ~~compared with $510 million, or 26.9% of revenue,~~ for the same ~~quarter~~period in ~~2022.~~2023. The year-over-year decrease as a percentage of revenue primarily reflects ~~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.~~providers and lower rates paid to third-party providers for purchased transportation miles.

Fuel, operating expenses and supplies includes the cost of fuel purchased for use in our vehicles as well as related taxes, maintenance and lease costs for our equipment, including tractors and trailers, costs related to operating our owned and leased facilities, bad debt expense, third-party professional fees, information technology expenses and supplies expense. Fuel, operating expenses and supplies for the first quarter of ~~2023~~2024 was $413 million, or 20.5% of revenue, compared with $427 million, or 22.4% of revenue, ~~compared with $418 million, or 22.1% of revenue,~~ for the same ~~quarter~~period in ~~2022.~~2023. The year-over-year ~~increase~~decrease primarily reflects ~~higher lease~~lower fuel costs and lower bad debt ~~expense, partially offset by lower third-party information technology expenses.~~expense.

Operating taxes and licenses includes tax expenses related to our vehicles and our owned and leased facilities as well as license expenses to operate our vehicles. Operating taxes and licenses for the first quarter of 2024 was $19 million, compared with $15 million for the same period in 2023. The year-over-year increase primarily reflects property taxes on newly acquired service centers and lower tax incentives in Illinois.

Insurance and claims includes costs related to vehicular and cargo claims for both purchased insurance and self-insurance programs. Insurance and claims for the first quarter of ~~2023~~2024 was ~~$44~~$38 million, compared with ~~$56~~$44 million for the same ~~quarter~~period in ~~2022.~~2023. The year-over-year decrease reflects lower ~~cargo insurance~~ expense due to improved operating performance related to damaged ~~shipments.~~shipments, partially offset by higher vehicular claims.

Gains on sales of property and equipment for the first quarter of 2024 was $2 million, compared with $3 million for the same period in 2023.

Depreciation and amortization expense for the first quarter of ~~2023~~2024 was ~~$101~~$117 million, compared with ~~$94~~$101 million for the same ~~quarter~~period in ~~2022.~~2023. The year-over-year increase reflects the impact of capital investments, in particular tractors and trailers.

Transaction and integration costs for the first quarter of ~~2023~~2024 were ~~$22~~$14 million, compared with $7$22 million for the same ~~quarter~~period in ~~2022.~~2023. Transaction and integration costs for the first quarter of 2024 and 2023 are primarily comprised of stock-based compensation for certain employees related to strategic initiatives. Transaction and integration costs for the first quarter of 2022 are primarily comprised of third-party professional fees related to strategic initiatives as well as retention awards paid to certain employees. We expect ~~to incur additional transaction and integration~~stock-based compensation costs related to ~~rebranding and stock-based compensation~~our previously announced strategic initiatives to conclude in ~~2023 and~~ 2024.

Restructuring costs for the first quarter of ~~2023~~2024 were ~~$24~~$8 million, compared with $6$24 million for the same ~~quarter~~period in ~~2022.~~2023. 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.~~infrastructure. For more information, see Note 5—4—Restructuring Charges to our Condensed Consolidated Financial Statements.

Other income ~~primarily consists of pension income. Other income~~ for the first quarter of ~~2023~~2024 was $5$10 million, compared with ~~$14~~$5 million for the same ~~quarter~~period in ~~2022.~~2023. The year-over-year ~~decrease~~increase reflects ~~$11~~$3 million ~~of lower~~in investment income and a $2 million increase in net periodic pension ~~income in the first quarter of 2023 primarily due to a rise in interest rates and a lower expected return on plan assets.~~income.

Interest expense increased to $58 million for the first quarter of 2024, compared with $42 million for the ~~first three months~~same period of ~~2023 from $37 million for the first three months of 2022.~~2023. The increase ~~in interest expense~~ is primarily due to athe debt issuance in the fourth quarter of 2023 to finance the Yellow Asset Acquisition and higher ~~floating~~prevailing interest ~~rate on our Term Loan Facilities, partially offset by the impact of the redemption of $1.1 billion of our 6.25% senior notes due 2025~~rates in ~~2022.~~2024.

