QXO 8-K
QXO, Inc. (QXO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) |
Name of each exchange on which registered | ||
| | ||||
| , each representing a 1/20th interest in a share of 5.50% Series B Mandatory Convertible Preferred Stock, par value $0.001 per share |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 8.01 | Other Events. |
As previously reported, (i) on April 29, 2025, QXO, Inc., a Delaware corporation (“QXO”), completed the acquisition (the “Beacon Acquisition”) of QXO Building Products, Inc., a Delaware corporation formerly known as Beacon Roofing Supply, Inc. (“QXO Building Products”), pursuant to the Agreement and Plan of Merger, dated as of March 20, 2025, by and among QXO, QXO Building Products and Queen MergerCo, Inc., (ii) on April 1, 2026, QXO completed the acquisition (the “Kodiak Acquisition”) of Kodiak Building Partners Inc., a Delaware corporation (“Kodiak”), pursuant to the Agreement and Plan of Merger, dated as of February 10, 2026, by and among QXO, Kodiak, Juno Merger Sub, Inc. and CSC Shareholder Services LLC and (iii) on April 20, 2026, QXO entered into an Agreement and Plan of Merger with TopBuild Corp., a Delaware corporation (“TopBuild”), Titanium MergerCo, Inc. and Titanium MergerCo 2, LLC, pursuant to which QXO agreed to acquire TopBuild (the “TopBuild Acquisition” and, together with the Beacon Acquisition and the Kodiak Acquisition, the “Acquisitions”).
This Current Report on Form 8-K is being filed in connection with the TopBuild Acquisition to provide (i) the audited and unaudited consolidated financial statements of Kodiak, (ii) the audited and unaudited consolidated financial statements of TopBuild, (iii) the unaudited combined pro forma financial information for QXO, QXO Building Products, Kodiak and TopBuild (collectively, the “Companies”), in each case as described below, and (iv) the consents of KPMG LLP, Kodiak’s independent auditor, and PricewaterhouseCoopers LLP, TopBuild’s independent registered public accounting firm. This Current Report on Form 8-K does not modify or update the consolidated financial statements of QXO or QXO Building Products included in QXO’s Annual Report on Form 10-K for the year ended December 31, 2025 or Quarterly Report on Form 10-Q for the three months ended March 31, 2026, nor does it reflect any subsequent information or events.
The historical audited consolidated balance sheet of Kodiak as of December 31, 2025 and the related consolidated statements of operations, changes in stockholders’ deficit and cash flows of Kodiak for the year ended December 31, 2025, together with the notes thereto and the independent auditor’s report thereon, are filed as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference. The historical unaudited condensed consolidated balance sheet of Kodiak as of March 31, 2026 and the related condensed consolidated statements of operations, changes in stockholders’ deficit and cash flows of Kodiak for the three months ended March 31, 2026 and 2025, together with the notes thereto, are filed as Exhibit 99.2 to this Current Report on Form 8-K and incorporated herein by reference.
The historical audited consolidated balance sheets of TopBuild as of December 31, 2025 and 2024 and the related consolidated statements of operations, comprehensive income, cash flows and changes in shareholders’ equity of TopBuild for each of the years ended December 31, 2025, 2024 and 2023, together with the notes thereto and the independent registered public accounting firm’s report thereon, are filed as Exhibit 99.3 to this Current Report on Form 8-K and incorporated herein by reference. The historical unaudited condensed consolidated balance sheets of TopBuild as of March 31, 2026 and December 31, 2025 and the related condensed consolidated statements of operations, comprehensive income, cash flows and changes in equity of TopBuild for the three months ended March 31, 2026 and 2025, together with the notes thereto, are filed as Exhibit 99.4 to this Current Report on Form 8-K and incorporated herein by reference.
The unaudited pro forma combined financial statements of the Companies, consisting of the unaudited pro forma combined statements of operations of the Companies for the three months ended March 31, 2026 and year ended December 31, 2025, giving effect to the Acquisitions, as if they had occurred on January 1, 2025, and the unaudited pro forma combined balance sheet of the Companies as of March 31, 2026, giving effect to the Kodiak Acquisition and TopBuild Acquisition, as if they had occurred on March 31, 2026, together with the notes thereto, are filed as Exhibit 99.5 to this Current Report on Form 8-K and incorporated herein by reference.
The consents of KPMG LLP and PricewaterhouseCoopers LLP are filed as Exhibits 23.1 and 23.2, respectively, to this Current Report on Form 8-K and incorporated herein by reference.
Cautionary Statement Regarding Forward-Looking Information
This communication contains forward-looking statements. Statements that are not historical facts, including statements about beliefs, expectations, targets or goals, the expected timing of the closing of the proposed acquisition, the anticipated benefits of the proposed acquisition, including synergies, and expected future financial position, total addressable market, positions in building product verticals and results of operations, 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: (i) the risk that the proposed acquisition of TopBuild may not be completed on the anticipated terms in a timely manner or at all; (ii) the failure to satisfy any of the conditions to the consummation of the proposed acquisition, including the risk that the required shareholder approvals may not be obtained; (iii) the effect of the pendency of the proposed acquisition on each of QXO’s and TopBuild’s business relationships with employees, customers, or suppliers, or on operating results or the businesses generally; (iv) the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the acquisition agreement for TopBuild, including circumstances that require the payment of a termination fee; (v) the possibility that the proposed acquisition may be more expensive to complete than anticipated, including as a result of unexpected factors or events, significant transaction costs or unknown liabilities; (vi) potential litigation and/or regulatory action relating to the proposed acquisition; (vii) the risk that the anticipated benefits of the proposed acquisition may not be fully realized or may take longer to realize than expected; (viii) the impacts of legislative, regulatory, economic, competitive or technological changes; (ix) QXO’s ability to finance the proposed acquisition; (x) unknown liabilities and uncertainties regarding general economic, market sector, competitive, legal, regulatory, tax and geopolitical conditions; and (xi) those risks and uncertainties set forth in QXO’s and TopBuild’s filings with the Securities and Exchange Commission (the “SEC”), including each company’s Annual Report on Form 10-K for the year ended December 31, 2025 and any subsequent Quarterly Reports on Form 10-Q. 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. Neither QXO nor TopBuild undertakes any obligation to update any of these statements in light of new information or future events, except to the extent required by applicable law.
Important Information for Investors and Stockholders
In connection with the proposed acquisition, QXO expects to file a registration statement on Form S-4 with the SEC containing a preliminary prospectus of QXO that also constitutes a preliminary joint proxy statement of each of QXO and TopBuild. After the registration statement is declared effective, each of QXO and TopBuild will mail a definitive joint proxy statement/prospectus to stockholders of QXO and TopBuild, respectively. This communication is not a substitute for the joint proxy statement/prospectus or registration statement or for any other document that QXO or TopBuild may file with the SEC in connection with the proposed acquisition. INVESTORS AND SECURITY HOLDERS OF QXO AND TOPBUILD ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders will be able to obtain free copies of the joint proxy statement/prospectus (when available) and other documents filed with the SEC by QXO or TopBuild through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by QXO will be available free of charge on QXO’s website at https://investors.qxo.com and copies of the documents filed with the SEC by TopBuild will be available free of charge on TopBuild’s website at https://www.topbuild.com/investors. Additionally, copies may be obtained by contacting the investor relations department of QXO or TopBuild.
No Offer or Solicitation
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Participants in the Solicitation
QXO and certain of its directors and executive officers may be deemed to be participants in the solicitation of proxies from QXO’s stockholders in connection with the proposed acquisition. Information regarding QXO’s directors and its executive officers, including a description of their direct or indirect interests, by security holdings or otherwise, can be found under the captions “Security Ownership of Certain Beneficial Owners and Management,” “Executive Compensation,” and “Director Compensation” contained in QXO’s definitive proxy statement on Schedule 14A for QXO’s 2026 annual meeting of stockholders, which was filed with the SEC on March 24, 2026. To the extent holdings of QXO’s securities by its directors or executive officers have changed since the applicable “as of” date described in its 2026 proxy statement, such changes will be reflected on Statements of Beneficial Ownership on Form 4 filed with the SEC.
2
TopBuild and certain of its directors and executive officers may be deemed to be participants in the solicitation of proxies from TopBuild’s stockholders in connection with the proposed acquisition. Information regarding TopBuild’s directors and its executive officers, including a description of their direct or indirect interests, by security holdings or otherwise, can be found under the captions “Common Stock Ownership of Officers, Directors and Significant Shareholders,” “Compensation Committee Report,” and “Director Compensation” contained in TopBuild’s definitive proxy statement on Schedule 14A for TopBuild’s 2026 annual meeting of stockholders, which was filed with the SEC on March 17, 2026. To the extent holdings of TopBuild’s securities by its directors or executive officers have changed since the applicable “as of” date described in its 2026 proxy statement, such changes will be reflected on Statements of Beneficial Ownership on Form 4 filed with the SEC.
The information regarding the interests of such participants in the solicitation of proxies in respect of the proposed acquisition will be included in the registration statement and joint proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits |
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: May 15, 2026
| QXO, INC. | |||
| By: | /s/ Ihsan Essaid | ||
| Name: | Ihsan Essaid | ||
| Title: | Chief Financial Officer | ||
Exhibit 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in the registration statement (No. 333-281084) on Form S-3 and registration statements (No. 333-281106, 333-286815, and 333-295849) on Form S-8 of QXO, Inc. of our report dated February 18, 2026, with respect to the consolidated financial statements of Kodiak Building Partners Inc., which report appears in the Form 8-K of QXO, Inc. dated May 15, 2026.
/s/ KPMG LLP
Denver, Colorado
May 15, 2026
Exhibit 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-281084) and S-8 (Nos. 333-281106, 333-286815, and 333-295849) of QXO, Inc. of our report dated February 26, 2026 relating to the financial statements of TopBuild Corp., which is incorporated by reference in this Current Report on Form 8-K.
/s/ PricewaterhouseCoopers LLP
Tampa, Florida
May 15, 2026
Exhibit 99.1
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Consolidated Financial Statements
December 31, 2025
(With Independent Auditors’ Report Thereon)
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Table of Contents
| Page(s) | |
| Independent Auditors’ Report | 1–2 |
| Consolidated Financial Statements: | |
| Consolidated Balance Sheet | 3–4 |
| Consolidated Statement of Operations | 5 |
| Consolidated Statement of Changes in Stockholders’ Deficit | 6 |
| Consolidated Statement of Cash Flows | 7–8 |
| Notes to Consolidated Financial Statements | 9–37 |
Independent Auditors’ Report
The Board of Directors
Kodiak Building Partners Inc.:
Opinion
We have audited the consolidated financial statements of Kodiak Building Partners Inc. and its subsidiaries (the Company), which comprise the consolidated balance sheet as of December 31, 2025, and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for the year then ended, and the related notes to the consolidated financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year then ended in accordance with U.S. generally accepted accounting principles.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Emphasis of Matter
As discussed in Note 2 to the consolidated financial statements, the Company has changed its methods of accounting related to goodwill amortization and the discount rate used in calculating lease liabilities and right of use assets. Our opinion is not modified with respect to this matter.
Responsibilities of Management for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with U.S. generally accepted accounting principles, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date that the consolidated financial statements are available to be issued.
Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.
| KPMG LLP, a Delaware limited liability partnership, and its subsidiaries are part of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. |
In performing an audit in accordance with GAAS, we:
| ● | Exercise professional judgment and maintain professional skepticism throughout the audit. |
| ● | Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. |
| ● | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed. |
| ● | Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements. |
| ● | Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time. |
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.
/s/ KPMG LLP
Denver, Colorado
February 18, 2026
2
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Consolidated Balance Sheet
December 31, 2025
| December 31, | ||||
| 2025 | ||||
| Assets | ||||
| Current assets: | ||||
| Cash | $ | 20,860,885 | ||
| Accounts receivable, net of allowance for credit losses of $7,198,170 | 195,059,943 | |||
| Vendor rebates receivable | 12,102,653 | |||
| Inventory, net | 187,216,703 | |||
| Prepaid and other assets | 21,891,945 | |||
| Income taxes receivable | 10,346,975 | |||
| Total current assets | 447,479,104 | |||
| Noncurrent assets: | ||||
| Property and equipment, net | 140,443,509 | |||
| Operating lease right-of-use assets | 166,725,885 | |||
| Intangible assets, net | 111,470,707 | |||
| Goodwill | 249,746,447 | |||
| Deferred income taxes, net | 14,460,899 | |||
| Other noncurrent assets | 4,352,466 | |||
| Total noncurrent assets | 687,199,913 | |||
| Total assets | $ | 1,134,679,017 | ||
See accompanying notes to consolidated financial statements.
3
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Consolidated Balance Sheet
December 31, 2025
| December 31, | ||||
| 2025 | ||||
| Liabilities and Stockholders’ Deficit | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 100,461,074 | ||
| Accrued expenses | 82,675,881 | |||
| Customer deposits | 7,743,075 | |||
| Income taxes payable | 1,535,509 | |||
| Current portion of long-term debt | 18,485,524 | |||
| Total current liabilities | 210,901,063 | |||
| Long-term liabilities: | ||||
| Long-term debt | 1,462,829,032 | |||
| Operating lease liabilities | 149,745,192 | |||
| Contingent consideration | 130,000 | |||
| Total long-term liabilities | 1,612,704,224 | |||
| Total liabilities | 1,823,605,287 | |||
| Stockholders’ deficit: | ||||
| Convertible class L common stock, $0.01 par value, 18,800 shares authorized; 15,595 shares issued and outstanding | 156 | |||
| Class A common stock, $0.01 par value, 1,481 shares authorized; 1,030 shares issued and outstanding | 10 | |||
| Additional paid-in capital | 188,252,949 | |||
| Accumulated deficit | (877,179,385 | ) | ||
| Total stockholders’ deficit | (688,926,270 | ) | ||
| Total liabilities and stockholders’ deficit | $ | 1,134,679,017 | ||
See accompanying notes to consolidated financial statements.
4
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Consolidated Statement of Operations
For the year ended December 31, 2025
| December 31, | ||||
| 2025 | ||||
| Revenue | $ | 2,337,815,037 | ||
| Cost of revenue | 1,664,414,853 | |||
| Gross margin | 673,400,184 | |||
| Operating expenses: | ||||
| Salaries and wages | 263,393,100 | |||
| Selling, general, and administrative expenses | 106,562,453 | |||
| Depreciation and amortization | 66,472,154 | |||
| Taxes and benefits | 62,470,267 | |||
| Rent | 39,529,447 | |||
| Change in fair value of contingent consideration | (1,476,000 | ) | ||
| Strategic development expenses | 13,477,064 | |||
| Gain on disposal of assets | (795,091 | ) | ||
| Total operating expenses | 549,633,394 | |||
| Income from operations | 123,766,790 | |||
| Other income (expense): | ||||
| Interest expense | (126,483,714 | ) | ||
| Other income | 4,306,165 | |||
| Total other income (expense) | (122,177,549 | ) | ||
| Income from continuing operations before income taxes | 1,589,241 | |||
| Income tax expense | (2,181,221 | ) | ||
| Loss from continuing operations | (591,980 | ) | ||
| Discontinued operations (Note 3): | ||||
| Income from discontinued operations, including gain on sale of $67,579,837, net of tax | 70,823,747 | |||
| Income tax expense | (769,578 | ) | ||
| Income from discontinued operations | 70,054,169 | |||
| Net income | $ | 69,462,189 | ||
See accompanying notes to consolidated financial statements.
5
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Consolidated Statement of Changes in Stockholders’ Deficit
For the year ended December 31, 2025
| Additional | Total | |||||||||||||||||||||||||||
| Class L Common stock | Class A Common stock | paid-in | Accumulated | stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | capital | deficit | deficit | ||||||||||||||||||||||
| Balance – January 1, 2025 | 15,595 | 156 | 1,024 | 10 | 187,724,073 | (946,641,574 | ) | (758,917,335 | ) | |||||||||||||||||||
| Issuance of common stock | — | — | 6 | — | 30,806 | — | 30,806 | |||||||||||||||||||||
| Stock compensation | — | — | — | — | 498,070 | — | 498,070 | |||||||||||||||||||||
| Net income | — | — | — | — | — | 69,462,189 | 69,462,189 | |||||||||||||||||||||
| Balance – December 31, 2025 | 15,595 | $ | 156 | 1,030 | $ | 10 | $ | 188,252,949 | $ | (877,179,385 | ) | $ | (688,926,270 | ) | ||||||||||||||
See accompanying notes to consolidated financial statements.
6
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Consolidated Statement of Cash Flows
For the year ended December 31, 2025
| December 31, | ||||
| 2025 | ||||
| Cash flows from operating activities: | ||||
| Net income | $ | 69,462,189 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||
| Income from discontinued operations | (70,054,169 | ) | ||
| Provision for credit losses | (1,568,516 | ) | ||
| Depreciation | 37,409,291 | |||
| Gain on disposal of assets | (795,091 | ) | ||
| Reduction in the carrying amount of operating lease right-of-use assets | 26,479,431 | |||
| Amortization of intangible assets | 29,062,863 | |||
| Amortization of debt issuance costs | 3,536,479 | |||
| Loss on extinguishment of debt | 1,644,909 | |||
| Change in value of contingent consideration | (1,476,000 | ) | ||
| Payments of contingent consideration | (724,166 | ) | ||
| Stock compensation | 498,070 | |||
| Deferred taxes | (17,461,745 | ) | ||
| Changes in operating assets and liabilities: | ||||
| Accounts receivable | 26,035,717 | |||
| Vendor rebates receivable | (2,379,006 | ) | ||
| Inventory | 8,975,407 | |||
| Prepaid and other assets | (8,100,039 | ) | ||
| Other noncurrent assets | (65,940 | ) | ||
| Accounts payable | (7,515,845 | ) | ||
| Accrued expenses and other liabilities | (10,277,793 | ) | ||
| Income taxes payable/receivable | 6,543,609 | |||
| Operating lease liabilities | (24,628,590 | ) | ||
| Customer deposits | 202,375 | |||
| Net cash provided by operating activities of continuing operations | 64,803,440 | |||
| Net cash provided by operating activities of discontinued operations | 11,046,260 | |||
| Net cash provided by operating activities | 75,849,700 | |||
| Cash flows from investing activities: | ||||
| Purchases of property and equipment | (31,838,189 | ) | ||
| Proceeds from the disposal of fixed assets | 2,231,915 | |||
| Cash paid for acquisitions, net of cash acquired | (48,064,266 | ) | ||
| Net cash used in investing activities of continuing operations | (77,670,540 | ) | ||
| Net cash provided by investing activities of discontinued operations | 152,352,515 | |||
| Net cash provided by investing activities | 74,681,975 | |||
| Cash flows from financing activities: | ||||
| Borrowings under ABL revolver | 170,000,000 | |||
| Repayments under ABL revolver | (170,000,000 | ) | ||
| Payments on notes payable | (68,553 | ) | ||
| Payments on 2031 term loan | (153,200,000 | ) | ||
| Payments on finance lease obligations | (2,239,880 | ) | ||
| Payments of contingent consideration | (924,000 | ) | ||
| Issuance of Class A common stock | 30,806 | |||
| Net cash used in financing activities of continuing operations | (156,401,627 | ) | ||
| Net cash used in financing activities of discontinued operations | (10,004 | ) | ||
| Net cash used in financing activities | (156,411,631 | ) | ||
| Net decrease in cash | (5,879,956 | ) | ||
| Cash – beginning of period | 26,740,841 | |||
| Cash – end of period | $ | 20,860,885 | ||
See accompanying notes to consolidated financial statements.
(Continued)
7
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Consolidated Statement of Cash Flows
For the year ended December 31, 2025
Supplemental disclosure of cash flow information and noncash activity:
Cash paid for income taxes during the year ended December 31, 2025 was $29,565,809.
Cash paid for interest during the year ended December 31, 2025 was $131,583,768.
During the year ended December 31, 2025, the Company financed $3,088,142 of property and equipment additions through finance leases.
During the year ended December 31, 2025, the Company obtained $27,461,334 of right-of-use lease assets in exchange for operating lease liabilities, including amounts added to the carrying amount of right-of use lease assets resulting from lease modifications and reassessments.
See accompanying notes to consolidated financial statements.
8
| (1) | Description of Business |
Kodiak Building Partners Inc. (“Kodiak” or the “Company”) was incorporated in the state of Delaware in October 2017. Kodiak is a construction services and building products distribution company that manages over 110 facilities across the U.S. and operates through a decentralized, local brand business model. Products and services offered by Kodiak -owned businesses include:
| (a) | Construction Supplies |
Construction supplies businesses distribute, fabricate, and erect steel, concrete, and related materials to commercial and residential builders.
| (b) | Lumber and Building Materials |
Lumber and building materials businesses distribute stock and fabricated building materials (lumber, millwork, gypsum, steel framing, roofing, trusses, hardware, cabinets, windows, and doors) to commercial and residential builders and work with architects, builders, contractors, developers, and property management companies to provide turn-key solutions on single-building to multiple-building projects. Additionally, retail centers are attached to certain lumber yards where product is sold directly to walk-in customers.
| (c) | Gypsum |
Gypsum businesses distribute wallboard and associated accessories, including steel studs and track, lath and plaster, insulation, stucco and exterior insulation and finish, trim, fasteners, and screws to commercial and residential builders.
| (d) | Kitchen and Interiors |
Prior to disposal, kitchen and interiors businesses distributed and installed appliances, cabinets, countertops, fixtures, and floor coverings to home builders, remodelers, and homeowners. The kitchen and interiors businesses were operated by the Company until the July 8, 2025 sale of the Company’s 100% equity interests in Kodiak Interiors Group LLC, which operated the kitchen and interiors businesses (Note 3).
| (2) | Summary of Significant Accounting Policies |
| (a) | Basis of Presentation |
The accompanying consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
These accompanying consolidated financial statements have been prepared for inclusion in QXO, Inc.’s filing with the Securities and Exchange Commission in connection with its anticipated acquisition of the Company (Note 19). Accordingly, the accompanying consolidated financial statements have been prepared in accordance with accounting principles generally applicable to public business entities and do not reflect certain accounting alternatives available solely to private companies.
9
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025
The Company’s historical financial statements issued for other purposes utilized certain private company accounting alternatives not available to public business entities as follows:
| (i) | The Company’s historical financial statements reflected accounting policy elections to amortize goodwill over a period of ten years and to test goodwill for impairment at the entity level. Goodwill is not subject to amortization in the accompanying consolidated financial statements and was tested for impairment at the reporting unit level. |
| (ii) | The Company’s historical financial statements reflected an accounting policy election to measure all lease liabilities and corresponding right-of-use assets by applying a risk-free discount rate when the rate implicit in the lease was not readily determinable. The accompanying consolidated financial statements reflect the measurement of leases using a discount rate based on the Company’s incremental borrowing rate for such leases. |
The effects of these differences have been applied retrospectively. The impact on the Company’s consolidated balance sheet at January 1, 2025 is as follows:
| As Previously | ||||||||||||
| Reported | Adjustments | As Presented | ||||||||||
| Operating lease right-of-use assets | $ | 224,175,541 | (20,349,769 | ) | $ | 203,825,772 | ||||||
| Goodwill | 144,064,369 | 115,393,735 | 259,458,104 | |||||||||
| Operating lease liabilities | 233,581,534 | (20,185,001 | ) | 213,396,533 | ||||||||
| Deferred income taxes, net | 21,352,250 | (17,725,088 | ) | 3,627,162 | ||||||||
| Accumulated deficit | 1,044,145,453 | (97,503,879 | ) | 946,641,574 | ||||||||
| (b) | Principles of Consolidation |
The consolidated financial statements of the Company include the accounts and operating activities of Kodiak and its indirect wholly owned subsidiaries, Kodiak BP, LLC (“KBP”) and American Builders Supply, Inc. (“ABS”), and their wholly owned subsidiaries as of and for the year ended December 31, 2025. All intercompany accounts and transactions have been eliminated.
The Company holds no other operations, cash flows, material assets or liabilities other than its equity interests in Kodiak Guarantor Inc. Kodiak Guarantor Inc. holds no other operations, cash flows, material assets or liabilities other than its equity interests in Kodiak Finance Inc. Kodiak Finance Inc. holds no other operations, cash flows, material assets or liabilities other than its equity interests in KBP and ABS.
| (c) | Discontinued Operations |
When the Company has disposed of, or classified as held for sale, a business component that represents a strategic shift with significant effect on the Company’s operations and financial results, it classifies that business component as a discontinued operation. A gain or loss on disposal of the discontinued operation is recognized upon final disposal.
10
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025
| (d) | Cash |
The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. The Company continually monitors its positions with, and the credit quality of, the banks with which it maintains its cash balances. The Company had no cash equivalents at December 31, 2025. Periodically, the Company has maintained balances in its operating accounts in excess of federally insured limits.
| (e) | Financing Receivables |
The Company’s customer mix is a balance of national, regional, and local homebuilders, multi-family homebuilders, repair and remodeling contractors, and other construction contractors. The Company extends unsecured credit to qualifying customers in the ordinary course of business but mitigates the associated credit risk by performing routine credit checks, monitoring the financial condition of customers, and actively pursuing past due accounts. Although the Company requires no collateral from its customers, it does typically retain lien rights in case of nonpayment and frequently obtains personal guarantees from prospective buyers. Past-due receivables are determined based on contractual terms.
Retainage receivables represent the amount retained by the Company’s customers to ensure the quality of the goods and services provided prior to full payment.
Arrangements with certain suppliers provide for rebates of specified amounts of consideration based on inventory purchase levels. The Company accrues vendor rebates receivable when amounts are reasonably estimable and probable of achievement based on actual purchase volumes. Estimated rebates are accounted for as a reduction of the price of the purchased inventory until such time as it is sold, at which time rebates reduce cost of revenue.
Financing receivables are measured at cost. Interest income earned on past-due receivables is included in other income in the accompanying consolidated statement of operations.
The allowance for credit losses represents the Company’s estimate of amounts, reviewed monthly, that may become uncollectible in the future, which considers historical experience, overall portfolio quality, current and forecasted economic conditions that may affect customer ability to pay, any receivables in dispute, and other relevant factors. The Company expenses uncollectible amounts when it becomes probable, based upon counterparty facts and circumstances, that such amounts will not be collected.
| (f) | Concentrations of Credit Risk |
The Company grants credit to customers located throughout the United States with a concentration in the states of Illinois and Florida. Substantially all of the Company’s trade accounts receivable are with residential and commercial construction contractor counterparties. To determine customer eligibility for extension of credit terms, the Company performs ongoing credit evaluations of existing and potential customers’ creditworthiness. As of and for the year ended December 31, 2025, no single customer accounted for greater than 10% of total accounts receivable or revenue.
