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QXO, Inc(QXO) - 2024 Q4 - Annual Report
QXOQXO, Inc(QXO)2025-03-04 13:19

Stock Performance and Ownership - The common stock price has been highly volatile, ranging from 41.74to41.74 to 205.40 since June 13, 2024, significantly higher than the initial sale price of 9.14pershare[36].−Approximately31.49.14 per share[36]. - Approximately 31.4% of the voting power of the capital stock is controlled by the Chairman and CEO, Brad Jacobs, allowing him significant influence over company decisions[49]. - JPE, controlled by Mr. Jacobs, holds 900,000 shares of Convertible Preferred Stock and 197,109,065 Warrants, potentially convertible into 394,218,132 shares of common stock, representing about 49.2% of the voting power on a fully-diluted basis[50]. - The company does not intend to pay dividends in the foreseeable future, relying on market price appreciation for investor returns[44]. - The company has registered 789,549,465 shares of common stock for potential future sales, which could impact the market price[39]. - Future equity capital raises may lead to substantial dilution for existing shareholders, particularly if shares are issued at a significant discount[45]. - The concentration of ownership and voting power may delay or prevent beneficial changes in control or business combinations[52]. Financial Performance - Total revenue for the year ended December 31, 2024, was 56.873 million, an increase from 54.517millionin2023,representingagrowthofapproximately4.454.517 million in 2023, representing a growth of approximately 4.4%[149]. - The net income for the year ended December 31, 2024, was 27.969 million, compared to a net loss of 1.070millionin2023,indicatingasignificantturnaroundinfinancialperformance[149].−Operatingexpensessurgedto1.070 million in 2023, indicating a significant turnaround in financial performance[149]. - Operating expenses surged to 93.932 million in 2024 from 22.925millionin2023,reflectingincreasedselling,general,andadministrativeexpenses[149].−Thecompanyreportedalossfromoperationsof22.925 million in 2023, reflecting increased selling, general, and administrative expenses[149]. - The company reported a loss from operations of 71 million for the year ended December 31, 2024, compared to a loss of 1.311millionin2023[149].−Thetotalliabilitiesincreasedfrom1.311 million in 2023[149]. - The total liabilities increased from 13.024 million in 2023 to 45.363millionin2024,indicatingasignificantriseinfinancialobligations[145].−Cashprovidedbyoperatingactivitiesincreasedto45.363 million in 2024, indicating a significant rise in financial obligations[145]. - Cash provided by operating activities increased to 84,883,000 in 2024, compared to 584,000in2023[157].−Thecompanyreportedanetlossof584,000 in 2023[157]. - The company reported a net loss of 23.0 million for the year ended December 31, 2024, compared to a loss of 1.1millionin2023[210].−Basicanddilutedlosspersharefor2024was1.1 million in 2023[210]. - Basic and diluted loss per share for 2024 was (0.11), a significant improvement from (1.63)in2023[210].IndustryandMarketConditions−Thebuildingproductsdistributionindustryishighlyfragmentedandcompetitive,withlowbarrierstoentryforlocalcompetitors,affectingnetsalesandoperatingresults[64].−Theindustryissubjecttocyclicalmarketpressures,andprolongedperiodsofweakdemandcouldreducenetsalesandmargins,potentiallyleadingtolosses[66].−Thecompanymayfaceincreasedcostsandreducedsupplyofbuildingmaterialsduetoglobaltradetensionsandtariffs,impactingcompetitiveness[67].−Thetrendtowardconsolidationinthesoftwareindustrymayimpedethecompany′sabilitytocompeteeffectively,potentiallyincreasingacquisitioncosts[75].LeadershipandGovernance−ThecompanyishighlydependentontheleadershipofBradJacobsasChairmanandCEO,andhislosscouldmateriallyadverselyaffectthebusinessandfinancialcondition[57].