Third Quarter 2024 Press Release

GREENWICH, Conn., Nov. 13, 2024 (GLOBE NEWSWIRE) -- QXO, Inc. (Nasdaq: QXO) today announced its financial results for the third quarter 2024. The company reported a loss of $0.01 per basic and diluted share attributable to common shareholders.

THIRD QUARTER 2024 SUMMARY RESULTS
	Three Months Ended					Nine Months Ended
	September 30,		September 30,		Percent		September 30,		September 30,		Percent
(in thousands)		2024				2023			Change		2024		2023		Change
Revenue:
Software product, net	$	3,028			$	2,850			6.2	%		$	10,284			$	9,471			8.6	%
Service and other, net		10,127				10,573			(4.2	)%			31,846				30,337			5.0	%
Total revenue, net	$	13,155			$	13,423			(2.0	)%		$	42,130			$	39,808			5.8	%
Net income (loss)	$	17,132			$	(2,110	)		NM		$	16,680			$	(1,489	)		NM
Adjusted EBITDA1	$	(11,469	)		$	665			NM		$	(12,177	)		$	2,033			NM
NM - Not Meaningful

_{¹ See "Non-GAAP Financial Measures" section for additional information on non-GAAP financial measures.}

Brad Jacobs, chairman and chief executive officer of QXO, said, "With over $5 billion in cash, no debt and a seasoned leadership team, we're poised to make QXO a leader in the $800 billion building products distribution industry."

Third Quarter Highlights

Total revenue for the quarter was $13.16 million, compared with $13.42 million for the same period in 2023. Software product revenue was $3.03 million, compared with $2.85 million for the same period in 2023. Service and other revenue was $10.13 million, compared with $10.57 million for the same period in 2023.

Net income, inclusive of $57.0 million interest income, was $17.1 million.

Adjusted EBITDA, a non-GAAP measure, was negative $11.47 million, compared with positive $665,000 for the same period in 2023. The decline in Adjusted EBITDA relates to higher employee-related costs, reflecting the introduction of a new senior management team to execute QXO's expansive growth plan.

The company completed two previously announced private placements during the quarter, raising approximately $4.1 billion to support its growth strategy and increasing the number of common shares outstanding to 409.4 million.

As of September 30, 2024, the company had approximately $5.04 billion in cash on hand.

About QXO
QXO provides technology solutions, primarily to clients in the manufacturing, distribution and service sectors. The company provides consulting and professional services, including specialized programming, training and technical support, and develops proprietary software. As a value-added reseller of business application software, QXO offers solutions for accounting, financial reporting, enterprise resource planning, warehouse management systems, customer relationship management, business intelligence and other applications. QXO plans to become a tech-forward leader in the $800 billion building products distribution industry. The company is targeting tens of billions of dollars of annual revenue in the next decade through accretive acquisitions and organic growth. Visit QXO.com for more information.

Non-GAAP Financial Measures

As required by the rules of the SEC, we provide reconciliations of the non-GAAP financial measures contained in this press release to the most directly comparable measure under GAAP, which are set forth in the financial tables attached to this press release.

QXO's non-GAAP financial measures in this press release include Adjusted EBITDA.

We believe that the above adjusted financial measure facilitates analysis of our ongoing business operations because it excludes items that may not be reflective of, or are unrelated to, QXO's core operating performance, and may assist investors with comparisons to prior periods and assessing trends in our underlying business. Other companies may calculate this non-GAAP financial measure differently, and therefore our measure may not be comparable to similarly titled measures of other companies. This non-GAAP financial measure should only be used as a supplemental measure of our operating performance.

Adjusted EBITDA includes adjustments for share-based compensation, transaction, and severance costs as set forth in the attached reconciliation. Transaction adjustments are generally incremental costs that result from an actual or planned acquisition or divestiture and may include transaction costs, consulting fees, retention awards, internal salaries and wages (to the extent the individuals are assigned full-time to integration and transformation activities) and certain costs related to integrating and converging IT systems. Management uses this non-GAAP financial measure in making financial, operating and planning decisions and evaluating QXO's ongoing performance.

We believe that Adjusted EBITDA improves comparability from period to period by removing the impact of our capital structure (interest and financing expenses), asset base (depreciation and amortization), tax impacts and other adjustments as set out in the attached tables that management has determined are not reflective of core operating activities and thereby assist investors with assessing trends in our underlying businesses.

Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net income (loss), and our other GAAP results.