11
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025
| (g) | Inventory |
Inventory consists principally of materials purchased for resale, including steel, lumber, gypsum, windows, doors and millwork, other building products, and manufactured products. Inventory is valued at the lower of cost or net realizable value, with cost determined using the weighted average method. Costs included in inventory consist of materials including inbound shipping, labor, and manufacturing overhead that relate to the purchase and manufacture of inventory. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable cost of completion, disposal, and transportation.
| (h) | Prepaid and Other Assets |
Prepaid expenses consist primarily of prepaid insurance and other expenses paid in advance.
| (i) | Property and Equipment |
Property and equipment are initially recorded at cost or, if acquired as part of a business combination, at fair value as of the acquisition date. Depreciation is provided utilizing the straight-line method over the estimated useful lives for owned assets. Estimated useful lives of fixed assets are evaluated on an ongoing basis. Major additions or improvements to existing assets are capitalized, while maintenance and repairs that do not improve or extend the life of the respective assets are expensed.
| (j) | Goodwill and Intangible Assets |
Goodwill represents the excess of purchase consideration and the fair value of liabilities assumed over the fair value of assets acquired in business acquisitions. Goodwill is tested for impairment on an annual basis on December 31 and when events and circumstances indicate that the fair value of a reporting unit may be below its carrying amount.
When events and circumstances indicate that the fair value of a reporting unit may be below its carrying amount, the Company has the option to first assess qualitative factors to determine whether a quantitative impairment test is necessary. If the qualitative assessment determines that it is more likely than not that goodwill is not impaired, further testing is unnecessary. If the qualitative assessment indicates that it is more likely than not that goodwill is impaired, the Company then performs a quantitative test to compare the reporting unit’s fair value with its carrying amount, including goodwill. The Company did not recognize any goodwill impairment during the year ended December 31, 2025.
Intangible assets include customer relationships, trade names, and noncompete agreements. Intangible assets are amortized using the straight-line method over their estimated useful lives ranging from 5 to 10 years.
| (k) | Long-Lived Assets |
The Company reviews its long-lived- assets to be held and used by the Company, including finite-lived- intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Impairment, which is measured based upon the estimated fair value of the asset, is recorded when estimated undiscounted cash flows expected to be generated by the asset are insufficient to recover its net carrying value. No long-lived assets were impaired during the year ended December 31, 2025.
| (l) | Revenue Recognition |
The Company recognizes revenue as performance obligations are satisfied by transferring control of promised goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company generally classifies revenue into two types: distribution and construction services.
12
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025
Distribution sales typically consist of the sale or resale of construction materials. Distribution contracts frequently include multiple performance obligations and are generally completed in less than one year. The contract transaction price is allocated on a relative basis to each distinct performance obligation using the Company’s best estimate of the stand-alone selling price for each distinct good or service in the contract. The Company estimates stand-alone selling price both using the adjusted market assessment approach and the expected cost-plus-margin approach under which the Company identifies market-based pricing information or forecasts expected costs of satisfying a performance obligation and then adjusts prices as necessary to reflect an appropriate margin for that distinct good or service. The Company also provides install services related to some goods sold through the distribution channel. Such services are not complex in nature and are generally completed on the same day as the delivery such that the product and installation service are practically treated as a single performance obligation satisfied at a point in time.
The Company recognizes revenue for distribution performance obligations satisfied at a point in time when control passes to the customer, which is generally based on shipping terms when title and risks and rewards of ownership pass to the customer. The Company also considers customer acceptance provisions as contracts may include installation, testing, or other acceptance provisions. When contractual terms include a provision for customer acceptance, the Company considers whether it has previously demonstrated that the product meets the specified criteria based on either seller or customer-specified objective criteria in assessing whether control has passed to the customer prior to customer acceptance. Shipping and handling activities are accounted for as activities to fulfill a promise to transfer a product to a customer. As such, shipping and handling activities are not evaluated as a separate performance obligation. Shipping and handling costs are recorded as cost of revenue when control of the transferred product is transferred to the customer.
Construction services revenue typically comprises contracts with a significant service element for the turn-key construction of a significant portion of a construction project. The majority of construction services contracts are completed in less than one year, and contract terms typically do not exceed three years. Construction services contracts generally consist of a single combined performance obligation for which revenue is recognized over time because the work is performed at the customer’s site, and the customer controls the asset as it is being created. The Company has determined that a cost-to-cost input measure best depicts progress toward complete satisfaction of construction services performance obligations. Contract costs include all direct material, labor, and indirect costs related to contract performance, and are recognized as incurred. The use of estimated costs to complete contracts is a significant variable in the process of measuring recognized revenue that requires the application of judgment. Estimates can change throughout the duration of the contract term based on dynamics such as contract modifications, labor productivity and availability, complexity of the work, cost and availability of materials, sub-tier contractor performance, and other environmental factors.
The Company’s contracts generally contain warranty provisions covering materials, design, or workmanship defects typically for a period not exceeding two years after project completion. Historically, the Company has not incurred material costs for warranties. Such assurance type- warranties do not represent a separate performance obligation and, as such, do not impact the timing or extent of revenue recognition. Warranty fulfillment costs were not material to the Company’s consolidated results of operations during the year ended December 31, 2025.
13
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025
The Company’s revenue consisted of the following for the year ended December 31, 2025:
| Over time | $ | 416,061,329 | ||
| Point in time | 1,921,753,708 | |||
| Total | $ | 2,337,815,037 |
The transaction price generally includes a significant fixed price- component and may include variable consideration, such as changes in the transaction price for unapproved change orders, variable unit prices, penalties and damages, returns, and prompt payment discounts. Return rights are generally limited to stock inventory on distribution contracts and do not exceed 10 days. The Company most often estimates variable consideration at the expected value considering all information (historical, current, and forecasted) that is reasonably available and utilizing estimation methods that consider contractual terms, susceptibility to factors outside of the Company’s control, customer approval, supporting documentation, predictive historical experience, the anticipated time to resolve the uncertainty, and the magnitude of any potential future revenue reversals. The Company includes variable consideration in the estimated transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur or when the uncertainty associated with the variable consideration is resolved. The effect of variable consideration on the transaction price is recognized as an adjustment to revenue on a cumulative catch-up basis. The Company excludes taxes assessed by and collected on behalf of government authorities from the transaction price.
Distribution contracts may require payment in full or a significant deposit at the time of a customer order. Qualifying distribution customers may also be extended credit and are generally invoiced at delivery. Billing on construction services contracts occurs primarily on a monthly basis throughout the contract period whereby the Company submits invoices for customer payment based on project costs incurred during the billing period. Payment terms generally do not exceed 60 days.
Generally, construction services contracts and some customized materials distribution contracts provide for the customer to withhold a stated percentage of invoiced amounts, which will be subsequently paid after satisfactory completion of the project. Retainage is presented as a component of accounts receivable classified as current or long-term assets based primarily on the expected time to project completion.
The Company’s contracts are subject to modification to account for changes in contract specifications and requirements. Contract modifications exist when a change to the contract either creates new, or changes the existing, enforceable rights and obligations. Contract modifications are treated either as a separate contract or as a continuation of the existing contract. Distribution contract modifications for the addition of distinct goods and services are generally priced at the applicable relative stand-alone selling price and are accounted for as a new contract. Distribution contracts may also be modified for additional shipments that are not distinct performance obligations, resulting in the termination of the existing contract and the creation of a new contract, including the additional consideration accounted for on a prospective basis. Construction services contract modifications are generally for goods or services that are not distinct from the existing contract due to the significant integration service provided in the context of the contract and are accounted for as a part of the existing contract on a cumulative catch-up basis.
14
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025
The Company sometimes purchases goods for resale and uses third parties in fulfilling performance obligations, most frequently for the shipment of construction materials to customers and for subcontract labor. The Company controls such goods and services prior to transfer of control of the customer, is primarily responsible for fulfillment of the related performance obligations, is responsible for customer satisfaction, and exercises pricing discretion such that the Company is the principal in the arrangements. As such, the related revenue and costs are presented gross in the consolidated statement of operations.
The timing of revenue recognition, invoicing, and cash collections results in recognition of contract assets and contract liabilities. Contract assets generally consist of unbilled accounts receivable and were not material at December 31, 2025. Contract liabilities consist primarily of customer deposits. Changes in contract liabilities during the year ended December 31, 2025 were primarily based on underlying changes in sales volume and prices. Substantially all of the contract liability balance at January 1, 2025 was recognized as revenue during the year ended December 31, 2025. Contract liabilities are reflected as customer deposits on the accompanying consolidated balance sheet and were $7,540,700 at January 1, 2025.
Incremental costs of obtaining contracts, primarily sales commissions, are expensed when incurred as the amortization period is less than one year. Sales commissions are a component of salaries and wages in the accompanying consolidated statement of operations.
Other income primarily comprises net proceeds from the sale of metal scrap, homebuilder credits, and other miscellaneous operating activities.
| (m) | Contingent Consideration |
Contingent consideration estimates are revalued at each reporting period with changes in fair value that are not measurement period adjustments recorded in the consolidated statement of operations. Changes to contingent consideration liabilities may result from adjustments to the discount rate, changes in the assumptions regarding probability of successful achievement of related contractual provisions, and the estimated timing at which provision targets are expected to be achieved.
| (n) | Leases |
The Company is a lessee in various noncancellable operating leases, primarily for real estate, and finance leases, primarily for office equipment, field equipment, and vehicles. The Company determines if an arrangement is or contains a lease at contract inception.
The Company recognizes a right-of-use (“ROU”) asset and a lease liability at the lease commencement date. For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments. For finance leases, the lease liability is initially measured in the same manner as for operating leases and is subsequently measured at amortized cost using the effective-interest method.
15
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025
Lease guidance requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate.
Key estimates and judgments include determination of the lease term and allocation of transaction price.
The lease term for all of the Company’s leases includes the noncancellable period of the lease plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor.
Lease payments included in the measurement of the lease liability are comprised of the following: 1) fixed payments, including in-substance fixed payments, owed over the lease term (inclusive of termination penalties the Company would owe if the lease term assumes Company exercise of a termination option); 2) variable lease payments that depend on an index or rate, initially measured using the index or rate at lease commencement; 3) amounts expected to be payable under a Company-provided residual value guarantee; and 4) the exercise price of a Company option to purchase the underlying asset if the Company is reasonably certain to exercise the option.
The ROU asset is initially measured at cost, determined by reference to the initial amount of the lease liability adjusted for lease payments made at or before lease commencement, plus any initial direct costs incurred less any lease incentives received.
For operating leases, the ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus unamortized initial direct costs; plus or minus any prepaid or accrued lease payments, respectively; less the unamortized balance of lease incentives received. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
For finance leases, the ROU asset is subsequently amortized using the straight-line method from the lease commencement date to the earlier of the end of its useful life or the end of the lease term unless the lease transfers ownership of the underlying asset to the Company or the Company is reasonably certain to exercise an option to purchase the underlying asset. In those cases, the ROU asset is amortized over the useful life of the underlying asset. Amortization of the ROU asset is recognized and presented separately from interest expense on the lease liability.
The Company applies the long-lived asset impairment model to its operating and finance lease ROU assets.
Variable lease payments are recognized based on when the event, activity, or circumstance in the lease agreement on which those payments are assessed occurs. Variable lease payments are presented as rent in the Company’s consolidated statement of operations.
The Company monitors for events or changes in circumstances that require a reassessment of one of its leases. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the ROU asset unless doing so would reduce the carrying amount of the ROU asset to less than zero. In that case, the amount of the adjustment that would result in a negative ROU asset balance is recorded in income or loss.
16
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025
Operating lease ROU assets are presented as operating lease right-of-use assets on the consolidated balance sheet. The current portion of operating lease liabilities is included in accrued expenses, and the long-term portion is presented separately as operating lease liabilities on the consolidated balance sheet. Finance lease ROU assets are included in property and equipment, net. The current and long-term portions of finance lease liabilities are included in current portion of long-term debt and long-term debt, respectively, on the consolidated balance sheet.
Certain of the Company’s lease arrangements contain lease and non-lease components. The Company has elected to account for non-lease components as a part of the related lease components for all leases. Originated and acquired leases with an initial term of 12 months or less are not recognized on the consolidated balance sheet. The expense for these short-term leases is recognized on a straight-line basis over the lease term and is presented as rent in the Company’s consolidated statement of operations.
| (o) | Advertising Costs |
The Company expenses advertising costs as incurred. Advertising expense was $1,899,201 during the year ended December 31, 2025.
| (p) | Debt Issuance Costs and Debt Discount/Premium |
Loan costs, which include underwriting, legal, and other direct costs related to the issuance of debt, are deferred and amortized to interest expense over the life of the related debt. Debt issuance costs associated with term debt are presented as a reduction to long-term debt. Debt issuance costs associated with revolving debt arrangements are presented as a component of other noncurrent assets. Debt issuance costs, discounts, and premiums incurred in connection with term debt are amortized on a straight-line basis over the term of the debt, which approximates the effective-interest method. Debt issuance costs incurred in connection with revolving debt arrangements are amortized on a straight-line basis.
| (q) | Income Taxes |
The Company is a C corporation for tax purposes. Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences, operating loss, and tax credit carryforwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
The Company evaluates uncertainty in income taxes, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements. Under this evaluation, the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The guidance on accounting for uncertainty in income taxes also addresses derecognition, classification, interest and penalties on income taxes, and accounting in interim periods.
17
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025
There were no identified uncertain tax positions as of December 31, 2025. Interest and penalties, if any, are recorded by the Company within income tax expense. No interest or penalties were assessed for the year ended December 31, 2025.
| (r) | Stock Compensation |
The Company recognizes expenses for employee services received in exchange for stock-based compensation. Equity-classified awards are measured at the grant-date fair value of the award. Certain of the Company’s stock-based awards contain performance and service conditions. The Company estimates the requisite service period based on expected and actual outcomes of the related service or performance conditions that affect vesting of the award. Compensation expense from service-based awards with graded vesting features is recognized over the requisite service period using the straight-line attribution method. Compensation expense from service-based awards with immediate vesting is recognized immediately. Compensation expense from performance-based awards that vest subject to continued service and the Company’s achievement of certain performance targets is recognized over the requisite service period using the graded-vesting method and is adjusted for changes to probabilities of achieving performance targets. Forfeitures are recognized as incurred.
| (s) | Fair Value Measurements |
Fair value is an exit price representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is determined for assets and liabilities based upon a hierarchy for which those assets and liabilities must be grouped as follows:
Level 1: Quoted prices in active markets for identical assets or liabilities
Level 2: Observable inputs based on inputs not quoted on active markets but corroborated by market data
Level 3: Unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions
The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
The Company’s financial assets and liabilities approximate fair value due to their short-term nature or variable interest rates that approximate market interest rates.
| (t) | Contingencies |
Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.
18
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025
| (u) | Use of Estimates |
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported. Actual results could differ from those estimates. Significant items subject to such estimates include allowances for credit losses, vendor rebates receivable, inventory values, deferred tax asset valuation allowance, useful lives of long-lived assets, fair values of acquired intangible assets, lease terms and lease payments included in the measurement of ROU assets and lease liabilities, fair values of contingent consideration liabilities, stock-based compensation, variable consideration included in revenue, and progress toward satisfaction of performance obligations.
| (v) | Risks and Uncertainties |
As of December 31, 2025, the Company employed 5,423 full- and part-time employees, including 236 covered by collective bargaining agreements that are scheduled to expire in 2026 and 2030.
| (w) | Other Comprehensive Income (Loss) |
Other comprehensive income (loss) is composed of certain gains and losses that are excluded from net income under GAAP and instead recorded as a separate element of stockholders’ equity. The Company has not recorded any other comprehensive income (loss) since inception. Comprehensive income was equal to net income for the year ended December 31, 2025.
| (x) | Recent Accounting Pronouncements |
In December, 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU increases transparency and decision usefulness of income tax disclosures for investors by requiring information to better assess how an entity’s operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows. The standard requires entities to provide enhanced disclosures related to the income tax rate reconciliation and income taxes paid. The standard is effective for all entities that are subject to Topic 740, Income Taxes, for annual periods beginning after December 15, 2024. The Company adopted the standard as of January 1, 2025 and incorporated the required disclosures (Note 15).
In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The ASU requires disclosure of disaggregated information about certain financial statement costs and expenses into prescribed natural expense categories and other related disclosures. The standard may be applied prospectively or retrospectively and is effective in annual reporting periods beginning after December 15, 2026 with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The ASU provides a practical expedient to assume that current conditions as of the balance sheet date will persist through the reasonable and supportable forecast period when estimating credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC Topic 606, Revenue from Contracts with Customers. The standard applies prospectively and is effective in annual reporting periods beginning after December 15, 2025 with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements.
19
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025
| (3) | Discontinued Operations |
On July 8, 2025, the Company completed the sale of its previously owned and operated kitchen and interiors business to a related party with a minority ownership interest. The historical results of the kitchen and interiors business have been reflected as discontinued operations in the Company’s consolidated financial statements for the period prior to the sale. In connection with the sale, the Company entered into or adopted agreements that provide a framework for the relationship between the Company and the buyer including, but not limited to, the following:
Equity Purchase Agreement – governs the rights and obligations of the parties regarding the sale, including the transfer of assets and assumption of liabilities, and establishes certain rights and obligations between the Company and the buyer following the sale, including procedures with respect to post-closing adjustments to the sale price, and related matters.
Transition Services Agreement – governs services between the Company and the buyer and their respective affiliates for the Company to provide on an interim, transitional basis, various services including, but not limited to, information technology, human resources, treasury, insurance, and mergers and acquisitions support. The services will terminate no later than July 8, 2026, unless extended by mutual agreement.
The agreements do not provide the Company with the ability to influence the operating or financial policies of the buyer subsequent to the sale. During the year ended December 31, 2025, the value of the services provided to the buyer was $2,114,365. Current amounts due to the Company from the buyer as of December 31, 2025 were not material.
20
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025
The following table provides details about the major classes of line items constituting income from discontinued operations, net of tax, as presented in the accompanying consolidated statement of operations for the year ended December 31, 2025. The results of discontinued operations include an allocation of $8,445,320 of interest expense on corporate debt (Note 10) based on the ratio of the disposal group’s net assets to the Company’s total consolidated net assets:
| Revenue | $ | 250,511,630 | ||
| Cost of revenue | 181,114,553 | |||
| Gross margin | 69,397,077 | |||
| Operating expenses: | ||||
| Salaries and wages | 26,773,506 | |||
| General, operating, and administrative expenses | 15,478,090 | |||
| Depreciation and amortization | 2,707,451 | |||
| Taxes and benefits | 6,079,655 | |||
| Rent | 6,794,731 | |||
| Gain on disposal of assets | (1,550 | ) | ||
| Total operating expenses | 57,831,883 | |||
| Income from operations | 11,565,194 | |||
| Other income (expense): | ||||
| Interest expense | (8,500,429 | ) | ||
| Other income | 179,145 | |||
| Total other income (expense) | (8,321,284 | ) | ||
| Net income from discontinued operations before taxes | 3,243,910 | |||
| Gain on sale of discontinued operations, net of tax | 67,579,837 | |||
| Income tax expense | (769,578 | ) | ||
| Net income from discontinued operations | $ | 70,054,169 |
| (4) | Acquisition |
Total consideration paid for business acquisitions is allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. Contingent consideration is measured at fair value based on probability-weighted assumptions related to the achievement of contractual provisions. Fair values are determined by management based on information available at the date of acquisition. Intangible assets are primarily valued using the income approach based on a discounted cash flow model for specific assets derived from projections of future revenue, expense, and economic conditions (Level 3).
Goodwill is the excess of the purchase price over those estimated fair values. The estimated fair values assigned to the assets acquired and liabilities assumed are based on reasonable assumptions that a marketplace participant would use. The estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with corresponding offsets to goodwill. Upon the conclusion of the measurement period or final determination of the estimated fair values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded in the Company’s consolidated statement of operations. Factors that contribute to the recognition of goodwill may include acquiring a talented workforce, including management experience, customer loyalty, brand reputation, and industry expertise. Goodwill is expected to be fully deductible for tax purposes.
21
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025
Operating results of acquired businesses are included in the Company’s consolidated results from the date of acquisition. Transaction costs of $2,838,736 were paid by the Company during the year ended December 31, 2025. These costs are included in strategic development expenses on the consolidated statement of operations.
On April 2, 2025, through its wholly owned subsidiary KBP, LLC, the Company acquired all of the outstanding stock of New River Building Supply, Inc., a North Carolina based supplier of high-quality lumber and building materials to professional builders, contractors, and do-it-yourself homeowners. The acquisition was undertaken to expand the Company’s presence in the growing markets of North Carolina and enhance operations through Kodiak’s resources, expertise, and national network. The purchase price consisted of cash consideration of $47,510,600 and contingent consideration of $542,000. The earn-out provision in the arrangement provides for the payment of additional consideration of up to $1,000,000 based on a defined earnings-related target measured over the 12-month period ending April 2, 2026. The purchase price was allocated as follows:
| Useful life | ||||||||
| Cash | $ | 240,716 | ||||||
| Accounts receivable | 5,262,352 | |||||||
| Vendor rebates receivable | 100,000 | |||||||
| Inventory | 8,657,402 | |||||||
| Prepaid and other assets | 92,426 | |||||||
| Property and equipment | 1,589,377 | |||||||
| Operating lease right-of-use assets | 589,953 | |||||||
| Customer relationships | 8 | 17,690,000 | ||||||
| Trade name | 10 | 1,915,000 | ||||||
| Noncompete agreements | 5 | 135,000 | ||||||
| Goodwill | 17,462,057 | |||||||
| Accounts payable | (4,274,562 | ) | ||||||
| Accrued expenses | (817,168 | ) | ||||||
| Operating lease liabilities | (589,953 | ) | ||||||
| Total | $ | 48,052,600 | ||||||
The fair value of the acquired assets and assumed liabilities is provisional pending determination of the tax treatment of the transaction as an asset purchase for U.S. federal income tax purposes and receipt of the final valuation report from a third-party valuation expert.
22
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025
| (5) | Credit Losses |
Changes in the Company’s allowance for credit losses were as follows:
| January 1, 2025 | $ | 8,734,392 | ||
| Current period provision | (1,568,516 | ) | ||
| Amounts written off, net of recoveries | 32,294 | |||
| December 31, 2025 | $ | 7,198,170 |
| (6) | Property and Equipment |
Property and equipment consisted of the following at December 31, 2025:
| Depreciable lives | ||||||
| Equipment and fixtures | 3-7 years | $ | 116,598,501 | |||
| Vehicles | 5-7 years | 85,901,511 | ||||
| Buildings and improvements | 3-40 years | 40,278,484 | ||||
| Finance lease right-of-use assets | 2-6 years | 17,479,008 | ||||
| Technology | 2-7 years | 7,840,505 | ||||
| Construction in process | 6,324,964 | |||||
| 274,422,973 | ||||||
| Less accumulated depreciation | (133,979,464 | ) | ||||
| Property and equipment, net | $ | 140,443,509 | ||||
| (7) | Intangible Assets and Goodwill |
Intangible assets consisted of the following at December 31, 2025:
| Gross carrying | Accumulated | Net | ||||||||||
| amount | amortization | book value | ||||||||||
| Customer relationships | $ | 201,468,440 | 121,266,595 | 80,201,845 | ||||||||
| Trade names | 90,594,000 | 60,090,188 | 30,503,812 | |||||||||
| Noncompete agreements | 1,542,058 | 777,008 | 765,050 | |||||||||
| Intangible assets | $ | 293,604,498 | 182,133,791 | 111,470,707 | ||||||||
23
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025
The weighted average amortization period of intangible assets acquired during the year ended December 31, 2025 was 8.2 years.
Future estimated amortization expense of intangible assets is as follows:
| Year Ending December 31: | ||||
| 2026 | $ | 24,073,030 | ||
| 2027 | 20,900,960 | |||
| 2028 | 15,923,913 | |||
| 2029 | 14,764,366 | |||
| 2030 | 13,488,247 | |||
| Thereafter | 22,320,191 | |||
| $ | 111,470,707 |
Goodwill of $27,968,096 was derecognized in connection with the disposal of the kitchen and interiors business during the year ended December 31, 2025 (Note 3). Changes in the carrying value of goodwill attributed to continuing operations during the year ended December 31, 2025 were as follows:
| January 1, 2025 | $ | 231,490,008 | |||
| Acquisition | 17,462,057 | ||||
| Measurement period adjustments | 794,382 | ||||
| December 31, 2025 | $ | 249,746,447 |
| (8) | Revenue |
Revenue by product category consisted of the following for the year ended December 31, 2025:
| Amount | Percentage | |||||||
| Specialty building products and services | $ | 550,646,081 | 24 | % | ||||
| Lumber and wood products | 509,885,316 | 22 | % | |||||
| Manufactured components | 431,472,452 | 18 | % | |||||
| Doors and millwork | 310,885,357 | 13 | % | |||||
| Steel | 262,115,270 | 11 | % | |||||
| Windows | 144,016,773 | 6 | % | |||||
| Wallboard and interior construction | 128,793,788 | 6 | % | |||||
| Revenue | $ | 2,337,815,037 | 100 | % | ||||
24
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025
| (9) | Accrued Expenses |
Accrued expenses consisted of the following at December 31, 2025:
| Accrued salaries and wages | $ | 29,048,354 | ||
| Operating lease liabilities | 27,163,787 | |||
| Other accrued liabilities | 10,195,274 | |||
| Accrued employee benefits | 8,436,225 | |||
| Sales tax payable | 7,493,403 | |||
| Accrued interest | 338,838 | |||
| Accrued expenses | $ | 82,675,881 |
| (10) | Debt |
Credit Facilities
In December 2024, the Company entered into a new syndicated, secured debt financing arrangement (“2031 Term Loan Agreement”) in the form of a $1,640,000,000, 7-year term loan (“2031 Term Loan”). In connection with the 2031 Term Loan issuance, the Company also amended the terms of its existing syndicated, asset-based lending credit facility (“ABL Credit Agreement”) to extend the maturity to December 4, 2029. The 2031 Term Loan Agreement provides for the Company to request incremental commitments for amounts based, in part, on future operating results and the maintenance of an overall maximum leverage ratio, as defined.
Borrowings under the 2031 Term Loan bear interest at variable rates, at the Company’s designation, at either 1) the designated term SOFR plus 3.75% or 2) an alternate daily Base Rate (the greater of the prime rate, the federal funds rate plus 0.50%, or the one-month term SOFR plus 1.0%) plus 2.75%, subject to a floor of 0.00%. Interest is payable no less than quarterly. The interest rate in effect on the 2031 Term Loan at December 31, 2025 was 7.47%.