Our effective income tax rates were ~~18.3%~~25.2% and ~~19.6%~~18.3% for the first ~~three months~~quarter of ~~2023~~2024 and ~~2022,~~2023, respectively. The effective tax rates for the first quarter of ~~2023~~2024 and ~~2022~~2023 were based on forecasted full-year effective tax rates, adjusted for discrete items that occurred within the periods presented. The ~~decrease~~increase in our effective income tax rate for the first ~~three months~~quarter of ~~2023~~2024 compared to the same ~~quarter of 2022~~period in 2023 was primarily driven by ~~an increased impact~~

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~~from discrete items due to lower~~higher pre-tax book ~~income. The primary items impacting~~income which reduced the impact of discrete tax items. In the first quarter of 2024, the effective tax rate was impacted by losses for which no tax benefit can be recognized and forecasted non-deductible executive compensation expense, partially offset by a discrete tax benefit of $5 million from stock-based compensation. In the first quarter of 2023, ~~are~~the effective tax rate was impacted by $2 million of discrete tax benefits from revaluing deferred state taxes, partially offset by forecasted non-deductible executive compensation expense. ~~The primary item impacting the effective tax rate for the first quarter~~

Table of ~~2022 was a discrete tax benefit of $2 million from stock-based compensation.~~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 EBITDA”), which we define as income from continuing operations before interest expense, income tax, depreciation and amortization expense, transaction and integration costs, restructuring costs and other adjustments. Segment Adjusted EBITDA ~~has historically reflected~~includes 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 3—2—Segment Reporting to our Condensed Consolidated Financial Statements for further information and a reconciliation of Adjusted EBITDA to Income from continuing operations.

North American Less-Than-Truckload Segment


		Three Months Ended March 31,	Percent of Revenue				Change
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,												Percent of Revenue	Change
(Dollars in millions)	(Dollars in millions)		2023		2022		2023		2022		2023 vs. 2022		(Dollars in millions)			2024			2023				2024					2023					2024 vs. 2023
Revenue	Revenue		$	1,120	$	1,107	100.0	%	100.0	%	1.2	%	Revenue			$	1,221	$	$	1,120	100.0			100.0		%			100.0		%			9.0		%
Adjusted EBITDA	Adjusted EBITDA		182		186		16.3	%	16.8	%	(2.2)	%	Adjusted EBITDA			255		182		182		20.9			20.9		%			16.3		%			40.1		%
Depreciation and amortization	Depreciation and amortization		68		56		6.1	%	5.1	%	21.4	%	Depreciation and amortization			82		68		68		6.7			6.7		%			6.1		%			20.6		%

Revenue in our North American LTL segment increased ~~1.2%~~9.0% to ~~$1.12~~$1.2 billion for the first quarter of ~~2023,~~2024, compared with ~~$1.11~~$1.1 billion for the same ~~quarter~~period in ~~2022.~~2023. Revenue included fuel surcharge revenue of ~~$217~~$210 million and ~~$207~~$217 million, respectively, for the first ~~three months~~quarters of ~~2023~~2024 and ~~2022.~~2023. The ~~increase~~decrease in fuel surcharge revenue was primarily ~~reflects higher~~driven by lower diesel prices.

We evaluate the revenue performance of our LTL business using several commonly used metrics, including volume (weight per day in pounds) and yield, which is a commonly used measure of LTL pricing trends. 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 March 31,
				2023		2022		Change %
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
			2024															2024			2023	Change %
Pounds per day (thousands)	Pounds per day (thousands)			68,889		70,176		(1.8)	%	Pounds per day (thousands)	70,709		68,889		68,889	2.6			2.6	%

Shipments per day
Shipments per day
Shipments per day											51,392			49,107			4.7		%

Average weight per shipment (in pounds)
Average weight per shipment (in pounds)
Average weight per shipment (in pounds)											1,376			1,403			(1.9)		%

Gross revenue per hundredweight, excluding fuel surcharges	Gross revenue per hundredweight, excluding fuel surcharges			$	21.06	$	20.76	1.4	%

Gross revenue per hundredweight, excluding fuel surcharges

Gross revenue per hundredweight, excluding fuel surcharges											$	23.13		$	21.06		9.8		%

The year-over-year increase in revenue, excluding fuel surcharge revenue, ~~for~~in the first quarter of ~~2023~~2024 reflects ~~an increase in~~higher volume and gross revenue per hundredweight, ~~almost entirely offset by lower volume.~~primarily related to our improvements in service quality and investments in capacity. The ~~decrease~~increase in ~~weight~~volume per day for the first quarter of 2024 reflects higher shipments per day, partially offset by lower average weight per ~~shipment, partially offset by higher shipments per day.~~ shipment. The increase in yield in the first quarter of 2024 reflects the benefit of numerous pricing initiatives.