Forward-Looking Statements
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that are not historical facts, including statements about beliefs, expectations, targets and goals are forward-looking statements. These statements are based on plans, estimates, expectations and/or goals at the time the statements are made, and readers should not place undue reliance on them. In some cases, readers can identify forward-looking statements by the use of forward-looking terms such as "may," "will," "should," "expect," "opportunity," "intend," "plan," "anticipate," "believe," "estimate," "predict," "potential," "target," "goal," or "continue," or the negative of these terms or other comparable terms. Forward-looking statements involve inherent risks and uncertainties and readers are cautioned that a number of important factors could cause actual results to differ materially from those contained in any such forward-looking statements. Factors that could cause actual results to differ materially from those described herein include, among others:

• risks associated with potential significant volatility and fluctuations in the market price of the company's common stock;

• risks associated with raising additional equity or debt capital from public or private markets to pursue the company's business plan, including potentially one or more additional private placements of common stock, and the effects that raising such capital may have on the company and its business, including the risk of substantial dilution or that the company's common stock may experience a substantial decline in trading price;

• the possibility that additional future financings may not be available to the company on acceptable terms or at all;

• the possibility that an active, liquid trading market for the company's common stock may not develop or, if developed, may not be sustained;

• the possibility that the company's outstanding warrants and preferred stock may or may not be converted or exercised, and the economic impact on the company and the holders of common stock of the company that may result from either such exercise or conversion, including dilution, or the continuance of the preferred stock remaining outstanding, and the impact its terms, including its dividend, may have on the company and the common stock of the company;

• uncertainties regarding the company's focus, strategic plans and other management actions;

• the risk that the company is or becomes highly dependent on the continued leadership of Brad Jacobs as chairman and chief executive officer and the possibility that the loss of Mr. Jacobs in these roles could have a material adverse effect on the company's business, financial condition and results of operations;

• the possibility that the concentration of ownership by Mr. Jacobs may have the effect of delaying or preventing a change in control of the company and might affect the market price of shares of the common stock of the company;

• the risk that Mr. Jacobs' past performance may not be representative of future results;

• the risk that the company is unable to attract and retain world-class talent;

• the risk that the failure to consummate any acquisition expeditiously, or at all, could have a material adverse effect on the company's business prospects, financial condition, results of operations or the price of the company's common stock;

• risks that the company may not be able to enter into agreements with acquisition targets on attractive terms, or at all, that agreed acquisitions may not be consummated, or, if consummated, that the anticipated benefits thereof may not be realized and that the company encounter difficulties in integrating and operating such acquired companies, or that matters related to an acquired business (including operating results or liabilities or contingencies) may have a negative effect on the company or its securities or ability to implement its business strategy, including that any such transaction may be dilutive or have other negative consequences to the company and its value or the trading prices of its securities;

• risks associated with cybersecurity and technology, including attempts by third parties to defeat the security measures of the company and its business partners, and the loss of confidential information and other business disruptions;

• the possibility that new investors in any future financing transactions could gain rights, preferences and privileges senior to those of the company's existing stockholders;

• the possibility that building products distribution industry demand may soften or shift substantially due to cyclicality or seasonality or dependence on general economic and political conditions, including inflation or deflation, interest rates, governmental subsidies or incentives, consumer confidence, labor and supply shortages, weather and commodity prices;

• the possibility that regional or global barriers to trade or a global trade war could increase the cost of products in the building products distribution industry, which could adversely impact the competitiveness of such products and the financial results of businesses in the industry;

• risks associated with periodic litigation, regulatory proceedings and enforcement actions, which may adversely affect the company's business and financial performance;

• uncertainties regarding general economic, business, competitive, legal, regulatory, tax and geopolitical conditions; and

• other factors, including those set forth in the company's filings with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and subsequent Quarterly Reports on Form 10-Q.
  

The company cautions that forward-looking statements should not be relied on as predictions of future events, and these statements are not guarantees of performance or results. Forward-looking statements herein speak only as of the date each statement is made. The company undertakes no obligation to update any of these statements in light of new information or future events, except to the extent required by applicable law.

Media Contact:
Joe Checkler
[email protected]
203-609-9650

Investor Contact:
Mark Manduca
[email protected]
203-321-3889

QXO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
	September 30, 2024	December 31, 2023
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	5,037,112		$	6,143
Accounts receivable, net		2,236			2,969
Prepaid expenses and other current assets		16,291			2,684
Total current assets		5,055,639			11,796
Property and equipment, net		456			503
Operating lease right-of-use assets		320			522
Intangible assets, net		4,246			4,919
Goodwill		1,160			1,140
Deferred tax assets		1,444			1,444
Other non-current assets		202			171
Total assets	$	5,063,467		$	20,495
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	3,861		$	4,563
Accrued expenses		12,488			2,681
Deferred revenue		2,867			3,161
Long-term debt - current portion		-			702
Finance lease obligations - current portion		126			154
Operating lease liabilities - current portion		205			263
Total current liabilities		19,547			11,524
Long-term debt net of current portion		-			994
Finance lease obligations net of current portion		223			247
Operating lease liabilities net of current portion		115			259
Total liabilities		19,885			13,024
Stockholders' equity:
Preferred stock, $0.001 par value; authorized 10,000,000 shares, 1,000,000 and 0 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively		498,621			-
Common stock, $0.00001 par value; authorized 2,000,000,000 shares, 409,430,195 and 664,448 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively		4			-
Additional paid-in capital		4,539,975			9,419
Retained earnings (accumulated deficit)		4,982			(1,948	)
Total stockholders' equity		5,043,582			7,471
Total liabilities and stockholders' equity	$	5,063,467		$	20,495

