QXO, Inc(QXO) - 2025 Q2 - Quarterly Results

Executive Summary & Q2 2025 Financial Highlights Second Quarter 2025 Summary Results QXO reported a basic and diluted loss per common share of $(0.15) and adjusted diluted EPS (non-GAAP) of $0.11, with net sales of $1,906.4 million and adjusted EBITDA of $204.6 million Second Quarter 2025 Summary Results (Millions of USD, except per share data) | Metric (Millions of USD, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :---------------------------------------------- | :------------------------------- | :------------------------------- | | Net Sales | $1,906.4 | $14.5 | | Gross Profit | $401.7 | $5.8 | | Adjusted Gross Profit | $482.0 | $5.8 | | Gross Margin | 21.1 % | 40.0 % | | Adjusted Gross Margin | 25.3 % | 40.0 % | | Net Loss | $(58.5) | $(0.6) | | Net Margin | (3.1)% | (4.1)% | | Adjusted EBITDA | $204.6 | $(1.2) | | Adjusted EBITDA Margin | 10.7 % | (8.3)% | | Adjusted Net Income | $109.2 | N/M | | Basic and Diluted Loss Per Common Share | $(0.15) | N/M | | Adjusted Diluted EPS | $0.11 | N/M | Second Quarter Highlights QXO completed the acquisition of Beacon Roofing Supply, Inc. for $1.06 billion on April 29, 2025, with Q2 results reflecting Beacon's operations from acquisition date to June 30 - QXO completed the acquisition of Beacon Roofing Supply, Inc. on April 29, 2025, for a total purchase price of $1.06 billion, financed through cash, debt, and equity[5] - Second quarter operating financial results include Beacon's operating data only from the acquisition completion date of April 29, 2025, through June 30[6] Second Quarter Highlights (Millions of USD) | Metric | Amount (Millions of USD) | | :--------------------- | :----------------------- | | Net Sales | $1,910 | | Adjusted Gross Margin | 25.3% | | Adjusted Net Income | $109.2 | | Adjusted Diluted EPS | $0.11 | | Adjusted EBITDA | $204.6 | | Adjusted EBITDA Margin | 10.7% | Management Commentary QXO Chairman and CEO Brad Jacobs noted smooth integration of Beacon, identifying opportunities beyond initial expectations, and initiated a transformation plan targeting $50 billion in annual revenue within a decade - Beacon's integration is progressing smoothly, revealing opportunities exceeding initial expectations[4] - The company has made key strategic hires and launched an extensive transformation plan focusing on pricing, procurement, sales, organizational structure, logistics, and other core performance drivers[4] - The company is confident in organically at least doubling Beacon's original EBITDA and has set a long-term goal of $50 billion in annual revenue within the next decade[4] Financing Update QXO raised $970 million through debt and equity offerings in Q2, repaid $140 million in term loans, and reported net debt of approximately $120 million as of June 30, 2025 - In the second quarter, the company raised $490 million through debt and an additional $480 million through common stock and mandatory convertible preferred stock offerings[8] - Subsequently, the company repaid $140 million of its term loan[8] - As of June 30, 2025, the company's net debt was approximately $120 million[8] Company Overview About QXO QXO is North America's largest publicly traded distributor of roofing, waterproofing, and related building products, aiming to be a technology-enabled leader in the $800 billion building products distribution industry and achieve $50 billion in annual revenue within a decade - QXO is North America's largest publicly traded distributor of roofing, waterproofing, and related building products[9] - The company plans to be a technology-enabled leader in the $800 billion building products distribution industry and create outsized value for shareholders[9] - The company is executing its strategy to achieve $50 billion in annual revenue within the next decade through accretive acquisitions and organic growth[9] Non-GAAP Financial Measures Definition and Rationale QXO provides definitions and reconciliations for non-GAAP financial measures, including Adjusted Gross Profit, Adjusted Net Income, and Adjusted EBITDA, which management uses to assess ongoing performance by excluding items not