FedEx Freight reports $2.44B revenue for Q3 2026

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For the fiscal year ended May 31 , 2026

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

For the quarterly period ended September 30, 2026

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Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes No

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Indicate by check mark whether the registrant has filed a report on and attestation to its management s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant s executive officers during the relevant recovery period pursuant to 240.10D-1(b).

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There was no public market for the registrant s common stock as of the last business day of its most recently completed second fiscal quarter. The registrant has no non-voting stock.

DOCUMENTS INCORPORATED BY REFERENCE

As of August 3, October 27, 2026, 149,518,133 149,521,266 shares of the registrant's registrant s common stock were outstanding.

FEDEX FREIGHT HOLDING COMPANY, INC.

PART I. FINANCIAL INFORMATION

Financial statements 174 changes

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Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 )

Consolidated Statements of Income

Consolidated Statements of Cash Flows

Consolidated Statements of Changes in Equity

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of FedEx Freight Holding Company, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of FedEx Freight Holding Company, Inc. (the Company) as of May 31, 2026 and 2025, the related consolidated statements of income, cash flows and changes in equity for each of the three years in the period ended May 31, 2026, and the related notes (collectively referred to as the consolidated financial statements ). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at May 31, 2026 and 2025, and the results of its operations and its cash flows for each of the three years in the period ended May 31, 2026, in conformity with U.S. generally accepted accounting principles.

These financial statements are the responsibility of the Company s management. Our responsibility is to express an opinion on the Company s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.

Valuation of Self-Insurance Reserves

Description of the Matter As disclosed in Note 2 to the consolidated financial statements, a portion of FedEx Corporation s self-insurance reserve associated with workers compensation claims, vehicle accidents, and property and general business liabilities is attributable to the Company. These reserves are based on actuarially estimated claim costs incurred by the Company as of the balance sheet date. As of May 31, 2026, $330 million of self-insurance reserves attributable to the Company were assumed by FedEx Corporation and included in net transfers from (to) Parent in the consolidated statement of changes in equity.

Auditing the estimated self-insurance claims costs attributable to the Company and assumed by FedEx Corporation for workers compensation claims and vehicle accidents is complex due to the significant measurement uncertainty inherent to the estimate, the application of management judgment, and the use of various actuarial methods. In addition, these estimates are sensitive due to the volume of claims and the amount of time that can pass before the final cost is known.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design of controls and tested the operating effectiveness of controls over management s process for estimating self-insurance reserves, including the review of actuarial estimates and underlying data for determining the appropriate amount to be assumed by FedEx Corporation.

To evaluate the self-insurance claims costs attributable to the Company and assumed by FedEx Corporation, our audit procedures included, among others, testing the completeness and accuracy of the underlying claims data used in the actuarial analyses. We involved our actuarial specialists to assist in evaluating the actuarial methodologies and assumptions used by management and in independently developing a range of reasonable reserve estimates for comparison to management s estimate. In addition, we compared the Company s historical estimates of expected incurred losses to actual losses experienced during the current year. We also evaluated the Company s disclosures in relation to these reserves.

/s/ Ernst & Young LLP

We have served as the Company s auditor since 2025.

FEDEX FREIGHT HOLDING COMPANY, INC.

CONSOLIDATED BALANCE SHEETS

CONDENSED CONSOLIDATED BALANCE SHEETS

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Vehicles and trailers 3,850 3,964

Facilities and other 1,672 1,512

Ground support and dock equipment 628 621

Information technology 520 397

2026 (Unaudited) May 31,

Receivables, less allowances of $ 204 196 and $ 14 204

Prepaid expenses and other 196 83 43

Total current assets 1,846 1,506 284

Property and equipment AT COST

Total Property and equipment, at cost 6,671 6,670 6,494

Less accumulated depreciation and amortization 3,764 3,747 3,714

Net property and equipment 2,907 2,923 2,780

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TOTAL ASSETS $ 6,884 $ 5,022

The accompanying notes are an integral part of these consolidated financial statements.

FEDEX FREIGHT HOLDING COMPANY, INC.

CONSOLIDATED BALANCE SHEETS

(IN MILLIONS, EXCEPT SHARE DATA)

Operating lease right-of-use assets, net 1,822 1,824 1,352

Total other long-term assets 2,463 2,455 1,958

TOTAL ASSETS $ 7,216 $ 6,884

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Accounts payable 106 150

Due to Parent, net 5

Accrued expenses 283 212

Total current liabilities 993 773

Current portion of long-term debt $ 43 45 $ 7 43

Accrued salaries and employee benefits 305 389 227

Accounts payable 210 106

Operating lease liabilities 172 162 172

Accrued expenses 414 283

Total current liabilities 1,136 993

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Other liabilities 5 52

Total (deficit) equity ( 497 ) 2,393

Long-term debt, less current portion 4,376 4,484 66

Deferred income taxes 209 220 235

Self-insurance accruals 43 13 315

Operating lease liabilities 1,679 1,666 1,188

Other liabilities 25 5

Total long-term liabilities 6,332 6,388 1,856

Commitments and contingencies

Common stock, $ 0.10 par value; 149,505,248 500 million shares authorized; 150 million shares issued and outstanding as of September 30, 2026 and 150 million shares authorized, issued, and outstanding as of May 31, 2026 (Accumulated deficit) Retained earnings ( 509 ) 2,400

Additional paid-in capital 19

Accumulated deficit ( 280 ) ( 509 )

Accumulated other comprehensive loss ( 3 6 ) ( 7 3 )

Total (deficit) equity ( 252 ) ( 497 )

TOTAL LIABILITIES AND (DEFICIT) EQUITY $ 6,884 7,216 $ 5,022 6,884

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Revenue $ 8,795 $ 8,892 $ 9,424

Salaries and employee benefits 4,276 4,157 4,177

Purchased transportation 807 807 873

Depreciation and amortization 512 471 455

Maintenance and repairs 343 362 358

Total operating expenses 8,255 7,488 7,671

Operating income 540 1,404 1,753

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(IN MILLIONS, EXCEPT EARNINGS PER SHARE) DATA)

Three Months Ended Four Months Ended

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and 94 more changes in the filing

Note 1: DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION 13 changes

BACKGROUND. FedEx Freight Holding Company, Inc. ( FedEx Freight, the Company, we, or our ) was incorporated in Delaware on July 14, 2025, for the purpose of receiving, pursuant to a reorganization, all of the outstanding equity interests of FedEx Freight, Inc., an indirect wholly owned subsidiary of FedEx Corporation (the Parent or FedEx ). On June 1, 2026 (the Distribution Date ), FedEx completed the previously announced spin-off of FedEx Freight (the Spin-Off or the Separation ), which was tax-free for U.S. federal income tax purposes. The Separation was completed through the distribution of approximately 80.1 % of the Company s outstanding common stock to holders of record of FedEx common stock as of the close of business on May 15, 2026 (the Distribution ), which resulted in the issuance of approximately 150 million shares of common stock inclusive of FedEx s retained stake. Prior to the Distribution, the Company issued 100 shares of common stock in exchange for a subscription receivable of $ 10 , all of which were held by FedEx. and subsequently On May 27, 2026, the Company effected a recapitalization whereby those shares were reclassified and converted into 149,505,248 shares of common stock. as described below. As a result of In connection with the Distribution, Spin-Off, the Company became an independent, publicly traded company. Our common stock is listed under the symbol FDXF on the New York Stock Exchange.

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FedEx Freight, Inc. was created through several acquisitions by FedEx, including Viking Freight, Inc. in January 1998, American Freightways, Inc. in February 2001, and Watkins Motor Lines in May 2006. In April 2002, American Freightways, Inc. was renamed FedEx Freight East, Inc. and Viking Freight, Inc. was renamed FedEx Freight West, Inc. In May 2006, the Watkins Motor Lines business was renamed FedEx National LTL, Inc. In December 2008, FedEx Freight East, Inc. and FedEx Freight West, Inc. merged and became FedEx Freight, Inc., which was wholly owned by FedEx Freight Corporation. In January 2011, FedEx National LTL, Inc. merged into FedEx Freight, Inc. On June 1, 2024, FedEx Freight Corporation merged into FedEx Freight, Inc., and ownership of FedEx Custom Critical, Inc. ( FedEx Custom Critical ) was transferred from another FedEx subsidiary to FedEx Freight, Inc. On September 1, 2024, FedEx Freight Canada Holding Company, Inc., formerly a subsidiary of FedEx Freight Corporation, merged into FedEx Freight, Inc. and its subsidiary, FedEx Freight Canada Corp. ( FedEx Freight Canada ), became a subsidiary of FedEx Freight, Inc.

On July 14, 2025, FedEx Freight Holding Company, Inc. was incorporated to serve as the ultimate parent company of FedEx Freight, Inc. in connection with the planned Spin-Off. Subsequently, on February 11, 2026, FDXF Holding Corporation was formed as an intermediate holding company to become a direct subsidiary of FedEx Freight Holding Company, Inc. On May 29, 2026, ownership of FedEx Freight, Inc. and its subsidiaries was transferred from another FedEx subsidiary to FDXF Holding Corporation. Immediately thereafter, ownership of FDXF Holding Corporation and its subsidiaries was transferred to FedEx Freight Holding Company, Inc. Collectively, these ownership transfers completed the reorganization.

The consolidated financial statements include the consolidated results of operations, financial position, and cash flows of FedEx Freight Holding Company, Inc. and its subsidiaries for all periods presented since the reorganizations were transactions under common control.

On May 27, 2026, the Company effected a recapitalization pursuant to an amendment to its certificate of incorporation, whereby our 100 issued and outstanding shares of common stock were reclassified and converted into 149,505,248 shares of common stock. As the common stock par value remained $ 0.10 per share, the recapitalization resulted in a corresponding increase in Common Stock in the accompanying Consolidated Balance Sheets.

FISCAL YEARS . Except as otherwise specified, references to years indicate our fiscal year ended May 31, 2026, or ended May 31 of the year referenced.

Effective for the period beginning June 1, 2026, the Company's fiscal year-end will change from May 31 to December 31.

FISCAL YEARS. Effective June 1, 2026, the Company s fiscal year-end changed from May 31 to December 31. The accompanying unaudited condensed consolidated financial statements present our financial position as of September 30, 2026 and May 31, 2026; our results of operations and changes in stockholders equity for the three- and four-month periods ended September 30, 2026 and 2025; and cash flows for the four-month periods ended September 30, 2026 and 2025. Refer to Note 4, Additional Financial Information , for additional information regarding the periods presented and related comparisons.

BASIS OF PRESENTATION. These unaudited condensed consolidated financial statements of FedEx Freight have been prepared in accordance with accounting principles generally accepted in the United States ( GAAP ) and Securities and Exchange Commission ( SEC ) instructions for interim financial information and should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended May 31, 2026 ( Annual Report ). Accordingly, certain disclosures required by GAAP and normally included in annual financial statements have been omitted.