Beginning on June 30, 2025, the Company began making minimum quarterly principal payments on 2031 Term Loan borrowings of $4,100,000. Remaining unpaid balances are due on the maturity date of December 4, 2031. Beginning in 2026, additional annual mandatory principal payments are required to the extent that Excess Cash Flow, as defined in the 2031 Term Loan Agreement, are generated in the preceding calendar year. Voluntary repurchases and prepayments reduce the Company’s obligation to make mandatory principal prepayments under the Excess Cash Flow provision. The 2031 Term Loan Agreement further provides for partial mandatory prepayments to the extent certain contractually defined events occur. No amounts were due under the mandatory prepayment provisions at December 31, 2025. The 2031 Term Loan may be prepaid at the Company’s option without penalty. On July 25, 2025, the Company utilized net cash proceeds from the sale of its kitchen and interiors business unit (Note 3) to voluntarily prepay $145,000,000 in principal on the 2031 Term Loan. The July 2025 prepayment was a partial extinguishment under which the Company recognized a loss on extinguishment of $1,644,909, associated with the write-off of associated unaccreted original issue discount and unamortized debt issuance costs. The loss is classified as interest expense in the accompanying consolidated statement of operations.
25
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025
The ABL Credit Agreement provides for revolving loan commitments (“ABL Revolver”) of up to $350,000,000, including up to $5,000,000 of swingline loans, and available letters of credit of up to $35,000,000. Borrowing availability is based on a percentage of the value of certain assets securing the Company’s obligations, reduced by outstanding letters of credit and borrowings. The ABL Credit Agreement provides for incremental commitments for amounts based, in part, on future operating results and the maintenance of an overall maximum leverage ratio, as defined. ABL Revolver borrowings bear variable interest, at the Company’s designation, at either 1) the designated term SOFR based on the applicable interest period plus 0.10% (“ABL Term SOFR”) plus 1.00%, plus a margin of 1.50% to 2.00% based on Quarterly Average Excess Availability, as defined or 2) the base rate (the greater of the prime rate, the federal funds rate plus 0.50%, or the 1-month ABL Term SOFR, subject to a floor of 1.00%, plus 1.00%, plus a margin of 0.50% to 1.00% based on Quarterly Average Excess Availability, as defined). Swingline loans bear interest solely under the base rate. The Company incurs unused commitment fees on the ABL Credit Facility based on utilization ranging from 0.250% to 0.375%. Interest and fees are payable no less than quarterly with all accrued unpaid interest and outstanding principal amounts due in full at maturity on December 4, 2029. As of December 31, 2025, the Company had $13,642,568 in outstanding letters of credit. There was no outstanding revolving loan or swingline loan balance. As of December 31, 2025, availability under the ABL Credit Agreement was $336,357,432.
All of the obligations under the 2031 Notes and ABL Credit Agreement are guaranteed jointly and severally by all of the Company’s existing restricted subsidiaries and will be guaranteed by the Company’s future restricted subsidiaries. Additionally, all obligations under the 2031 Term Loan Agreement and ABL Credit Agreement, and the guarantees of those obligations, are secured by substantially all of the assets of the Company and the guarantors, subject to certain exceptions and permitted liens, including a prioritized security interest in substantially all current assets that constitute ABL Priority Collateral and a prioritized security interest in substantially all non-current assets that constitute the Term Loan Priority Collateral, as respectively defined in the Intercreditor Agreement among the 2031 Term Loan Agreement and ABL Credit Agreement lenders.
The 2031 Term Loan Agreement and ABL Credit Agreement facilities contain restrictive covenants which, among other things, limit the Company’s ability to incur additional indebtedness, incur liens, engage in mergers or other fundamental changes, sell certain assets, pay dividends, make acquisitions or investments, prepay certain indebtedness, change the nature of the business, and engage in certain transactions with affiliates. In addition, the ABL Credit Agreement facility also contains a financial covenant requiring the satisfaction of a minimum fixed charge ratio of 1.00 to 1.00 if excess availability falls below the greater of $31,500,000 or 10% of the maximum borrowing amount, which was $350,000,000 as of December 31, 2025.
Notes Payable
The Company has issued a note payable financing property and equipment. The property and equipment note is secured by the assets financed.
26
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025
Long-term debt consisted of the following at December 31, 2025:
| 2031 Term Loan | $ | 1,486,800,000 | ||
| Notes payable | 427,255 | |||
| Finance lease obligations (Note 11) | 9,850,237 | |||
| 1,497,077,492 | ||||
| Less unamortized debt discount/premium and debt issuance costs | (15,762,936 | ) | ||
| Less current maturities of long-term debt and lease obligations | (18,485,524 | ) | ||
| Long-term debt, net of current maturities, discounts, and issuance costs | 1,462,829,032 |
Future maturities of long-term debt as of December 31, 2025 were as follows:
| 2031 | ||||||||||||
| Term Loan | Notes Payable | Total | ||||||||||
| Year Ending December 31: | ||||||||||||
| 2026 | $ | 16,400,000 | 427,255 | $ | 16,827,255 | |||||||
| 2027 | 16,400,000 | — | 16,400,000 | |||||||||
| 2028 | 16,400,000 | — | 16,400,000 | |||||||||
| 2029 | 16,400,000 | — | 16,400,000 | |||||||||
| 2030 | 16,400,000 | — | 16,400,000 | |||||||||
| Thereafter | 1,404,800,000 | — | 1,404,800,000 | |||||||||
| Long-term debt | $ | 1,486,800,000 | $ | 427,255 | $ | 1,487,227,255 | ||||||
| (11) | Leases |
As of December 31, 2025, the Company is obligated under finance leases covering certain office and field equipment and vehicles with remaining lease terms that begin to expire in January 2026 and periodically expire through September 2035.
The Company is also obligated under noncancellable operating leases, primarily for real estate, with remaining lease terms that begin to expire in December 2026 and periodically expire through September 2035. These leases frequently contain renewal options for periods ranging from 1 to 10 years. Because the Company is generally not reasonably certain to exercise these renewal options, such options are not included in the lease term, and associated potential option payments are excluded from lease payments.
Payments due under lease contracts include fixed payments, plus for many of the Company’s leases, variable payments based on variable rates, including but not limited to, property taxes, insurance, common area maintenance, and mileage. For equipment leases, maintenance services are often provided by the lessor at a fixed cost and are included in the fixed lease payments.
The Company’s leases generally do not include any material residual value guarantees or restrictive financial or other covenants.
27
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025
Amounts reported on the consolidated balance sheet were as follows at December 31, 2025:
| Operating leases: | ||||
| Operating lease right-of-use assets | $ | 166,725,885 | ||
| Current operating lease liabilities (included in accrued expenses) | 27,163,787 | |||
| Non-current operating lease liabilities | 149,745,192 | |||
| Total operating lease liabilities | $ | 176,908,979 | ||
| Finance leases: | ||||
| Property and equipment | $ | 17,479,008 | ||
| Accumulated amortization | (6,225,874 | ) | ||
| Property and equipment, net | $ | 11,253,134 | ||
| Current portion of finance lease obligations (included in current portion of long-term debt) | $ | 1,658,269 | ||
| Long-term portion of finance lease obligations (included in long-term debt) | 8,191,968 | |||
| Total finance lease liabilities | $ | 9,850,237 |
The components of total lease cost were as follows for the year ended December 31, 2025:
| Operating lease cost | $ | 35,909,110 | ||
| Finance lease cost: | ||||
| Amortization of right-of-use assets | 2,239,880 | |||
| Interest on lease liabilities | 1,223,323 | |||
| Total finance lease cost | 3,463,203 | |||
| Variable and short-term lease cost | 3,620,337 | |||
| Total lease cost | $ | 42,992,650 |
Other information related to leases at December 31, 2025 was as follows:
| Weighted average remaining lease term: | ||||
| Operating leases | 9.22 years | |||
| Finance leases | 4.55 years | |||
| Weighted average discount rate: | ||||
| Operating leases | 5.17 | % | ||
| Finance leases | 12.37 | % |
28
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025
Maturities of lease liabilities under noncancellable leases as of December 31, 2025 were as follows:
| Operating | Finance | |||||||
| leases | leases | |||||||
| Year Ending December 31: | ||||||||
| 2026 | $ | 35,521,793 | 3,081,060 | |||||
| 2027 | 31,740,507 | 2,879,784 | ||||||
| 2028 | 24,753,490 | 2,811,011 | ||||||
| 2029 | 20,476,896 | 2,383,940 | ||||||
| 2030 | 16,409,998 | 1,032,421 | ||||||
| Thereafter | 92,367,366 | 852,474 | ||||||
| Total undiscounted lease payments | 221,270,050 | 13,040,690 | ||||||
| Less imputed interest | (44,361,071 | ) | (3,190,453 | ) | ||||
| Total lease liabilities | $ | 176,908,979 | 9,850,237 | |||||
Cash paid for amounts included in the measurement of lease liabilities was as follows during the year ended December 31, 2025:
| Operating cash flow from operating leases | $ | 34,604,450 | ||
| Operating cash flow from finance leases | 1,223,323 | |||
| Financing cash flow from finance leases | 2,239,880 |
| (12) | Equity |
Under its Amended Certificate of Incorporation, the Company is authorized to issue 36,332 shares of common stock consisting of 18,800 shares of Class L common stock (“Class L”) and 17,532 shares of Class A common stock (“Class A”) as of the date the financial statements were available to be issued. Both classes of stock have a par value of $0.01 per share. Class L provides for a yield that accrues daily at a rate of 10% annually, compounded on a semiannual basis, applied to a $10,000 per share priority amount plus unpaid Class L yield and has certain preferential rights with respect to distributions, including a liquidity event as defined in the Company’s Amended and Restated Certificate of Incorporation. In the event of a distribution, the holders of Class L are first entitled to receive amounts equaling any accrued and unpaid yield on a pro rata basis based on the number of Class L shares. After the required amount for any accrued and unpaid Class L yield, holders of Class L are further entitled an amount equal to the aggregate unreturned $10,000 per share priority amount on a pro rata basis based on the number of Class L shares. During the year ended December 31, 2021, the Company paid Class L dividends in full satisfaction of Class L yield and Class L priority amounts. The Company has not subsequently issued any additional shares of Class L. Accordingly, as of December 31, 2025 all Class L yield and Class L priority amounts were fully returned. Upon settlement of Class L yield and Class L priority amounts, holders of both classes of common stock receive any remaining distributions on a pro rata basis. Excepting the majority investor, holders of Class L and Class A are subject to transfer restrictions.
29
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025
In general, with respect to voting rights, holders of Class L and Class A vote together as a single class for all purposes, including election of the board of directors. Upon the consummation of an initial public offering, or at any time, at the option of the board of directors and upon approval of the holders of a majority of the outstanding common stock, Class L may be converted to Class A at a 1:1 conversion ratio adjusted for any unpaid Class L yield and any unreturned Class L priority amount.
Designated shares of Class A held by members of management are subject to vesting and may be repurchased at the Company’s option upon the holder’s termination of employment with the Company generally at fair market value and cost for vested shares and unvested shares, respectively. As of December 31, 2025, 896 Class A outstanding shares were subject to the contingent repurchase option, all of which were vested. No shares were redeemable at December 31, 2025.
The payment of any cash dividends in the future is at the discretion of the Company’s board of directors, subject to applicable laws, and will depend on a number of factors including results of operations, financial condition, capital requirements, contractual restrictions, and other relevant factors.
| (13) | Stock Compensation |
The Company’s board of directors administers a nonqualified equity incentive plan (the “Equity Incentive Plan”) for key employees under which the board of directors may grant options to purchase up to 456.02 Class A common shares of the Company. The exercise price of each stock option equals the fair value of the Company’s stock on the date of grant and has a maximum contractual term of 10 years. Shares of common stock available under the Equity Incentive Plan may be either authorized and unissued shares, treasury shares, or a combination thereof, as determined by the board of directors. Service-based options generally cliff vest over a period of four to five years. Certain options are subject to performance vesting conditions in addition to service vesting. Vested options become exercisable on the earliest to occur of a separation of service or 10 years following the vesting commencement date and are immediately redeemable upon a change of control. Certain outstanding and unvested options vest immediately upon a change of control as long as the recipient remains continuously employed by the Company through the consummation thereof.
On July 8, 2025, in connection with the disposal of the Company’s kitchen and interiors business unit (Note 3), the Company modified 63.920 outstanding stock option awards held by employees who were terminated by the Company and were subsequently employed by the buyer. The board of directors approved a modification to extend the exercise period associated with vested options held by the affected employees to align with each grantee’s continued employment with the buyer rather than the standard 60-day post-termination period and to allow for the affected employees to continue vesting in unvested options based on their continued service with the buyer or its affiliates. Under the modified terms, vested options will remain exercisable on the earliest to occur of a separation of service from the buyer or its affiliates or 10 years following the vesting commencement date and will remain immediately redeemable upon a Kodiak change of control. Application of modification accounting, which contemplates the fair value of awards both before and after a modification, resulted in aggregate incremental non-cash stock option expense associated with the modification of $68,035 measured on the modification date and recognized as an expense within discontinued operations in the accompanying consolidated statement of operations. As of December 31, 2025, 63.920 options remain outstanding under these modified terms, 60.220 of which are vested.
30
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025
The following table presents the activity for options outstanding and weighted average exercise price:
| Non-qualified | ||||||||
| stock options | Exercise price | |||||||
| Outstanding - January 1, 2025 | 443.709 | $ | 23,668 | |||||
| Granted | 15.000 | 68,000 | ||||||
| Forfeited | (10.300 | ) | 71,730 | |||||
| Canceled | (12.874 | ) | 24,912 | |||||
| Exercised | (6.760 | ) | 4,557 | |||||
| Outstanding - December 31, 2025 | 428.775 | $ | 24,328 | |||||
At December 31, 2025, 0.200 options with a weighted average exercise price of $88,191 and a weighted average remaining contractual term of 8.55 years were exercisable. As of December 31, 2025, the weighted average remaining contractual term on options outstanding was 4.82 years.
The fair value of options granted was estimated on the date of grant using a Black Scholes option valuation model. Because the Company’s stock is not publicly traded and its stock is rarely traded privately, expected volatility is estimated based on the average historical volatility of similar entities with publicly traded shares. The assumptions used in determining the value of options granted were as follows during the year ended December 31, 2025:
| Class A per share value | $68,000 | |||
| Expected term (years) | 1.55 - 3.81 | |||
| Expected volatility | 38.68% - 39.29% | |||
| Risk-free interest rate | 3.83% - 3.87% | |||
| Per share fair value of options granted | $14,829 - $23,608 |
The total fair value of options vested during the year ended December 31, 2025 was $983,980.
The following table presents the status of and changes in nonvested options:
| Weighted | ||||||||
| average | ||||||||
| Non-qualified | grant date fair | |||||||
| stock options | value | |||||||
| Nonvested – January 1, 2025 | 93.588 | $ | 19,496 | |||||
| Granted | 15.000 | 19,219 | ||||||
| Vested | (53.488 | ) | 18,396 | |||||
| Forfeited | (10.300 | ) | 20,003 | |||||
| Nonvested – December 31, 2025 | 44.800 | $ | 20,600 | |||||
31
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025
Compensation expense is recorded in salaries and wages in the accompanying consolidated statement of operations. As of December 31, 2025, there was $612,487 of total unrecognized compensation cost related to outstanding options. This cost is expected to be recognized over a weighted average period of 1.87 years. Total unrecognized compensation expense is subject to future adjustments for forfeitures.
| (14) | Fair Value Measurements |
The financial liabilities that are measured and recorded at estimated fair value on a recurring basis consist of contingent consideration associated with business acquisitions. Reported fair values of financial liabilities, classified as Level 3 within the fair value hierarchy were as follows at December 31, 2025:
| Contingent consideration | $ | 130,000 | ||
| $ | 130,000 |
The fair values of the Company’s Level 3 contingent consideration liabilities are determined using a Monte Carlo simulation model based on significant inputs not observable in the market, Level 3 inputs. The valuation model requires inputs including contractual terms, discount rates, EBITDA volatilities, and probabilities of achievement of contractual provisions. The fair value of contingent consideration arrangements is sensitive to changes in forecasts of earnings and discount rates. The fair value is reassessed at each reporting date based on assumptions in the Company’s most recent projections and input from management.
The fair value of Level 3 contingent consideration at December 31, 2025 was based on the assumptions summarized below. Because the Company’s stock is not publicly traded and its stock is rarely traded privately, expected volatility estimates are derived based on the average historical volatility of similar entities with publicly traded shares.
| EBITDA growth rate | -82.25% - 142.61% | |||
| Expected EBITDA volatility | 33.00% - 37.00% | |||
| EBITDA discount rate | 10.90% - 12.70% | |||
| Discount rate to payment | 7.75%-7.76% | |||
| Payment cap | $14,500,000 | |||
| Expected final payment period remaining (in years) | 0.61 - 2.25 |
A reconciliation of the changes in Level 3 fair value measurements is as follows:
| Contingent | ||||
| consideration | ||||
| January 1, 2025 | $ | 2,712,166 | ||
| Acquisitions | 542,000 | |||
| Fair value adjustments | (1,476,000 | ) | ||
| Payments of contingent consideration | (1,648,166 | ) | ||
| December 31, 2025 | $ | 130,000 | ||
32
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025
| (15) | Income Taxes |
The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Deferred tax liabilities and assets are determined based on the differences between the financial statement and tax bases of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to reverse.
All net income from continuing operations before income taxes was generated in the United States during the year ended December 31, 2025. The provision for income taxes from continuing operations consisted of the following for the year ended December 31, 2025:
| Current income tax expense (benefit) | ||||
| Federal | $ | 14,414,289 | ||
| State and local | 5,228,677 | |||
| Total current income tax expense | 19,642,966 | |||
| Deferred income tax expense (benefit) | ||||
| Federal | (13,885,202 | ) | ||
| State and local | (3,576,543 | ) | ||
| Total deferred income tax benefit | (17,461,745 | ) | ||
| Total income tax expense | $ | 2,181,221 |
33
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025
Significant components of the Company’s net deferred tax assets and liabilities were as follows at December 31, 2025:
| Deferred tax assets: | ||||
| Operating lease liabilities | $ | 46,752,355 | ||
| Disallowed interest expense | 20,167,026 | |||
| Intangible assets | 5,478,479 | |||
| Inventory valuation | 1,905,766 | |||
| Capitalized inventory | 1,866,523 | |||
| Allowance for credit losses | 1,802,817 | |||
| Accrued expenses | 1,460,058 | |||
| Stock compensation | 1,140,191 | |||
| Net operating losses | 215,151 | |||
| Deferred tax assets | 80,788,366 | |||
| Deferred tax liabilities: | ||||
| Operating lease right-of-use assets | (41,738,689 | ) | ||
| Property and equipment | (24,588,778 | ) | ||
| Deferred tax liabilities | (66,327,467 | ) | ||
| Net deferred tax asset | $ | 14,460,899 |
As of December 31, 2025, the Company has no U.S. federal net operating loss and has state net operating losses of $3,565,711 that begin to expire in 2038.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those temporary differences are deductible. Management considers the scheduled reversal of deferred tax liabilities (including the effect in available carryback and carryforward periods), projected taxable income, and tax-planning strategies in this assessment. In order to fully realize the deferred tax asset, the Company has considered the reversal of its deferred tax liabilities. On the basis of this evaluation, the Company has not recorded a valuation allowance as of December 31, 2025.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law. The OBBBA makes permanent or introduces certain changes to the Internal Revenue Code, including 100% bonus depreciation, the deductibility of interest expense, and expensing domestic research costs. ASC 740, Income Taxes, requires that the effect of changes in tax rates and laws be recognized in the period in which the legislation is enacted. The impact of this change is primarily a reclassification from current to deferred taxes.
The Company’s effective income tax rate differs from the statutory U.S. federal tax rate for the year ended December 31, 2025 due to state taxes, nondeductible items, and prior year adjustments.
34
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025
The following is a reconciliation of the statutory U.S. federal income tax rate applied to pretax accounting net income from continuing operations compared to the income taxes in the consolidated statement of operations for the year ended December 31, 2025:
| Amount | Percentage | |||||||
| Income tax expense at the U.S. federal statutory rate | $ | 333,741 | 21 | % | ||||
| State and local income taxes, net of federal tax benefit [1] | 465,761 | 29 | % | |||||
| Foreign tax effects | — | 0 | % | |||||
| Effect of changes in tax laws or rates enacted in the current period | 24,712 | 2 | % | |||||
| Effect of cross-border tax laws | — | 0 | % | |||||
| Tax credits | — | 0 | % | |||||
| Changes in valuation allowances | — | 0 | % | |||||
| Nontaxable or nondeductible items: | ||||||||
| Meals and entertainment | 696,161 | 44 | % | |||||
| Stock-based compensation | (118,746 | ) | -7 | % | ||||
| Other | (21,627 | ) | -1 | % | ||||
| Change in unrecognized tax benefits | — | 0 | % | |||||
| Other adjustments: | ||||||||
| Prior year federal payable adjustments | 526,244 | 33 | % | |||||
| Prior year state payable adjustments | 582,394 | 37 | % | |||||
| Prior year deferred adjustments | (307,419 | ) | -19 | % | ||||
| Total income tax expense | $ | 2,181,221 | 139 | % | ||||
[1] State taxes in Florida, Illinois, Massachusetts, Minnesota, and Texas during the year ended December 31, 2025 represented the majority (greater than 50%) of the tax effect within this category.
Cash paid for income taxes, net of refunds, was composed of the following during the year ended December 31, 2025:
| U.S. federal | $ | 22,300,000 | ||
| State* | 7,265,809 | |||
| Total cash paid for income taxes, net of refunds | $ | 29,565,809 |
* No individual jurisdictions met the 5% disaggregation threshold.
The Company had no uncertain tax positions as of December 31, 2025 or during the year ended December 31, 2025. Additionally, the Company does not expect significant changes to the total amount of unrecognized tax benefits within the next 12 months.
The statute of limitations on Internal Revenue Service examinations has expired for all years prior to 2022. State income tax returns are generally subject to examination for a period of three to four years after the return.
35
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025
| (16) | Contingencies |
Litigation
In the normal course of business, the Company may be party to litigation from time to time. The Company maintains insurance to cover certain actions and believes that the outcome of such matters will not have a significant effect on the Company’s consolidated financial position or results of operations.
Change of Control Bonuses
In connection with anti-dilution protection provided to certain stock option holders as a result of historical equity restructuring events, the Company may be required to make cash payments upon a change of control, provided that the recipients remain continuously employed by the Company through the consummation thereof. Contingent bonuses expire based on the normal expiration date of the associated stock options.
Concurrent with the July 8, 2025 stock option modification (Note 13) related to the disposal of the Company’s kitchen and interiors business unit (Note 3), the Company modified outstanding change of control bonus awards valued at $4,760,606 held by employees who were terminated by the Company and were subsequently employed by the buyer. The board of directors approved a modification to provide for continued vesting of the contingent bonus awards held by the affected employees to align with each grantee’s continued employment with the buyer or its affiliates and to allow for payment of the awards to be triggered either by a Kodiak change in control or a change in control of the buyer’s ultimate parent. All of the modified awards remained outstanding at December 31, 2025.
At December 31, 2025, the maximum payment obligation for all outstanding contingent bonus awards was $30,375,814. At December 31, 2025, the weighted average remaining contractual term on contingent bonus awards was 4.16 years. Contingent bonuses will be accrued upon the occurrence of a triggering change of control transaction.
| (17) | Related Party Transactions |
Employee Loans
The Company makes short-term loans to employees on a discretionary basis. As determined by management, loans to employees are made on substantially the same terms, including interest rates and collateral, as those terms prevailing at the time for comparable loans with persons not related to the lender that do not involve more than the normal risk of collectability. Outstanding amounts receivable from employees at December 31, 2025 were $930,512, the majority of which was due from an officer of the Company. The amounts are presented as a component of prepaid and other assets on the accompanying consolidated balance sheet. There were no past-due employee receivables as of December 31, 2025.
| (18) | Employee Benefit Plan |
The Company sponsors a 401(k) Plan (the “Plan”) for the combined benefit of all eligible employees. The Plan allows qualified employees to make voluntary contributions from gross wages. The Company makes matching contributions according to the Plan document. Matching contributions during the year ended December 31, 2025 were $5,202,127.
36
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025
| (19) | Subsequent Events |
The Company has evaluated all subsequent events through February 18, 2026, which is the date the consolidated financial statements were available to be issued.
On February 10, 2026, the Company entered into a definitive agreement to be acquired by QXO, Inc. Under the terms of the agreement, QXO, Inc. will acquire all of the outstanding stock of the Company for aggregate consideration of approximately $2,000,000,000 in cash and 13,157,895 shares of stock, subject to customary working capital and other adjustments. The transaction is subject to approval by the Company’s shareholders and is expected to close in the second calendar quarter of 2026, subject to closing conditions. There can be no assurance that the transaction will be completed on the anticipated timeline or at all.
37
Exhibit 99.2
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Condensed Consolidated Financial Statements
March 31, 2026
(Unaudited)
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Table of Contents
| Page(s) | |
| Condensed Consolidated Financial Statements: | |
| Condensed Consolidated Balance Sheets | 1–2 |
| Condensed Consolidated Statements of Operations | 3 |
| Condensed Consolidated Statements of Changes in Stockholders’ Deficit | 4 |
| Condensed Consolidated Statements of Cash Flows | 5–6 |
| Notes to Condensed Consolidated Financial Statements | 7–20 |
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 15,770,153 | $ | 20,860,885 | ||||
| Accounts receivable, net of allowance for credit losses of $7,169,565 and $7,198,170 as of March 31, 2026 and December 31, 2025, respectively | 213,805,605 | 195,059,943 | ||||||
| Vendor rebates receivable | 8,768,026 | 12,102,653 | ||||||
| Inventory, net | 213,311,478 | 187,216,703 | ||||||
| Prepaid and other assets | 16,838,611 | 21,891,945 | ||||||
| Income taxes receivable | 19,721,813 | 10,346,975 | ||||||
| Total current assets | 488,215,686 | 447,479,104 | ||||||
| Noncurrent assets: | ||||||||
| Property and equipment, net | 134,696,510 | 140,443,509 | ||||||
| Operating lease right-of-use assets | 159,535,631 | 166,725,885 | ||||||
| Intangible assets, net | 105,264,538 | 111,470,707 | ||||||
| Goodwill | 249,746,447 | 249,746,447 | ||||||
| Deferred income taxes, net | 9,204,328 | 14,460,899 | ||||||
| Other noncurrent assets | 4,201,209 | 4,352,466 | ||||||
| Total noncurrent assets | 662,648,663 | 687,199,913 | ||||||
| Total assets | $ | 1,150,864,349 | $ | 1,134,679,017 | ||||
See accompanying notes to unaudited condensed consolidated financial statements.