In the month of April ~~2023, as compared to April 2022,~~2024 weight per day ~~decreased 2.0% while~~increased 3.1%, as compared with April 2023, attributable to a year-over-year increase of 4.7% in shipments per day ~~increased 3.1%.~~and a decrease of 1.5% in weight per shipment. These April 2024 operating metrics are preliminary and actual results may vary.

Adjusted EBITDA was $255 million, or 20.9% of revenue, for the first quarter of 2024, compared with $182 million, or 16.3% of revenue, for the ~~first three months of 2023, compared with $186 million, or 16.8% of revenue, for the~~ same ~~quarter~~period in ~~2022.~~2023. The ~~decrease~~increase in Adjusted EBITDA inas a percentage of revenue reflects higher revenue, excluding fuel surcharge revenue, driven by the ~~first quarter of 2023 reflected~~pricing and volume dynamics explained above, lower purchased transportation, lower bad debt expense, and lower damage claims. These items were partially offset by higher salaries, wages and employee benefits ~~primarily due to cost inflation~~ and ~~to a lesser extent, higher headcount, $11 million of~~ lower ~~pension income and higher~~ fuel costs and bad debt expense. These items were almost entirely 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.

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surcharge revenue.

Depreciation and amortization expense increased to ~~$68~~$82 million in the first quarter of ~~2023~~2024 compared with ~~$56~~$68 million for the same ~~quarter~~period in ~~2022~~2023. The increase was due to the impact of capital investments, in particular tractors and trailers.

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European Transportation Segment


		Three Months Ended March 31,	Percent of Revenue				Change
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,												Percent of Revenue	Change
(Dollars in millions)	(Dollars in millions)		2023		2022		2023		2022		2023 vs. 2022		(Dollars in millions)			2024			2023				2024					2023					2024 vs. 2023
Revenue	Revenue		$	787	$	787	100.0	%	100.0	%	—	%	Revenue			$	797	$	$	787	100.0			100.0		%			100.0		%			1.3		%
Adjusted EBITDA	Adjusted EBITDA		37		38		4.7	%	4.9	%	(2.6)	%	Adjusted EBITDA			38		37		37		4.8			4.8		%			4.7		%			2.7		%
Depreciation and amortization	Depreciation and amortization		32		33		4.1	%	4.2	%	(3.0)	%	Depreciation and amortization			34		32		32		4.3			4.3		%			4.1		%			6.3		%

Revenue in our European Transportation segment ~~was~~increased 1.3% to $797 million for the first quarter of 2024, compared with $787 million for the same period in ~~each of the first quarters of 2023 and 2022.~~2023. Foreign currency movement ~~decreased~~increased revenue by approximately ~~6.1~~2.5 percentage points in the first quarter of ~~2023. The increase in revenue compared to~~2024. Revenue was essentially flat during the first quarter of ~~2022,~~2024, compared to the same period in 2023, after taking into effect the impact of foreign currency ~~movement, primarily reflects price increases to cover cost inflation as well as higher volume.~~movement.

Adjusted EBITDA was $38 million, or 4.8% of revenue, for the first quarter of 2024, compared with $37 million, or 4.7% of revenue, for the ~~first three months of 2023, compared with $38 million, or 4.9% of revenue, for the~~ same ~~quarter~~period in 2022. The decrease in Adjusted EBITDA was primarily driven by higher salaries, wages and employee benefits due to the impact of cost inflation and bonuses paid to certain French employees in connection with a government program (PPV: Prime de Partage de la Valeur), almost entirely offset by lower purchased transportation and higher gains on sales of property and equipment.2023.