QXO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
	Three Months Ended	Nine Months Ended
	September 30, 2024	September 30, 2023	September 30, 2024	September 30, 2023
Revenue:
Software product, net	$	3,028		$	2,850		$	10,284		$	9,471
Service and other, net		10,127			10,573			31,846			30,337
Total revenue, net		13,155			13,423			42,130			39,808
Cost of revenue
Software product		1,822			1,754			6,390			5,714
Service and other		5,891			6,319			18,846			18,201
Total cost of revenue		7,713			8,073			25,236			23,915
Operating expenses:
Selling, general and administrative expenses		39,023			7,712			54,047			17,018
Depreciation and amortization expenses		245			196			746			608
Total operating expenses		39,268			7,908			54,793			17,626
Loss from operations		(33,826	)		(2,558	)		(37,899	)		(1,733	)
Other income (expense), net:
Interest income (expense), net		56,989			(8	)		60,438			(42	)
Total other income (expense)		56,989			(8	)		60,438			(42	)
Income (loss) before taxes		23,163			(2,566	)		22,539			(1,775	)
Provision (benefit) for income taxes		6,031			(456	)		5,859			(286	)
Net income (loss)	$	17,132		$	(2,110	)	$	16,680		$	(1,489	)
Loss per common share - basic and diluted	$	(0.01	)	$	(3.21	)	$	(0.10	)	$	(2.27	)
Total weighted average common shares outstanding:
Basic		358,813			657			120,919			657
Diluted		358,813			657			120,919			657

QXO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
	Nine Months Ended September 30.
		2024			2023
Cash flows from operating activities:
Net income (loss)	$	16,680		$	(1,489	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Deferred income taxes		-			(236	)
Depreciation		198			253
Amortization of intangibles		653			486
Non-cash lease expense		202			273
Provision for expected losses		25			(55	)
Share-based compensation		13,985			41
Changes in assets and liabilities:
Accounts receivable		708			(407	)
Prepaid expenses and other current assets		(10,106	)		1,996
Other assets		(31	)		7
Accounts payable		(702	)		229
Accrued expenses		9,807			398
Deferred revenue		(294	)		(405	)
Operating lease liabilities		(202	)		(273	)
Net cash provided by operating activities		30,923			818
Cash flows from investing activities:
Purchase of property and equipment		(64	)		(75	)
Net cash used in investing activities		(64	)		(75	)
Cash flows from financing activities:
Proceeds from the issuance of common stock and pre-funded warrants, net of issuance costs		4,051,103			-
Proceeds from issuance of preferred stock and warrants, net of issuance costs		981,538			-
Payment of preferred stock dividend		(9,750	)		-
Payment of common-stock dividend		(17,400	)		(1,051	)
Payment of long-term debt		(1,696	)		(659	)
Payment for fractional shares		(45	)		-
Payment of finance lease obligations		(140	)		(162	)
Net cash provided by (used in) financing activities		5,003,610			(1,872	)
Net increase (decrease) in cash, cash equivalents and restricted cash		5,034,469			(1,129	)
Cash, cash equivalents and restricted cash, beginning of period		6,143			8,009
Cash, cash equivalents and restricted cash, end of period	$	5,040,612		$	6,880
Cash paid during period for:
Interest	$	57		$	57
Income taxes	$	-		$	23

QXO, INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
(in thousands)
(Unaudited)
	Three Months Ended	Nine Months Ended
	September 30, 2024	September 30, 2023	September 30, 2024	September 30, 2023
Net income (loss)	$	17,132		$	(2,110	)	$	16,680		$	(1,489	)
Add (deduct):
Depreciation and amortization		277			237			851			739
Share-based compensation		13,985			-			13,985			41
Interest (income) expense		(56,989	)		8			(60,438	)		42
Provision (benefit) for income taxes		6,031			(456	)		5,859			(286	)
Transaction costs		8,095			2,986			8,118			2,986
Severance costs		-			-			2,768			-
Adjusted EBITDA	$	(11,469	)	$	665		$	(12,177	)	$	2,033

Source: QXO, Inc.

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