1
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Liabilities and Stockholders’ Deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 132,540,061 | $ | 100,461,074 | ||||
| Accrued expenses | 69,870,378 | 82,675,881 | ||||||
| Customer deposits | 7,795,720 | 7,743,075 | ||||||
| Income taxes payable | 856,984 | 1,535,509 | ||||||
| Current portion of long-term debt | 18,769,190 | 18,485,524 | ||||||
| Total current liabilities | 229,832,333 | 210,901,063 | ||||||
| Long-term liabilities: | ||||||||
| Borrowings under revolving line of credit | 15,000,000 | — | ||||||
| Long-term debt | 1,462,683,159 | 1,462,829,032 | ||||||
| Operating lease liabilities | 143,179,534 | 149,745,192 | ||||||
| Contingent consideration | 130,000 | 130,000 | ||||||
| Total long-term liabilities | 1,620,992,693 | 1,612,704,224 | ||||||
| Total liabilities | 1,850,825,026 | 1,823,605,287 | ||||||
| Stockholders’ deficit: | ||||||||
| Convertible class L common stock, $0.01 par value, 18,800 shares authorized; 15,595 shares issued and outstanding as of March 31, 2026 and December 31, 2025 | 156 | 156 | ||||||
| Class A common stock, $0.01 par value, 1,481 shares authorized; 1,030 shares issued and outstanding as of March 31, 2026 and December 31, 2025 | 10 | 10 | ||||||
| Additional paid-in capital | 188,315,159 | 188,252,949 | ||||||
| Accumulated deficit | (888,276,002 | ) | (877,179,385 | ) | ||||
| Total stockholders’ deficit | (699,960,677 | ) | (688,926,270 | ) | ||||
| Total liabilities and stockholders’ deficit | $ | 1,150,864,349 | $ | 1,134,679,017 | ||||
See accompanying notes to unaudited condensed consolidated financial statements.
2
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Revenue | $ | 531,393,836 | $ | 527,991,248 | ||||
| Cost of revenue | 385,259,116 | 374,697,085 | ||||||
| Gross margin | 146,134,720 | 153,294,163 | ||||||
| Operating expenses: | ||||||||
| Salaries and wages | 62,259,681 | 63,874,597 | ||||||
| Selling, general, and administrative expenses | 28,668,284 | 26,225,029 | ||||||
| Depreciation and amortization | 15,676,159 | 13,799,115 | ||||||
| Taxes and benefits | 14,523,772 | 16,300,578 | ||||||
| Rent | 10,153,006 | 10,027,588 | ||||||
| Change in fair value of contingent consideration | — | (813,000 | ) | |||||
| Strategic development expenses | 2,304,729 | 4,967,622 | ||||||
| Gain on disposal of assets | (68,734 | ) | (170,164 | ) | ||||
| Total operating expenses | 133,516,897 | 134,211,365 | ||||||
| Income from operations | 12,617,823 | 19,082,798 | ||||||
| Other income (expense): | ||||||||
| Interest expense | (28,682,205 | ) | (30,704,779 | ) | ||||
| Other income | 854,593 | 880,935 | ||||||
| Total other income (expense) | (27,827,612 | ) | (29,823,844 | ) | ||||
| Loss from continuing operations before income taxes | (15,209,789 | ) | (10,741,046 | ) | ||||
| Income tax benefit | 4,113,172 | 6,675,726 | ||||||
| Loss from continuing operations | (11,096,617 | ) | (4,065,320 | ) | ||||
| Discontinued operations (Note 3): | ||||||||
| Income from discontinued operations before income taxes | — | 1,236,143 | ||||||
| Income tax expense | — | (385,137 | ) | |||||
| Income from discontinued operations | — | 851,006 | ||||||
| Net loss | $ | (11,096,617 | ) | $ | (3,214,314 | ) | ||
See accompanying notes to unaudited condensed consolidated financial statements.
3
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in Stockholders’ Deficit
(Unaudited)
| Three months ended March 31, 2026 | ||||||||||||||||||||||||||||
| Additional | Total | |||||||||||||||||||||||||||
| Class L Common stock | Class A Common stock | paid-in | Accumulated | stockholders' | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | capital | deficit | deficit | ||||||||||||||||||||||
| Balance – December 31, 2025 | 15,595 | $ | 156 | 1,030 | $ | 10 | $ | 188,252,949 | $ | (877,179,385 | ) | $ | (688,926,270 | ) | ||||||||||||||
| Stock compensation | — | — | — | — | 62,210 | — | 62,210 | |||||||||||||||||||||
| Net loss | — | — | — | — | — | (11,096,617 | ) | (11,096,617 | ) | |||||||||||||||||||
| Balance – March 31, 2026 | 15,595 | $ | 156 | 1,030 | $ | 10 | $ | 188,315,159 | $ | (888,276,002 | ) | $ | (699,960,677 | ) | ||||||||||||||
| Three months ended March 31, 2025 | ||||||||||||||||||||||||||||
| Additional | Total | |||||||||||||||||||||||||||
| Class L Common stock | Class A Common stock | paid-in | Accumulated | stockholders' | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | capital | deficit | deficit | ||||||||||||||||||||||
| Balance – December 31, 2024 | 15,595 | $ | 156 | 1,024 | $ | 10 | $ | 187,724,073 | $ | (946,641,574 | ) | $ | (758,917,335 | ) | ||||||||||||||
| Stock compensation | — | — | — | — | 8,994 | — | 8,994 | |||||||||||||||||||||
| Net loss | — | — | — | — | — | (3,214,314 | ) | (3,214,314 | ) | |||||||||||||||||||
| Balance – March 31, 2025 | 15,595 | $ | 156 | 1,024 | $ | 10 | $ | 187,733,067 | $ | (949,855,888 | ) | $ | (762,122,655 | ) | ||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
4
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (11,096,617 | ) | $ | (3,214,314 | ) | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Income from discontinued operations | — | (851,006 | ) | |||||
| Provision for credit losses | 260,338 | (752,874 | ) | |||||
| Depreciation | 9,469,990 | 8,631,007 | ||||||
| Gain on disposal of assets | (68,734 | ) | (170,164 | ) | ||||
| Reduction in the carrying amount of operating lease right-of-use assets | 7,190,254 | 10,187,571 | ||||||
| Amortization of intangible assets | 6,206,169 | 5,168,108 | ||||||
| Amortization of debt issuance costs | 846,368 | 912,736 | ||||||
| Change in value of contingent consideration | — | (813,000 | ) | |||||
| Stock compensation | 62,210 | 8,994 | ||||||
| Deferred taxes | 5,256,571 | 87,788,448 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (19,006,000 | ) | 5,224,312 | |||||
| Vendor rebates receivable | 3,334,627 | 2,484,177 | ||||||
| Inventory | (26,094,775 | ) | (24,834,430 | ) | ||||
| Prepaid and other assets | 5,053,334 | (3,284,118 | ) | |||||
| Other noncurrent assets | (30,747 | ) | 51,514 | |||||
| Accounts payable | 32,078,987 | 27,799,907 | ||||||
| Accrued expenses and other liabilities | (12,554,848 | ) | 6,113,881 | |||||
| Income taxes payable/receivable | (10,053,363 | ) | (95,810,091 | ) | ||||
| Operating lease liabilities | (6,816,313 | ) | (9,377,520 | ) | ||||
| Customer deposits | 52,645 | 1,153,441 | ||||||
| Net cash (used in) provided by operating activities of continuing operations | (15,909,904 | ) | 16,416,579 | |||||
| Net cash provided by operating activities of discontinued operations | — | 4,770,838 | ||||||
| Net cash (used in) provided by operating activities | (15,909,904 | ) | 21,187,417 | |||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (3,810,136 | ) | (11,968,671 | ) | ||||
| Proceeds from the disposal of fixed assets | 155,879 | 74,620 | ||||||
| Cash paid for acquisitions, net of cash acquired | — | (626,825 | ) | |||||
| Net cash used in investing activities of continuing operations | (3,654,257 | ) | (12,520,876 | ) | ||||
| Net cash used in investing activities of discontinued operations | — | (350,043 | ) | |||||
| Net cash used in investing activities | (3,654,257 | ) | (12,870,919 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Borrowings under revolving line of credit | 40,000,000 | — | ||||||
| Repayments under revolving line of credit | (25,000,000 | ) | — | |||||
| Payments on notes payable | (1,197 | ) | (25,280 | ) | ||||
| Payments on finance lease obligations | (525,374 | ) | (631,604 | ) | ||||
| Net cash provided by (used in) financing activities of continuing operations | 14,473,429 | (656,884 | ) | |||||
| Net cash used in financing activities of discontinued operations | — | (856,578 | ) | |||||
| Net cash provided by (used in) financing activities | 14,473,429 | (1,513,462 | ) | |||||
| Net (decrease) increase in cash | (5,090,732 | ) | 6,803,036 | |||||
| Cash – beginning of period | 20,860,885 | 26,740,841 | ||||||
| Cash – end of period | $ | 15,770,153 | $ | 33,543,877 | ||||
See accompanying notes to unaudited condensed consolidated financial statements.
5
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Supplemental disclosure of cash flow information and noncash activity:
Cash paid for income taxes during the three months ended March 31, 2026 and 2025 was $678,525 and $0, respectively.
Cash paid for interest during the three months ended March 31, 2026 and 2025 was $27,827,200 and $40,073,485, respectively.
During the three months ended March 31, 2025, the Company financed $1,458,692 of property and equipment additions through finance leases.
During the three months ended March 31, 2025, the Company obtained $14,561,408 of right-of-use lease assets in exchange for operating lease liabilities, including amounts added to the carrying amount of right-of use lease assets resulting from lease modifications and reassessments.
See accompanying notes to unaudited condensed consolidated financial statements.
6
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 2026
| (1) | Description of Business |
On April 1, 2026, pursuant to the terms of the Agreement and Plan of Merger, dated as of February 10, 2026 (the “Merger Agreement”), by and among Kodiak Building Partners Inc., a Delaware corporation (“Kodiak” or the “Company”), QXO, Inc., a Delaware corporation (“QXO”), Juno Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of QXO (“Merger Sub”) and CSC Shareholder Services LLC, in its capacity as shareholder representative, Merger Sub merged with and into Kodiak (the “Merger”), with Kodiak surviving the Merger as an indirect, wholly owned subsidiary of QXO. At the effective time of the Merger, QXO paid to equityholders of Kodiak an amount in cash equal to $2,000,000,000 (subject to customary adjustments for working capital, indebtedness, cash and transaction expenses as set forth in the Merger Agreement) plus 13,157,895 shares of QXO common stock. The condensed consolidated financial statements do not give effect to any adjustments that may result from the consummation of the Merger Agreement.
In connection with the Merger, after payment of associated transaction expenses, the Company settled outstanding indebtedness (Note 8), stock options (Note 11), and contingent bonus awards (Note 13). The remaining transaction proceeds were distributed pro rata to holders of common stock based on their respective ownership percentages (Note 10).
Kodiak is a construction services and building products distribution company that manages over 110 facilities across the U.S. and operates through a decentralized, local brand business model. Products and services offered by Kodiak -owned businesses include:
| (a) | Construction Supplies |
Construction supplies businesses distribute, fabricate, and erect steel, concrete, and related materials to commercial and residential builders.
| (b) | Lumber and Building Materials |
Lumber and building materials businesses distribute stock and fabricated building materials (lumber, millwork, gypsum, steel framing, roofing, trusses, hardware, cabinets, windows, and doors) to commercial and residential builders and work with architects, builders, contractors, developers, and property management companies to provide turn-key solutions on single-building to multiple-building projects. Additionally, retail centers are attached to certain lumber yards where product is sold directly to walk-in customers.
| (c) | Gypsum |
Gypsum businesses distribute wallboard and associated accessories, including steel studs and track, lath and plaster, insulation, stucco and exterior insulation and finish, trim, fasteners, and screws to commercial and residential builders.
| (d) | Kitchen and Interiors |
Prior to disposal, kitchen and interiors businesses distributed and installed appliances, cabinets, countertops, fixtures, and floor coverings to home builders, remodelers, and homeowners. The kitchen and interiors businesses were operated by the Company until the July 8, 2025 sale of the Company’s 100% equity interests in Kodiak Interiors Group LLC, which operated the kitchen and interiors businesses (Note 3).
7
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 2026
| (2) | Summary of Significant Accounting Policies |
| (a) | Basis of Presentation |
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and contain all normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of the financial position of the Company as of March 31, 2026 and December 31, 2025, the results of operations for the three months ended March 31, 2026 and 2025, and cash flows for the three months ended March 31, 2026 and 2025. The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2026. The unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2025.
| (b) | Fair Value Measurements |
Fair value is an exit price representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is determined for assets and liabilities based upon a hierarchy for which those assets and liabilities must be grouped as follows:
| Level 1: | Quoted prices in active markets for identical assets or liabilities |
| Level 2: | Observable inputs based on inputs not quoted on active markets but corroborated by market data |
| Level 3: | Unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions |
The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
The Company’s financial assets and liabilities approximate fair value due to their short-term nature or variable interest rates that approximate market interest rates.
The financial liabilities that are measured and recorded at estimated fair value on a recurring basis consist of contingent consideration associated with business acquisitions. The fair values of the Company’s Level 3 contingent consideration liabilities are determined using a Monte Carlo simulation model based on significant inputs not observable in the market, Level 3 inputs. The valuation model requires inputs including contractual terms, discount rates, EBITDA volatilities, and probabilities of achievement of contractual provisions. The fair value of contingent consideration arrangements is sensitive to changes in forecasts of earnings and discount rates. The fair value is reassessed at each reporting date based on assumptions in the Company’s most recent projections and input from management.
| (c) | Use of Estimates |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported. Actual results could differ from those estimates. Significant items subject to such estimates include allowances for credit losses, vendor rebates receivable, inventory values, deferred tax asset valuation allowance, useful lives of long-lived assets, fair values of acquired intangible assets, lease terms and lease payments included in the measurement of ROU assets and lease liabilities, fair values of contingent consideration liabilities, stock-based compensation, variable consideration included in revenue, and progress toward satisfaction of performance obligations.
8
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 2026
| (d) | Recent Accounting Pronouncements – Adopted |
In July 2025, the FASB issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The ASU provides a practical expedient to assume that current conditions as of the balance sheet date will persist through the reasonable and supportable forecast period when estimating credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC Topic 606, Revenue from Contracts with Customers. The standard applies prospectively and is effective in annual reporting periods beginning after December 15, 2025, and interim periods within those fiscal years, with early adoption permitted. The Company adopted the standard on a prospective basis for interim and annual periods beginning January 1, 2026. The adoption of this guidance did not have a material impact on the Company’s financial position and results of operations as of and for the three months ended March 31, 2026.
| (e) | Recent Accounting Pronouncements – Not Yet Adopted |
In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The ASU requires disclosure of disaggregated information about certain financial statement costs and expenses into prescribed natural expense categories and other related disclosures. The standard may be applied prospectively or retrospectively and is effective in annual reporting periods beginning after December 15, 2026 with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements.
| (3) | Discontinued Operations |
On July 8, 2025, the Company completed the sale of its previously owned and operated kitchen and interiors business to a related party with a common minority ownership interest with the Company. The historical results of the kitchen and interiors business have been reflected as discontinued operations in the Company’s condensed consolidated financial statements for the period prior to the sale. In connection with the sale, the Company entered into or adopted agreements that provided a framework for the relationship between the Company and the buyer including, but not limited to, the following:
Equity Purchase Agreement – governs the rights and obligations of the parties regarding the sale, including the transfer of assets and assumption of liabilities, and establishes certain rights and obligations between the Company and the buyer following the sale, including procedures with respect to post-closing adjustments to the sale price, and related matters.
Transition Services Agreement – governed services between the Company and the buyer and their respective affiliates for the Company to provide on an interim, transitional basis, various services including, but not limited to, information technology, human resources, treasury, insurance, and mergers and acquisitions support. All services were terminated effective March 31, 2026.
The agreements do not provide the Company with the ability to influence the operating or financial policies of the buyer subsequent to the sale. During the three months ended March 31, 2026, the value of the services provided to the buyer was $182,396. No amounts were due to the Company from the buyer as of March 31, 2026.
9
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 2026
The following table provides details about the major classes of line items constituting income from discontinued operations, net of tax, as presented in the condensed consolidated statement of operations for the three months ended March 31, 2025. The results of discontinued operations include an allocation of $3,976,816 of interest expense on corporate debt (Note 8) based on the ratio of the disposal group’s net assets to the Company’s total consolidated net assets:
| Revenue | $ | 115,202,401 | ||
| Cost of revenue | 83,318,303 | |||
| Gross margin | 31,884,098 | |||
| Operating expenses: | ||||
| Salaries and wages | 12,477,780 | |||
| Selling, general, and administrative expenses | 6,486,992 | |||
| Depreciation and amortization | 1,606,001 | |||
| Taxes and benefits | 3,045,867 | |||
| Rent | 3,149,797 | |||
| Gain on disposal of assets | 10,650 | |||
| Total operating expenses | 26,777,087 | |||
| Income from operations | 5,107,011 | |||
| Other income (expense): | ||||
| Interest expense | (3,992,322 | ) | ||
| Other income | 121,454 | |||
| Total other income (expense) | (3,870,868 | ) | ||
| Income from discontinued operations before income taxes | 1,236,143 | |||
| Income tax expense | (385,137 | ) | ||
| Income from discontinued operations | $ | 851,006 |
| (4) | Acquisition |
Total consideration paid for business acquisitions is allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. Contingent consideration is measured at fair value based on probability-weighted assumptions related to the achievement of contractual provisions. Fair values are determined by management based on information available at the date of acquisition. Intangible assets are primarily valued using the income approach based on a discounted cash flow model for specific assets derived from projections of future revenue, expense, and economic conditions (Level 3).
10
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 2026
Goodwill is the excess of the purchase price over those estimated fair values. The estimated fair values assigned to the assets acquired and liabilities assumed are based on reasonable assumptions that a marketplace participant would use. The estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with corresponding offsets to goodwill. Upon the conclusion of the measurement period or final determination of the estimated fair values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded in the Company’s consolidated statement of operations. Factors that contribute to the recognition of goodwill may include acquiring a talented workforce, including management experience, customer loyalty, brand reputation, and industry expertise. Goodwill is expected to be fully deductible for tax purposes.
Operating results of acquired businesses are included in the Company’s consolidated results from the date of acquisition. Transaction costs incurred by the Company during the three months ended March 31, 2026 and 2025 were $448,633 and $1,044,827, respectively. These costs are included in strategic development expenses on the condensed consolidated statement of operations.
On April 2, 2025, through its wholly owned subsidiary KBP, LLC, the Company acquired all of the outstanding stock of New River Building Supply, Inc., a North Carolina based supplier of high-quality lumber and building materials to professional builders, contractors, and do-it-yourself homeowners. The acquisition was undertaken to expand the Company’s presence in the growing markets of North Carolina and enhance operations through Kodiak’s resources, expertise, and national network. The purchase price consisted of cash consideration of $47,510,600 and contingent consideration of $542,000. The earn-out provision in the arrangement provided for the payment of additional consideration of up to $1,000,000 based on a defined earnings-related target measured over the 12-month period ending April 2, 2026.
11
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 2026
The purchase price was allocated as follows:
| Useful life (years) | Allocation | ||||||
| Cash | $ | 240,716 | |||||
| Accounts receivable | 5,262,352 | ||||||
| Vendor rebates receivable | 100,000 | ||||||
| Inventory | 8,657,402 | ||||||
| Prepaid and other assets | 92,426 | ||||||
| Property and equipment | 1,589,377 | ||||||
| Operating lease right-of-use assets | 589,953 | ||||||
| Customer relationships | 8 | 17,690,000 | |||||
| Trade name | 10 | 1,915,000 | |||||
| Noncompete agreements | 5 | 135,000 | |||||
| Goodwill | 17,462,057 | ||||||
| Accounts payable | (4,274,562 | ) | |||||
| Accrued expenses | (817,168 | ) | |||||
| Operating lease liabilities | (589,953 | ) | |||||
| Total | $ | 48,052,600 | |||||
| (5) | Intangible Assets and Goodwill |
The following tables summarize intangible assets by category:
| March 31, 2026 | ||||||||||||
| Gross carrying amount | Accumulated amortization | Net book value | ||||||||||
| Customer relationships | $ | 201,468,440 | $ | 125,805,039 | $ | 75,663,401 | ||||||
| Trade names | 90,594,000 | 61,697,413 | 28,896,587 | |||||||||
| Noncompete agreements | 1,542,058 | 837,508 | 704,550 | |||||||||
| Intangible assets | $ | 293,604,498 | $ | 188,339,960 | $ | 105,264,538 | ||||||
| December 31, 2025 | ||||||||||||
| Gross carrying amount | Accumulated amortization | Net book value | ||||||||||
| Customer relationships | $ | 201,468,440 | $ | 121,266,595 | $ | 80,201,845 | ||||||
| Trade names | 90,594,000 | 60,090,188 | 30,503,812 | |||||||||
| Noncompete agreements | 1,542,058 | 777,008 | 765,050 | |||||||||
| Intangible assets | $ | 293,604,498 | $ | 182,133,791 | $ | 111,470,707 | ||||||
Goodwill of $27,968,096 was derecognized in connection with the disposal of the kitchen and interiors business during the year ended December 31, 2025 (Note 3). There were no material changes in the carrying value of goodwill during the three months ended March 31, 2026 or 2025.
12
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 2026
| (6) | Revenue |
The following table summarizes revenue from continuing operations by product category:
| Three Months Ended March 31, | ||||||||||||||||
| 2026 | 2025 | |||||||||||||||
| Amount | Percentage | Amount | Percentage | |||||||||||||
| Specialty building products and services | $ | 143,118,947 | 27 | % | $ | 137,237,930 | 26 | % | ||||||||
| Lumber and wood products | 88,079,108 | 17 | % | 85,547,553 | 16 | % | ||||||||||
| Manufactured components | 94,262,746 | 18 | % | 94,552,089 | 18 | % | ||||||||||
| Doors and millwork | 70,312,993 | 13 | % | 82,364,093 | 16 | % | ||||||||||
| Steel | 66,175,211 | 12 | % | 62,635,431 | 12 | % | ||||||||||
| Windows | 35,997,759 | 7 | % | 33,866,152 | 6 | % | ||||||||||
| Wallboard and interior construction | 33,447,072 | 6 | % | 31,788,000 | 6 | % | ||||||||||
| Revenue | $ | 531,393,836 | 100 | % | $ | 527,991,248 | 100 | % | ||||||||
| (7) | Accrued Expenses |
The following table presents the components of accrued expenses:
| March 31, 2026 | December 31, 2025 | |||||||
| Operating lease liabilities | $ | 26,913,132 | $ | 27,163,787 | ||||
| Accrued salaries and wages | 23,042,197 | 29,048,354 | ||||||
| Other accrued liabilities | 9,661,460 | 10,195,274 | ||||||
| Accrued employee benefits | 1,958,813 | 8,436,225 | ||||||
| Sales tax payable | 7,947,301 | 7,493,403 | ||||||
| Accrued interest | 347,475 | 338,838 | ||||||
| Accrued expenses | $ | 69,870,378 | $ | 82,675,881 | ||||
| (8) | Debt |
Credit Facilities
In December 2024, the Company entered into a syndicated, secured debt financing arrangement (“2031 Term Loan Agreement”) in the form of a $1,640,000,000, 7-year term loan (“2031 Term Loan”). In connection with the 2031 Term Loan issuance, the Company also amended the terms of its existing syndicated, asset-based lending credit facility (“ABL Credit Agreement”) to extend the maturity to December 4, 2029. The 2031 Term Loan Agreement provided for the Company to request incremental commitments for amounts based, in part, on future operating results and the maintenance of an overall maximum leverage ratio, as defined.
Borrowings under the 2031 Term Loan bore interest at variable rates, at the Company’s designation, at either 1) the designated term SOFR plus 3.75% or 2) an alternate daily Base Rate (the greater of the prime rate, the federal funds rate plus 0.50%, or the one-month term SOFR plus 1.0%) plus 2.75%, subject to a floor of 0.00%. Interest was payable no less than quarterly. The interest rate in effect on the 2031 Term Loan as of March 31, 2026 was 7.42%.
13
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 2026
Beginning on June 30, 2025, the Company began making minimum quarterly principal payments on 2031 Term Loan borrowings of $4,100,000. Remaining unpaid balances were initially due on the initial maturity date of December 4, 2031. Beginning in 2026, additional annual mandatory principal payments were required to the extent that Excess Cash Flow, as defined in the 2031 Term Loan Agreement, was generated in the preceding calendar year. Voluntary repurchases and prepayments reduce the Company’s obligation to make mandatory principal prepayments under the Excess Cash Flow provision. The 2031 Term Loan Agreement further provided for partial mandatory prepayments to the extent certain contractually defined events occurred. No amounts were due under the mandatory prepayment provisions as of December 31, 2025.
The 2031 Term Loan provided for prepayment at the Company’s option without penalty. On July 25, 2025, the Company utilized net cash proceeds from the sale of its kitchen and interiors business unit (Note 3) to voluntarily prepay $145,000,000 in principal on the 2031 Term Loan. The July 2025 prepayment was a partial extinguishment under which the Company recognized a loss on extinguishment of $1,644,909, associated with the write-off of associated unaccreted original issue discount and unamortized debt issuance costs.
Under the terms of the 2031 Term Loan Agreement, the Merger resulted in a change of control of the Company under which all outstanding obligations were immediately due and paid effective April 1, 2026, and the 2031 Term Loan Agreement was automatically terminated.
Through March 31, 2026, the ABL Credit Agreement provided for revolving loan commitments (“ABL Revolver”) of up to $350,000,000, including up to $5,000,000 of swingline loans, and available letters of credit of up to $35,000,000. Borrowing availability under the ABL Revolver was based on a percentage of the value of certain assets securing the Company’s obligations, reduced by outstanding letters of credit and borrowings. The ABL Credit Agreement provided for incremental commitments for amounts based, in part, on future operating results and the maintenance of an overall maximum leverage ratio, as defined. ABL Revolver borrowings bore variable interest, at the Company’s designation, at either 1) the designated term SOFR based on the applicable interest period plus 0.10% (“ABL Term SOFR”) plus 1.00%, plus a margin of 1.50% to 2.00% based on Quarterly Average Excess Availability, as defined or 2) the base rate (the greater of the prime rate, the federal funds rate plus 0.50%, or the 1-month ABL Term SOFR, subject to a floor of 1.00%, plus 1.00%, plus a margin of 0.50% to 1.00% based on Quarterly Average Excess Availability, as defined). Swingline loans bore interest solely under the base rate. The Company incurred unused commitment fees on the ABL Credit Facility based on utilization ranging from 0.250% to 0.375%. Interest and fees were payable no less than quarterly with all accrued unpaid interest and outstanding principal amounts due in full on the initial maturity date of December 4, 2029. As of March 31, 2026, the Company had outstanding borrowings under the ABL Revolver of $15,000,000 and $13,642,568 in outstanding letters of credit. There was no outstanding swingline loan balance.