−Anti−takeoverprovisionsinthecompany′sCharterandbylawscouldimpairpotentialacquisitionattempts,affectingstockholderopportunities[53].AcquisitionsandGrowthStrategy−Thecompanyplanstotargettensofbillionsofdollarsinannualrevenueinthenextdecadethroughacquisitionsandorganicgrowthinthe(1.63) in 2023[210]. Industry and Market Conditions - The building products distribution industry is highly fragmented and competitive, with low barriers to entry for local competitors, affecting net sales and operating results[64]. - The industry is subject to cyclical market pressures, and prolonged periods of weak demand could reduce net sales and margins, potentially leading to losses[66]. - The company may face increased costs and reduced supply of building materials due to global trade tensions and tariffs, impacting competitiveness[67]. - The trend toward consolidation in the software industry may impede the company's ability to compete effectively, potentially increasing acquisition costs[75]. Leadership and Governance - The company is highly dependent on the leadership of Brad Jacobs as Chairman and CEO, and his loss could materially adversely affect the business and financial condition[57]. - Anti-takeover provisions in the company's Charter and bylaws could impair potential acquisition attempts, affecting stockholder opportunities[53]. Acquisitions and Growth Strategy - The company plans to target tens of billions of dollars in annual revenue in the next decade through acquisitions and organic growth in the 800 billion building products distribution industry[161]. - The company faces risks related to acquisitions, including the failure to consummate acquisitions expeditiously, which could adversely impact business prospects and stock price[60]. - The company may not be able to successfully integrate acquired businesses, which could lead to unexpected liabilities and adversely affect financial condition and results of operations[62]. - The Company announced a cash tender offer to acquire Beacon Roofing Supply, Inc. at a purchase price of 124.25pershare,withfinancingcommitmentssecured[247][248].CashandCapitalManagement−Thecompany′scashbalancetotaled124.25 per share, with financing commitments secured[247][248]. Cash and Capital Management - The company's cash balance totaled 5.1 billion as of December 31, 2024, with a hypothetical 1% change in interest rates impacting net interest income by 51million[132].−Totalcash,cashequivalents,andrestrictedcashattheendof2024was51 million[132]. - Total cash, cash equivalents, and restricted cash at the end of 2024 was 5,072,004,000, up from 6,143,000in2023[165].−Thecompanyissued6,143,000 in 2023[165]. - The company issued 4,051,103,000 in common stock and pre-funded warrants, net of issuance costs, during the financing activities[157]. - The company raised approximately 3.5billionfromaprivateplacementof340,932,212sharesat3.5 billion from a private placement of 340,932,212 shares at 9.14 per share, closing on July 19, 2024[206]. - An additional private placement generated approximately 620millionfromthesaleof67,833,699sharesat620 million from the sale of 67,833,699 shares at 9.14 per share, closing on July 25, 2024[207]. Tax and Regulatory Matters - The effective income tax rate for 2024 was 45.0%, significantly higher than 22.0% in 2023[236]. - The Company has U.S. federal net operating loss carryforwards of 3.4millionasofDecember31,2024,downfrom3.4 million as of December 31, 2024, down from 5.8 million in 2023[239]. - The Company’s total current tax provision for 2024 was 24.0million,comparedto24.0 million, compared to 41,000 in 2023[236]. - The Company has not incurred any expense related to interest or penalties for income tax matters during the years ended December 31, 2024 and 2023[191]. Share-Based Compensation - Share-based compensation for the year was 34,513,000,comparedto34,513,000, compared to 41,000 in 2023[157]. - The Company granted 13,470 RSUs with a grant date fair value of 11.57,resultingintotalunrecognizedcompensationexpenseof11.57, resulting in total unrecognized compensation expense of 143.1 million expected to be recognized over 4.93 years[230]. - The Company granted 8,420 pRSUs with a grant date fair value of 20.24,leadingtototalunrecognizedcompensationexpenseof20.24, leading to total unrecognized compensation expense of 148.5 million expected to be recognized over 3.52 years[233]. - The Company's total share-based compensation expense for 2024 was 34.5million,comparedto34.5 million, compared to 41,000 in 2023[235]. Changes in Company Structure - The company underwent a name change from SilverSun Technologies, Inc. to QXO, Inc. on June 6, 2024, following a $1.0 billion cash investment[159]. - The company transferred its common stock listing from Nasdaq to the New York Stock Exchange on January 17, 2025[159]. - An 8:1 reverse stock split was executed on June 6, 2024, reducing the outstanding shares from 5,315,581 to 664,284[205].