Resumption of Coverage, Overweight Rating

Research evidence excerpt

Resumption of Coverage, Overweight Rating

s are based on Morgan Stanley ModelWare

framework

investment. But now armed with ~$20B of pro-forma revenue, we think the focus ** = Based on consensus methodology

§ = Consensus data is provided by Refinitiv Estimates

over the NTM will shift to business integration as the market looks for signs of e = Morgan Stanley Research estimates

operational improvement, a key underpinning of the QXO value creation Quarterly EPS ($)

2026e 2026e 2027e 2027e

framework. We expect to see positive self-help signals over the coming quarters as Quarter 2025 Prior Current Prior Current

the organization benefits from cross selling, procurement, price initiatives and Q1 0.03 - (0.12)a - 0.03

Q2 0.12 - 0.09 - 0.13

refocused salesforce incentives. As we look into 2027, we see a more meaningful Q3 0.14 - 0.18 - 0.20

shift in operational execution as QXO rolls out a synchronized Tech stack across the Q4 0.02 - 0.10 - 0.14

recently acquired businesses. While we have been cautious on US construction e = Morgan Stanley Research estimates, a = Actual Company reported data

activity over the LTM, we have begun to hear commentary around positive rate of

change for the non-res market during Q2 EPS (AYI, ALLE, MMM Roofing Granules) -

this could allow QXO to go from fighting market headwinds over the LTM to

enjoying market tailwinds over the NTM, a backdrop that aids self-help action

and should also improve sentiment around QXO M&A timing.

How does QXO create value ? QXO creates value by buying distributors at a

material discount to its own valuation and then using its scale to leverage

investment in technology + best practices to improve the performance of acquired

businesses. This flywheel is not macro dependent and has significant runway w/