The consummation of the Merger constituted a change of control under the terms of the ABL Credit Agreement, which triggered an event of default thereunder entitling the lenders to, among other remedies, declare all outstanding borrowings immediately due and payable, terminate all revolving commitments, and require that all outstanding letters of credit be cash collateralized. Simultaneously with the closing of the Merger, all outstanding obligations under the ABL Revolver were paid in full, and cash collateral was posted with respect to all outstanding letters of credit. The ABL Credit Agreement was subsequently terminated.
14
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 2026
All of the obligations under the 2031 Notes and ABL Credit Agreement were guaranteed jointly and severally by all of the Company’s restricted subsidiaries. Additionally, all obligations under the 2031 Term Loan Agreement and ABL Credit Agreement, and the guarantees of those obligations, were secured by substantially all of the assets of the Company and the guarantors, subject to certain exceptions and permitted liens, including a prioritized security interest in substantially all current assets that constituted ABL Priority Collateral and a prioritized security interest in substantially all non-current assets that constituted the Term Loan Priority Collateral, as respectively defined in the Intercreditor Agreement among the 2031 Term Loan Agreement and ABL Credit Agreement lenders.
The 2031 Term Loan Agreement and ABL Credit Agreement facilities contained restrictive covenants which, among other things, limited the Company’s ability to incur additional indebtedness, incur liens, engage in mergers or other fundamental changes, sell certain assets, pay dividends, make acquisitions or investments, prepay certain indebtedness, change the nature of the business, and engage in certain transactions with affiliates. In addition, the ABL Credit Agreement facility also contained a financial covenant requiring the satisfaction of a minimum fixed charge ratio of 1.00 to 1.00 if excess availability fell below the greater of $31,500,000 or 10% of the maximum borrowing amount, which was $350,000,000 as of March 31, 2026.
Notes Payable
The Company has issued a note payable financing property and equipment. The property and equipment note is secured by the assets financed.
Long-term debt consisted of the following:
| March 31, 2026 | December 31, 2025 | |||||||
| 2031 Term Loan | $ | 1,486,800,000 | $ | 1,486,800,000 | ||||
| Notes payable | 426,058 | 427,255 | ||||||
| Finance lease obligations (Note 9) | 9,324,863 | 9,850,237 | ||||||
| 1,496,550,921 | 1,497,077,492 | |||||||
| Less unamortized debt discount/premium and debt issuance costs | (15,098,572 | ) | (15,762,936 | ) | ||||
| Less current maturities of long-term debt and lease obligations | (18,769,190 | ) | (18,485,524 | ) | ||||
| Long-term debt, net of current maturities, discounts, and issuance costs | $ | 1,462,683,159 | $ | 1,462,829,032 | ||||
| (9) | Leases |
As of March 31, 2026, the Company is obligated under finance leases covering certain office and field equipment and vehicles with remaining lease terms that expire between 2026 and 2035.
The Company is also obligated under noncancellable operating leases, primarily for real estate, with remaining lease terms that expire between 2026 and 2040. These leases frequently contain renewal options for periods ranging from 1 to 10 years. Because the Company is generally not reasonably certain to exercise these renewal options, such options are not included in the lease term, and associated potential option payments are excluded from lease payments.
Payments due under lease contracts include fixed payments, plus for many of the Company’s leases, variable payments based on variable rates, including but not limited to, property taxes, insurance, common area maintenance, and mileage. For equipment leases, maintenance services are often provided by the lessor at a fixed cost and are included in the fixed lease payments.
15
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 2026
The Company’s leases generally do not include any material residual value guarantees or restrictive financial or other covenants.
Amounts reported on the condensed consolidated balance sheets were as follows:
| March 31, 2026 | December 31, 2025 | |||||||
| Operating leases: | ||||||||
| Operating lease right-of-use assets | $ | 159,535,631 | $ | 166,725,885 | ||||
| Current operating lease liabilities (included in accrued expenses) | $ | 26,913,132 | $ | 27,163,787 | ||||
| Non-current operating lease liabilities | 143,179,534 | 149,745,192 | ||||||
| Total operating lease liabilities | $ | 170,092,666 | $ | 176,908,979 | ||||
| Finance leases: | ||||||||
| Property and equipment | $ | 17,479,008 | $ | 17,479,008 | ||||
| Accumulated amortization | (6,788,908 | ) | (6,225,874 | ) | ||||
| Property and equipment, net | $ | 10,690,100 | $ | 11,253,134 | ||||
| Current portion of finance lease obligations (included in current portion of long-term debt) | $ | 1,943,132 | $ | 1,658,269 | ||||
| Long-term portion of finance lease obligations (included in long-term debt) | 7,381,731 | 8,191,968 | ||||||
| Total finance lease liabilities | $ | 9,324,863 | $ | 9,850,237 | ||||
The components of total lease cost from continuing operations were as follows:
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Operating lease cost | $ | 9,251,432 | $ | 8,960,398 | ||||
| Finance lease cost: | ||||||||
| Amortization of right-of-use assets | 578,471 | 456,482 | ||||||
| Interest on lease liabilities | 300,862 | 261,366 | ||||||
| Total finance lease cost | 879,333 | 717,848 | ||||||
| Variable and short-term lease cost | 901,574 | 1,067,190 | ||||||
| Total lease cost | $ | 11,032,339 | $ | 10,745,436 | ||||
Cash paid for amounts included in the measurement of lease liabilities was as follows:
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Operating cash flow from operating leases | $ | 9,034,433 | $ | 8,077,410 | ||||
| Operating cash flow from finance leases | 300,862 | 261,366 | ||||||
| Financing cash flow from finance leases | 525,374 | 631,604 | ||||||
16
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 2026
| (10) | Equity |
Under its Amended Certificate of Incorporation (“COI”), the Company is authorized to issue 36,332 shares of common stock consisting of 18,800 shares of Class L common stock (“Class L”) and 17,532 shares of Class A common stock (“Class A”). Both classes of stock have a par value of $0.01 per share. Class L provides for a yield that accrues daily at a rate of 10% annually, compounded on a semiannual basis, applied to a $10,000 per share priority amount plus unpaid Class L yield and has certain preferential rights with respect to distributions, including a Liquidity Event as defined in the COI. In the event of a distribution, the holders of Class L are first entitled to receive amounts equaling any accrued and unpaid yield on a pro rata basis based on the number of Class L shares. After the required amount for any accrued and unpaid Class L yield, holders of Class L are further entitled an amount equal to the aggregate unreturned $10,000 per share priority amount on a pro rata basis based on the number of Class L shares. During the year ended December 31, 2021, the Company paid Class L dividends in full satisfaction of Class L yield and Class L priority amounts. The Company has not subsequently issued any additional shares of Class L. Accordingly, as of March 31, 2026 all Class L yield and Class L priority amounts were fully returned. Upon settlement of Class L yield and Class L priority amounts, holders of both classes of common stock receive any remaining distributions on a pro rata basis. Excepting the majority investor, holders of Class L and Class A are subject to transfer restrictions.
In general, with respect to voting rights, holders of Class L and Class A vote together as a single class for all purposes, including election of the board of directors. Upon the consummation of an initial public offering, or at any time, at the option of the board of directors and upon approval of the holders of a majority of the outstanding common stock, Class L may be converted to Class A at a 1:1 conversion ratio adjusted for any unpaid Class L yield and any unreturned Class L priority amount.
Designated shares of Class A held by members of management are subject to vesting and may be repurchased at the Company’s option upon the holder’s termination of employment with the Company generally at fair market value and cost for vested shares and unvested shares, respectively. As of March 31, 2026, 896 Class A outstanding shares were subject to the contingent repurchase option, all of which were vested. No shares were redeemable as of March 31, 2026.
The Merger constituted a Liquidity Event under the COI under which all holders of Class L and Class A received pro rata distributions of residual proceeds from the transaction, in a combination of cash and QXO common stock in proportion to the aggregate transaction price, after the settlement of indebtedness (Note 8), payment of transaction costs, settlement of outstanding stock options (Note 11) and change of control bonuses (Note 13). A portion of the proceeds otherwise distributable to all equity security holders was withheld at closing and placed into escrow pending resolution of customary working capital and other post-closing adjustments.
| (11) | Stock Compensation |
Through March 31, 2026, the Company’s board of directors administered a nonqualified equity incentive plan (the “Equity Incentive Plan”) for key employees under which the board of directors granted options to purchase Class A common shares of the Company. The exercise price of each stock option was equal to the fair value of the Company’s stock on the date of grant and had a maximum contractual term of 10 years. Service-based stock options generally cliff vested over a period of four to five years. Certain stock options were subject to performance vesting conditions in addition to service vesting. Vested stock options became exercisable on the earliest to occur of a separation of service or 10 years following the vesting commencement date and were immediately redeemable upon a change of control. Certain outstanding and unvested stock options provided for immediate vesting upon a change of control as long as the recipient remained continuously employed by the Company through the consummation thereof.
17
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 2026
On July 8, 2025, in connection with the disposal of the Company’s kitchen and interiors business unit (Note 3), the Company modified 63.920 outstanding stock option awards held by employees who were terminated by the Company and were subsequently employed by the buyer. The board of directors approved a modification to extend the exercise period associated with vested stock options held by the affected employees to align with each grantee’s continued employment with the buyer rather than the standard 60-day post-termination period and to allow for the affected employees to continue vesting in unvested stock options based on their continued service with the buyer or its affiliates. Under the modified terms, vested stock options remained exercisable on the earliest to occur of a separation of service from the buyer or its affiliates or 10 years following the vesting commencement date and remained immediately redeemable upon a Kodiak change of control. As of March 31, 2026, 63.920 stock options remained outstanding under these modified terms, 62.820 of which were vested.
The following table presents the activity for stock options outstanding and weighted average exercise price:
| Non-qualified Stock Options | Exercise Price | |||||||
| Outstanding - December 31, 2025 | 428.775 | $ | 24,328 | |||||
| Granted | — | — | ||||||
| Forfeited | (1.500 | ) | 68,000 | |||||
| Canceled | (0.200 | ) | 88,191 | |||||
| Exercised | — | — | ||||||
| Outstanding - March 31, 2026 | 427.075 | $ | 24,145 | |||||
No stock options were exercisable as of March 31, 2026. As of March 31, 2026, the weighted average remaining contractual term on stock options outstanding was 4.55 years.
The total fair value of stock options vested during the three months ended March 31, 2026 was $302,504. The following table presents the status of and changes in nonvested stock options:
| Non-qualified stock options | Weighted average grant date fair value | |||||||
| Nonvested - December 31, 2025 | 44.800 | $ | 20,600 | |||||
| Granted | — | — | ||||||
| Vested | (13.300 | ) | 22,745 | |||||
| Forfeited | (1.500 | ) | 19,219 | |||||
| Nonvested - March 31, 2026 | 30.000 | $ | 19,718 | |||||
Compensation expense is recorded in salaries and wages in the condensed consolidated statements of operations. As of March 31, 2026, there was $522,260 of total unrecognized compensation cost related to outstanding stock options. This cost was expected to be recognized over a weighted average period of 2.63 years. Total unrecognized compensation expense was subject to future adjustments for forfeitures.
18
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 2026
In accordance with the terms of the awards, vesting was accelerated upon closing of the Merger for all eligible unvested stock options. All outstanding stock options were immediately canceled. Vested stock options were each redeemed in exchange for a combination of cash and QXO common stock, in proportion to the transaction consideration, equal to the product of the number of Class A Common shares subject to each stock option and the excess, if any, of the Class A Common per-share transaction consideration over the applicable strike price of each stock option, net of applicable withholding taxes. A portion of such consideration was withheld from each option holder and deposited into escrow at closing on the same terms applicable to holders of common stock. The Equity Incentive Plan was terminated in connection with the Merger.
| (12) | Income Taxes |
The Company’s interim provision for income taxes is determined based on its annual estimated effective tax rate, applied to the actual year-to-date income, and adjusted for the tax effects of any discrete items. The Company’s effective tax rate for the three months ended March 31, 2026, excluding discrete items, was 27.04%, compared to 66.18% for the three months ended March 31, 2025. The Company’s effective tax rates for the three months ended March 31, 2026 and 2025 were based on the U.S. federal statutory tax rate of 21% and state jurisdictional income tax rates, adjusted for permanent items including non-deductible expenses.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law. The OBBBA makes permanent or introduces certain changes to the Internal Revenue Code, including 100% bonus depreciation, the deductibility of interest expense, and expensing domestic research costs. ASC 740, Income Taxes, requires that the effect of changes in tax rates and laws be recognized in the period in which the legislation is enacted. The impact of this change was primarily a reclassification from current to deferred taxes.
| (13) | Contingencies |
Litigation
In the normal course of business, the Company may be party to litigation from time to time. The Company maintains insurance to cover certain actions and believes that the outcome of such matters will not have a significant effect on the Company’s consolidated financial position or results of operations.
Change of Control Bonuses
In connection with anti-dilution protection provided to certain stock option holders as a result of historical equity restructuring events, the Company was required to make cash payments upon a change of control, provided that the recipients remained continuously employed by the Company through the consummation thereof. Contingent bonuses expired based on the normal expiration date of the associated stock options.
19
KODIAK BUILDING PARTNERS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 2026
Concurrent with the July 8, 2025 stock option modification (Note 11) related to the disposal of the Company’s kitchen and interiors business unit (Note 3), the Company modified outstanding change of control bonus awards valued at $4,760,606 held by employees who were terminated by the Company and were subsequently employed by the buyer. The board of directors approved a modification to provide for continued vesting of the contingent bonus awards held by the affected employees to align with each grantee’s continued employment with the buyer or its affiliates and to allow for payment of the awards to be triggered either by a Kodiak change in control or a change in control of the buyer’s ultimate parent. All of the modified awards remained outstanding as of March 31, 2026.
As of March 31, 2026, the maximum payment obligation for all outstanding contingent bonus awards was $30,375,814. As of March 31, 2026, the weighted average remaining contractual term on contingent bonus awards was 4.19 years. Contingent bonuses were accrued and settled on April 1, 2026 upon the occurrence of the triggering change of control Merger transaction.
| (14) | Subsequent Events |
The Company has evaluated all subsequent events through May 11, 2026, which is the date the condensed consolidated financial statements were available to be issued.
20
Exhibit 99.5
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
On April 18, 2026, QXO, Inc. (“QXO” ) entered into an Agreement and Plan of Merger (the “TopBuild Merger Agreement”), with TopBuild Corp., a Delaware corporation (“TopBuild”), Titanium MergerCo, Inc., a Delaware corporation and wholly-owned subsidiary of QXO (“Titanium Merger Sub”) and Titanium MergerCo 2, LLC, a Delaware limited liability company and wholly-owned subsidiary of QXO (“Forward Merger Sub”). Pursuant to the TopBuild Merger Agreement, each share of TopBuild’s common stock issued (other than certain excluded shares, cancelled shares and dissenting shares) and outstanding immediately prior to the effective time of the merger of Titanium Merger Sub with and into TopBuild, will be automatically converted into the right to receive, at the election of the holder, one of the following forms of consideration: (i) an amount in cash equal to $505.00 (the “TopBuild Cash Consideration”) or (ii) 20.200 shares of QXO common stock, par value $0.00001 per share (“common stock”) (the “TopBuild Stock Consideration”), subject, in each case, to proration as described in the TopBuild Merger Agreement (the “TopBuild Acquisition”). The TopBuild Acquisition will be funded through the TopBuild Series C Preferred Stock Issuance (as defined below), proceeds from the issuance of certain debt instruments as defined below (“TopBuild Debt Financings” and, collectively with the TopBuild Series C Preferred Stock Issuance, the “TopBuild Acquisition Financings”) and cash on hand.
On February 10, 2026, QXO entered into an Agreement and Plan of Merger (the “Kodiak Merger Agreement”), with Kodiak Building Partners Inc., a Delaware corporation (“Kodiak”), Juno Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of QXO (“Juno Merger Sub”), and CSC Shareholder Services LLC, in its capacity as shareholder representative (the “Shareholder Representative”). QXO paid to equity holders of Kodiak (“Kodiak Stockholders”), subject to adjustments in net working capital, closing date indebtedness, closing date cash and cash equivalents and transaction expenses, an amount in cash equal to $2.0 billion plus 13.2 million shares (the “Consideration Shares”) of QXO common stock. On April 1, 2026 (the “Kodiak Closing Date”), pursuant to the Kodiak Merger Agreement, and upon the terms and subject to the conditions thereof, Juno Merger Sub merged with and into Kodiak (the “Kodiak Acquisition”), with Kodiak surviving the merger as an indirect, wholly-owned subsidiary of QXO.
In January 2026, QXO entered into an investment agreement (the “January 2026 Investment Agreement” or “Series C Convertible Preferred Investment”) with AP Quince Holdings, L.P., a fund managed by affiliates of Apollo Global Management, Inc., and the other investors party thereto, pursuant to which such investors committed until July 15, 2026 (the “Initial Commitment Period”) to purchase up to 300,000 shares of a new series of Series C Convertible Perpetual Preferred Stock, par value $0.001 per share (the “Series C Preferred Stock”), for an aggregate gross purchase price of $3.0 billion to fund one or more qualifying acquisitions, defined as an acquisition with an aggregate purchase price exceeding $1.5 billion or an acquisition that has been approved by QXO’s board of directors (the “Board”) as a Qualifying Acquisition (a “Qualifying Acquisition”). The Initial Commitment Period will be extended with respect to the commitment for a Qualifying Acquisition up to an additional 12 months if a definitive acquisition agreement for such Qualifying Acquisition is executed before the expiration of the Initial Commitment Period. On April 1, 2026, QXO issued 200,000 shares of the Series C Preferred Stock (the “Kodiak Series C Preferred Stock Issuance”) to fund the $2.0 billion cash consideration for the Kodiak Acquisition, which was deemed to be a Qualifying Acquisition. QXO expects to issue the remaining 100,000 shares of Series C Preferred Stock (the “TopBuild Series C Preferred Stock Issuance”) and use the $1.0 billion proceeds received to fund part of the TopBuild Cash Consideration.
Additionally, on January 20, 2026, QXO sold 31.6 million shares of QXO common stock in an underwritten public offering at a price of $23.80 per share. QXO raised $749.4 million in net proceeds from the equity offering, after deducting offering costs of $3.8 million (the “January 2026 Equity Financing”). The proceeds from the January 2026 Equity Financing have been reflected in QXO’s historical condensed consolidated balance sheet as of March 31, 2026 and, as such, no adjustment was included herein for the unaudited pro forma combined balance sheet. Note 8, Pro Forma Earnings Per Share, gives pro forma effect to the January 2026 Equity Financing in the calculation of basic and diluted weighted-average shares outstanding for the year ended December 31, 2025 and the three months ended March 31, 2026.
On June 25, 2025, QXO sold 89.9 million shares of QXO common stock in an underwritten public offering at a price of $22.25 per share. QXO also granted the underwriters in the public offering a 30-day option to purchase up to an additional 13.5 million shares of QXO common stock. On July 24, 2025, the option was partially exercised with respect to 1.7 million shares. QXO raised $1.96 billion in net proceeds from the equity offering, after deducting offering costs of $37.8 million (the “June 2025 Equity Financing”).
On May 23, 2025, QXO completed an underwritten public offering of 55.8 million shares of QXO common stock, at a public offering price of $16.50 per share. On May 27, 2025, QXO completed an underwritten public offering of 11.5 million depositary shares (“Depositary Shares”), each representing a 1/20 interest in a share of QXO’s 5.50% Series B Mandatory Convertible Preferred Stock, par value $0.001 per share (the “Mandatory Convertible Preferred Stock”), at a public offering price of $50 per Depositary Share. QXO received aggregate net proceeds of $1.45 billion, after deducting offering costs of $44.5 million from the offerings of common stock and the Mandatory Convertible Preferred Stock (collectively, the “May 2025 Equity Financing”), the proceeds of which were used to repay indebtedness under the Existing Term Loan Facility (as defined below).
The proceeds from the May 2025 Equity Financing and June 2025 Equity Financing are included in QXO’s historical balance sheet and as such, no adjustment was included herein for the unaudited pro forma combined balance sheet. Note 8, Pro Forma Earnings Per Share, gives pro forma effect to the May 2025 Equity Financing and June 2025 Equity Financing in the calculation of basic and diluted weighted-average shares outstanding for the year ended December 31, 2025. The impact of the May 2025 Equity Financing and the June 2025 Equity Financing was reflected in QXO’s historical basic and diluted weighted-average shares outstanding for the three months ended March 31, 2026. As such, no adjustment was included herein for the calculation of basic and diluted earnings per share for that period.
On March 20, 2025, QXO entered into an Agreement and Plan of Merger (the “Beacon Merger Agreement”) with Beacon Roofing Supply, Inc., a Delaware corporation (“Beacon”), and Queen MergerCo, Inc., a Delaware corporation and wholly-owned subsidiary of QXO (“Merger Sub”), pursuant to which QXO agreed to acquire Beacon for a purchase price of $124.35 per share of common stock of Beacon (the “ Beacon Acquisition”). On April 29, 2025, pursuant to the Beacon Merger Agreement, Merger Sub merged with and into Beacon, with Beacon remaining as the surviving entity and being renamed QXO Building Products, Inc. (“QXO Building Products”), and QXO completed its acquisition of Beacon. In conjunction with and prior to the Beacon Acquisition, QXO closed on various equity and debt financing transactions during the years ended December 31, 2024 and 2025, respectively. The financing transactions that closed during the year ended December 31, 2025 are further described and defined as the “Beacon Acquisition Financings” below.
The Beacon Acquisition, the Kodiak Acquisition and the TopBuild Acquisition are referred to herein collectively as the “Acquisitions.”
The unaudited pro forma combined financial information set forth below gives effect to the following (collectively, the “Transactions”):
| ● | the TopBuild Acquisition; | |
| ● | the TopBuild Acquisition Financings to fund a portion of the consideration for the TopBuild Acquisition and pay related fees and expenses; | |
| ● | the Kodiak Acquisition; | |
| ● | the Kodiak Series C Preferred Stock Issuance; | |
| ● | the Beacon Acquisition; |
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| ● | the Beacon Acquisition Financings to fund a portion of the consideration for the Beacon Acquisition, the subsequent refinancing of certain of the Beacon Acquisition Financings and pay related fees and expenses; | |
| ● | May 2025 Equity Financing (only impacts Note 8, Pro Forma Earnings Per Share); | |
| ● | June 2025 Equity Financing (only impacts Note 8, Pro Forma Earnings Per Share); and | |
| ● | January 2026 Equity Financing (only impacts Note 8, Pro Forma Earnings Per Share). |
The unaudited pro forma combined balance sheet gives effect to the TopBuild Acquisition, the TopBuild Acquisition Financings, the Kodiak Acquisition and the Kodiak Series C Preferred Stock Issuance as if they occurred on March 31, 2026. The pro forma adjustments to the unaudited pro forma combined balance sheet as of March 31, 2026 do not include the Beacon Acquisition, Beacon Acquisition Financings, the May 2025 Equity Financing, the June 2025 Equity Financing, or the January 2026 Equity Financing as those transactions were consummated prior to March 31, 2026 and are collectively reflected in QXO’s historical consolidated balance sheet. The unaudited pro forma combined statements of operations give effect to the Transactions as if they occurred on January 1, 2025. The unaudited pro forma combined statement of operations for the year ended December 31, 2025 combines the consolidated statement of operations of QXO for the year ended December 31, 2025, which includes Beacon from the period following the closing of the Beacon Acquisition on April 29, 2025 to December 31, 2025 with the historical consolidated statement of operations of Beacon for the period from January 1, 2025 to April 28, 2025, the historical consolidated statement of operations of Kodiak for the year ended December 31, 2025 and the historical consolidated statement of operations of TopBuild for the year ended December 31, 2025. The unaudited pro forma combined statement of operations for the three months ended March 31, 2026 combines the consolidated condensed statement of operations of QXO for the three months ended March 31, 2026 with the historical consolidated condensed statement of operations of Kodiak for the three months ended March 31, 2026 and the historical consolidated condensed statement of operations of TopBuild for the three months ended March 31, 2026.
All financial data included in the unaudited combined financial information is presented in millions of U.S. dollars, except per share information, and has been prepared on the basis of generally accepted accounting principles in the United States (“U.S. GAAP”) and QXO’s accounting policies.
The unaudited pro forma combined financial information has been prepared by management in accordance with Article 11 of Regulation S-X, is presented for informational purposes only and is not necessarily indicative of the financial position or results of operations that would have been realized if the Transactions had been completed on the dates set forth above, nor is it indicative of future results or financial position of the combined company. In addition, the unaudited pro forma combined financial information does not purport to project the future financial position or results of operations of the combined entity. The unaudited pro forma combined statements of operations do not reflect any anticipated synergies or dis-synergies, operating efficiencies or cost savings that may result from the Acquisitions or any integration costs that may be incurred. The pro forma adjustments, which QXO believes are reasonable under the circumstances, are preliminary and are based upon available information and certain assumptions described in the accompanying notes to the unaudited pro forma combined financial information.
The pro forma adjustments included in this document are subject to modification based on the final determination of the fair value of the assets acquired and liabilities assumed in the Acquisitions, additional analysis, and additional information that may become available, which may cause the final adjustments to be materially different from the unaudited pro forma combined financial information presented below.