BASIS OF PRESENTATION . Throughout For the periods included presented in these consolidated financial statements prior to the Spin-Off, FedEx Freight operated as part of FedEx and consisted of several legal entities. As stated above, FedEx Custom Critical s and FedEx Freight Canada s results have been included retrospectively for all periods presented as the contribution of these entities to FedEx Freight was a transaction under common control. Separate financial statements have were not historically been prepared for FedEx Freight. These consolidated The financial statements have been for periods prior to the Spin-Off were derived from FedEx s historical accounting records and presented as if FedEx Freight s operations had been conducted independently from FedEx, using the historical accounting policies applied by FedEx. These consolidated financial statements were prepared on a stand-alone basis As discussed in accordance with U.S. generally accepted accounting principles the Annual Report, the results of FedEx Custom Critical, Inc. ( GAAP FedEx Custom Critical ) and pursuant FedEx Freight Canada Corp. have been retrospectively included for the periods ended prior to June 1, 2026, as the rules and regulations contribution of the U.S. Securities and Exchange Commission ( SEC ). these entities to FedEx Freight was accounted for as a transaction under common control. These financial statements are presented on a consolidated basis for all periods presented.

Following completion of the Spin-Off, FedEx Freight began operating as an independent, publicly traded company. Accordingly, transactions and balances after June 1, 2026 reflect the Company's stand-alone operations, capital structure, financing arrangements, and cash management activities.

The historical results of operations, financial position, and cash flows of FedEx Freight prior to the Spin-Off presented in these financial statements may not be indicative of what they would have been had FedEx Freight been an independent stand-alone entity. In the opinion of management, these financial statements reflect all adjustments, including normal recurring adjustments, that are necessary for a fair presentation of results of operations and financial condition for the interim periods shown. The results for the current interim periods are not necessarily indicative of results for the full year.

The financial statements include all revenue and costs directly attributable to FedEx Freight and, prior to the Spin-Off, an allocation of expenses related to certain FedEx corporate and shared functions. These expenses have been allocated to FedEx Freight based on direct usage or benefit where specifically identifiable, with the remainder allocated pro rata based on an applicable measure of total revenue, headcount, specific revenue by function, transaction volume, or other relevant measures. Management considers these allocations to be a reasonable reflection of the utilization of services or the benefit received. Where allocations of amounts were necessary, the allocations of these amounts were determined on a reasonable basis and the methods were applied consistently for the applicable periods presented prior to the Spin-Off and reflect all of the costs of FedEx Freight. These allocated amounts are not necessarily indicative of the actual amounts that might have been incurred or realized had FedEx Freight operated as an independent, stand-alone entity during the periods presented, nor are they indicative of FedEx Freight s future operations. Consequently, the financial

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Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 13 changes

REVENUE RECOGNITION .

Satisfaction of Performance Obligation

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the basis of revenue recognition in accordance with GAAP. To determine the proper revenue recognition method for contracts, we evaluate whether two or more contracts should be combined and accounted for as one single contract and whether the combined or single contract should be accounted for as more than one performance obligation. For most of our contracts, the customer contracts with us to provide distinct transportation services within a single contract. Substantially all of our transportation service contracts with customers include only one performance obligation, the transportation services themselves. However, if a contract is separated into more than one performance obligation, we allocate the total transaction price to each performance obligation in an amount based on the estimated relative stand-alone selling prices of the promised services underlying each performance obligation. We frequently sell standard transportation services with observable stand-alone sales prices. In these instances, the observable stand-alone sales are used to determine the stand-alone selling price.

For transportation services, revenue is recognized over time as we perform the services in the contract because of the continuous transfer of control to the customer. Our customers receive the benefit of our services as the goods are transported from one location to another. If we were unable to complete delivery to the final location, another entity would not need to reperform the transportation service already performed. As control transfers over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the services to be provided. We use an output method of progress based on time-in-transit because it depicts the transfer of control to the customer that occurs throughout the time-in-transit.

Contract Modification

Contracts are often modified to account for changes in the rates we charge our customers or to add distinct services. We consider contract modifications to exist when the modification either creates new enforceable rights and obligations or alters the existing arrangement. Contract modifications that add distinct services are treated as separate contracts. Contract modifications that do not add distinct services typically change the price of existing services. These contract modifications are accounted for prospectively as the remaining performance obligations are distinct.

Variable Consideration

Certain contracts contain customer incentives, guaranteed service refunds, and other provisions that can either increase or decrease the transaction price. These incentives are generally awarded based upon achieving certain performance metrics. We estimate variable consideration as the most likely amount to which we expect to be entitled. We include estimated amounts of revenue, which may be reduced by incentives or other contract provisions, in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based on an assessment of anticipated customer spending and all information (historical, current, and forecasted) that is reasonably available to us.

Certain of our revenue-producing transactions are subject to taxes and duties, such as sales tax, assessed by governmental authorities. We present these revenues net of tax. Under the typical payment terms of our customer contracts, the customer pays at periodic intervals (e.g., every 15 days, 30 days, 45 days) for shipments included on invoices received. It is not customary business practice to extend payment terms past 90 days, and as such, we do not have a practice of including a significant financing component within our revenue contracts with customers.

CONTRACT ASSETS. Contract assets include billed and unbilled amounts resulting from in-transit shipments, as we have an unconditional right to payment only once all performance obligations have been completed (e.g., delivery has occurred). Contract assets are generally classified as current, and the full balance is converted each quarter based on the short-term nature of the transactions.

The Company s contract assets were historically included in the balances sold to FedEx pursuant to the Company s historical factoring arrangement. On November 30, 2025, the Company s factoring agreement with FedEx was terminated in preparation for the Spin-Off. Additionally, on November 18, 2025, the Company entered into a True Sale and Assignment Agreement with FedEx, effective December 1, 2025, under which the Company reacquired all outstanding U.S. trade receivables previously sold to FedEx. Refer to Note 10, 1 2 , Related Party Transactions , for additional information related to the Company s participation in the historical factoring agreement with FedEx.

Gross contract assets related to in-transit shipments totaled $ 150 149 million at May 31, September 30, 2026 and were not material $ 150 million at May 31, 2025. 2026. Contract assets net of deferred unearned revenue were $ 76 74 million at May 31, September 30, 2026 and were not material $ 76 million at May 31, 2025. 2026. Contract assets are included within Receivables in the accompanying Condensed Consolidated Balance Sheets.

CREDIT RISK. We routinely grant credit to many of our customers without collateral. We believe the risk of credit loss in our non-factored trade receivables is substantially mitigated by our credit evaluation process, short collection terms, and our broad and diverse customer base. We have elected the practical expedient under Accounting Standards Codification ( ASC ) Topic 326, Financial Instruments - Credit Losses to assume that current conditions as of the balance sheet date do not change for the remaining life of our accounts receivable. Accordingly, allowances for potential credit losses are updated monthly and determined using historical experience and the impact of current economic conditions. Historically, credit losses have been within management s expectations.

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Note 3: RECENT ACCOUNTING GUIDANCE 8 changes

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Recently Adopted Accounting Standards

In December 2023, the Financial Accounting Standards Board ( FASB ) issued Accounting Standards Update ( ASU ) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures in an entity s income tax rate reconciliation table and regarding cash taxes paid both in the United States and foreign jurisdictions. We adopted this standard effective June 1, 2025 on a prospective basis. While the new accounting rules did not have any impact on our financial condition, results of operations, or cash flows, the adoption of the new accounting rules resulted in additional disclosures, which are included in Note 8, Income Taxes .

New Accounting Standards and Accounting Standards Not Yet Adopted

In July 2025, the FASB issued ASU 2025-05, Financial Instruments Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which simplifies the application of the current expected credit loss model for current accounts receivable and current contract assets under Accounting Standards Codification 606. The update is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted. We are assessing the effect of this update on our consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which expands disclosures about specific expense categories at interim and annual reporting periods. The update will be effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027. We are assessing the effect of this update on our consolidated financial statements and related disclosures.

RECENTLY ADOPTED ACCOUNTING STANDARDS. In July 2025, the Financial Accounting Standards Board ( FASB ) issued Accounting Standards Update ( ASU ) 2025-05, Financial Instruments Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which simplifies the application of the current expected credit loss model for current accounts receivable and current contract assets under ASC 606 by providing a practical expedient that permits entities to assume that economic conditions existing as of the balance sheet date will remain unchanged when estimating expected credit losses on current trade receivables and contract assets. We adopted the standard and elected the practical expedient effective June 1, 2026 on a prospective basis. The practical expedient did not have a material impact on our financial statements.

NEW ACCOUNTING STANDARDS AND ACCOUNTING STANDARDS NOT YET ADOPTED. In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies the applicability of the interim reporting guidance, the types of interim reporting, and the form and content of interim financial statements in accordance with U.S. GAAP. Per the FASB, the amendment does not intend to change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements but rather provide clarity and improve navigability of the existing interim reporting requirements. The update will be effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. We are assessing the effect of this update on our consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles Goodwill and Other Internal-Use Software (Subtopic 350-40): Targeted Improvements to Accounting for Internal-Use Software, which updates the accounting for internal-use software by eliminating the concept of development stages. Under the updated guidance, software costs are capitalized once management has authorized and committed to funding the project, and it is probable the project will be completed and the software will be used to perform the function intended. The update will be effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted. We are assessing the effect of this update on our consolidated financial statements and related disclosures.

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Note 7: LONG-TERM DEBT 20 changes

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Term loan facility 4.91 % 2029 $ 599 $

Less current portion (1)

(1) The current portion of long-term debt relates to the current portion of finance lease liabilities. Amounts included in Current portion of long-term debt and Long-term debt, less current portion related to finance lease liabilities for 2025 were reclassified from Finance lease obligations to conform to the current period presentation. This change had no impact on total current or long-term liabilities.

Interest Rate % Fiscal Year of Maturity May 31, September 30,

Term loan facility 5.15 % 2029 $ 499 $ 599

Senior unsecured note 4.30 % 2029 994 993

Senior unsecured note 4.65 % 2031 992 991

Senior unsecured note 4.95 % 2033 693 693

Senior unsecured note 5.25 % 2036 988 988

Total unsecured debt 4,166 4,264

Finance lease liabilities 255 263 73

Total long-term debt 4,421 4,527

Current portion of long-term debt 45 43

Long-term debt, less current portion $ 4,376 $ 4,484

In preparation for the Spin-Off, FedEx Freight Holding Company, Inc. issued $ 3.7 billion of senior unsecured notes (the Notes ) and borrowed a $ 0.6 billion under a three-year delayed draw term loan agreement (the Term Loan Facility ). as further described below. Substantially all of the proceeds from the Notes and Term Loan Facility were used to fund a portion of the distribution of approximately $ 4.1 billion in cash to FedEx at the closing of the Spin-Off. as further described below and in Note 2, Summary of Significant Accounting Policies . Obligations under the Notes and Term Loan Facility were jointly and severally guaranteed by FedEx and FedEx Freight, Inc. until the completion of the Spin-Off, when FedEx will be was automatically released from its guarantees and FedEx Custom Critical, will join Inc., a wholly owned subsidiary of FedEx Freight, joined FedEx Freight, Inc. as a guarantor of the Notes.