Liquidity and Capital Resources

Our cash and cash equivalents balance was ~~$309~~$229 million as of March 31, ~~2023,~~2024, compared to ~~$460~~$412 million as of December 31, ~~2022.~~2023. 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”); and (iii) proceeds from the issuance of other ~~debt; and (iv) proceeds from divestiture activities.~~debt. As of March 31, ~~2023,~~2024, we have ~~$502~~$564 million available to draw under our ABL Facility, based on a borrowing base of ~~$502~~$565 million and outstanding letters of credit of less than $1 million. Additionally, we have a $200 million uncommitted secured evergreen letter of credit facility, under which we had issued ~~$154~~$138 million in aggregate face amount of letters of credit as of March 31, ~~2023.~~2024.

As of March 31, ~~2023,~~2024, we had approximately ~~$811~~$793 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

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 ~~$217~~$216 million as of March 31, ~~2023)~~2024). As of March 31, ~~2023,~~2024, the maximum amount available under the program was utilized. Under the securitization program, we service the receivables we sell on behalf of the purchasers. ~~In May 2023, we entered into an agreement to extend the securitization~~The program ~~which was scheduled to expire~~expires in July ~~2024, through July~~ 2026.

Term Loan Facility

The ~~terms and conditions~~applicable interest rate for the two tranches of the ~~extended securitization program are materially consistent with the prior program.~~term loan facility approximated 7.32% as of March 31, 2024.

Loan Covenants and Compliance

As of March 31, ~~2023,~~2024, 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.

2021

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Sources and Uses of Cash


			Three Months Ended March 31,
		Three Months Ended March 31,								Three Months Ended March 31,
(In millions)	(In millions)		2023		2022		(In millions)	2024	2023
Net cash provided by operating activities from continuing operations	Net cash provided by operating activities from continuing operations		$	76	$	188
Net cash used in investing activities from continuing operations	Net cash used in investing activities from continuing operations		(216)		(120)
Net cash used in financing activities from continuing operations	Net cash used in financing activities from continuing operations		(10)		(24)

During the three months ended March 31, 2024, we generated cash from operating activities from continuing operations of $145 million. We used cash during the period primarily to: (i) purchase property and equipment of $306 million; (ii) make payments on debt and finance leases of $21 million; and (iii) make payments of $15 million related to tax withholding obligations in connection with the vesting of restricted shares.

During the three months ended March 31, 2023, we generated cash from operating activities from continuing operations of $76 million. We used cash during this period primarily to: (i) purchase property and equipment of $224 million; (ii) make payments on debt and finance leases of $16 million; and (iii) make payments of $12 million related to tax withholding obligations in connection with the vesting of restricted shares.

During the three months ended March 31, 2022, we generated cash from operating activities from continuing operations of $188 million. We used cash during this period primarily to: (i) purchase property and equipment of $123 million; (ii) make payments on debt and finance leases of $16 million; and (iii) make payments of $12 million related to tax withholding obligations in connection with the vesting of restricted shares.

Cash flows from operating activities from continuing operations for the three months ended March 31, ~~2023 decreased~~2024 increased by ~~$112~~$69 million, compared with the same period in ~~2022.~~2023. The ~~decrease reflects~~increase primarily reflects: (i) higher income from continuing operations of $50 million and (ii) the impact of operating assets and liabilities utilizing $68 million of cash in the first three months of 2024, compared with utilizing $79 million during the same period in 2023.

Investing activities from continuing operations used $299 million of cash in the three months ended March 31, ~~2023, compared with generating $42 million of cash during the same period in 2022. Within operating assets~~2024 and liabilities, for the three months ended March 31, 2023, compared with the same period in 2022: (i) accounts payable utilized $125 million more cash primarily due to the timing of payments; and (ii) accrued expenses and other liabilities generated $94 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. Partially offsetting these items, accounts receivable utilized $85 million less cash in the first quarter of 2023 as compared to the first quarter of 2022 primarily as a result of a lower sequential increase in revenues.

~~Investing activities from continuing operations used~~ $216 million of cash in the three months ended March 31, ~~2023 and $120 million of cash in the three months ended March 31, 2022.~~2023. During the three months ended March 31, ~~2023,~~2024, we used ~~$224~~$306 million to purchase property and equipment, as compared to a ~~$123~~$224 million usage of cash in the same period in ~~2022.~~2023. The increase reflects our continued investment ~~primarily in tractors and trailers,~~ to support our long-term growth targets.