The unaudited pro forma combined financial information should be read together with the following documents:
| ● | TopBuild’s audited consolidated financial statements as of and for the year ended December 31, 2025 and the related notes, which are incorporated by reference into QXO’s Current Report on Form 8-K dated on May 15, 2026; | |
| ● | TopBuild’s unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2026 and the related notes; which are incorporated by reference into QXO’s Current Report on Form 8-K dated on May 15, 2026; | |
| ● | Kodiak’s audited consolidated financial statements as of and for the year ended December 31, 2025 and the related notes included as Exhibit 99.1 in QXO’s Current Report on Form 8-K dated on May 15, 2026; | |
| ● | Kodiak’s unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2026 and the related notes included as Exhibit 99.2 in QXO’s Current Report on Form 8-K dated on May 15, 2026; | |
| ● | QXO’s audited consolidated financial statements as of and for the year ended December 31, 2025 and the related notes, which are included in its Annual Report on Form 10-K for the year ended December 31, 2025. QXO’s Annual Report on Form 10-K also included an exhibit containing the audited consolidated statements of operations for QXO Building Products as the predecessor to QXO for financial reporting purposes for the period from January 1, 2025 to April 28, 2025; and | |
| ● | QXO’s unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2026 and the related notes, which are included in its Quarterly Report on Form 10-Q for the three months ended March 31, 2026. |
Description of the TopBuild Acquisition
As described above, on April 18, 2026, QXO entered into the TopBuild Merger Agreement, pursuant to which QXO agreed to acquire TopBuild. Under the terms of the TopBuild Merger Agreement, each outstanding share of TopBuild common stock (other than certain excluded shares, cancelled shares and dissenting shares) will be converted into the right to receive, at the election of the holder, either the TopBuild Cash Consideration or the TopBuild Stock Consideration, subject to an overall consideration mix limitation, pursuant to which no more than 45% of the number of outstanding shares of TopBuild common stock could be paid in cash (the “Maximum Cash Election Number”) and no less than 55% could be paid in shares of QXO common stock. QXO may increase the number of shares of QXO common stock if TopBuild stockholders holding more than 55% of the number of outstanding shares of TopBuild common stock elect to receive the TopBuild Stock Consideration (the “Maximum Stock Election Number”). As a result, the form of consideration a TopBuild stockholder elects to receive may be adjusted pursuant to the proration procedures set forth in the TopBuild Merger Agreement such that such TopBuild stockholder may receive, in part, a different form of consideration than the form of consideration elected. Given the QXO stock price on May 11, 2026, QXO calculated the purchase consideration using the Maximum Cash Election Number.
Further, under the terms of TopBuild Merger Agreement, each outstanding TopBuild stock option (“TopBuild Options”), whether vested or unvested, will be cancelled and converted into the right to receive shares of QXO common stock, determined in accordance with the terms of the TopBuild Merger Agreement. All outstanding TopBuild restricted stock awards (“TopBuild RSAs”) will become fully vested immediately prior to close of the TopBuild Acquisition, and the holders thereof will be entitled to receive either the TopBuild Cash Consideration or TopBuild Stock Consideration, at the holders’ election.
All outstanding service-based restricted stock units (“TopBuild RSUs”) held by TopBuild employees will be converted into replacement QXO instruments with identical terms. All outstanding performance-based restricted stock units (“TopBuild PRSUs”) held by TopBuild employees will be converted into replacement QXO instruments, with the applicable performance conditions deemed satisfied at target levels, and with the resulting award subject solely to time-based vesting. The number of estimated replacement QXO instruments to be issued in respect of each TopBuild RSU and TopBuild PRSU will be determined by applying the TopBuild Stock Consideration exchange ratio to the corresponding TopBuild award.
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Description of the TopBuild Acquisition Financings
In connection with entering into the TopBuild Merger Agreement on April 18, 2026, QXO obtained commitments for a $3.0 billion incremental senior secured term loan facility with an expected 7-year term (the “New Term Loan Facility”), and a $1.5 billion senior unsecured bridge loan facility with an expected 8 year term (the “Senior Unsecured Bridge A Facility”) and a $1.5 billion senior unsecured bridge loan facility with an expected 5 year term (the “Senior Unsecured Bridge B Facility” and, together with the Senior Unsecured Bridge A Facility, the “Senior Unsecured Bridge Facilities”). These financings are contingent upon the consummation of the TopBuild Acquisition in accordance with the TopBuild Merger Agreement and are subject to certain other closing conditions customary for transactions of this type. QXO does not expect to draw on the Senior Unsecured Bridge Facilities but the Senior Unsecured Bridge Facilities will be available to the extent QXO has not prior to or concurrently with the consummation of the TopBuild Acquisition received proceeds from one or more debt offerings in an aggregate principal amount equal to the Senior Unsecured Bridge Facilities (the “Permanent Financing”). The New Term Loan Facility is expected to require scheduled quarterly amortization payments in an annual amount equal to 1.0% of the original principal amount of the term loans borrowed on the closing date of the New Term Loan Facility, with the balance to be paid at maturity. The associated financing fees related to these transactions are discussed herein. Such fees assume that the Senior Unsecured Bridge Facilities will be undrawn and that the Permanent Financing will be consummated. These debt financings in combination with QXO’s cash on hand, the TopBuild Stock Consideration, and the TopBuild Series C Preferred Stock Issuance, are expected to finance the TopBuild Acquisition and other related fees and expenses.
The unaudited pro forma combined financial information assumes that, in connection with the TopBuild Acquisition Financings, QXO will pay off all historical TopBuild debt outstanding and any related prepayment penalties or breakage fees as of the closing of the TopBuild Acquisition. The actual treatment of such debt may vary and a portion thereof could be assumed.
As described above, QXO intends to issue 100,000 shares of Series C Preferred Stock in the TopBuild Series C Preferred Stock Issuance and use the $996.7 million of proceeds (net of issuance costs of $3.3 million) received to fund part of the TopBuild Cash Consideration as it was deemed to be a Qualifying Acquisition. For purposes of the unaudited pro forma combined financial information, management assumed that the fair value of the Series C Preferred Stock intended to be issued in the TopBuild Series C Preferred Stock Issuance equals the gross cash proceeds of $1.0 billion, net of issuance costs.
Description of the Kodiak Acquisition and Kodiak Series C Preferred Stock Issuance
As described above, on February 10, 2026, QXO and Kodiak entered into the Kodiak Merger Agreement pursuant to which QXO agreed to acquire Kodiak. At the closing of the transaction, Juno Merger Sub merged with and into Kodiak, with Kodiak continuing as the surviving entity and becoming a wholly-owned subsidiary of QXO. The aggregate merger consideration consisted of a base purchase price of $2.0 billion plus 13.2 million shares of QXO common stock, subject to customary adjustments for net working capital, cash and cash equivalents, indebtedness and transaction expenses, and included both cash and shares of QXO common stock issued to Kodiak’s equity holders. Further, under the terms of the Kodiak Merger Agreement, each outstanding share of Kodiak common stock was converted into the right to receive cash and equity consideration, and each vested (including such options that vest as a result of the Kodiak Acquisition) in-the-money Kodiak stock option was cancelled and converted into the right to receive a combination of cash and equity consideration, in each case in accordance with the terms of the Kodiak Merger Agreement. Any Kodiak stock options that were not in-the-money were cancelled without consideration, and Kodiak’s equity incentive plan was terminated in connection with the closing of the Kodiak Acquisition.
As described above, in January 2026, QXO entered into the Series C Convertible Perpetual Preferred Investment with AP Quince Holdings, L.P., a fund managed by affiliates of Apollo Global Management, Inc., and the other investors party thereto. QXO issued 200,000 shares of Series C Preferred Stock to fund the $2.0 billion cash consideration for the Kodiak Acquisition, which was deemed to be a Qualifying Acquisition. For purposes of the unaudited pro forma combined financial information, management assumed that the fair value of the Series C Preferred Stock intended to be issued in the Kodiak Series C Preferred Stock Issuance equals the gross cash proceeds of $2.0 billion, net of issuance costs.
In addition, and as described above, QXO issued 13.2 million shares of QXO common stock as a component of the purchase consideration for the Kodiak Acquisition. The fair value of the shares of QXO common stock was based upon a QXO closing share price on March 31, 2026 of $19.42.
Description of the Beacon Acquisition
As described above, on April 29, 2025, pursuant to the Beacon Merger Agreement, QXO completed its acquisition of Beacon. Under the terms of the Beacon Merger Agreement, the outstanding stock options (“Beacon Options”) and restricted stock units (“Beacon RSUs”) held by Beacon employees and directors were either settled in cash or converted into replacement QXO instruments with identical terms. All outstanding performance-based restricted stock units (“Beacon PRSUs”) held by Beacon employees were converted into replacement QXO instruments, with the performance-based vesting condition deemed satisfied at target and the resulting award subject solely to time-based vesting. Beacon’s employee stock purchase plan (“ESPP”) was terminated prior to the Beacon Acquisition. Any outstanding share purchase rights were automatically exercised into shares of Beacon common stock and then settled in cash at identical terms as those given to other Beacon common stockholders. As described above, the unaudited pro forma combined statement of operations for the year ended December 31, 2025 reflects the necessary adjustments to portray the ‘full-period’ impact of the Beacon Acquisition. The unaudited pro forma financial information as of and for the three months ended March 31, 2026 reflects such financial information in the column entitled “QXO Historical.”
Description of the Beacon Acquisition Financings
In connection with entering into the Beacon Merger Agreement, on March 17, 2025, QXO entered into purchase agreements (the “2025 Purchase Agreements”) with certain institutional investors to issue and sell in a private placement 67.5 million shares of QXO common stock at a purchase price of $12.30 per share. The closing of the issuance and sale of the shares was contingent upon the completion of QXO’s acquisition of Beacon and was completed on April 29, 2025. As a result of the closing, QXO raised $823.8 million in net proceeds after deducting offering costs of $6.8 million.
On April 16, 2025, QXO offered and sold 37.7 million shares of QXO common stock in an underwritten public offering at a price of $13.25 per share. QXO raised $487.7 million in net proceeds from the equity offering, after deducting offering costs of $12.3 million. QXO also granted the underwriters in the public offering a 30-day option to purchase up to an additional 5.7 million shares of QXO common stock at a price of $13.25 per share less underwriting discounts and commissions. On May 5, 2025, the option was partially exercised with respect to 4.0 million shares resulting in an additional $51.8 million of net proceeds (the “April 2025 Equity Financing”). The remaining option to purchase additional shares expired unexercised at the end of the 30-day period.
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In connection with the consummation of the Beacon Acquisition, on April 29, 2025, Merger Sub issued $2.25 billion in aggregate principal amount of 6.75% Senior Secured Notes due 2032 (the “Senior Secured Notes”), entered into and incurred the full amount under a $2.25 billion senior secured term loan facility (the “Existing Term Loan Facility”), and entered into a $2.0 billion senior secured asset-based credit facility (the “ABL Facility”), under which $400.0 million was drawn (collectively referred to herein as the “Beacon Debt Financings”). The associated financing fees related to these transactions are discussed herein. These facilities financed the Beacon Acquisition and other related fees and expenses, ensuring that the Beacon Acquisition and subsequent operations are financially supported while maintaining liquidity and compliance with outlined financial metrics.
The equity financings contemplated under the 2025 Purchase Agreement and the April 2025 Equity Financing are referred to collectively herein as the “Beacon Acquisition Equity Financings”. The Beacon Acquisition Equity Financings and Beacon Debt Financings are collectively referred to as the “Beacon Acquisition Financings”.
In connection with the Beacon Acquisition Financings, QXO repaid all historical Beacon debt outstanding and any related prepayment penalties or breakage fees as of the closing of the Beacon Acquisition. As described above, the unaudited pro forma combined statement of operations for the year-ended December 31, 2025 reflects the necessary adjustments to portray the ‘full-period’ impact of transactions described in this section. The unaudited pro forma combined financial information as of and for the three months ended March 31, 2026, reflects such financial information in the column entitled “QXO Historical.”
Accounting for the Series C Preferred Stock
Based on the information currently available and QXO’s preliminary analysis, pursuant to Accounting Standards Codification (“ASC”) 480, – Distinguishing Liabilities from Equity (“ASC 480”), management preliminarily determined that the Series C Preferred Stock contains a feature that would make it redeemable at the option of the investors upon a fundamental change, which includes events not solely within QXO’s control. As a result, the Series C Preferred Stock is expected to meet the criteria to be classified within mezzanine equity. The evaluation and finalization of accounting conclusions including, but not limited to, classification of the instrument as a liability, mezzanine equity or permanent equity, impact to earnings per share and analysis of any potential embedded derivatives are ongoing and subject to change and could materially impact QXO’s financial statements subsequent to issuance. In addition, the fees incurred by QXO relating to the commitment to issue Series C Preferred Stock were recorded within equity, and reclassified as a reduction of mezzanine equity as issuances occur. The analysis of the accounting treatment for the Series C Preferred Stock is ongoing and not final.
Accounting for the Acquisitions
The Acquisitions were, or are expected to be, accounted for as business combinations using the acquisition method of accounting, with QXO determined to be the accounting acquirer for each acquisition in accordance with ASC 805, Business Combinations, (“ASC 805”). QXO was determined to be the accounting acquirer primarily due to having control over the combined company, and its managers, including the chief executive officer, directing the activities of QXO. Under this method of accounting, the aggregate acquisition consideration paid for each acquisition was, or will be, allocated to the assets acquired and liabilities assumed based upon their estimated fair values as of the respective acquisition dates. Accordingly, the aggregate acquisition consideration related to the Beacon Acquisition was allocated to Beacon’s assets acquired and liabilities assumed, the aggregate acquisition consideration related to the Kodiak Acquisition was allocated to Kodiak’s assets acquired and liabilities assumed, and the aggregate acquisition consideration related to the TopBuild Acquisition is expected to be allocated to TopBuild’s assets acquired and liabilities assumed. The process of valuing the net assets of Beacon upon consummation of the Beacon Acquisition, Kodiak upon consummation of the Kodiak Acquisition, and TopBuild immediately prior to the TopBuild Acquisition is preliminary. Any differences between the estimated consideration transferred and the estimated fair value of the assets acquired and liabilities assumed are recorded as goodwill. Accordingly, preliminary purchase price allocations and related adjustments reflected in the unaudited pro forma combined financial information are subject to revision based on a final determination of fair values. The final purchase price allocations for the Kodiak Acquisition and the TopBuild Acquisition may be materially different from the preliminary purchase price allocations presented in the unaudited pro forma combined financial information. Refer to Note 1 - Basis of Presentation for more information.
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UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of March 31, 2026
(in millions)
| (A) | (B) | (A) + (B) = (C) | (D) | (E) | (F) | (C) + (D) + (E)+ (F) = (G) | |||||||||||||||||||||||||
| QXO Historical | Kodiak
Acquisition Pro Forma - Note 3 | Subtotal | TopBuild Historical (Reclassified - See Note 4) | TopBuild Acquisition Transaction Accounting Adjustments | Note 6 | TopBuild Acquisition Financing Transaction Accounting Adjustments | Note 6 | Pro
Forma Combined | |||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||
| Current assets: | |||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 3,046.3 | $ | 4.9 | $ | 3,051.2 | $ | 268.8 | $ | (9,268.3 | ) | (a) | $ | 6,897.9 | (a) | $ | 949.6 | ||||||||||||||
| Accounts receivable, net | 1,135.7 | 213.8 | 1,349.5 | 930.5 | — | — | 2,280.0 | ||||||||||||||||||||||||
| Inventories, net | 1,668.2 | 213.3 | 1,881.5 | 515.2 | — | — | 2,396.7 | ||||||||||||||||||||||||
| Vendor rebates receivable | 478.8 | 8.8 | 487.6 | — | — | — | 487.6 | ||||||||||||||||||||||||
| Income tax receivable | 32.8 | 19.7 | 52.5 | — | — | — | 52.5 | ||||||||||||||||||||||||
| Prepaid expenses and other current assets | 94.8 | 16.8 | 111.6 | 42.2 | — | — | 153.8 | ||||||||||||||||||||||||
| Total current assets | 6,456.6 | 477.3 | 6,933.9 | 1,756.7 | (9,268.3 | ) | 6,897.9 | 6,320.2 | |||||||||||||||||||||||
| Property and equipment, net | 659.7 | 134.7 | 794.4 | 286.5 | 74.9 | (b) | — | 1,155.8 | |||||||||||||||||||||||
| Goodwill | 5,129.4 | 1,136.9 | 6,266.3 | 3,070.9 | 5,975.5 | (c) | — | 15,312.7 | |||||||||||||||||||||||
| Intangibles, net | 3,704.5 | 870.0 | 4,574.5 | 1,325.0 | 5,005.0 | (d) | — | 10,904.5 | |||||||||||||||||||||||
| Operating lease right-of-use assets, net | 669.7 | 170.1 | 839.8 | 261.5 | 15.9 | (e) | — | 1,117.2 | |||||||||||||||||||||||
| Other assets, net | 40.3 | 4.2 | 44.5 | 10.6 | — | — | 55.1 | ||||||||||||||||||||||||
| Total assets | $ | 16,660.2 | $ | 2,793.2 | $ | 19,453.4 | $ | 6,711.2 | $ | 1,803.0 | $ | 6,897.9 | $ | 34,865.5 | |||||||||||||||||
| Liabilities and Stockholders’ Equity | |||||||||||||||||||||||||||||||
| Current liabilities: | |||||||||||||||||||||||||||||||
| Accounts payable | $ | 1,170.8 | $ | 132.5 | $ | 1,303.3 | $ | 471.2 | $ | — | $ | — | $ | 1,774.5 | |||||||||||||||||
| Accrued expenses | 606.5 | 55.0 | 661.5 | 252.0 | 29.2 | (g) | — | 942.7 | |||||||||||||||||||||||
| Current portion of long-term debt | — | — | — | 62.5 | (62.5 | ) | (h) | 30.0 | (h) | 30.0 | |||||||||||||||||||||
| Current portion of operating lease liabilities | 110.1 | 26.9 | 137.0 | 87.3 | — | — | 224.3 | ||||||||||||||||||||||||
| Current portion of finance lease liabilities | 49.8 | 1.9 | 51.7 | 6.6 | — | — | 58.3 | ||||||||||||||||||||||||
| Total current liabilities | 1,937.2 | 216.3 | 2,153.5 | 879.6 | (33.3 | ) | 30.0 | 3,029.8 | |||||||||||||||||||||||
| Long-term debt, net | 3,058.6 | — | 3,058.6 | 2,769.9 | (2,769.9 | ) | (h) | 5,871.2 | (h) | 8,929.8 | |||||||||||||||||||||
| Deferred income tax liabilities, net | 789.4 | 182.8 | 972.2 | 395.8 | 1,300.1 | (f) | — | 2,668.1 | |||||||||||||||||||||||
| Operating lease liabilities | 554.4 | 143.2 | 697.6 | 190.1 | — | — | 887.7 | ||||||||||||||||||||||||
| Finance lease liabilities | 129.6 | 7.4 | 137.0 | 11.0 | — | — | 148.0 | ||||||||||||||||||||||||
| Other long-term liabilities | 26.1 | 0.1 | 26.2 | 60.4 | — | — | 86.6 | ||||||||||||||||||||||||
| Total liabilities | 6,495.3 | 549.8 | 7,045.1 | 4,306.8 | (1,503.1 | ) | 5,901.2 | 15,750.0 | |||||||||||||||||||||||
| Commitments and contingencies | |||||||||||||||||||||||||||||||
| Series C Preferred Stock | — | 1,961.8 | 1,961.8 | — | — | 980.9 | (i) | 2,942.7 | |||||||||||||||||||||||
| Total mezzanine equity | — | 1,961.8 | 1,961.8 | — | — | 980.9 | 2,942.7 | ||||||||||||||||||||||||
| Stockholders' equity: | |||||||||||||||||||||||||||||||
| Mandatory Convertible Preferred Stock | 558.1 | — | 558.1 | — | — | — | 558.1 | ||||||||||||||||||||||||
| Convertible preferred stock | 498.6 | — | 498.6 | — | — | — | 498.6 | ||||||||||||||||||||||||
| Common stock | — | — | — | 0.4 | (0.4 | ) | (i) | — | — | ||||||||||||||||||||||
| Treasury stock | — | — | — | (2,142.2 | ) | 2,142.2 | (i) | — | — | ||||||||||||||||||||||
| Additional paid-in capital | 9,760.2 | 287.0 | 10,047.2 | 950.3 | 4,815.0 | (i) | 15.8 | (i) | 15,828.3 | ||||||||||||||||||||||
| Retained earnings (accumulated deficit) | (652.0 | ) | (5.4 | ) | (657.4 | ) | 3,620.1 | (3,674.9 | ) | (i) | — | (712.2 | ) | ||||||||||||||||||
| Accumulated other comprehensive income (loss) | — | — | — | (24.2 | ) | 24.2 | (i) | — | — | ||||||||||||||||||||||
| Total stockholders' equity | 10,164.9 | 281.6 | 10,446.5 | 2,404.4 | 3,306.1 | 15.8 | 16,172.8 | ||||||||||||||||||||||||
| Total liabilities, mezzanine equity, and stockholders’ equity | $ | 16,660.2 | $ | 2,793.2 | $ | 19,453.4 | $ | 6,711.2 | $ | 1,803.0 | $ | 6,897.9 | $ | 34,865.5 | |||||||||||||||||
See the accompanying notes to the Unaudited Pro Forma Combined Financial Information.
5
UNAUDITED PRO FORMA COMBINED INCOME STATEMENT
For the year ended December 31, 2025
(in millions, except per share amounts)
| (A) | (B) | (C) | (A)+(B)+(C)=(D) | (E) | (F) | (G) | (D) + (E) + (F) + (G) = (H) | |||||||||||||||||||||||||||||
| QXO Historical | Beacon Acquisition Pro Forma - Note 2 | Kodiak Acquisition Pro Forma - Note 3 | Subtotal | TopBuild Historical (Reclassified - See Note 4) | TopBuild Acquisition Transaction Accounting Adjustments | Note 7 | TopBuild Acquisition Financing Transaction Accounting Adjustments | Note 7 | Pro
Forma Combined | |||||||||||||||||||||||||||
| Net sales | $ | 6,842.2 | $ | 2,694.6 | $ | 2,337.8 | $ | 11,874.6 | $ | 5,409.1 | $ | — | $ | — | $ | 17,283.7 | ||||||||||||||||||||
| Cost of products sold | 5,269.5 | 2,029.8 | 1,664.4 | 8,963.7 | 3,840.1 | 22.1 | (a) | — | 12,825.9 | |||||||||||||||||||||||||||
| Gross profit (loss) | 1,572.7 | 664.8 | 673.4 | 2,910.9 | 1,569.0 | (22.1 | ) | — | 4,457.8 | |||||||||||||||||||||||||||
| Operating expense: | ||||||||||||||||||||||||||||||||||||
| Selling, general and administrative | 1,394.8 | 630.5 | 488.5 | 2,513.8 | 669.6 | 58.1 | (b) | — | 3,241.5 | |||||||||||||||||||||||||||
| Depreciation | 108.4 | 48.7 | 37.4 | 194.5 | 12.1 | 4.3 | (c) | — | 210.9 | |||||||||||||||||||||||||||
| Amortization | 314.7 | 152.9 | 94.0 | 561.6 | 95.3 | 560.7 | (d) | — | 1,217.6 | |||||||||||||||||||||||||||
| Total operating expense | 1,817.9 | 832.1 | 619.9 | 3,269.9 | 777.0 | 623.1 | — | 4,670.0 | ||||||||||||||||||||||||||||
| Income (loss) from operations | (245.2 | ) | (167.3 | ) | 53.5 | (359.0 | ) | 792.0 | (645.2 | ) | — | (212.2 | ) | |||||||||||||||||||||||
| Interest income (expense), net | (47.7 | ) | (72.1 | ) | — | (119.8 | ) | (88.6 | ) | 103.8 | (e) | (391.7 | ) | (e) | (496.3 | ) | ||||||||||||||||||||
| Loss on debt extinguishment | (49.7 | ) | — | — | (49.7 | ) | — | — | — | (49.7 | ) | |||||||||||||||||||||||||
| Other income (expense), net | 5.5 | 2.7 | 4.3 | 12.5 | 0.2 | — | — | 12.7 | ||||||||||||||||||||||||||||
| Income (loss) before provision for income taxes | (337.1 | ) | (236.7 | ) | 57.8 | (516.0 | ) | 703.6 | (541.4 | ) | (391.7 | ) | (745.5 | ) | ||||||||||||||||||||||
| Provision for (benefit from) income taxes | (57.7 | ) | (56.9 | ) | 16.8 | (97.8 | ) | 181.9 | (140.7 | ) | (f) | (101.8 | ) | (f) | (158.4 | ) | ||||||||||||||||||||
| Net income (loss) | $ | (279.4 | ) | $ | (179.8 | ) | $ | 41.0 | $ | (418.2 | ) | $ | 521.7 | $ | (400.7 | ) | $ | (289.9 | ) | $ | (587.1 | ) | ||||||||||||||
| Reconciliation of net income (loss) to net income (loss) attributable to common stockholders: | ||||||||||||||||||||||||||||||||||||
| Net income (loss) | $ | (279.4 | ) | $ | (179.8 | ) | $ | 41.0 | $ | (418.2 | ) | $ | 521.7 | $ | (400.7 | ) | $ | (289.9 | ) | $ | (587.1 | ) | ||||||||||||||
| Dividends on Preferred Stock | (90.0 | ) | — | — | (90.0 | ) | — | — | — | (90.0 | ) | |||||||||||||||||||||||||
| Dividends on Mandatory Convertible Preferred Stock | (18.9 | ) | (12.7 | ) | — | (31.6 | ) | — | — | — | (31.6 | ) | ||||||||||||||||||||||||
| Dividends on Series C Preferred Stock | — | — | (95.0 | ) | (95.0 | ) | — | — | (47.5 | ) | (g) | (142.5 | ) | |||||||||||||||||||||||
| Undistributed income allocated to participating securities | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | (388.3 | ) | $ | (192.5 | ) | $ | (54.0 | ) | $ | (634.8 | ) | $ | 521.7 | $ | (400.7 | ) | $ | (337.4 | ) | $ | (851.2 | ) | |||||||||||||
| Weighted-average common shares outstanding - Note 8: | ||||||||||||||||||||||||||||||||||||
| Basic | 613.0 | 1,071.7 | ||||||||||||||||||||||||||||||||||
| Diluted | 613.0 | 1,071.7 | ||||||||||||||||||||||||||||||||||
| Net income (loss) per common share: | ||||||||||||||||||||||||||||||||||||
| Basic | $ | (0.63 | ) | $ | (0.79 | ) | ||||||||||||||||||||||||||||||
| Diluted | $ | (0.63 | ) | $ | (0.79 | ) | ||||||||||||||||||||||||||||||
See the accompanying notes to the Unaudited Pro Forma Combined Financial Information.