At May 31, 2026, Long-term debt, exclusive of finance leases, had a carrying value values of $ 4.2 billion at September 30, 2026 and $ 4.3 billion a at May 31, 2026, with estimated fair value values of $ 4.2 4.0 billion at September 30, 2026 and an $ 4.2 billion at May 31, 2026. The annualized weighted-average interest rate of 4.79 on long-term debt was 4.82 % at September 30, 2026. The underlying fair value of our long-term debt was estimated based on quoted is classified as Level 2 within the fair value hierarchy.

CREDIT FACILITIES. On January 15, 2026, FedEx Freight entered into (a) a five-year revolving credit facility in an aggregate committed amount of $ 1.2 billion (including a letter of credit sub-facility in an aggregate face amount of up to $ 50 million) (the Revolving Credit Facility ) and (b) the Term Loan Facility in the aggregate principal amount of $ 0.6 billion (together with the Revolving Credit Facility, the Credit Facilities ). As of September 30, 2026, $ 500 million was outstanding under the Term Loan Facility and no amounts were outstanding under the Revolving Credit Facility.

The Credit Facilities require that we maintain, on a quarterly basis, a total leverage ratio of no more than (a) in the case of any fiscal quarter ending prior to January 1, 2027, 3.75 :1.00 and (b) in the case of any fiscal quarter ending on or after January 1, 2027, 3.50 :1.00. As of September 30, 2026, our total leverage ratio was 2.61 :1.00.

The proceeds of the borrowings under the Revolving Credit Facility will be used for general corporate purposes and to pay fees and expenses related to the Spin-Off. Letters of credit issued under the Revolving Credit Facility will be used for general corporate purposes.

On October 7, 2026, we entered into amendments to the Credit Facilities. Pursuant to the amendments, we may elect to borrow under the Revolving Credit Facility at a Daily Simple SOFR rate with a same-day borrowing notice. Additionally, the amendments revise the definition of consolidated EBITDA for purposes of calculating the total leverage ratio to permit the add-back of certain non-cash charges associated with share-based employee compensation.

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Note 8: LEASES 32 changes

The following table is a summary of the components of net lease cost for the period ended May 31 (in millions):

Operating lease cost $ 258 $ 245 $ 236

Amortization of right-of-use assets 16 3 2

Interest on lease liabilities 7 3 3

Total finance lease cost 23 6 5

Short-term lease cost 8 9 8

Variable lease cost 42 39 41

Net lease cost $ 331 $ 299 $ 290

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows paid for operating leases $ 250 $ 239 $ 232

Operating cash flows paid for interest portion of finance leases 7 3 3

Financing cash flows paid for principal portion of finance leases (1)

Supplemental information related to leases as of May 31 is as follows (dollars in millions):

Weighted-average remaining lease term:

Operating leases 9.2 8.3

Finance leases 6.1 9.1

Weighted-average discount rate:

Operating leases 4.42 % 3.96 %

Finance leases 4.89 % 5.50 %

We utilize certain facilities and vehicles under finance and operating leases that expire at various dates through 2044. Our leased facilities include service centers and administrative space.

FEDEX FREIGHT HOLDING COMPANY, INC.

Supplemental cash flow information related to leases for the period ended May 31 is as follows (in millions):

Right-of-use assets obtained in exchange for new operating lease liabilities 579 132 136

Right-of-use assets obtained in exchange for new finance lease liabilities 212 94 (1) Principal payments on debt in financing activities of the accompanying Consolidated Statements of Cash Flows includes finance lease liabilities. 7 65

A summary of future minimum lease payments under noncancelable operating and finance leases with an initial or remaining term in excess of one year at September 30, 2026 is as follows (in millions):

2026 (remainder) $ 66 $ 14 $ 80

Thereafter 1,331 62 1,393

Total lease payments 2,387 298 2,685

Less imputed interest ( 546 ) ( 43 ) ( 589 )

Present value of lease liability $ 1,841 $ 255 $ 2,096

While certain of our lease agreements contain covenants governing the use of the leased assets or require us to maintain certain levels of insurance, none of our lease agreements include material financial covenants or limitations. Certain of our lease agreements include guarantees from FedEx. We and FedEx are currently using commercially reasonable efforts to terminate all such guarantees. See Note 1 2 , Related Party Transactions , for further discussion.

As of September 30, 2026, we have entered into additional leases which have not yet commenced and are therefore not part of the right-of-use asset and liability. These leases are generally for build-to-suit facilities and have undiscounted future payments of approximately $ 275 million and will commence when we gain beneficial access to the leased asset. Commencement dates are expected to be from 2026 to 2030 .

Note 9: COMPUTATION OF EARNINGS PER SHARE 13 changes

There were no shares that had a dilutive effect during 2026, 2025, and 2024, and therefore the weighted-average common shares outstanding used to calculate both basic and diluted earnings per share are the same. The calculation of basic and diluted earnings per common share for the years ended May 31 was as follows (in millions, except share and per share amounts):

Weighted-average common shares 149,505,248 149,505,248 149,505,248

On May 27, 2026, the Company effected a recapitalization pursuant to an amendment to its certificate of incorporation, whereby our 100 issued and outstanding shares of common stock were reclassified and converted into 149,505,248 shares of common stock. As the common stock par value remained $ 0.10 per share, the recapitalization resulted in a corresponding increase in Common Stock in the accompanying Condensed Consolidated Balance Sheets. All historical share and per-share amounts presented herein have been retrospectively adjusted to reflect this recapitalization.

The calculation of basic and diluted earnings per common share for the three- and four-month periods ended September 30, 2026 and 2025 was as follows (in millions, except earnings per share):

Three Months Ended Four Months Ended

Net earnings allocable to common shares $ 655 $ 1,346 $ 1,574 (1)

Weighted-average common shares for basic earnings per common share

Dilutive effect of stock options and RSUs 0.4 0.4

Basic and Weighted-average common shares for diluted earnings per common share

Basic earnings per common share

Basic and Diluted earnings per common share $ 4.38 $ 9.00 $ 10.53

(1) Net earnings allocated to participating securities were immaterial for the three- and four-month periods ended September 30, 2026.

FEDEX FREIGHT HOLDING COMPANY, INC.

Note 11: SUPPLEMENTAL CASH FLOW INFORMATION 4 changes

Interest (net of capitalized interest) $ 7 $ 3 $ 3

Income taxes 29 36 37

FEDEX FREIGHT HOLDING COMPANY, INC.

Cash paid for interest expense and income taxes for the years four-month periods ended May 31 September 30, was as follows (in millions):

Note 12: RELATED PARTY TRANSACTIONS 15 changes

Shared Services and Corporate Allocations. Prior to the Spin-Off, FedEx Freight operated as part of FedEx and not as a stand-alone company. Accordingly, FedEx has historically allocated certain shared services and general corporate costs to FedEx Freight that are reflected as expenses in these accompanying consolidated financial statements including, but not limited to, information technology, marketing, sales, financial services, support services, customer experience, and corporate executives salaries and employee benefits. It is not practicable to estimate actual costs that would have been incurred had FedEx Freight been an independent, stand-alone company during the periods presented. The allocation methods used include specific identification when available or a pro rata basis of total revenue, headcount, specific revenue by function, transaction volume, or other relevant measures. Management considers these allocations to be a reasonable reflection of the utilization of services by, or the benefits provided to, FedEx Freight.

Allocations for shared services and general corporate costs provided to FedEx Freight are reflected in the accompanying Consolidated Statements of Income as follows (in millions):

Salaries and employee benefits $ 285 $ 292 $ 253

Depreciation and amortization 63 55 51

Maintenance and repairs 29 29 28

Total operating expenses $ 616 $ 628 $ 573

Transaction Costs. Costs of $ 252 million were recognized by FedEx in connection with the Spin-Off and $ 492 million of Spin-Off-related costs were recognized by FedEx Freight for the year ended May 31, 2026. These costs include legal, consulting, and advisory services and an employee incentive plan associated with the Spin-Off and were recorded in the "Separation and other costs" line item in

RELATIONSHIP WITH FEDEX. Prior to the Spin-Off, FedEx Freight was a wholly owned subsidiary of FedEx. On June 1, 2026, FedEx completed the Spin-Off, after which FedEx Freight began operating as an independent, publicly traded company. Following the Spin-Off, FedEx retained 19.9 % of the outstanding shares of our common stock. We operate as an independent, publicly traded company; however, FedEx remains a significant stockholder of FedEx Freight and we continue to have certain commercial and other relationships with FedEx. Accordingly, FedEx and its affiliates are considered related parties of the Company.

RELATED PARTY REVENUE AND PURCHASES. FedEx Freight often provides transportation services to and receives services from other FedEx. businesses. The nature of the services provided is similar to the services that FedEx Freight provides to its other third-party customers. Revenue for these services was $ 158 million in 2026, $ 171 million in 2025, and $ 136 million in 2024. The costs for these services are reflected in the Purchased transportation line item in the accompanying Consolidated Statements of Income and were $ 6 million in 2026, $ 10 million in 2025, following table presents related party revenue and $ 13 million purchases (in 2024. millions):

Three Months Ended Four Months Ended

Related party revenue $ 11 $ 39 $ 16 $ 51

Related party purchased transportation 2 3

All significant intercompany transactions between FedEx Freight and FedEx, other than those pertaining to centralized cash management, have been included in these accompanying consolidated financial statements and are considered to have been effectively settled at the time the transactions were recorded or are expected to be settled for cash. These amounts are included in the accompanying Condensed Consolidated Balance Sheets in the captions Receivables, less allowances and Due from Parent as of September 30, 2026 and Due to Parent, net. May 31, 2026, respectively. The total net effect of the settlement of these intercompany transactions is reflected in the accompanying Condensed Consolidated Statements of Cash Flows as an operating activity.

RELATED PARTY TRANSITION SERVICES. In connection with the Spin-Off, FedEx Freight entered into a Separation and Distribution Agreement and various other agreements with FedEx that govern certain aspects of FedEx Freight and FedEx s relationship following the Spin-Off, including a Transition Services Agreement, Tax Matters Agreement, and Employee Matters Agreement. Under the Transition Services Agreement, FedEx provides us with specified services on a transitional basis. These services include certain information technology, financial, administrative, and other support services. We recognized expenses of $ 20 million and $ 30 million under the Transition Services Agreement during the three and four-month periods ended September 30, 2026, respectively. Such expenses are included in the Operating supplies and expenses caption in the accompanying Condensed Consolidated Statements of Income.

