0001628280-25-040367
SEC filingBeacon Acquisition drove revenue to $1.91B but net loss widened due to acquisition costs and fair value adjustments.
For the three months ended June 30, 2025, QXO reported net sales of $1.906 billion, a massive increase from $14.5 million in the same period of 2024, driven entirely by the Beacon Acquisition completed on April 29, 2025. Gross profit rose to $401.7 million (21.1% of sales) from $5.8 million (40.0% of sales), but margin compression resulted from inventory fair value adjustments of $80.3 million and a shift toward lower-margin building products. Operating loss widened to $162.1 million from $4.3 million, as SG&A surged to $456.8 million, including $65.6 million in transaction costs and $65.0 million in stock-based compensation. Net loss was $58.5 million versus $0.6 million, but benefited from a $177.8 million income tax benefit. Adjusted EBITDA, which excludes non-recurring items, reached $204.6 million (10.7% margin), compared to negative $1.2 million in the prior year, highlighting underlying profitability of the acquired business.
The company now reports four segments. Residential roofing products generated $929.8 million (48.7% of sales), non-residential roofing $535.5 million (28.1%), complementary building products $426.1 million (22.4%), and legacy software products and services $15.0 million (0.8%). The software segment grew 3.4% year-over-year, while all building products segments were new from the Beacon acquisition. The shift to building products significantly altered revenue mix and margin profile.
Management's strategy targets $50 billion in annual revenues within a decade through accretive acquisitions and organic growth. They acknowledge seasonality, expecting highest sales and net income in Q2, Q3, and Q4, with potential losses in Q1 due to winter weather. No specific financial guidance for upcoming quarters was provided. Key risks include integration of Beacon and leverage from $2.23 billion in senior secured notes and $823 million in term loans. Liquidity is supported by $2.28 billion cash and $1.78 billion available under the ABL facility.
As of June 30, 2025, QXO reported cash and cash equivalents of $2,278.5 million, down from $5,068.5 million at December 31, 2024, primarily due to the Beacon acquisition and related financing activities. Total debt (carrying value) stood at $3,251.4 million, including $199.9 million drawn on the ABL facility, $823.2 million on the Term Loan (net of OID and costs), and $2,228.3 million on the 6.75% Senior Secured Notes. Shareholders' equity increased to $9,915.3 million from $5,052.9 million, driven by equity issuances and the acquisition. Inventory was $1,849.6 million, reflecting the addition of Beacon's distribution operations.
The Notes do not disclose any material purchase commitments (e.g., supply or capacity agreements). Lease obligations are significant: $832.2 million in future operating lease payments and $211.3 million in finance lease payments, with weighted-average remaining terms of 6.3 and 4.4 years, respectively. The ABL facility provides $1.78 billion borrowing capacity as of June 30, 2025. No other contractual commitments were noted.
Capital allocation in H1 2025 was dominated by acquisition-related financing. No share repurchases were authorized or executed. Dividends on preferred stock totaled $48.1 million ($45.0 million on Convertible Preferred and $3.1 million on Mandatory Convertible Preferred). Common stock dividends were not declared. Capex was $19.7 million (1.0% of sales), modest relative to the company's scale. Debt activity included $2.25 billion in new Notes, $2.25 billion Term Loan (partially repaid $1.4 billion in May 2025), and $199.9 million net drawn on the ABL facility, resulting in a net debt increase of $3.25 billion.
QXO operates as a single operating segment. For the three months ended June 30, 2025, net sales by product category were: Residential roofing $929.8M (48.8%), Non-residential roofing $535.5M (28.1%), Complementary building products $426.1M (22.3%), and Software $15.0M (0.8%). Geographically, 97% of net sales and long-lived assets were in the U.S., with the remainder in Canada.