6
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 2026
(in millions, except per share amounts)
| (A) | (B) | (A) + (B) = (C) | (D) | (E) | (F) | (C) + (D) + (E) + (F) = (G) | ||||||||||||||||||||||||||
| QXO Historical | Kodiak
Acquisition Pro Forma - Note 3 | Subtotal | TopBuild Historical (Reclassified -See Note 4) | TopBuild
Acquisition Transaction Accounting Adjustments | Note 7 | TopBuild Acquisition Financing Transaction Accounting Adjustments | Note 7 | Pro Forma Combined | ||||||||||||||||||||||||
| Net sales | $ | 1,730.2 | $ | 531.4 | $ | 2,261.6 | $ | 1,445.9 | $ | — | $ | — | $ | 3,707.5 | ||||||||||||||||||
| Cost of products sold | 1,320.9 | 385.3 | 1,706.2 | 1,045.7 | 4.5 | (a) | — | 2,756.4 | ||||||||||||||||||||||||
| Gross profit (loss) | 409.3 | 146.1 | 555.4 | 400.2 | (4.5 | ) | — | 951.1 | ||||||||||||||||||||||||
| Operating expense: | ||||||||||||||||||||||||||||||||
| Selling, general and administrative | 497.0 | 117.9 | 614.9 | 185.4 | (1.3 | ) | (b) | — | 799.0 | |||||||||||||||||||||||
| Depreciation | 47.3 | 9.5 | 56.8 | 3.9 | 1.1 | (c) | — | 61.8 | ||||||||||||||||||||||||
| Amortization | 116.9 | 23.5 | 140.4 | 35.9 | 128.1 | (d) | — | 304.4 | ||||||||||||||||||||||||
| Total operating expense | 661.2 | 150.9 | 812.1 | 225.2 | 127.9 | — | 1,165.2 | |||||||||||||||||||||||||
| Income (loss) from operations | (251.9 | ) | (4.8 | ) | (256.7 | ) | 175.0 | (132.4 | ) | — | (214.1 | ) | ||||||||||||||||||||
| Interest income (expense), net | (31.1 | ) | — | (31.1 | ) | (35.4 | ) | 36.6 | (e) | (97.8 | ) | (e) | (127.7 | ) | ||||||||||||||||||
| Other income (expense), net | 2.7 | 0.9 | 3.6 | 0.1 | — | — | 3.7 | |||||||||||||||||||||||||
| Income (loss) before provision for income taxes | (280.3 | ) | (3.9 | ) | (284.2 | ) | 139.7 | (95.8 | ) | (97.8 | ) | (338.1 | ) | |||||||||||||||||||
| Provision for (benefit from) income taxes | (53.2 | ) | (1.1 | ) | (54.3 | ) | 34.9 | (25.0 | ) | (f) | (25.4 | ) | (f) | (69.8 | ) | |||||||||||||||||
| Net income (loss) | $ | (227.1 | ) | $ | (2.8 | ) | $ | (229.9 | ) | $ | 104.8 | $ | (70.8 | ) | $ | (72.4 | ) | $ | (268.3 | ) | ||||||||||||
| Reconciliation of net income (loss) to net income (loss) attributable to common stockholders: | ||||||||||||||||||||||||||||||||
| Net income (loss) | $ | (227.1 | ) | $ | (2.8 | ) | $ | (229.9 | ) | $ | 104.8 | $ | (70.8 | ) | $ | (72.4 | ) | $ | (268.3 | ) | ||||||||||||
| Dividends on Preferred Stock | (22.5 | ) | — | (22.5 | ) | — | — | — | (22.5 | ) | ||||||||||||||||||||||
| Dividends on Mandatory Convertible Preferred Stock | (7.9 | ) | — | (7.9 | ) | — | — | — | (7.9 | ) | ||||||||||||||||||||||
| Dividends on Series C Preferred Stock | — | (23.8 | ) | (23.8 | ) | — | — | (11.9 | ) | (g) | (35.7 | ) | ||||||||||||||||||||
| Undistributed income allocated to participating securities | — | — | — | — | — | — | — | |||||||||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | (257.5 | ) | $ | (26.6 | ) | $ | (284.1 | ) | $ | 104.8 | $ | (70.8 | ) | $ | (84.3 | ) | $ | (334.4 | ) | ||||||||||||
| Weighted-average common shares outstanding - Note 8: | ||||||||||||||||||||||||||||||||
| Basic | 744.4 | 1,077.2 | ||||||||||||||||||||||||||||||
| Diluted | 744.4 | 1,077.2 | ||||||||||||||||||||||||||||||
| Net income (loss) per common share: | ||||||||||||||||||||||||||||||||
| Basic | $ | (0.35 | ) | $ | (0.31 | ) | ||||||||||||||||||||||||||
| Diluted | $ | (0.35 | ) | $ | (0.31 | ) | ||||||||||||||||||||||||||
See the accompanying notes to the Unaudited Pro Forma Combined Financial Information.
7
NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
Note 1 - Basis of Presentation
The unaudited pro forma combined financial information and related notes are prepared in accordance with Article 11 of Regulation S-X.
As discussed in Note 3 - Adjustments for the Kodiak Acquisition and the Kodiak Series C Preferred Stock Issuance and Note 4 - TopBuild Reclassification Adjustments, certain reclassifications were made to align QXO’s and Kodiak’s historical financial statement presentation and TopBuild’s historical financial statement presentation. For purposes of the unaudited pro forma combined financial information, QXO has preliminarily determined that no significant adjustments are necessary to conform Kodiak’s financial statements or TopBuild’s financial statements to the accounting policies used by QXO; however, this assessment is ongoing and additional analysis and information that may become available may cause conforming accounting policy changes that could be materially different from the unaudited pro forma combined financial information presented below.
The unaudited pro forma combined financial information was prepared using the acquisition method of accounting in accordance with ASC 805, with QXO as the accounting acquirer for the Acquisitions, using the fair value concepts defined in ASC 820, Fair Value Measurement, and based on the historical financial statements of QXO, Beacon, Kodiak and TopBuild, respectively. Under ASC 805, all assets acquired and liabilities assumed in a business combination are recognized and measured at their assumed acquisition date fair value, while transaction costs associated with the business combination are expensed as incurred. The excess of acquisition consideration over the estimated fair value of assets acquired and liabilities assumed, if any, is allocated to goodwill. The allocation of the aggregate acquisition consideration depends on certain estimates and assumptions, all of which are preliminary. The allocation of the aggregate acquisition consideration has been made for the purpose of developing the unaudited pro forma combined financial information and was based on the purchase price allocation for the Beacon Acquisition disclosed in QXO’s Quarterly Report on Form 10-Q for the three months ended March 31, 2026. The preliminary purchase price allocations for the Kodiak Acquisition and the TopBuild Acquisition are disclosed herein.
The unaudited pro forma combined balance sheet as of March 31, 2026 presented herein is presented as if the Kodiak Acquisition, the Kodiak Series C Preferred Stock Issuance, the TopBuild Acquisition and the TopBuild Acquisition Financings had occurred on March 31, 2026 and combines the historical unaudited condensed consolidated balance sheet of QXO as of March 31, 2026 with the historical unaudited condensed consolidated balance sheet of Kodiak as of March 31, 2026, and with the historical unaudited condensed consolidated balance sheet of TopBuild as of March 31, 2026. The pro forma adjustments to the unaudited pro forma combined balance sheet as of March 31, 2026 do not include the Beacon Acquisition, the Beacon Acquisition Financings, the January 2026 Equity Financing, the June 2025 Equity Financing or the May 2025 Equity Financing as those transactions were consummated prior to March 31, 2026 and are collectively reflected in QXO’s historical consolidated balance sheet.
The unaudited pro forma combined statements of operations for the year ended December 31, 2025 and for the three months ended March 31, 2026, presented herein are based on the historical financial statements of QXO, Beacon, Kodiak and TopBuild. The unaudited pro forma combined statements of operations for the year ended December 31, 2025 and the three months ended March 31, 2026 have been prepared as if the Transactions had occurred on January 1, 2025. The unaudited pro forma combined statement of operations for the year ended December 31, 2025 combines the historical consolidated statement of operations of QXO for the year ended December 31, 2025, which includes Beacon from the period following the closing of the Beacon Acquisition on April 29, 2025 to December 31, 2025, with the historical consolidated statement of operations of Beacon for the period from January 1, 2025 to April 28, 2025, the historical consolidated statement of operations of Kodiak for the year ended December 31, 2025, and the historical consolidated statement of operations of TopBuild for the year ended December 31, 2025. The unaudited pro forma combined statement of operations for the three months ended March 31, 2026 combines QXO’s historical condensed consolidated statement of operations for the three months ended March 31, 2026 with the historical condensed consolidated statement of operations of Kodiak for the three months ended March 31, 2026, and the historical condensed consolidated statement of operations of TopBuild for the three months ended March 31, 2026.
The pro forma adjustments represent management’s best estimates and are based upon currently available information and certain assumptions that QXO believes are reasonable under the circumstances. QXO is not aware of any material transactions between QXO and Beacon, QXO and Kodiak, QXO and TopBuild, and TopBuild and Kodiak during the periods presented. QXO transaction expenses related to the Beacon Acquisition were incurred in full in the historical periods presented herein; as such, no pro forma adjustment to remove or reclassify from the period in which they were incurred to the earliest period presented was recorded. QXO transaction expenses related to the Kodiak Acquisition and the TopBuild Acquisition have been recorded as a pro forma adjustment to the unaudited pro forma statement of operations for the year ended December 31, 2025 and as a corresponding accrued expense on the unaudited pro forma balance sheet as of March 31, 2026. Beacon, Kodiak and TopBuild transaction expenses related to the Acquisitions were not adjusted and are recorded in the historical periods as incurred.
8
Note 2 – Adjustments for the Beacon Acquisition and May 2025 Equity Financing
| Beacon Historical (January 1 through April 28) | Beacon Acquisition Transaction Accounting Adjustments | Note 2 | Beacon Acquisition Financing Transaction Accounting Adjustments | Note 2 | May 2025 Equity Financing Adjustments | Note 2 | Beacon Acquisition Pro Forma | |||||||||||||||||||
| Net sales | $ | 2,694.6 | $ | — | $ | — | $ | — | $ | 2,694.6 | ||||||||||||||||
| Cost of products sold | 2,029.8 | — | — | — | 2,029.8 | |||||||||||||||||||||
| Gross profit | 664.8 | — | — | — | 664.8 | |||||||||||||||||||||
| Operating expense: | ||||||||||||||||||||||||||
| Selling, general and administrative | 628.1 | 2.4 | (a) | — | — | 630.5 | ||||||||||||||||||||
| Depreciation | 41.6 | 7.1 | (b) | — | — | 48.7 | ||||||||||||||||||||
| Amortization | 30.1 | 122.8 | (c) | — | — | 152.9 | ||||||||||||||||||||
| Total operating expense | 699.8 | 132.3 | — | — | 832.1 | |||||||||||||||||||||
| Loss from operations | (35.0 | ) | (132.3 | ) | — | — | (167.3 | ) | ||||||||||||||||||
| Interest income (expense), net | (58.6 | ) | 56.2 | (d) | (156.2 | ) | (d) | 86.5 | (e) | (72.1 | ) | |||||||||||||||
| Loss on debt extinguishment | — | — | — | — | — | |||||||||||||||||||||
| Other income, net | 2.7 | — | — | — | 2.7 | |||||||||||||||||||||
| Income (loss) before provision for income taxes | (90.9 | ) | (76.1 | ) | (156.2 | ) | 86.5 | (236.7 | ) | |||||||||||||||||
| Provision for (benefit from) income taxes | (19.0 | ) | (19.8 | ) | (f) | (40.6 | ) | (f) | 22.5 | (f) | (56.9 | ) | ||||||||||||||
| Net income (loss) | $ | (71.9 | ) | $ | (56.3 | ) | $ | (115.6 | ) | $ | 64.0 | $ | (179.8 | ) | ||||||||||||
| Reconciliation of net income (loss) to net income (loss) attributable to common stockholders: | ||||||||||||||||||||||||||
| Net income (loss) | $ | (71.9 | ) | $ | (56.3 | ) | $ | (115.6 | ) | $ | 64.0 | $ | (179.8 | ) | ||||||||||||
| Dividends on Mandatory Convertible Preferred Stock | — | — | — | (12.7 | ) | (g) | (12.7 | ) | ||||||||||||||||||
| Undistributed income allocated to participating securities | — | — | — | — | — | |||||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | (71.9 | ) | $ | (56.3 | ) | $ | (115.6 | ) | $ | 51.3 | $ | (192.5 | ) | ||||||||||||
Beacon Acquisition preliminary purchase price allocation
QXO accounted for the completed Beacon Acquisition as a business combination in accordance with U.S. GAAP. Accordingly, the purchase price attributable to the Beacon Acquisition was allocated to the assets acquired and liabilities assumed based on their preliminary fair values. Refer to Note 3 of QXO’s condensed consolidated financial statements contained in its Quarterly Report on Form 10-Q for the three months ended March 31, 2026 for information on the purchase consideration, fair value estimates of the assets acquired and liabilities assumed, and resulting goodwill as of the April 29, 2025 acquisition date.
9
The following table presents the preliminary allocation of the purchase price to the assets acquired and liabilities assumed. The allocation of the purchase price is ongoing, and QXO continues to ascertain the reasonableness of the fair value of the assets acquired and liabilities assumed.
| Preliminary Allocation |
||||
| Assets: | ||||
| Accounts receivable | $ | 1,319.1 | ||
| Inventories | 1,772.6 | |||
| Vendor rebates receivable | 235.8 | |||
| Income tax receivable | 19.9 | |||
| Prepaid expenses and other current assets | 81.0 | |||
| Property and equipment | 683.6 | |||
| Goodwill | 5,127.5 | |||
| Intangibles | 4,130.6 | |||
| Operating lease right-of-use assets | 708.0 | |||
| Other non-current assets | 17.5 | |||
| Liabilities: | ||||
| Accounts payable | (1,135.8 | ) | ||
| Accrued expenses | (532.6 | ) | ||
| Deferred income taxes | (906.0 | ) | ||
| Other long-term liabilities | (27.5 | ) | ||
| Operating lease liabilities | (668.2 | ) | ||
| Finance lease liabilities | (181.5 | ) | ||
| Preliminary aggregate acquisition consideration | $ | 10,644.0 | ||
Adjustments included in the Beacon Acquisition Transaction Accounting Adjustments column and the Beacon Acquisition Financing Transaction Accounting Adjustments column in the table above for the fiscal year ended December 31, 2025 are as follows:
| a) | Reflects the adjustments to Selling, general and administrative expenses: |
| For the Year Ended December 31, 2025 |
||||
| Pro forma Beacon Acquisition transaction accounting adjustments: | ||||
| Removal of historical Beacon stock-based compensation expense | $ | (12.5 | ) | |
| Removal of post-acquisition stock-based compensation expense | (59.4 | ) | ||
| Pro forma stock-based compensation expense for Beacon replacement equity awards | 66.0 | |||
| Pro forma lease expense, net (i) | 8.3 | |||
| Net pro forma Beacon Acquisition transaction accounting adjustment to Selling, general and administrative expenses | $ | 2.4 | ||
| (i) | This pro forma acquisition transaction accounting adjustment reflects the increase of lease expense as a result of resetting the leases in acquisition accounting and the amortization related to the favorable/unfavorable lease classification on QXO’s historical balance sheet. |
10
| b) | Reflects the incremental adjustments to Depreciation relating to the remeasurement of property and equipment, net to fair value: |
| For the Year Ended December 31, 2025 | ||||
| Pro forma Beacon Acquisition transaction accounting adjustments: | ||||
| Removal of Beacon's historical depreciation of property and equipment | $ | (149.7 | ) | |
| Pro forma annual depreciation of property and equipment | 156.8 | |||
| Net pro forma Beacon Acquisition transaction accounting adjustment to depreciation | $ | 7.1 | ||
| c) | Reflects the adjustments to amortization including the Amortization of the estimated fair value of intangibles: |
| For the Year Ended December 31, 2025 |
||||
| Pro forma Beacon Acquisition transaction accounting adjustments: | ||||
| Removal of Beacon's historical amortization of intangible assets | $ | (343.9 | ) | |
| Pro forma annual amortization of intangible assets | 466.7 | |||
| Net pro forma Beacon Acquisition transaction accounting adjustment to amortization | $ | 122.8 | ||
| d) | Reflects the expense related to the Beacon Debt Financings and amortization of related issuance costs: |
| For the Year Ended December 31, 2025 |
||||
| Pro forma Beacon Acquisition transaction accounting adjustments: | ||||
| Removal of Beacon’s historical interest expense (i) | $ | 56.2 | ||
| Net pro forma Beacon Acquisition transaction accounting adjustments to interest income (expense), net | $ | 56.2 | ||
| Pro forma Beacon Acquisition financing transaction accounting adjustments: | ||||
| New interest expense on Beacon Acquisition Financings: | ||||
| Removal of historical QXO Interest expense and Debt issuance amortization (ii) | $ | 164.9 | ||
| ABL Facility (iii) | (27.8 | ) | ||
| Existing Term Loan Facility (iii) | (138.9 | ) | ||
| Senior Secured Notes (iii) | (154.4 | ) | ||
| Net pro forma Beacon Acquisition financing transaction accounting adjustments to interest income (expense), net | $ | (156.2 | ) | |
| (i) | This pro forma acquisition transaction accounting adjustment reflects the removal of historical interest expense associated with Beacon’s existing indebtedness, which was extinguished upon consummation of the Beacon Acquisition. The Beacon Acquisition was partially funded by QXO’s historical cash on hand. QXO’s historical interest income has not been removed as a pro forma adjustment herein. QXO’s interest income in future periods may be materially lower than the amounts recognized for the year ended December 31, 2025. |
| (ii) | This adjustment reflects the elimination of interest expense recorded by QXO for the period following the Beacon Acquisition, related to the Beacon Debt Financings. To properly reflect the financing impact of the Beacon Acquisition, interest expense for the post-acquisition period was removed and instead recorded for the year ended December 31, 2025 in its entirety. |
| (iii) | The new interest expense on Beacon Acquisition financing transaction accounting adjustments included in the unaudited pro forma combined statements of operations reflect the interest expense and amortization of debt issuance costs associated with the Beacon Debt Financings. Adjustments reflect interest rates as of December 31, 2025 of 5.22%, 5.72% and 6.75% per annum for the ABL Facility, Existing Term Loan Facility, and Senior Secured Notes, respectively. The costs incurred to secure the ABL Facility are amortized on a straight-line basis over the five-year term of the commitment and the undrawn commitment fee of 0.2% is expensed annually. On November 5, 2025, QXO amended the credit agreement governing the Existing Term Loan Facility in order to refinance the Existing Term Loan Facility. The amendment reduced the applicable margin for borrowings under the Existing Term Loan Facility from 3.00% to 2.00% for Term SOFR borrowings and from 2.00% to 1.00% for base rate borrowings. This amendment to the credit agreement is reflected herein in the pro forma interest expense adjustments. |
11
| e) | Reflects adjustments to interest expense relating to the partial repayment of the Existing Term Loan Facility: |
| For the Year Ended December 31, 2025 |
||||
| Pro forma May 2025 Equity Financing adjustments: | ||||
| Removal of proportionate amount of Existing Term Loan Facility interest expense related to partial repayment | $ | 86.5 | ||
| Net pro forma May 2025 Equity Financing adjustment to interest income (expense), net | $ | 86.5 | ||
| f) | To record the income tax impact of the pro forma adjustments utilizing a statutory income tax rate in effect of 26.0% for the year ended December 31, 2025. The effective tax rate of the combined company could be significantly different (either higher or lower) depending on post-merger activities, including cash needs, the geographical mix of income and changes in tax law. Because the tax rates used for the pro forma financial information are estimated, the rate will likely vary from the actual effective rate in periods subsequent to completion of the Beacon Acquisition. This determination is preliminary and subject to change based upon the final determination of the fair value of the acquired assets and assumed liabilities. |
| g) | Reflects an adjustment to the Net income (loss) attributable to common stockholders of $12.7 million for the year ended December 31, 2025 to reflect the additional 5.5% dividend on the Mandatory Convertible Preferred Stock issued as a part of the May 2025 Equity Financing not reflected in QXO’s historical financial information. Net income (loss) attributable to common stockholders did not require an adjustment for any other issuances under the Beacon Acquisition Equity Financings as the dividends relating to other issuances were reflected in QXO’s historical financial information. |
Note 3 – Adjustments for the Kodiak Acquisition and the Kodiak Series C Preferred Stock Issuance
Refer to the table below for the adjustments related to the Kodiak Acquisition as of March 31, 2026:
| Kodiak Building Partners Inc. Historical (Reclassified - See Note 3(a)) | Kodiak Acquisition Transaction Accounting Adjustments | Note 3 (e) | Kodiak Acquisition Financing Transaction Adjustments | Note 3 (e) | Kodiak Acquisition Pro Forma | |||||||||||||||
| Assets | ||||||||||||||||||||
| Current assets: | ||||||||||||||||||||
| Cash and cash equivalents | $ | 15.8 | $ | (2,002.4 | ) | (I) | $ | 1,991.5 | (I) | $ | 4.9 | |||||||||
| Accounts receivable, net | 213.8 | — | — | 213.8 | ||||||||||||||||
| Inventories, net | 213.3 | — | — | 213.3 | ||||||||||||||||
| Vendor rebates receivable | 8.8 | — | — | 8.8 | ||||||||||||||||
| Income tax receivable | 19.7 | — | — | 19.7 | ||||||||||||||||
| Prepaid expenses and other current assets | 16.8 | — | — | 16.8 | ||||||||||||||||
| Total current assets | 488.2 | (2,002.4 | ) | 1,991.5 | 477.3 | |||||||||||||||
| Property and equipment, net | 134.7 | — | — | 134.7 | ||||||||||||||||
| Goodwill | 249.7 | 887.2 | (II) | — | 1,136.9 | |||||||||||||||
| Intangibles, net | 105.3 | 764.7 | (III) | — | 870.0 | |||||||||||||||
| Operating lease right-of-use assets, net | 159.5 | 10.6 | (IV) | — | 170.1 | |||||||||||||||
| Deferred income tax assets, net | 9.2 | (9.2 | ) | (V) | — | — | ||||||||||||||
| Other assets, net | 4.2 | — | — | 4.2 | ||||||||||||||||
| Total assets | $ | 1,150.8 | $ | (349.1 | ) | $ | 1,991.5 | $ | 2,793.2 | |||||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||||||||
| Current liabilities: | ||||||||||||||||||||
| Accounts payable | $ | 132.5 | $ | — | $ | — | $ | 132.5 | ||||||||||||
| Accrued expenses | 51.7 | 5.1 | (VI) | (1.8 | ) | (I) | 55.0 | |||||||||||||
| Current portion of long-term debt | 16.8 | (16.8 | ) | (VII) | — | — | ||||||||||||||
| Current portion of operating lease liabilities | 26.9 | — | — | 26.9 | ||||||||||||||||
| Current portion of finance lease liabilities | 1.9 | — | — | 1.9 | ||||||||||||||||
| Total current liabilities | 229.8 | (11.7 | ) | (1.8 | ) | 216.3 | ||||||||||||||
| Borrowings under revolving lines of credit | 15.0 | (15.0 | ) | (VII) | — | — | ||||||||||||||
| Long-term debt, net | 1,455.3 | (1,455.3 | ) | (VII) | — | — | ||||||||||||||
| Deferred income tax liabilities, net | — | 182.8 | (V) | — | 182.8 | |||||||||||||||
| Operating lease liabilities | 143.2 | — | — | 143.2 | ||||||||||||||||
| Finance lease liabilities | 7.4 | — | — | 7.4 | ||||||||||||||||
| Other long-term liabilities | 0.1 | — | — | 0.1 | ||||||||||||||||
| Total liabilities | 1,850.8 | (1,299.2 | ) | (1.8 | ) | 549.8 | ||||||||||||||
| Commitments and contingencies (Note 14) | ||||||||||||||||||||
| Series C Preferred Stock | — | — | 1,961.8 | (VIII) | 1,961.8 | |||||||||||||||
| Total Mezzanine Equity | — | — | 1,961.8 | 1,961.8 | ||||||||||||||||
| Stockholders' equity: | ||||||||||||||||||||
| Common stock | — | — | — | — | ||||||||||||||||
| Additional paid-in capital | 188.3 | 67.2 | (VIII) | 31.5 | (VIII) | 287.0 | ||||||||||||||
| Retained earnings (accumulated deficit) | (888.3 | ) | 882.9 | (VIII) | — | (5.4 | ) | |||||||||||||
| Accumulated other comprehensive income (loss) | — | — | — | — | ||||||||||||||||
| Total Stockholders' equity | (700.0 | ) | 950.1 | 31.5 | 281.6 | |||||||||||||||
| Total liabilities, Mezzanine equity, and Stockholders’ equity | $ | 1,150.8 | $ | (349.1 | ) | $ | 1,991.5 | $ | 2,793.2 | |||||||||||
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Refer to the table below for the adjustments related to the Kodiak Acquisition for the year ended December 31, 2025:
| Kodiak Building Partners Inc. Historical (Reclassified - See Note 3 (b) | Kodiak Acquisition Transaction Accounting Adjustments | Note 3 (f) | Kodiak Acquisition Financing Accounting Adjustments | Note 3 (f) | Kodiak Acquisition Pro Forma | |||||||||||||||
| Net sales | $ | 2,337.8 | $ | — | $ | — | $ | 2,337.8 | ||||||||||||
| Cost of products sold | 1,664.4 | — | — | 1,664.4 | ||||||||||||||||
| Gross profit | 673.4 | — | — | 673.4 | ||||||||||||||||
| Operating expense: | ||||||||||||||||||||
| Selling, general and administrative | 483.1 | 5.4 | (I) | — | 488.5 | |||||||||||||||
| Depreciation | 37.4 | — | — | 37.4 | ||||||||||||||||
| Amortization | 29.1 | 64.9 | (II) | — | 94.0 | |||||||||||||||
| Total operating expense | 549.6 | 70.3 | — | 619.9 | ||||||||||||||||
| Income (loss) from operations | 123.8 | (70.3 | ) | — | 53.5 | |||||||||||||||
| Interest income (expense), net | (126.5 | ) | 126.5 | (III) | — | — | ||||||||||||||
| Other income (expense), net | 4.3 | — | — | 4.3 | ||||||||||||||||
| Income (loss) before provision for income taxes | 1.6 | 56.2 | — | 57.8 | ||||||||||||||||
| Provision for (benefit from) income taxes | 2.2 | 14.6 | (IV) | — | 16.8 | |||||||||||||||
| Net income (loss) | $ | (0.6 | ) | $ | 41.6 | $ | — | $ | 41.0 | |||||||||||
| Reconciliation of net income (loss) to net income (loss) attributable to common stockholders: | ||||||||||||||||||||
| Net income (loss) | $ | (0.6 | ) | $ | 41.6 | $ | — | $ | 41.0 | |||||||||||
| Dividends on Series C Preferred Stock | — | — | (95.0 | ) | (V) | (95.0 | ) | |||||||||||||
| Net income (loss) attributable to common stockholders | $ | (0.6 | ) | $ | 41.6 | $ | (95.0 | ) | $ | (54.0 | ) | |||||||||
13
Refer to the table below for the adjustments related to the Kodiak Acquisition for the three months ended March 31, 2026:
| Kodiak Building Partners Inc. Historical (Reclassified - See Note 3 (c)) | Kodiak Acquisition Transaction Accounting Adjustments | Note 3 (f) | Kodiak Acquisition Financing Accounting Adjustments | Note 3 (f) | Kodiak Acquisition Pro Forma | |||||||||||||||
| Net sales | $ | 531.4 | $ | — | $ | — | $ | 531.4 | ||||||||||||
| Cost of products sold | 385.3 | — | — | 385.3 | ||||||||||||||||
| Gross profit | 146.1 | — | — | 146.1 | ||||||||||||||||
| Operating expense: | ||||||||||||||||||||
| Selling, general and administrative | 117.9 | — | (I) | — | 117.9 | |||||||||||||||
| Depreciation | 9.5 | — | — | 9.5 | ||||||||||||||||
| Amortization | 6.2 | 17.3 | (II) | — | 23.5 | |||||||||||||||
| Total operating expense | 133.6 | 17.3 | — | 150.9 | ||||||||||||||||
| Income (loss) from operations | 12.5 | (17.3 | ) | — | (4.8 | ) | ||||||||||||||
| Interest income (expense), net | (28.7 | ) | 28.7 | (III) | — | — | ||||||||||||||
| Other income (expense), net | 0.9 | — | — | 0.9 | ||||||||||||||||
| Income (loss) before provision for income taxes | (15.3 | ) | 11.4 | — | (3.9 | ) | ||||||||||||||
| Provision for (benefit from) income taxes | (4.1 | ) | 3.0 | (IV) | — | (1.1 | ) | |||||||||||||
| Net income (loss) | $ | (11.2 | ) | $ | 8.4 | $ | — | $ | (2.8 | ) | ||||||||||
| Reconciliation of net income (loss) to net income (loss) attributable to common stockholders: | ||||||||||||||||||||
| Net income (loss) | $ | (11.2 | ) | $ | 8.4 | $ | — | $ | (2.8 | ) | ||||||||||
| Dividends on Series C Preferred Stock | — | — | (23.8 | ) | (V) | (23.8 | ) | |||||||||||||
| Net income (loss) attributable to common stockholders | $ | (11.2 | ) | $ | 8.4 | $ | (23.8 | ) | $ | (26.6 | ) | |||||||||
Following the Kodiak Acquisition, QXO is retaining its existing financial statement line-item classification. As such, certain reclassification adjustments have been made to conform Kodiak’s historical financial statement presentation to QXO’s financial statement presentation.