NET TRANSFERS TO PARENT. As described in Note 1, Description of Business and Basis of Presentation , net transfers to Parent represents FedEx s historical investment in FedEx Freight and includes the net effect of transactions with and allocations from FedEx as

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Notes to the financial statements 28 changes

employees participation in FedEx-sponsored defined benefit plans, as well as an allocation of shared employee net periodic benefit costs, were $ 34 million, $ 43 million, and $ 65 million in 2026, 2025, and 2024, respectively.

Defined Contribution Plans

Certain of our employees in Canada participate in a defined contribution plan sponsored by FedEx Freight while certain of our employees in the United States participate in a defined contribution plan sponsored by FedEx. All contributions in the United States are subject to maximum compensation and contribution limits for a tax-qualified defined contribution plan as prescribed by the Internal Revenue Service. Expenses associated with our employees participation in all defined contribution plans and an allocation of shared employee costs are reflected within Salaries and employee benefits in the accompanying Consolidated Statements of Income and were $ 146 million, $ 132 million, and $ 137 million in 2026, 2025, and 2024, respectively.

INCOME TAXES. The Company s income tax provision was prepared following the separate return method. The separate return method applies Accounting Standard Codification 740, Income Taxes , to the stand-alone financial statements of each member of the combined group as if the group members were a separate taxpayer. The calculation of the Company s income taxes on a separate return basis requires a considerable amount of judgment and use of both estimates and allocations. Furthermore, the tax treatment of certain items reflected in the accompanying consolidated financial statements of the Company may not be reflected in the consolidated financial statements and tax returns of FedEx. Such items, including net operating losses, credit carry-forwards, and valuation allowances, may exist in the accompanying consolidated financial statements that may or may not exist in FedEx s consolidated financial statements. As a result, the income taxes of the Company as presented in the accompanying consolidated financial statements may not be indicative of the income taxes that the Company will generate in the future. Furthermore, current obligations for taxes where the Company s operations were included in tax returns with the activities of FedEx are deemed settled with FedEx as a component of (Accumulated deficit) Retained earnings for purposes of the accompanying consolidated financial statements.

Deferred income taxes are provided for the tax effect of temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. The liability method is used to account for income taxes, which requires deferred taxes to be recorded at the statutory rate expected to be in effect when the taxes are paid.

Deferred income tax assets represent amounts available to reduce income taxes payable on taxable income in future years. Such assets arise because of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from net operating loss, capital loss, and tax credit carryforwards. We evaluate the recoverability of these future tax deductions and credits by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings, and available tax planning strategies. These sources of income rely heavily on estimates to make this determination and, as a result, there is a risk that these estimates will have to be revised as new information is received. To the extent we do not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is established. We believe we will generate sufficient future taxable income to realize the tax benefits related to the remaining net deferred tax assets in the accompanying Consolidated Balance Sheets that are not subject to valuation allowances. We record the taxes for global intangible low-taxed income as a period cost.

We recognize liabilities for uncertain income tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as we must determine the probability of various possible outcomes. We reevaluate these uncertain tax positions on a quarterly basis or when new information becomes available to management. These reevaluations are based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, successfully settled issues under audit, and new audit activity. Such a change in recognition or measurement could result in the recognition of a tax benefit or an increase to the related provision.

We classify interest related to income tax liabilities as interest expense, and if applicable, penalties are recognized as a component of income tax expense. The income tax liabilities and accrued interest and penalties that are due within one year of the balance sheet date are presented as current liabilities. The noncurrent portion of our income tax liabilities and accrued interest and penalties are included within Other liabilities in the accompanying Consolidated Balance Sheets.

SELF-INSURANCE ACCRUALS. FedEx is self-insured for costs associated with workers compensation claims, vehicle accidents, property and cargo loss, general business liabilities, and benefits paid under employee health and disability programs. Accruals are primarily based on the actuarially estimated cost of claims incurred as of the balance sheet date. FedEx self-insures up to certain limits that vary by operating company and type of risk. Claims costs are recognized on a gross basis and a receivable is recorded for amounts covered by third-party insurance, as well as FedEx s captive insurance program. Periodically, FedEx evaluates the level of insurance coverage and adjusts insurance levels based on risk tolerance and premium expense.

A portion of FedEx s self-insurance reserve is attributable to FedEx Freight, up to a certain limit, representing FedEx Freight s obligation. As of May 31, 2026, FedEx assumed substantially all of the self-insurance reserves related to workers compensation claims, vehicle accidents, and property and general business liabilities attributable to FedEx Freight, amounting to $ 330 million. This amount is included in Net transfers from (to) Parent in the accompanying Consolidated Statements of Changes in Equity . FedEx Freight has retained self-insurance reserves related to cargo loss, certain employee group health claims, disability claims, and certain workers

well as FedEx Freight s accumulated earnings. Net transfers to and from Parent are included within Net Transfers from (to) Parent in the accompanying Condensed Consolidated Statements of Stockholders Equity and Condensed Consolidated Statements of Cash Flows. The components of the net transfers to Parent were as follows (in millions):

Cash pooling and general financing activities / other $ $ ( 1,130 )

Corporate and other allocations ( 13 ) 21

Total net transfers to Parent per Condensed Consolidated Statements of Stockholders' Equity ( 6 ) ( 1,057 )

Stock-based compensation equity classified awards ( 2 )

Non-cash Spin-Off adjustments 6

Total net transfers to Parent per Condensed Consolidated Statements of Cash Flows $ $ ( 1,059 )

SHARED SERVICES AND CORPORATE ALLOCATIONS. Prior to the Spin-Off, FedEx Freight operated as part of FedEx and not as a stand-alone company. Accordingly, FedEx allocated certain shared services and general corporate costs to FedEx Freight that are reflected as expenses in these condensed consolidated financial statements. See Note 1, Description of Business and Basis of Presentation, and Note 10, Related Party Transactions, to the financial statements included in our Annual Report for additional information related to these allocations.

Allocations for shared services and general corporate costs provided to FedEx Freight are reflected in the accompanying Condensed Consolidated Statements of Income as follows (in millions):

Three Months Ended September 30, 2025 Four Months Ended September 30, 2025

Salaries and employee benefits

Operating supplies and expenses

Depreciation and amortization

Total operating expenses $ 175 $ 236

CASH MANAGEMENT. The Company participated in FedEx s centralized cash management program prior to the Spin-Off. Interest income received from FedEx for the cumulative amount of cash swept from FedEx Freight to FedEx is included in Related party interest income in the accompanying Condensed Consolidated Statements of Income and was $ 98 million and $ 128 million for the three- and four-month periods ended September 30, 2025. On May 29, 2026, the Company's cash pooling arrangement with FedEx was terminated in preparation for the Spin-Off. See Note 1, Description of Business and Basis of Presentation, to the financial statements included in our Annual Report for additional information related to FedEx s centralized cash management program.

RECEIVABLES. The Company historically factored certain U.S. trade receivables through another subsidiary of FedEx on a non-recourse basis pursuant to a factoring agreement. The Company sold customer receivables of $ 2.1 billion and $ 2.8 billion in the three- and four-month periods ended September 30, 2025, respectively. Prior to the termination of the factoring agreement, these receivables were not recognized on the Company's Consolidated Balance Sheets. We incurred finance charges of $ 36 million and $ 48 million in the three- and four-month periods ended September 30, 2025, respectively, which are included in the Operating supplies and expenses line item in the accompanying Condensed Consolidated Statements of Income.

On November 30, 2025, the Company's factoring agreement with FedEx was terminated in preparation for the Spin-Off. On December 1, 2025, the Company reacquired all outstanding U.S. trade receivables previously sold to FedEx under the Company's factoring arrangement described above for approximately $ 1.0 billion. This transaction was structured as a true sale without recourse, resulting in the Company resuming ownership and collection of its outstanding receivable balances.

LEASES. FedEx is a named guarantor for certain of FedEx Freight s third-party lease agreements for the periods presented. In 2025, we began the process of releasing FedEx as a guarantor to our lessors in contemplation of the Spin-Off. We and FedEx are currently using commercially reasonable efforts to terminate all such guarantees; however, some guarantees remain in place following the Spin-Off.

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MD&A 191 changes

The following discussion and analysis of our results of operations and financial condition should be read in conjunction with the accompanying quarterly unaudited condensed consolidated financial statements and corresponding notes included elsewhere in this and our Annual Report The following discussion and analysis provides information management believes to be relevant to understanding the financial condition and results of operations of FedEx Freight on Form 10-K for the years year ended May 31, 2026. and 2025. For Our Annual Report includes additional information on the year ended May 31, 2024, and year-over-year comparisons to May 31, 2025, refer to Management's Discussion about our significant accounting policies, practices, and Analysis of the transactions that underlie our financial results, as well as a detailed discussion of Operations the most significant risks and uncertainties associated with our financial condition in our final information statement dated May 13, 2026, attached as Exhibit 99.1 to our Current Report on Form 8-K filed with the SEC on May 13, 2026. and operating results. This discussion contains forward-looking statements that are based upon current expectations and are subject to uncertainty and changes in circumstances. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed below and elsewhere in this Annual Quarterly Report on Form 10-Q ( Quarterly Report ). See Forward-Looking Statements and Part II, Item 1A. Risk Factors and Forward-Looking Statements for a discussion of the uncertainties, risks, and assumptions associated with these statements.

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Except as otherwise specified, references to years indicate our fiscal year ended May 31, 2026, or ended May 31 of The year referenced. The Company, FedEx Freight, we, us, and our refer to FedEx Freight Holding Company, Inc. and its direct and indirect subsidiaries after giving effect to the reorganization completed on May 29, 2026 in preparation for the Spin-Off or, when referencing the time period prior to the reorganization, FedEx Freight, Inc.

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FedEx Freight, Inc. was created through several acquisitions by FedEx Corporation ( FedEx ), including Viking Freight, Inc. in January 1998, American Freightways, Inc. in February 2001, and Watkins Motor Lines in May 2006. In April 2002, American Freightways, Inc. was renamed FedEx Freight East, Inc. and Viking Freight, Inc. was renamed FedEx Freight West, Inc. In May 2006, the Watkins Motor Lines business was renamed FedEx National LTL, Inc. In December 2008, FedEx Freight East, Inc. and FedEx Freight West, Inc. merged and became FedEx Freight, Inc., which was wholly owned by FedEx Freight Corporation. In January 2011, FedEx National LTL, Inc. merged into FedEx Freight, Inc. On June 1, 2024, FedEx Freight Corporation merged into FedEx Freight, Inc., and ownership of FedEx Custom Critical, Inc. ( FedEx Custom Critical ) was transferred from another FedEx subsidiary to FedEx Freight, Inc. On September 1, 2024, FedEx Freight Canada Holding Company, Inc., formerly a subsidiary of FedEx Freight Corporation, merged into FedEx Freight, Inc. and its subsidiary, FedEx Freight Canada Corp. ( FedEx Freight Canada ), became a subsidiary of FedEx Freight, Inc.

