QXO - Results As Expected, Heading Into Important Year

Research evidence excerpt

QXO - Results As Expected, Heading Into Important Year

omparable gross margins fell roughly

Enterprise Value ($M) $23,607 100 basis points, with high costs representing half of the loss and the remainder from

Cash & Equivalents ($M) $3,046 volumes, pricing and other items. We also believe that SG&A spending remains elevated,

Total Debt ($M) $3,059 particularly on technology investment as management structures the business for a much

larger company.

7 Page Document Price Increases Coming; Realization Issue. There are currently two residential and non-

residential price increases in the market for 2Q26. Early reports are favorable on the first,

but our experience is that rapid increases more or less merge into one. While prices are

Reasons for this report going up, realization is the big question at both the distributor and manufacturing level.

✓ Earnings Recap Inventory Build Ahead of Increases; Should Drive Margins. As we have previously

✓ Updating Estimates reported, we believe that QXO has followed its peers in buying product, particularly in

residential, ahead of the above increases. This should drive margin in 2H26 if any positive

volume is seen.

Segments Show Residential (46% of Sales) Sees Continued Weak Trends. Residential

sales were down roughly 14% in the period compared to historic Beacon results. Volume

was off 14% on a same days basis with a 1% fall in prices. The industry continues to struggle

with a weak single family construction and renovation market plus lack of storm damage

from the prior year.

Non-Residential (27% of Sales) Off As Well. Revenues from non-residential roofing were

down 7.5%, with a 8% fall in units and a 1% decline in price. This market has been

surprisingly weak given generally good commercial contruction activity.