reflective of core operations - QXO's non-GAAP financial measures include: Adjusted Gross Profit, Adjusted Gross Margin, Adjusted Net Income, Adjusted Diluted EPS, Adjusted EBITDA, and Adjusted EBITDA Margin[11] - Management uses these non-GAAP financial measures for financial, operational, and planning decisions, and to evaluate QXO's ongoing performance[13] - These metrics exclude items that may not reflect or be indicative of QXO's core operating performance, helping investors compare with prior periods and assess business trends[13] Forward-Looking Statements & Risk Factors Forward-Looking Statements This press release contains forward-looking statements based on management's assumptions and analysis of historical trends and future developments, subject to known and unknown risks and uncertainties that could cause actual results to differ materially - This press release contains forward-looking statements as defined under the Securities Act of 1933 and the Securities Exchange Act of 1934[14] - These statements are based on management's certain assumptions and analysis of historical trends, current conditions, and expected future developments[14] - Forward-looking statements are subject to known and unknown risks, uncertainties, and assumptions that could cause actual results, activity levels, performance, or achievements to differ materially from those expressed or implied by such statements[15] Risk Factors The company faces risks including product supply, supplier pricing, acquisition integration, industry demand fluctuations, economic conditions, IT system security, talent retention, debt obligations, and reliance on key management - Insufficient product supply could lead to lost revenue, reduced profits, and damaged customer relationships[15] - Changes in supplier pricing and demand, and variations in supplier rebates, could adversely affect revenue and gross margins[15] - Inability to identify potential acquisition targets or successfully complete acquisitions, and risks associated with the Beacon acquisition, including failure to fully realize anticipated benefits or integration difficulties[15][17] - Demand in the building products distribution industry may soften or shift significantly due to cyclicality or reliance on macroeconomic and political conditions, including inflation, interest rates, labor and supply shortages, weather, and commodity prices[15] - Risks to the proper functioning of IT systems (including cybersecurity threats and AI usage), and the risk of losing key talent or inability to attract and retain new qualified talent[17] - Risks related to debt obligations from the Beacon acquisition, and the company's high reliance on the continued leadership of Chairman and CEO Brad Jacobs[17] Condensed Consolidated Financial Statements Condensed Consolidated Statements of Operations QXO reported net sales of $1,906.4 million, gross profit of $401.7 million, and a net loss of $(58.5) million for Q2 2025, showing significant growth compared to Q2 2024 primarily due to the Beacon acquisition Condensed Consolidated Statements of Operations (Millions of USD, except per share data) | Metric (Millions of USD, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Sales | $1,906.4 | $14.5 | $1,919.8 | $29.0 | | Cost of Products Sold | $1,504.7 | $8.7 | $1,512.8 | $17.5 | | Gross Profit | $401.7 | $5.8 | $407.0 | $11.5 | | Total Operating Expenses | $563.8 | $10.1 | $608.5 | $15.6 | | Operating Loss | $(162.1) | $(4.3) | $(201.5) | $(4.1) | | Interest (Expense) Income, Net | $(30.2) | $3.5 | $26.4 | $3.4 | | Loss on Debt Extinguishment | $(45.7) | — | $(45.7) | — | | Loss Before Income Taxes | $(236.3) | $(0.8) | $(219.1) | $(0.7) | | Income Tax Benefit | $(177.8) | $(0.2) | $(169.3) | $(0.2) | | Net Loss | $(58.5) | $(0.6) | $(49.8) | $(0.5) | | Basic and Diluted Loss Per Common Share | $(0.15) | $(9.93) | $(0.19) | $(9.72) | Condensed Consolidated Balance Sheets As of June 30, 2025, QXO's total assets significantly increased to $17,114.2 million from $5,098.3 million at December 31, 2024, driven by the Beacon acquisition, with total liabilities rising to $7,198.9 million and total stockholders' equity