On July 14, 2025, FedEx Freight Holding Company, Inc. was incorporated to serve as the ultimate parent company of FedEx Freight, Inc. in connection with the planned Spin-Off. Subsequently, on February 11, 2026, FDXF Holding Corporation was formed as an intermediate holding company to become a direct subsidiary of FedEx Freight Holding Company, Inc. On May 29, 2026, ownership of FedEx Freight, Inc. and its subsidiaries was transferred from another FedEx subsidiary to FDXF Holding Corporation. Immediately thereafter, ownership of FDXF Holding Corporation and its subsidiaries was transferred to FedEx Freight Holding Company, Inc.

The consolidated financial statements include the consolidated results of operations, financial position, and cash flows of FedEx Freight Holding Company, Inc. and its subsidiaries for all periods presented since the reorganizations were transactions under common control. See Summary o f Results below and Item 1. Business elsewhere in this Annual Report for additional information.

FedEx Freight is a leading North American provider of less-than-truckload ( LTL ) freight transportation services. We offer a range of services designed to meet the diverse needs of LTL shippers including time-critical transportation needs leveraging our advanced tracking capabilities and a comprehensive network of service centers and hubs that facilitate efficient delivery and pickup. FedEx Freight s service offerings include priority services when speed is critical and economy services when time can be traded for savings. FedEx Freight is our sole reportable segment.

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the volumes of transportation services provided through our network, primarily measured by our average daily shipments, and shipment weight and size, and average length of haul;

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In analyzing the components of our revenue, we monitor changes and trends in our LTL volumes and LTL revenue per hundredweight. While LTL revenue per hundredweight is a yield measurement, it is also a commonly used indicator for general pricing trends in the LTL industry. This yield metric is not a true measure of price, however, as it can be influenced by many other factors, such as changes in fuel surcharges and weight per shipment. As a result, changes in revenue per hundredweight do not necessarily indicate actual changes in underlying base rates. LTL revenue per hundredweight and the key factors that can impact this metric are described in more detail below:

Revenue Per Hundredweight Our LTL transportation services are generally priced based on weight, commodity, and distance. This measurement reflects the application of our pricing policies to the services we provide, which are influenced by competitive market conditions and our growth objectives. Generally, freight is rated by a class system, which is established by the National Motor Freight Traffic Association. ( NMFTA ). Light, bulky freight typically has a higher class and is priced higher than dense, heavy freight. Fuel surcharges, accessorial charges, and revenue adjustments reflected in the Revenue line item in the accompanying unaudited Condensed Consolidated Statements of Income are included in this measurement.

Weight Per Shipment Fluctuations in weight per shipment can indicate changes in the mix of freight we receive from our customers, as well as changes in the number of units included in a shipment. Generally, increases in weight per shipment indicate higher demand for our customers products and overall increased economic activity. Changes in weight per shipment can also be influenced by shifts between LTL and other modes of transportation, such as truckload and intermodal, in response to capacity, service, and pricing conditions. issues. Fluctuations in weight per shipment generally have an inverse effect on our revenue per hundredweight, as a decrease in weight per shipment will typically cause an increase in revenue per hundredweight.

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FedEx Freight Holding Company, Inc. was incorporated in Delaware on July 14, 2025, for the purpose of receiving, pursuant to a reorganization, all of the outstanding equity interests of FedEx Freight, Inc. On June 1, 2026, FedEx distributed shares representing approximately 80.1% of FedEx Freight Holding Company, Inc.'s outstanding common stock to holders of record of FedEx's common stock as of the close of business on May 15, 2026 (the "Distribution"), in a Spin-Off that was tax-free for U.S. federal income tax purposes. ). Following the Distribution, Spin-Off, FedEx Freight became an independent, publicly traded company. For additional information, see Note 1 , D escription Description of Business and Basis of Presentation , and Note 14 , Subsequent E vents , of the accompanying consolidated financial statements.

Effective for the period beginning June 1, 2026, the Company's fiscal year-end has changed from May 31 to December 31. As a result of this change, the Company s financial statements include a four-month transition period from June 1, 2026 through September 30, 2026. The Company adopted this change to align its reporting periods with the calendar year.

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As a wholly owned subsidiary of FedEx prior to the Spin-Off, we relied on FedEx to manage certain of our operations and provide certain services, the costs of which were either allocated or directly billed to us. Historical costs for such services may not necessarily reflect the actual expenses we would have incurred, or will incur, as an independent company. In connection with the Spin-Off, we entered into the a Separation and Distribution Agreement and certain other agreements with FedEx, including the a Transition Services Agreement, the a Tax Matters Agreement, the an Employee Matters Agreement, the an Intellectual Property Cross-License Agreement, the a Trademark License Agreement, and the a Stockholder and Registration Rights Agreement, as described in Item 13. Certain Relationships and Related Transactions, and Director Independence , our Annual Report, which provides provide a framework for our relationship with FedEx after the separation. Spin-Off. We will expect to be able to utilize certain FedEx services for a transitional period following the Spin-Off, but generally not longer than 24 months after the Spin-Off before we replace these services over time with services supplied either internally or by third parties. The costs for the cost of replacing such services we receive from FedEx initially, and then internally or from third parties, may vary from the historical costs directly billed and allocated to us. for the same services. Addressing the needs that arise from becoming a stand-alone company will require significant resources. including time and attention from our senior management and others throughout the Company. We will continue to monitor potential separation dis-synergies and we have incurred, and anticipate we will further incur, certain one-time costs associated with creating our own capabilities to manage transitioning operations to self-management and provide certain arranging for services that we previously received as part of FedEx.

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As a result of the Spin-Off, we have become became subject to federal and state securities law and stock exchange requirements. and have begun to establish We are establishing additional procedures and practices as a stand-alone public company. As a result, subsequent to the Spin-Off, we have started to incurred and will continue to incur additional expenditures consisting primarily of employee-related costs, costs to establish certain stand-alone functions and information technology systems, and other transaction-related costs. Additionally, we have incurred and will continue to incur incremental costs that arise from becoming a stand-alone public company, including costs related to external reporting, internal audit, treasury, investor relations, board of directors and officers, and stock and benefit plan administration, as well as costs from expanding the services of existing functions, such as information technology, finance, human resources, legal, tax, facilities, branding, security, government relations, community outreach, and insurance. In line with our long-term cost strategy, we will continue to look for operational cost improvement opportunities as a stand-alone company by utilizing our lean culture and innovative technologies to drive lower costs and increased productivity levels across our business and corporate functions.

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Many of our operating expenses are directly affected by revenue and volume levels, and we expect these operating expenses to fluctuate on a year-over-year basis consistent with changes in revenue and volumes. Therefore, The discussion of operating expense below focuses on the key drivers and trends affecting expenses other than those factors strictly related to changes in revenue and volumes. The line item Other operating expenses includes shared services and general corporate costs, finance charges for factored trade receivables, self-insurance claims, and costs associated with professional fees and outside service contracts (such as information technology services, facility services, temporary labor, and security).

Our business is cyclical in nature, as seasonal fluctuations affect volumes, revenues, revenue, and earnings. The spring Our second and fall third quarters are historically the busiest periods while and the latter part of December through February is historically the slowest period. Shipment levels, operating costs, earnings, and cash flow can also be affected by timing of merit-based compensation increases, our annual general rate increase, and severe weather. See Part I, Item 1A. Risk Factors in our Annual Report for more information.

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The following trends significantly affect the indicators discussed above, as well as our business and operating results. See the risk factors identified under Item 1A. Risk Factors for more information.

The FedEx Board oversaw and monitored the risks related to FedEx Freight prior to the Spin-Off. Our Board has assumed oversight of these risks upon completion of the Spin-Off and, with management and through our Risk Oversight Committee, will continue to assess whether developments related to these risks have had, or are reasonably likely to have, a material impact on the Company.

In addition to the matters discussed above under Transition to Stand - Alone Company , the following trends significantly affect our business and operating results. See Part I, Item 1A. Risk Factors in our Annual Report and Part II, Item 1A. Risk Factors of this Quarterly Report for more information.

We apply fuel surcharges on our services, which are adjusted on a weekly basis. The fuel surcharge is based on a weekly fuel price from ten days prior to the week in which it is assessed. We routinely review our fuel surcharges and periodically update the tables used to determine our fuel surcharges.

While fluctuations in fuel surcharge percentages can be significant from period to period, fuel surcharges represent one of the many individual components of our pricing structure that impact our overall revenue and yield. Additional components include the mix of services sold, the base price, extra service charges, and the level of discounts offered.

In addition to variability in usage and market prices, the manner in which we purchase fuel (whether through retail or bulk suppliers) also influences our results. We must purchase large quantities of fuel to operate our vehicles, and the price and availability of fuel are beyond our control and can be highly volatile. For example, recent disruptions to shipping have contributed to a significant increase in fuel prices, and global volatility in fuel prices may persist due to ongoing regional and global tensions and conflicts in the Middle East and elsewhere. In addition, our purchased transportation expense is affected by fuel costs.

Because of the factors described above, our operating results may be affected should the market price of fuel suddenly change by a significant amount or change by amounts that do not result in an adjustment in our fuel surcharges, which can significantly affect our earnings either positively or negatively in the short-term. During calendar year 2026, higher fuel prices have positively affected yields through increased fuel surcharges which have more than offset the impact of higher fuel expense, resulting in a net favorable operating income impact.

To date, we have been mostly successful in mitigating over time the expense effect of higher fuel costs through our indexed fuel surcharges, as the amount of the surcharges is closely linked to the market prices for fuel. If we are unable to maintain or increase our fuel surcharges because of competitive pricing pressures or some other reason, fuel costs could materially and adversely affect our operating results.

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Based on the current trends, we expect the softness in the industrial economy to continue to put pressure on demand for LTL services for the remainder of calendar year 2026. In addition, we expect to continue to experience elevated expense levels in support of our separation from FedEx. We will continue to execute our revenue quality strategy and focus on cost management to align expenses to lower demand levels.

While broader freight conditions have shown signs of improvement and volume and base yield trends continue to stabilize, we expect softness in the industrial economy to continue to put pressure on demand for LTL services for the remainder of calendar year 2026. We will continue to execute on our four key priorities of optimizing our network, strengthening our commercial offering, advancing our technology capabilities, and driving financial value creation.

The uncertainty of slowing North American and global economies, global inflation, geopolitical challenges, and the effects these factors will have on the rate of growth of North American and global trade, supply chains, fuel prices, and our business in particular, make any expectations for the remainder of calendar year 2026 inherently less certain. See Item 1A. Risk Factors , Forward-Looking Statements , and Critical Accounting Estimates for a discussion of these and other potential risks and uncertainties that could materially affect our future performance.