Financing activities from continuing operations used $29 million of cash in the three months ended March 31, 2024 and $10 million of cash in the three months ended March 31, ~~2023 and $24 million of cash in the three months ended March 31, 2022.~~2023. The primary uses of cash from financing activities in each of the first three months of 2024 and 2023 were $21 million and ~~2022 were~~ $16 million, respectively, used to repay borrowings, primarily related to finance lease obligations, and $15 million and $12 million, respectively, to make payments for tax withholdings on restricted shares. The primary source of cash from financing activities during the first three months of ~~2023~~2024 was ~~$19~~$11 million of proceeds from bank overdrafts, as compared to $3$19 million in the same period of ~~2022.~~2023.

There were no material changes to our December 31, ~~2022~~2023 contractual obligations during the three months ended March 31, ~~2023.~~2024. We anticipate full year gross capital expenditures to be between ~~$500~~$700 million and ~~$600~~$800 million in ~~2023,~~2024, funded by cash on hand and 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.

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. There have been no material changes to our quantitative and qualitative disclosures about market risk ~~related to our continuing operations~~ during the three months ended March 31, ~~2023,~~2024, as compared with the quantitative and qualitative disclosures about market risk described in our ~~2022~~2023 Form 10-K.

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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 March 31, ~~2023.~~2024. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of March 31, ~~2023,~~2024, 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 March 31, ~~2023~~2024 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, ~~2022~~2023 and Note 9—8—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, ~~2022.~~2023.

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

None.

Item 3. Defaults ~~upon~~Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

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Item 6. Exhibits.


Exhibit Number						Description

~~10.1*+~~3.1						~~Offer Letter,~~4th Amended and Restated Bylaws of the registrant, dated February ~~14, 2023, between~~5, 2024 (incorporated herein by reference to Exhibit 3.8 to the ~~registrant and Wendy Cassity.~~registrant’s Annual Report on Form 10-K filed with the SEC on February 8, 2024).

10.2*10.1 +						~~Change in Control and Severance Agreement, dated February 14, 2023, between the registrant and Wendy Cassity.~~

~~10.3*+~~						Form of ~~Time-Based~~Restricted Stock Unit Award Agreement for Non-Employee Directors (2016 Omnibus Incentive Compensation Plan) (incorporated herein by reference to Exhibit 10.29 to the registrant’s Annual Report on Form 10-K filed with the SEC on February 8, 2024).

10.2 +*						Form of Restricted Stock Unit Award Agreement for executive chairman and CEO (2016 Omnibus Incentive Compensation Plan).

10.3 +*						Form of Restricted Stock Unit Award Agreement (2016 Omnibus Incentive Compensation Plan).

~~10.4+~~10.4 +						Form of Performance-Based Restricted Stock Unit Award Agreement for executive chairman and CEO (2016 Omnibus Incentive Compensation Plan).

~~10.5+~~10.5 +						Form of Performance-Based Restricted Stock Unit Award Agreement (2016 Omnibus Incentive Compensation Plan).

~~10.6+~~31.1						~~Offer Letter, dated April 17, 2023, between the registrant and David Bates.~~

~~10.7*+~~						~~Change in Control and Severance Agreement, dated April 17, 2023, between the registrant and David Bates.~~

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 March 31 ~~2023.~~, 202 4 .

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 March 3 1 31 , 202 34 .

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 March 31 , 202 34 .

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 March 3 1 31 , 202 34 .

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.

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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, INC.

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

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

Date: May ~~4, 2023~~3, 2024

2425


	Three Months Ended March 31, 2022
(In millions)	North American LTL		European Transportation		Total
Revenue
United States	$	1,084	$	—	$	1,084
North America (excluding United States)	23		—		23
France	—		352		352
United Kingdom	—		225		225
Europe (excluding France and United Kingdom)	—		210		210

Total	$	1,107	$	787	$	1,894


			Three Months Ended March 31, 2023
(In millions)	Reserve Balance as of December 31, 2022		Charges Incurred		Payments		Foreign Exchange and Other		Reserve Balance as of March 31, 2023
Severance
North American LTL	$	2	$	—	$	(1)	$	—	$	1
European Transportation	1		7		(2)		—		6
Corporate	19		11		(6)		(1)		23









Total	$	22	$	18	$	(9)	$	(1)	$	30