to $9,915.3 million Condensed Consolidated Balance Sheets (Millions of USD) | Metric (Millions of USD) | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Assets | | | | Cash and Cash Equivalents | $2,278.5 | $5,068.5 | | Accounts Receivable, Net | $1,575.7 | $2.7 | | Inventories, Net | $1,849.6 | — | | Total Current Assets | $6,494.8 | $5,089.6 | | Property and Equipment, Net | $696.3 | $0.4 | | Goodwill | $5,137.9 | $1.2 | | Intangible Assets, Net | $4,003.8 | $4.0 | | Total Assets | $17,114.2 | $5,098.3 | | Liabilities and Stockholders' Equity | | | | Accounts Payable | $1,426.9 | $6.2 | | Accrued Expenses | $585.7 | $38.6 | | Total Current Liabilities | $2,165.4 | $45.1 | | Long-Term Debt, Net | $3,051.5 | — | | Deferred Income Tax Liabilities, Net | $1,042.3 | — | | Total Liabilities | $7,198.9 | $45.4 | | Mandatory Convertible Preferred Stock | $558.1 | — | | Convertible Preferred Stock | $498.6 | $498.6 | | Additional Paid-in Capital | $8,965.8 | $4,560.5 | | Retained Earnings (Accumulated Deficit) | $(104.1) | $(6.2) | | Total Stockholders' Equity | $9,915.3 | $5,052.9 | | Total Liabilities and Stockholders' Equity | $17,114.2 | $5,098.3 | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, QXO reported net cash outflow from operating activities of $(137.7) million, net cash outflow from investing activities of $(10,575.4) million primarily due to business acquisitions, and net cash inflow from financing activities of $7,923.7 million from stock issuances Condensed Consolidated Statements of Cash Flows (Millions of USD) | Cash Flow Activities (Millions of USD) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------- | :----------------------------- | :----------------------------- | | Net Cash Outflow from Operating Activities | $(137.7) | $(0.7) | | Net Cash Outflow from Investing Activities | $(10,575.4) | $(0.1) | | Net Cash Inflow from Financing Activities | $7,923.7 | $965.9 | | Effect of Exchange Rate Changes | $(0.3) | — | | Net (Decrease) Increase in Cash and Cash Equivalents | $(2,789.7) | $965.1 | | Cash and Cash Equivalents at Beginning of Period | $5,072.0 | $6.2 | | Cash and Cash Equivalents at End of Period | $2,282.3 | $971.3 | - Net cash outflow from investing activities was primarily due to business acquisitions, totaling $(10,556.5) million[23] - Net cash inflow from financing activities primarily resulted from the issuance of common stock ($4,218.4 million) and mandatory convertible preferred stock ($558.1 million)[23] Sales by Line of Business Three Months Ended June 30, 2025 In Q2 2025, QXO's net sales reached $1,906.4 million, with residential roofing products contributing 48.7%, non-residential roofing products 28.1%, and complementary building products 22.4% Sales by Line of Business (Millions of USD, Percentage %) | Line of Business | 2025 Net Sales (Millions of USD) | Percentage % | 2024 Net Sales (Millions of USD) | Percentage % | | :---------------------------- | :------------------------------- | :----------- | :------------------------------- | :----------- | | Residential Roofing Products | $929.8 | 48.7 % | $— | 0.0 % | | Non-Residential Roofing Products | $535.5 | 28.1 % | $— | 0.0 % | | Complementary Building Products | $426.1 | 22.4 % | $— | 0.0 % | | Software Products and Services | $15.0 | 0.8 % | $14.5 | 100.0 % | | Total Net Sales | $1,906.4 | 100.0 % | $14.5 | 100.0 % | Six Months Ended June 30, 2025 For the six months ended June 30, 2025, QXO's total net sales were $1,919.8 million, with residential roofing products as the primary revenue source at 48.5%, followed by non-residential roofing products at 27.9% Sales by Line of Business (Millions of USD, Percentage %) | Line of Business | 2025 Net Sales (Millions of USD) | Percentage % | 2024 Net Sales (Millions of USD) | Percentage % | | :---------------------------- | :------------------------------- | :----------- | :------------------------------- | :----------- | | Residential Roofing Products | $929.8 | 48.5 % | $— | 0.0 % | | Non-Residential Roofing Products | $535.5 | 27.9 % | $— | 0.0 % | | Complementary Building Products | $426.1 | 22.2 % | $— | 0.0 % | | Software Products and Services | $28.4 | 1.4 % | $29.0 | 100.0 % | | Total Net Sales | $1,919.8 | 100.0 % | $29.0 | 100.0 % | Reconciliation of Non-GAAP Measures Adjusted Gross Profit and Adjusted Gross Profit Margin QXO reconciled gross profit and gross margin to adjusted gross profit of $482.0 million and adjusted gross margin of 25.3% for Q2 2025, primarily by excluding $80.3 million in inventory fair value adjustments Adjusted Gross Profit and Adjusted Gross Profit Margin (Millions of USD, except percentages) | Metric (Millions of USD, except percentages) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Gross Profit | $401.7 | $5.8 | $407.0 | $11.5 | | Inventory Fair Value Adjustment | $80.3 | — | $80.3 | — | | Adjusted Gross Profit | $482.0 | $5.8 | $487.3 | $11.5 | | Net Sales | $1,906.4 | $14.5 | $1,919.8 | $29.0 | | Gross Margin | 21.1 % | 40.0 % | 21.2 % | 39.7 % | | Adjusted Gross Margin | 25.3 % | 40.0 % | 25.4 % | 39.7 % | - The inventory fair value adjustment resulted from recording inventory at fair value during the business acquisition and is expected to be fully recognized within the year ending December 31, 2025[30] Adjusted Net Income and Adjusted Diluted EPS QXO reconciled net loss and diluted loss per common share to adjusted net income of $109.2 million and adjusted diluted EPS of $0.11 for Q2 2025, after adjustments for amortization, stock-based compensation, debt extinguishment, and other items Adjusted Net Income and Adjusted Diluted EPS (Millions of USD, except per share data) | Metric (Millions of USD, except per share data) | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :---------------------------------------------- | :------------------------------- | :----------------------------- | | Net Loss | $(58.5) | $(49.8) | | Loss Before Income Taxes | $(236.3) | $(219.1) | | Amortization | $79.8 | $80.0 | | Stock-Based Compensation | $65.0 | $85.2 | | Loss on Debt Extinguishment | $45.7 | $45.7 | | Restructuring Costs | $35.3 | $35.3 | | Transaction Costs | $65.6 | $75.5 | | Transformation Costs | $11.8 | $11.8 | | Inventory Fair Value Adjustment | $80.3 | $80.3 | | Adjusted Income Before Income Taxes | $147.2 | $194.7 | | Income Tax Impact of Adjusting Items | $38.0 | $50.3 | | Adjusted Net Income | $109.2 | $144.4 | | Convertible Preferred Stock Dividends | $(22.5) | $(45.0) | | Mandatory Convertible Preferred Stock Dividends | $(3.1) | $(3.1) | | Adjusted Net Income Attributable to Common Stockholders | $83.6 | $96.3 | | Basic and Diluted Loss Per Common Share | $(0.15) | $(0.19) | | Adjusted Diluted EPS | $0.11 | $0.17 | | Adjusted Diluted Weighted-Average Common Shares Outstanding | 702.0 | 580.6 | - The effective tax rate for adjusted net income (loss) is 25.84%, influenced by certain tax benefits on adjusted income (loss) before income taxes[32] Adjusted EBITDA and Adjusted EBITDA Margin QXO reconciled net loss to adjusted EBITDA of $204.6 million and adjusted EBITDA margin of 10.7% for Q2 2025, after adjustments for depreciation, amortization, stock-based compensation, interest expense, debt extinguishment, and other items Adjusted EBITDA and Adjusted EBITDA Margin (Millions of USD, except percentages) | Metric (Millions of USD, except percentages) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Loss | $(58.5) | $(0.6) | $(49.8) | $(0.5) | | Depreciation | $27.2 | $0.1 | $27.3 | $0.2 | | Amortization | $79.8 | $0.2 | $80.0 | $0.4 | | Stock-Based Compensation | $65.0 | — | $85.2 | — | | Interest Expense (Income), Net | $30.2 | $(3.5) | $(26.4) | $(3.4) | | Loss on Debt Extinguishment | $45.7 | — | $45.7 | — | | Income Tax Benefit | $(177.8) | $(0.2) | $(169.3) | $(0.2) | | Restructuring Costs | $35.3 | $2.8 | $35.3 | $2.8 | | Transaction Costs | $65.6 | — | $75.5 | — | | Transformation Costs | $11.8 | — | $11.8 | — | | Inventory Fair Value Adjustment | $80.3 | — | $80.3 | — | | Adjusted EBITDA | $204.6 | $(1.2) | $195.6 | $(0.7) | | Net Sales | $1,906.4 | $14.5 | $1,919.8 | $29.0 | | Net Margin | (3.1)% | (4.1)% | (2.6)% | (1.7)% | | Adjusted EBITDA Margin | 10.7 % | (8.3)% | 10.2 % | (2.4)% | - Loss on debt extinguishment resulted from the cost of extinguishing a portion of the term loan early[34]