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We apply fuel surcharges on our services, most of which are adjusted on a weekly basis. The fuel surcharge is based on a weekly fuel price from ten days prior to the week in which it is assessed. We routinely review our fuel surcharges and periodically update the tables used to determine our fuel surcharges.

While fluctuations in fuel surcharge percentages can be significant from period to period, fuel surcharges represent one of the many individual components of our pricing structure that impact our overall revenue and yield. Additional components include the mix of services sold, the base price, extra service charges, and the level of discounts offered.

In addition to variability in usage and market prices, the manner in which we purchase fuel (whether through retail or bulk suppliers) also influences our results. We must purchase large quantities of fuel to operate our vehicles, and the price and availability of fuel are beyond our control and can be highly volatile. For example, recent disruptions to shipping have contributed to a significant increase in fuel prices, and global volatility in fuel prices may persist due to ongoing regional and global tensions and conflicts in the Middle East and elsewhere. In addition, our purchased transportation expense is affected by fuel costs.

Because of the factors described above, our operating results may be affected should the market price of fuel suddenly change by a significant amount or change by amounts that do not result in an adjustment in our fuel surcharges, which can significantly affect our earnings either positively or negatively in the short-term. During 2026, higher fuel prices positively affected yields through increased fuel surcharges and negatively affected fuel expenses.

To date, we have been mostly successful in mitigating over time the expense effect of higher fuel costs through our indexed fuel surcharges, as the amount of the surcharges is closely linked to the market prices for fuel. If we are unable to maintain or increase our fuel surcharges because of competitive pricing pressures or some other reason, fuel costs could materially and adversely affect our operating results. For more information, see Item 1A. Risk Factors .

The following table compares summary operating results (dollars in millions, except per share amounts):

2026 2025 Percent Change

Revenue $ 8,795 $ 8,892 (1)

Operating income $ 540 $ 1,404 (62)

Operating margin 6.1 % 15.8 % (970) bp

Net income $ 655 $ 1,346 (51)

Diluted earnings per share (1)

Immediately prior to the Spin-Off, the Company effected a recapitalization whereby its 100 issued and outstanding shares of common stock were reclassified and converted into 149,505,248 shares of common stock. All historical share and per-share amounts presented herein have been retrospectively adjusted to reflect this recapitalization.

Operating income in 2026 was negatively affected by higher costs related to the Spin-Off including increased salaries and employee benefits, outside service contracts and professional fees as well as by reduced demand, partially offset by increased yield.

We incurred costs related to the Spin-Off of $492 million in 2026. These costs consisted of fees for professional services, as well as employee incentive plan amounts, all of which are included in the "Separation and other costs" line item in the accompanying consolidated statements of income. All separation costs in 2025 were recognized by FedEx and, therefore, we did not incur any Spin-Off costs in 2025.

Years Ended May 31, Percent Change Percent of Revenue

Revenue $ 8,795 $ 8,892 (1) 100.0 % 100.0 %

The following table compares tables compare revenue, operating expenses, operating income operating margin, selected statistics, and (dollars in millions), net income, operating expenses as a percent of revenue, (dollars in millions): operating margin, and selected statistics:

September 30, Percent

Change Four Months Ended

September 30, Percent

Revenue $ 2,442 $ 2,259 8 % $ 3,281 $ 3,004 9 %

Salaries and employee benefits 1,128 1,084 4 1,506 1,433 5

Operating supplies and expenses 546 471 16 722 621 16

Purchased transportation 235 200 18 309 265 17

Depreciation and amortization 114 125 (9) 152 168 (10)

Insurance and claims 44 42 5 59 56 5

Operating taxes and licenses 17 17 23 23

Separation and other costs 105 30 250 127 30 323

Total operating expenses 2,189 1,969 11 2,898 2,596 12

Operating income 253 290 (13) 383 408 (6)

Other income (expense):

Related party interest income 98 (100) 128 (100)

Interest expense (55) NM (73) NM

Interest income 5 NM 5 NM

Other, net 1 3 (67) 3 5 (40)

Total other income (expense) (49) 101 (149) (65) 133 (149)

Income before income taxes 204 391 (48) 318 541 (41)

Provision for income taxes 57 100 (43) 88 137 (36)

Net income $ 147 $ 291 (49) $ 230 $ 404 (43)

Basic $ 0.98 $ 1.95 (50) $ 1.54 $ 2.70 (43)

Diluted $ 0.98 $ 1.95 (50) % $ 1.54 $ 2.70 (43) %

September 30, Change (bps) Four Months Ended

September 30, Change (bps)

1 unchanged paragraph

Operating supplies and expenses 22.4 20.8 160 22.0 20.7 130

2 unchanged paragraphs

Maintenance and repairs

Insurance and claims

Operating taxes and licenses

2 unchanged paragraphs

Operating income $ 540 $ 1,404 (62)

Operating margin 6.1 % 15.8 % (970) bp

Operating days 252 252

September 30, Percent

Change Four Months Ended

3 unchanged paragraphs

1 unchanged paragraph

1 unchanged paragraph

1 unchanged paragraph

1 unchanged paragraph

2 unchanged paragraphs

1 unchanged paragraph

and 111 more changes in the filing

Forward-looking statements 3 changes

Certain statements contained in this Annual report on Form 10-K (this Annual Report ), are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact are, or may be deemed to be, forward-looking statements, including (but not limited to) statements contained in the notes to the financial statements contained in Part I, Item 1. Business ; Item 1A. Risk Factors ; Item 1C. Cybersecurity Fina ncial Statements ; Part I, Item 2. Properties ; Item 5. Market for Registrant s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities ; Item 7. Management s Discussion and Analysis of Results of Operations and Financial Condition ; and Part II, Item 8. Financial Statements and Supplementary Data 1A. Risk Factors ; regarding our strategy, outlook, financial condition, results of operations, cash flows, plans, objectives, future performance, and business.

Forward-looking statements are generally identified by the words will, may, could, would, should, believes, expects, forecasts, anticipates, plans, estimates, targets, projects, intends, outlook, potential, and similar expressions, although not all forward-looking statements contain these identifying words. These forward-looking statements are based on assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions, and expected future developments, as well as other factors we believe are appropriate under the circumstances. These forward-looking statements involve risks and uncertainties, and actual results may differ materially from those contemplated (expressed or implied) by such forward-looking statements, because of, among other things, economic conditions in the markets in which FedEx Freight Holding Company, Inc., together with its subsidiaries ( we us, our, FedEx Freight, or the Company ), operates; operate; significant changes in the volumes of shipments transported through FedEx Freight s our network, customer demand for FedEx Freight s our various services, or and the prices it obtains we obtain for its our services; geopolitical developments and additional changes in international trade policies and relations; the price and availability of fuel and limitations on our ability to recover fuel costs through surcharges; failure to successfully implement FedEx Freight s our business strategy and effectively respond to changes in market dynamics and customer preferences; FedEx Freight s our ability to achieve some or all of the anticipated benefits from its spin-off from FedEx Corporation ( FedEx ) and such spin-off the Spin-Off; ); the consequences of FedEx Freight us no longer operating as part of a globally diversified company; dis-synergies and other costs incurred in connection with the Spin-Off exceeding FedEx Freight s our estimates; the distribution of shares of FedEx Freight, together with certain related transactions, not qualifying for the intended tax treatment; a significant data breach or other disruption to FedEx Freight s our technology infrastructure, and its our ability to mitigate the technological, operational, legal, regulatory, and reputational risks related to emerging technologies such as autonomous technology and artificial intelligence ( AI ); increased insurance and claims expenses related to vehicle accidents, workers compensation claims, property and cargo loss, general business liabilities, and benefits paid under employee disability programs; failure to receive or collect expected insurance coverage; the effect of any international conflicts or terrorist activities; failure of third-party service providers to perform as expected, or disruptions in FedEx Freight s our relationships with those providers or their provision of services to FedEx Freight; us; widespread outbreak of an illness or any other communicable disease or public health crisis; damage to FedEx Freight s our or FedEx s reputation or loss of brand equity; the intense competition within FedEx Freight s our industry; FedEx Freight s our ability to maintain good relationships with its our employees and avoid attempts by labor organizations to organize groups of its our employees; any effects on FedEx Freight s our businesses resulting from evolving or new U.S. domestic or international government regulations, laws, policies, and actions; any liability resulting from and the costs of defending against litigation and governmental proceedings; the sufficiency of insurance coverage FedEx Freight purchases; we purchase; the effect of technology developments (including AI and machine learning) on FedEx Freight s our operations and on demand for its services, and FedEx Freight s our ability to identify and eliminate unnecessary information technology redundancy and complexity throughout the organization, including exiting the Transition Services Agreement with FedEx (the Transition Services Agreement ) in the expected timeframe and at the expected cost; disruptions in global supply chains; constraints, volatility, or disruption in the global capital and credit markets; FedEx Freight s our ability to maintain its our current credit ratings and senior unsecured debt credit ratings, and its our ability to meet credit agreement financial covenants; and other risk factors identified in Item 1A. Risk Factors of this our Annual Report, as may be updated by subsequent filings with the Securities and Exchange Commission ( SEC ). Further, new risk factors emerge from time to time, and it is not possible for us to predict all risk factors, nor can we accurately assess the ultimate impact of all risk factors on our business or the extent to which any risk factor, or combination of risk factors, may cause actual results to differ materially from those contained in any forward-looking statements.

As a result, no assurance can be given as to our future results and achievements or the effect of such results and achievements on our business and results of operations. A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those events or circumstances may not occur. You should not place undue reliance on forward-looking statements, which speak only as of the date of this Annual Quarterly Report. We undertake no obligation, and expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise.

Market risk 4 changes

Interest Rates. Our consolidated financial statements do not include an attribution of FedEx s third-party debt or interest expense from FedEx because we are not the legal obligor of the debt and the borrowings were not directly attributable to our business. We incurred indebtedness in contemplation of the Spin-Off, creating interest rate risk on the balance sheet. As discussed in Note 5, Long-Term Debt , to the accompanying consolidated financial statements, we have outstanding long-term debt (exclusive of finance leases) with an estimated fair value of $4.2 billion. Market risk for long-term debt is estimated as the potential decrease in fair value resulting from a hypothetical 10% increase in interest rates and amounts to approximately $91 million. The underlying fair value of our long-term debt was estimated based on quoted market prices or on the current rates offered for debt with similar terms and maturities.

Foreign Currency. While we are a provider of transportation services within North America, the majority of our transactions during the periods presented in this Annual Report are denominated in U.S. dollars. The only foreign currency exchange rate risks to which we are exposed are the Canadian dollar and Mexican peso. The result of a hypothetical 10% adverse movement in the value of the dollar relative to the currencies in which our transactions are denominated would not be material to our financial position, results of operations, or cash flows, in all periods presented. In addition to the direct effects of changes in exchange rates, fluctuations in exchange rates also affect the volume of sales or the foreign currency sales price as competitors services become more or less attractive. The sensitivity analysis of the effects of changes in foreign currency exchange rates does not factor in a potential change in sales levels or local currency prices.

Commodity. While we have market risk for changes in the price of vehicle fuel, this risk is largely mitigated by our indexed fuel surcharges. For additional discussion of our indexed fuel surcharges, see Results of Operations Fuel .

There have been no material changes in our exposures to market risk since May 31, 2026. For details on the Company s interest rate, foreign currency, and commodity risks, see Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk in our Annual Report.

Controls and procedures 6 changes

Management s Evaluation of Disclosure Controls and Procedures

Assessment of Internal Control Over Financial Reporting

This Annual Report does not include a report of management s assessment regarding internal control over financial reporting or an attestation report of our independent registered public accounting firm due to a transition period established by the rules of the SEC for newly public companies.

Changes in Internal Controls Over Financial Reporting

The management of FedEx Freight, with the participation of our principal executive and financial officers, has evaluated the effectiveness of our disclosure controls and procedures in ensuring that the information required to be disclosed in our filings under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the time periods specified in the SEC s rules and forms, including ensuring that such information is accumulated and communicated to FedEx Freight management as appropriate to allow timely decisions regarding required disclosure. Based on such evaluation, our principal executive and financial officers have concluded that such disclosure controls and procedures were effective as of May 31, September 30, 2026 (the end of the period covered by this Annual Quarterly Report).

There were During the quarter ended September 30, 2026, no changes change occurred in our internal control over financial reporting that occurred during the fiscal quarter ended May 31, 2026 that has materially affected, or are is reasonably likely to materially affect, our internal control over financial reporting.

Legal proceedings 1 change

FedEx Freight and its subsidiaries are subject to legal proceedings and claims that arise in the ordinary course of business. See Note 13, , Contingenc ies Commitments and Contingencies , of the accompanying consolidated financial statements, which is incorporated herein by reference, for additional information.

Risk factors 165 changes

In addition to the information set forth in other sections of this Annual Report, including, but not limited to, Item 1. Business , Item 1C. Cybersecurity , Item 3. Legal Proceedings , and Item 7. Management s Discussion and Analysis of Results of Operations and Financial Condition , you should carefully consider the following factors, which could materially adversely affect our business, results of operations, financial condition, and the price of our common stock. Additional risks not currently known to us or that we currently deem to be immaterial or general risks that apply to all companies operating in North America also may materially adversely affect our business, results of operations, financial condition, and the price of our common stock. Although the risks below are organized by headings and each risk is discussed separately, many are interrelated.

Our business is subject to numerous risks and uncertainties, including, but not limited to:

Risks Relating to Our Business and Industry

macroeconomic conditions, including inflation, interest rates, supply chain disruptions, geopolitical conflicts, and changes in trade policies (including tariffs);

customer demand for goods, and shifts in production, inventory, and distribution patterns;

fuel prices and supply disruptions, together with limitations on our ability to recover such costs through fuel surcharges;

failure to successfully implement our business strategy and effectively respond to changes in market dynamics and customer preferences;

adverse publicity relating to our or FedEx s activities and the FedEx brand generally;

the cost and availability of insurance;

our ability to meet our medium-term financial performance targets;

the high degree of competition in our industry;

extensive and evolving transportation, environmental, safety, labor, tax, data privacy, and other regulations;

legal proceedings and claims, litigation, governmental inquiries, notices, and investigations;

labor market conditions, including availability and cost of drivers and other personnel, workforce relations, and potential unionization or labor disruptions;

our ability to adapt to and implement new and emerging technologies, including AI;

data breaches or other disruptions to our technology infrastructure;

global climate change, environmental regulation, and sustainability expectations, including increased costs, regulatory uncertainty, and potential litigation or reputational harm; and severe weather events, natural disasters, public health crises, and other disruptions (including terrorism).

Risks Relating to the Spin-Off

significant tax liabilities that could result from the Spin-Off or related transactions failing to qualify as tax-free for U.S. federal income tax purposes;

certain restrictions resulting from the Spin-Off on our operations and strategy; and our ability to achieve some or all of the anticipated benefits of the Spin-Off.

Risks Relating to Our Common Stock

the potential for substantial sales of our common stock following the Spin-Off; and the impact of certain anti-takeover provisions in our organizational documents and under Delaware law.

General Risk Factors

constraints, volatility, or disruption in global capital and credit markets;

our inability to operate any acquired businesses; and

the effects of a widespread outbreak of an illness or any other communicable disease or public health crisis.

Risks Relating to Our Business and Industry

Risks Relating to Macroeconomic and Geopolitical Conditions

We are directly affected by the state of the global economy and geopolitical developments, which has affected the demand for our services and could materially adversely affect our business.

While our operations are limited to North America, we are indirectly impacted by broader macroeconomic and international trade policies and risks. The transportation industry is highly cyclical and especially susceptible to trends in economic activity. Our primary business is to transport goods, so our business levels are directly tied to the purchase and production of goods and the rate of global trade growth key macroeconomic measurements influenced by, among other things, inflation and deflation, international trade policies and relations (including tariffs or the imposition of new tariffs, trade wars, barriers, or restrictions or threats of such actions), supply chain disruptions, interest rates, currency exchange rates, labor costs and unemployment levels, fuel and energy prices, inventory levels, spending patterns (including shifts from goods to services and vice versa), disposable income, debt levels, credit availability, public health crises, political uncertainty, geopolitical tensions or conflicts, and changes to social conditions and regulations. When individuals and companies purchase and produce fewer goods, we transport fewer shipments, and as companies move manufacturing closer to consumer markets and expand the number of distribution centers, we transport shipments shorter distances, which adversely affects our revenue per shipment and results of operations. Certain manufacturers and retailers are also making investments to produce and store goods in closer proximity to supply chains and consumers.

The decline in U.S. imports of consumer goods that started in late 2022, along with slowed global industrial production, has contributed to continued weakened business conditions for the transportation industry leading to lower shipment volumes. Additionally, changes in U.S. and international trade policy have in the past and could in the future lead to further weakened business conditions for the transportation industry. We also have experienced, and may continue to experience, a decline in demand for our transportation services as inflation and elevated interest rates negatively affect consumer and business spending. We expect inflation and elevated interest rates to continue to negatively affect our results of operations for the remainder of calendar year 2026.

Additional changes in international relations and trade policies, including with respect to tariffs, could significantly reduce the volume of goods transported and increase our costs, which could materially adversely affect our results of operations and financial condition.

The U.S. government has taken certain actions that have negatively affected U.S. trade, including imposing and threatening to impose tariffs on many goods imported into the United States (including certain goods from Canada and Mexico). Additionally, many foreign governments (including Canada and Mexico) have imposed, and others have threatened to impose, tariffs on certain goods exported from the United States. These actions have contributed to weakness in the global economy and in the transportation industry which has led to lower shipments, adversely affecting our results of operations. These conditions may continue in the future. Increased tariffs may lead to lower levels of trade or heightened political tension. Additional changes to global trade policies could lead to increased tariffs, export controls, quotas, embargoes, or sanctions, which may lead to increased prices or trade limitations for transported goods, potentially reducing customer demand for our services.

In addition, negotiations among the United States, Canada, and Mexico on matters related to the United States-Mexico-Canada Agreement ( USMCA ), which governs trade among such countries, are ongoing. It remains difficult to predict the impact of any change in the USMCA on the economy, including the transportation industry, but given the amount of North American trade that moves by truck, any new or revised restrictions on trade could have a significant impact on supply and demand in the LTL freight transportation industry. Such changes could materially adversely affect our results of operations and financial condition.

Our business and results of operations are affected by the price and availability of fuel, as well as our ability to collect fuel surcharges.

We must purchase large quantities of fuel to operate our vehicles, and the price and availability of fuel is beyond our control and can be highly volatile. In addition, our purchased transportation expense is affected by fuel costs. To date, we have been mostly successful in mitigating over time the effect of higher fuel costs through our indexed fuel surcharges, which help offset the negative effect of increased fuel prices. If we are unable to maintain or increase our fuel surcharges because of competitive pricing pressures or other reasons, fuel costs could adversely affect our operating results. We have no derivative financial instruments to reduce our exposure to fuel price fluctuations, and we currently have no plans to use derivative financial instruments for this purpose in the future.

High fuel surcharges could reduce customer demand for our services. In addition, disruptions in the supply of fuel could have a negative effect on our ability to operate our business. The following factors may affect fuel supply and could result in shortages and price increases in the future: political disruptions or geopolitical conflicts involving oil-producing countries; economic sanctions imposed against oil-producing countries or specific industry participants; changes in governmental policy concerning fuel production; transportation taxes; weather-related events; natural disasters; changes in refining capacity; sustainability concerns or regulations;

cyberattacks; and public and investor sentiment. Fuel shortages and price increases could have a material adverse effect on our business, results of operations, and financial condition.

Risks Relating to Operations and Strategies

Failure to successfully implement our business strategy and effectively respond to changes in market dynamics and customer preferences could materially adversely affect our business, results of operations, and financial condition.

Our long-term business strategy depends on several key initiatives including, but not limited to, our ability to grow our key customer verticals, improve the experience of our customers, and effectively implement new technologies. We are making significant investments and incurring operating expenses in connection with these initiatives, and may not be able to derive the expected benefits from them.

In developing our business strategy, we make certain assumptions including, but not limited to, those related to customer demand and freight volume growth, competition, and the North American and global economies, and actual market, economic, and other conditions may be different from our assumptions. As technology, customer behavior, and market conditions continue to evolve, it is important that we maintain the relevance of our brand and service offerings to our customers. If we are not able to successfully implement our business strategy and effectively respond to changes in technology, customer preferences, and market dynamics, our business, results of operations, and financial condition will suffer.

Adverse publicity relating to our own activities or FedEx s activities could materially adversely affect our reputation and reduce the value of our goodwill and brand.

We and FedEx have a strong reputation among our respective customers and team members and the general public for high standards of corporate responsibility, governance, and ethics. We expect that our license to use the FedEx brand name pursuant to the Trademark License Agreement and our corporate reputation will be powerful tools for sales, marketing, and recruitment. See Item 13. Certain Relationships and Related Transactions, and Director Independence for additional details regarding the Trademark License Agreement and We do not own the FedEx trademark or logo or associated purple and orange trade dress and certain intellectual property retained by FedEx, the protection of which is largely out of our control, and any elimination of our rights to use specified trademarks and intellectual property granted to us under the Trademark License Agreement and the Intellectual Property Cross-License Agreement could materially adversely affect our reputation, business, and results of operations below.

Adverse publicity or sensationalism across media channels (whether or not justified) relating to activities including, but not limited to, those by our or FedEx s team members or others with whom we or FedEx do business, could tarnish our reputation and reduce the value of our brand and goodwill, such as: labor relations, legal matters, cybersecurity incidents, incidents involving vehicles or facilities, cargo theft, sustainability issues, and similar matters. Further, we may have little or no control over some of these activities, such as the activities that are carried out by FedEx or others with which we or FedEx do business.

With the increase in the use of AI and social media outlets, adverse publicity, whether warranted or not, can be disseminated quickly and broadly without context, making it increasingly difficult for us to effectively respond. Damage to our reputation and loss of brand equity could reduce demand for our services and/or create difficulties in retaining and recruiting employee talent, and may require additional resources to rebuild our reputation and restore the value of our brand and goodwill.

We are self-insured for certain costs associated with our operations, and insurance and claims expenses may increase, which could materially adversely affect our profitability and financial condition.

We maintain insurance coverage for covered losses that entitle us, subject to policy terms and limits, to coverage above our retention amount for workers compensation claims, vehicle accidents, property and cargo loss, and general business liabilities for occurrences on or after June 1, 2026. Occurrences prior to the Spin-Off are already covered by FedEx policies under which we may make claims pursuant to the Separation and Distribution Agreement between us and FedEx entered into in connection with the Spin-Off (the Separation and Distribution Agreement ). See Item 13. Certain Relationships and Related Transactions, and Director Independence for additional details regarding the Separation and Distribution Agreement. Our accruals are primarily based on estimated costs determined by actuarial methods. Estimated costs include consideration of a variety of factors and related assumptions, some or all of which may prove to be incorrect. Material increases in the magnitude of claims due to recent litigation outcomes, changes to healthcare costs, accident frequency and severity, insurance retention levels, judgment and settlement amounts, associated legal expenses, and other factors could result in unfavorable differences between actual costs and our reserve estimates. As a result, our insurance and claims costs could increase materially in the future.

As a supplement to our insurance coverage, we maintain coverage with excess insurance carriers in certain instances for potential losses related to occurrences following the Spin-Off that exceed the amounts of our foundational insurance coverage. However, we can provide no assurance that such coverage will be adequate to protect us from costs incurred with certain events. For example, the commercial trucking industry has experienced a wave of blockbuster or so-called nuclear verdicts, including some instances in which juries have awarded hundreds of millions of dollars to those injured in accidents and their families. As a result, several insurance companies have completely stopped offering coverage to trucking companies for automobile liability claims, significantly reduced the amount of coverage they offer, or significantly raised premiums. This trend could adversely affect our ability to obtain suitable insurance coverage, significantly increase our cost of obtaining such coverage, or subject us to significant liabilities for which no insurance is in place.

Given the current claims environment, the amount of coverage available from excess insurance carriers is decreasing, the premiums for this excess coverage are increasing significantly, and excess insurance carriers are challenging insurance claims more frequently, which could further exacerbate our ability to obtain adequate coverage. Our results of operations and financial condition could be adversely affected if our costs or losses significantly exceed our aggregate coverage limits, we are unable to obtain excess insurance coverage in amounts we deem sufficient, our insurance carriers fail to pay on our insurance claims, or we experience a claim for which coverage is not provided.

We may not be able to achieve our medium-term financial performance targets.

On April 8, 2026, we announced a comprehensive multi-year financial framework with medium-term financial performance targets. Our ability to achieve these goals is dependent on a number of factors, including the other risk factors described in this Annual Report. We may fail to achieve our medium-term financial performance targets if we are unsuccessful in implementing our strategies, our estimates or assumptions change, or for any other reason. If we are not able to achieve these targets, there could be an adverse effect on our results of operations and financial condition, and the price of our common stock may be negatively affected.

Failure of third-party service providers to perform as expected, or disruptions in our relationships with those third parties or their provision of services to us, could materially adversely affect our business.

We engage third-party service providers to perform certain functions that are integral to our business, including the provision of information technology infrastructure, application development, maintenance and support, and end-user support services. In addition, we have entered into go-forward arm s-length agreements with FedEx pursuant to which FedEx will provide certain services to us and vice versa following the Spin-Off. See Item 13. Certain Relationships and Related Transactions, and Director Independence for additional details regarding such agreements with FedEx. There can be no assurance that such third parties will adhere to contractual service performance or compliance requirements, perform their assignments in a satisfactory manner, or comply with our safety rules in an appropriate manner, and such third parties may suffer disruptions to their systems, labor groups, or supply chains that could adversely affect their services. Such failures could compromise our ability to fulfill our commitments to our customers, comply with applicable regulations, or otherwise meet our customers expectations. We may also have disagreements with such third parties, and related contracts may be terminated or may not be extended or renewed. Additionally, from time to time certain service providers have engaged, and some may in the future engage, in fraudulent activities in the course of their business relationships with us. Any of the foregoing could materially adversely affect our business, results of operations, and financial condition.

We operate in a rapidly evolving and highly competitive industry and we may be affected by downward pricing pressures and other competitive factors, along with a decrease in our customers use of our services, which could materially adversely affect our results of operations and financial condition.

The freight transportation market is highly competitive and sensitive to price and service levels. Continued transportation industry consolidation may further increase competition. We also face competition from outside the LTL freight transportation industry, including from regional transportation providers that operate smaller and less capital-intensive transportation networks and startup companies. Some smaller competitors may not be fully compliant with applicable regulations, which may allow such competitors to achieve additional driver productivity or other advantages. Capacity levels in the broader freight transportation industry also influence demand and pricing for our services. In addition, some retailers are developing and implementing in-house transportation capabilities. For example, Amazon has announced the offering of its internal freight and other transportation and logistics capabilities more broadly to third parties.

Customers may shift to other LTL providers or modes of transportation for a variety of reasons, including in response to capacity, service, and pricing issues. Some of our competitors may have actual or perceived competitive advantages. Our current competitors or potential future competitors could offer a broader range of services or better service levels, more effectively bundle their services, offer services at lower prices, or take greater advantage of emerging technologies such as AI and autonomous transportation. Certain competitors may also be willing to operate at little or no margin to gain market share. The existence of such a pricing environment could limit our ability to maintain or increase our prices. Advancements in technology may also necessitate that we increase investments in order to remain competitive, and our customers may not be willing to accept higher rates to cover the cost of these investments.

Risks Relating to Regulatory and Legal Matters

We have been and may be subject to new and revised regulations related to the transportation industry, which could increase our compliance costs and materially adversely affect our business.

We are subject to laws, regulations, and requirements promulgated by the DOT, the FMCSA, the U.S. Department of Homeland Security, CBP, Canada Border Services Agency, and various other international, domestic, state, and local agencies and port authorities. These authorities have broad powers over matters relating to authorized motor carrier operations, as well as motor carrier registration, driver hours of service, safety and fitness of transportation equipment and drivers, transportation of hazardous materials, and other matters. The trucking industry is also subject to regulatory and legislative changes from a variety of other governmental authorities, which address matters such as increasingly stringent environmental regulations, occupational safety and health regulations, limits or restrictions on vehicle weight and size and types of shipments transported, port security, driver hours of service, driver meal and rest breaks, and drug and alcohol testing. We are subject to the costs and potential adverse effect of compliance with ELD regulations and guidance, including the operation of our fleet and safety management systems on the ELD hardware and software platform. In addition, certain shipments may subject us to compliance with cargo-security and transportation regulations issued by the TSA and CBP. Legal and regulatory requirements and changes in these requirements or guidance, together with the growing compliance risks presented by increased differences between applicable federal and state laws and regulations, may adversely affect our business or the economics of the industry by requiring changes in operating practices that could influence the demand for and increase the costs of providing transportation services. See Item 1. Business Regulation for additional discussion regarding certain applicable regulations.

Our right to serve foreign points is subject to the approval of the DOT and generally requires a bilateral agreement between the U.S. and foreign governments. In addition, we must obtain the permission of foreign governments to provide specific services. For example, in Canada, carriers must obtain licenses issued by provincial transport boards in order to carry goods inter-provincially or to transport goods within any province. Our operations outside of the United States are also subject to regulations that restrict, make difficult, and sometimes prohibit the ability of foreign-owned companies such as us to compete effectively in parts of the international domestic transportation and logistics market. If we are unable to maintain our Free and Secure Trade ( FAST ), U.S. Customs Trade Partnership Against Terrorism ( C-TPAT ), and Partners in Protection ( PIP ) certification statuses, we may have significant border delays, which could cause our cross-border operations to be less efficient than those of competitor carriers that obtain or continue to maintain FAST, C-TPAT, and PIP certifications. Regulatory or executive actions affecting global transportation rights or a failure to obtain or maintain transportation rights in important international markets could impair our ability to operate our business. Further, our ability to obtain or maintain transportation rights internationally may be adversely affected by changes in international trade policies and relations, and any lapses in government operations may result in, among other things, disruptions in the ability of government agencies to grant required regulatory approvals.

We may also become subject to new or more restrictive regulations. Compliance with these laws and regulations can be onerous and expensive and new and changing laws and regulations can require changes that adversely affect our business. New and changing laws and regulations can also create uncertainty about how such laws and regulations will be interpreted and applied. There can be no assurance that our employees, contractors, or agents will not violate such laws and regulations. If we are found to have violated laws and regulations, it could increase our compliance costs and materially adversely affect our business.

Our business is subject to complex data privacy, data security, cybersecurity, and AI laws and regulations that may significantly increase our costs and adversely affect our business.

Laws and regulations regarding data privacy, data security, cybersecurity, and AI in North America continue to be updated and expanded. Enforcement actions relating to these areas continue to increase and be an area of focus. The failure to comply with applicable data protection laws, regulations, or cybersecurity or AI regulations may expose us or our third-party service providers to litigation, fines, sanctions, or other penalties. Compliance with applicable regulations in the various states and international jurisdictions in which we do business may present material obligations and risks to our business, including significantly expanded compliance burdens, costs, and enforcement risks; extensive system or operational changes; or increased cost and/or reduced attractiveness of the services we offer. All of these evolving compliance and operational requirements, as well as the uncertain interpretation and enforcement of laws, impose significant costs and regulatory risks that are likely to increase over time.

We are subject to legal proceedings and claims, litigation, governmental inquiries, notices, and investigations, which could result in significant expense and materially adversely affect our business, results of operations, and financial condition.

The nature of our business exposes us to the potential for various legal proceedings and claims regarding a variety of issues, including accidents involving our trucks and employees and the trucks and employees of third-party contractors, workers compensation, federal and state labor and employment law claims, securities claims, privacy claims, contract claims, personal injury, property damage, cargo claims, safety and contract compliance, environmental liability, and other matters. These proceedings may be time-consuming, expensive, and disruptive to normal business operations, and may include collective and/or class action allegations. Additionally, we may from time to time be subject to potential governmental inquiries, notices, or investigations. The defense, settlement, or resolution of such matters could result in significant expense that may not be covered in whole or in part by insurance.

3 unchanged paragraphs

and 99 more changes in the filing

Other information 2 changes

and 2 more changes in the filing

Exhibits 53 changes

1 unchanged paragraph

1 unchanged paragraph

and 53 more changes in the filing