14
| a) | Refer to the table below for a summary of adjustments made to Kodiak’s historical condensed consolidated balance sheet as of March 31, 2026 to conform with QXO: |
Kodiak Historical Condensed Consolidated Balance Sheet | QXO Condensed Balance Sheet Line Items | Kodiak as of March 31, 2026 | Reclassification | Kodiak Reclassified as of March 31, 2026 | ||||||||||
| Accrued expenses | Accrued expenses | $ | 69.9 | $ | (18.2 | ) | (a), (b), (c) | $ | 51.7 | |||||
| Customer deposits | 7.8 | (7.8 | ) | (a) | — | |||||||||
| Income taxes payable | 0.9 | (0.9 | ) | (c) | — | |||||||||
| Current portion of long-term debt | Current portion of long-term debt | 18.7 | (1.9 | ) | (d) | 16.8 | ||||||||
| Current portion of finance lease liabilities | — | 1.9 | (d) | 1.9 | ||||||||||
| Long-term debt | Long-term debt, net | 1,462.7 | (7.4 | ) | (e) | 1,455.3 | ||||||||
| Current portion of operating lease liabilities | — | 26.9 | (b) | 26.9 | ||||||||||
| Finance lease liabilities | — | 7.4 | (e) | 7.4 | ||||||||||
| Other long-term liabilities | — | 0.1 | (f) | 0.1 | ||||||||||
| Contingent consideration | 0.1 | (0.1 | ) | (f) | — | |||||||||
| a) | Reclassification of $7.8 million of Customer deposits to Accrued expenses. |
| b) | Reclassification of $26.9 million of Accrued expenses to Current portion of operating lease liabilities. |
| c) | Reclassification of $0.9 million of Income taxes payable to Accrued expenses. |
| d) | Reclassification of $1.9 million of Current portion of long-term debt to Current portion of finance lease liabilities. |
| e) | Reclassification of $7.4 million of Long-term debt, net to Finance lease liabilities. |
| f) | Reclassification of $0.1 million of Contingent consideration to Other long-term liabilities. |
| b) | Refer to the table below for a summary of adjustments made to present Kodiak’s consolidated statement of operations for the year ended December 31, 2025 to conform with QXO: |
Kodiak Historical Consolidated Statements of | QXO, Inc. Consolidated Statements | Kodiak for Year Ended | Reclassification | Kodiak Reclassified for the year ended | ||||||||||
| Salaries and wages | $ | 263.4 | $ | (263.4 | ) | (a) | $ | — | ||||||
| Selling, general, and administrative expenses | Selling, general and administrative | 106.5 | 376.6 | (a), (b), (c), (d), (e), (f) | 483.1 | |||||||||
| Taxes and benefits | 62.5 | (62.5 | ) | (b) | — | |||||||||
| Rent | 39.5 | (39.5 | ) | (c) | — | |||||||||
| Change in fair value of contingent consideration | (1.5 | ) | 1.5 | (d) | — | |||||||||
| Strategic development expenses | 13.5 | (13.5 | ) | (e) | — | |||||||||
| Gain on disposal of assets | (0.8 | ) | 0.8 | (f) | — | |||||||||
| Depreciation and amortization | 66.5 | (66.5 | ) | (g) | — | |||||||||
| Depreciation | — | 37.4 | (g) | 37.4 | ||||||||||
| Amortization | — | 29.1 | (g) | 29.1 | ||||||||||
| a) | Reclassification of $263.4 million of Salaries and wages to Selling, general and administrative. |
| b) | Reclassification of $62.5 million of Taxes and benefits to Selling, general and administrative. |
| c) | Reclassification of $39.5 million of Rent to Selling, general and administrative. |
| d) | Reclassification of $1.5 million of Change in fair value of contingent consideration to Selling, general and administrative. |
| e) | Reclassification of $13.5 million of Strategic development expenses to Selling, general and administrative. |
| f) | Reclassification of $0.8 million of Gain on disposal of assets to Selling, general and administrative. |
| g) | Reclassification of $37.4 million of Depreciation and amortization expenses to Depreciation, and reclassification of $29.1 million of Depreciation and amortization expenses to Amortization. |
15
| c) | Refer to the table below for a summary of adjustments made to present Kodiak’s condensed consolidated statement of operations for the three months ended March 31, 2026 to conform with QXO: |
Kodiak Historical Condensed Consolidated Statements of | QXO, Inc. Condensed Consolidated Statements | Kodiak for the Three Months Ended March 31, 2026 | Reclassification | Kodiak Reclassified for the Three Months Ended March 31, 2026 | ||||||||||
| Salaries and wages | $ | 62.3 | $ | (62.3 | ) | (a) | $ | — | ||||||
| Selling, general, and administrative expenses | Selling, general and administrative | 28.7 | 89.2 | (a), (b), (c), (d), (e), (f) | 117.9 | |||||||||
| Taxes and benefits | 14.5 | (14.5 | ) | (b) | — | |||||||||
| Rent | 10.2 | (10.2 | ) | (c) | — | |||||||||
| Strategic development expenses | 2.3 | (2.3 | ) | (d) | — | |||||||||
| Gain on disposal of assets | (0.1 | ) | 0.1 | (e) | — | |||||||||
| Depreciation and amortization | 15.7 | (15.7 | ) | (f) | — | |||||||||
| Depreciation | — | 9.5 | (f) | 9.5 | ||||||||||
| Amortization | — | 6.2 | (f) | 6.2 | ||||||||||
| a) | Reclassification of $62.3 million of Salaries and wages to Selling, general and administrative. |
| b) | Reclassification of $14.5 million of Taxes and benefits to Selling, general and administrative. |
| c) | Reclassification of $10.2 million of Rent to Selling, general and administrative. |
| d) | Reclassification of $2.3 million of Strategic development expenses to Selling, general and administrative. |
| e) | Reclassification of $0.1 million of Gain on disposal of assets to Selling, general and administrative. |
| f) | Reclassification of $9.5 million of Depreciation and amortization expenses to Depreciation, and reclassification of $6.2 million of Depreciation and amortization expenses to Amortization. |
| d) | Kodiak preliminary purchase price allocation |
The following table summarizes the preliminary aggregate acquisition consideration for the Kodiak Acquisition as of March 31, 2026:
| Amount | ||||
| Cash purchase price (i) | $ | 2,002.4 | ||
| QXO consideration shares issued (ii) | 255.5 | |||
| Preliminary aggregate acquisition consideration (iii) | $ | 2,257.9 | ||
| (i) | The cash paid by QXO includes the settlement of Kodiak’s term loan, borrowings under revolving lines of credit and notes payable of $1,487.2 million, $15.0 million and $0.4 million, respectively, and accrued interest expense of $0.3 million as of March 31, 2026. The remainder of the $2.0 billion cash purchase price represents cash paid to Kodiak shareholders. |
| (ii) | The QXO share consideration component of the preliminary aggregate acquisition consideration is based on 13,157,895 shares of outstanding QXO common stock issued to Kodiak at a per share price of $19.42, which was based on the QXO share price as of the Kodiak Closing Date. |
| (iii) | No impact is reflected for customary working capital adjustments herein, as such amounts are not estimable at this time. |
Preliminary Aggregate Acquisition Consideration Allocation for the Kodiak Acquisition
The accounting for the Kodiak Acquisition, including the preliminary aggregate acquisition consideration, is based on provisional amounts, and the associated purchase accounting is not final. The preliminary allocation of the purchase price to the acquired assets and assumed liabilities was based upon a preliminary estimate of fair values. For the preliminary estimate of fair values of assets acquired and liabilities assumed of Kodiak, QXO used publicly available benchmarking information as well as a variety of other assumptions, including market participant assumptions. QXO expects to use widely accepted income-based, market-based, or cost-based valuation approaches upon finalization of purchase accounting for the Kodiak Acquisition. Actual results may differ materially from the assumptions within the accompanying unaudited pro forma combined financial information. The unaudited pro forma adjustments are based upon available information and certain assumptions that QXO believes are reasonable under the circumstances. The purchase price adjustments relating to the Kodiak and QXO unaudited pro forma combined financial information are preliminary and subject to change, as additional information becomes available and as additional analyses are performed. For purposes of the unaudited pro forma combined financial information, adjustments were recorded primarily to Intangibles, Goodwill and Deferred income tax liabilities. QXO will continue to analyze the purchase price allocation in the future with regard to items such as favorable/unfavorable leases and property and equipment, among others. Additionally, in connection with the Kodiak Acquisition, QXO has agreed to provide incremental consideration to the sellers of Kodiak if certain criteria are met with regard to the tax deductibility of items such as net operating loss carryforwards and other potential tax deductions if recognized by QXO during the first two taxable years following the closing. Management is unable to estimate the amount of such potential future tax deductions at this time and, as such, no adjustment has been made to the unaudited pro forma combined financial information for this item.
16
The following table summarized the preliminary aggregate acquisition consideration allocation, as if the Kodiak Acquisition had been completed on March 31, 2026.
| Preliminary Allocation | ||||
| Assets: | ||||
| Cash and cash equivalents | $ | 15.8 | ||
| Accounts receivable | 213.8 | |||
| Inventories | 213.3 | |||
| Vendor rebates receivable | 8.8 | |||
| Income tax receivable | 19.7 | |||
| Prepaid expenses and other current assets | 16.8 | |||
| Property and equipment | 134.7 | |||
| Goodwill (i) | 1,136.9 | |||
| Intangibles (ii) | 870.0 | |||
| Operating lease right-of-use assets | 170.1 | |||
| Other assets | 4.2 | |||
| Liabilities: | ||||
| Accounts payable | (132.5 | ) | ||
| Accrued expenses | (51.4 | ) | ||
| Current portion of operating lease liabilities | (26.9 | ) | ||
| Current portion of finance lease liabilities | (1.9 | ) | ||
| Deferred income tax liabilities (iii) | (182.8 | ) | ||
| Operating lease liabilities | (143.2 | ) | ||
| Finance lease liabilities | (7.4 | ) | ||
| Other long-term liabilities | (0.1 | ) | ||
| Preliminary aggregate acquisition consideration | $ | 2,257.9 | ||
| (i) | Goodwill represents excess of the estimated aggregate acquisition consideration over the preliminary fair value of the underlying Kodiak assets acquired and liabilities assumed. | |
| (ii) | Preliminary identifiable intangible assets in the unaudited pro forma combined financial information consist of the following: |
| Preliminary Fair Value | Estimated
Useful | |||||
| Preliminary fair value of intangible assets acquired: | ||||||
| Trade names | $ | 70.0 | 5 | |||
| Customer relationships | $ | 800.0 | 10 | |||
A 10% change in the valuation of intangible assets would cause a corresponding increase or decrease in amortization expense of approximately $9.4 million for the year ended December 31, 2025 and $2.4 million for the three months ended March 31, 2026. Pro forma amortization is preliminary and based on the use of straight-line amortization. The amount of amortization following the Kodiak Acquisition may differ significantly between periods based upon the final value assigned and amortization methodology used for each identifiable intangible asset.
| (iii) | Deferred tax liabilities were derived based on incremental differences in the book and tax basis created from the preliminary purchase allocation. The deferred tax liability was derived using a statutory tax rate of 26.0%. |
| (e) | Adjustments included in the Kodiak Acquisition Transaction Accounting Adjustments column and the Kodiak Acquisition Financing Transaction Accounting Adjustments column in the accompanying unaudited pro forma combined condensed balance sheet as of March 31, 2026 are as follows: |
17
| (I) | Reflects the adjustment to Cash and cash equivalents. |
As of March 31, 2026 | ||||
| Pro forma Kodiak Acquisition transaction accounting adjustments: | ||||
| Cash purchase consideration for the Kodiak Acquisition | $ | (2,002.4 | ) | |
| Pro forma Kodiak Acquisition transaction accounting adjustment to Cash and cash equivalents | $ | (2,002.4 | ) | |
| Cash proceeds from Kodiak Series C Preferred Stock Issuance | $ | 2,000.0 | ||
| Commitment fees remaining to be paid for the Kodiak Series C Preferred Stock Issuance (i) | (1.8 | ) | ||
| Issuance fees from the Kodiak Series C Preferred Stock Issuance | (6.7 | ) | ||
| Pro forma Kodiak Acquisition financing transaction accounting adjustment to Cash and cash equivalents | $ | 1,991.5 | ||
| (i) | This reflects a corresponding decrease to accrued expenses for the portion of commitment fees for the Kodiak Series C Preferred Stock Issuance accrued as of March 31, 2026. |
| (II) | Preliminary goodwill adjustment which represents the elimination of historical goodwill and excess of the aggregate acquisition consideration over the preliminary fair value of the underlying assets acquired and liabilities assumed. |
As of March 31, 2026 | ||||
| Pro forma Kodiak Acquisition transaction accounting adjustments: | ||||
| Elimination of Kodiak historical goodwill | $ | (249.7 | ) | |
| Goodwill per purchase price allocation (Note 3 (d)) | 1,136.9 | |||
| Net pro forma Kodiak Acquisition transaction accounting adjustment to Goodwill | $ | 887.2 | ||
| (III) | Reflects the preliminary purchase accounting adjustment for estimated intangibles based on the acquisition method of accounting. |
As of March 31, 2026 | ||||
| Pro forma Kodiak Acquisition transaction accounting adjustments: | ||||
| Elimination of Kodiak historical intangible assets | $ | (105.3 | ) | |
| Preliminary fair value of acquired intangibles (Note 3 (d)) | 870.0 | |||
| Net pro forma Kodiak Acquisition transaction accounting adjustment to Intangibles, net | $ | 764.7 | ||
| (IV) | Reflects the preliminary purchase accounting adjustment to remeasure the operating lease right-of-use asset. |
As of March 31, 2026 | ||||
| Pro forma Kodiak Acquisition transaction accounting adjustments: | ||||
| Kodiak historical operating lease right-of-use assets | $ | (159.5 | ) | |
| Kodiak historical operating lease liabilities | 170.1 | |||
| Net pro forma Kodiak Acquisition transaction accounting adjustment to Operating lease right-of-use assets, net | $ | 10.6 | ||
| (V) | Represents the adjustment to deferred tax liability of $182.8 million, net of a historical Kodiak deferred tax asset that was re-valued in the preliminary acquisition accounting for the Kodiak Acquisition, associated with the incremental differences in the book and tax basis created from the preliminary purchase price allocation, primarily resulting from the preliminary fair value of intangible assets. These adjustments were based on the applicable statutory tax rate of 26.0% with the respective estimated purchase price allocation. The effective tax rate of the combined company could be significantly different (either higher or lower) depending on post-acquisition activities, including cash needs, the geographical mix of income and changes in tax law. Because the tax rates used for the unaudited pro forma combined financial information are estimated, the rate will likely vary from the actual effective rate in periods subsequent to completion of the Kodiak Acquisition. This determination is preliminary and subject to change based upon the final determination of the fair value of the acquired assets and assumed liabilities. |
18
| (VI) | Reflects the write-off of Kodiak’s accrued interest as of March 31, 2026 and the accrual of estimated transaction costs incurred by QXO subsequent to March 31, 2026 to consummate the Kodiak Acquisition: |
As of March 31, 2026 | ||||
| Pro forma Kodiak Acquisition transaction accounting adjustments: | ||||
| Write-off of Kodiak historical accrued interest | $ | (0.3 | ) | |
| Estimated transaction costs incurred by QXO related to Kodiak Acquisition | 5.4 | |||
| Net pro forma Kodiak Acquisition transaction accounting adjustment to Accrued expenses | $ | 5.1 | ||
| (VII) | Reflects the impact of the settlement of Kodiak’s historical debt balances as of March 31, 2026: |
| Current portion of long-term debt | Long term debt | Borrowings under revolving lines of credit | Total | ||||||||||
| Pro forma Kodiak Acquisition transaction accounting adjustments: | |||||||||||||
| Settlement of historical Kodiak term loan | $ | (16.4 | ) | $ | (1,470.4 | ) | $ | — | $ | (1,486.8 | ) | ||
| Settlement of historical Kodiak borrowings under revolving lines of credit | — | — | (15.0 | ) | (15.0 | ) | |||||||
| Settlement of historical Kodiak notes payable | (0.4 | ) | — | — | (0.4 | ) | |||||||
| Removal of unamortized debt discount/premium and debt issuance costs | — | 15.1 | — | 15.1 | |||||||||
| Net pro forma Kodiak Acquisition transaction accounting adjustments to debt | $ | (16.8 | ) | $ | (1,455.3 | ) | $ | (15.0 | ) | $ | (1,487.1 | ) | |
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| (VIII) | Reflects adjustments to Mezzanine equity and Stockholders’ equity as of March 31, 2026: |
| Mezzanine equity | Common stock |
Preferred | Additional paid-in capital | Accumulated Deficit | Accumulated other comprehensive loss | |||||||||||||||
| Pro forma Kodiak Acquisition transaction accounting adjustments: | ||||||||||||||||||||
| Elimination of Kodiak’s historical equity | $ | — | $ | — | $ | — | $ | (188.3 | ) | $ | 888.3 | $ | — | |||||||
| QXO transaction costs (i) | — | — | — | — | (5.4 | ) | — | |||||||||||||
| Merger consideration | — | — | — | 255.5 | — | — | ||||||||||||||
| Net pro forma Kodiak Acquisition transaction accounting adjustments to stockholders’ equity | $ | — | $ | — | $ | — | $ | 67.2 | $ | 882.9 | $ | — | ||||||||
| Pro forma Kodiak Acquisition financing transaction accounting adjustments: | ||||||||||||||||||||
| Kodiak Series C Preferred Stock Issuance (ii) | $ | 2,000.0 | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||
| Series C Preferred Stock commitment fees (iii) | (31.5 | ) | — | — | 31.5 | — | — | |||||||||||||
| Kodiak Series C Preferred Stock issuance fees (iv) | (6.7 | ) | — | — | — | — | — | |||||||||||||
| Net pro forma Kodiak Acquisition financing transaction accounting adjustments to mezzanine equity and stockholders’ equity | $ | 1,961.8 | $ | — | $ | — | $ | 31.5 | $ | — | $ | — | ||||||||
| (i) | These costs consist of estimated financial advisory, legal advisory, accounting and consulting costs of QXO expected to be incurred subsequent to March 31, 2026. For the three months ended March 31, 2026, there were $8.1 million of transaction costs related to the Kodiak Acquisition. |
| (ii) | For purposes of the unaudited pro forma combined financial information, management assumed that the fair value of the Series C Preferred Stock issued in the Kodiak Series C Preferred Stock Issuance equals the gross cash proceeds of $2.0 billion. |
| (iii) | The $31.5 million adjustment represents a reclassification from additional paid-in capital to mezzanine equity to present the pro rata portion of fees paid prior to March 31, 2026 for the commitment to issue the Series C Preferred Stock to investors upon a Qualifying Acquisition. |
| (iv) | The $6.7 million adjustment represents fees incurred in connection with the Kodiak Series C Preferred Stock Issuance, which are recorded as a reduction of mezzanine equity. |
| (f) | Adjustments included in the Kodiak Acquisition Transaction Accounting Adjustments column and the Kodiak Acquisition Financing Transaction Accounting Adjustments column in the accompanying unaudited pro forma combined statements of operations for the fiscal year ended December 31, 2025 and for the three months ended March 31, 2026 are as follows: |
| (I) | Reflects the adjustments to Selling, general and administrative expenses: |
For the Year Ended December 31, 2025 | For the Three Months Ended March 31, 2026 | |||||||
| Pro forma Kodiak Acquisition transaction accounting adjustments: | ||||||||
| Transaction costs incurred by QXO related to the Kodiak Acquisition | $ | 5.4 | $ | — | ||||
| Net pro forma Kodiak Acquisition transaction accounting adjustment to Selling, general and administrative expenses | $ | 5.4 | $ | — | ||||
| (II) | Reflects the adjustments to Amortization including the amortization of the estimated fair value of intangibles: |
For the Year Ended December 31, 2025 | For the Three Months Ended March 31, 2026 | |||||||
| Pro forma Kodiak Acquisition transaction accounting adjustments: | ||||||||
| Removal of Kodiak's historical amortization of intangible assets | $ | (29.1 | ) | $ | (6.2 | ) | ||
| Pro forma annual amortization of intangible assets | 94.0 | 23.5 | ||||||
| Net pro forma Kodiak Acquisition transaction accounting adjustment to Amortization | $ | 64.9 | $ | 17.3 | ||||
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| (III) | Reflects the adjustments to Interest income (expense), net: |
For the Year Ended December 31, 2025 | For the Three Months Ended March 31, 2026 | |||||||
| Pro forma Kodiak Acquisition transaction accounting adjustments: | ||||||||
| Removal of Kodiak’s historical interest expense | $ | 126.5 | $ | 28.7 | ||||
| Net pro forma Kodiak Acquisition transaction accounting adjustment to Interest income (expense), net | $ | 126.5 | $ | 28.7 | ||||
| (IV) | To record the income tax impact of the pro forma adjustments utilizing a statutory tax rate of 26.0% for the year ended December 31, 2025 and for the three months ended March 31, 2026. The effective tax rate of the combined company could be significantly different (either higher or lower) depending on post-acquisition activities, including cash needs, the geographical mix of income and changes in tax law. Because the tax rates used for the pro forma financial information are estimated, the rate will likely vary from the actual effective rate in periods subsequent to completion of the Kodiak Acquisition. This determination is preliminary and subject to change based upon the final determination of the fair value of the acquired assets and assumed liabilities. |
| (V) | As discussed above, the impact of the Kodiak Series C Preferred Stock Issuance has been adjusted within the unaudited pro forma combined statements of operations as if it occurred on January 1, 2025 in the calculation of Net income (loss) attributable to common stockholders. To reflect the terms of the Kodiak Series C Preferred Stock Issuance for the entirety of 2025 and the three months ended March 31, 2026, Net income (loss) attributable to common stockholders was adjusted by $95.0 million and $23.8 million, respectively, to reflect an assumed cash payment based on the 4.75% dividend rate on the Series C Preferred Stock. Note that QXO has the option to pay the dividend in cash, in kind, or in the form of QXO common stock. For purposes of the unaudited pro forma financial information, QXO assumed that the dividend was paid in cash. Refer to Note 2 - Adjustments for the Beacon Acquisition and May 2025 Equity Financing for further information regarding the adjustment to Net income (loss) attributable to common stockholders related to the May 2025 Equity Financing. |
Note 4 – TopBuild Reclassification Adjustments
Following the TopBuild Acquisition, QXO is retaining its existing financial statement line-item classification. As such, certain reclassification adjustments have been made to conform TopBuild’s historical financial statement presentation to QXO’s financial statement presentation.
| (a) | Refer to the table below for a summary of adjustments made to TopBuild’s historical condensed consolidated balance sheet as of March 31, 2026 to conform with QXO: |
| TopBuild Historical
Condensed Consolidated Balance Sheet Line Items | QXO, Inc. Condensed Consolidated Balance Sheet Line Items | TopBuild as of March 31, 2026 |
Reclassification | TopBuild
| |||||||||||
| Long-term portion of insurance reserves | $ | 58.6 | $ | (58.6 | ) | (a) | $ | — | |||||||
| Other long-term liabilities | 1.8 | 58.6 | (a) | 60.4 | |||||||||||
| a) | Reclassification of $58.6 million of Long-term portion of insurance reserves to Other long-term liabilities. |
| (b) | Refer to the table below for a summary of adjustments made to present TopBuild’s historical consolidated statement of operations for the year ended December 31, 2025 to conform with QXO: |
| TopBuild Historical Consolidated Statements of Operations Line Items | QXO, Inc. Consolidated Statements of Operations Line Items | TopBuild for the Year Ended | Reclassification | TopBuild | ||||||||||||||
| Selling, general, and administrative expenses | Selling, general and administrative | $ | 777.0 | $ | (107.4 | ) | $ | 669.6 | ||||||||||
| Depreciation | — | 12.1 | 12.1 | |||||||||||||||
| Amortization | — | 95.3 | 95.3 | |||||||||||||||
| Interest expense | Interest income (expense), net | (103.8 | ) | 15.2 | (a) | (88.6 | ) | |||||||||||
| Other, net | Other income (expense), net | 15.4 | (15.2 | ) | (a) | 0.2 | ||||||||||||
| a) | Reclassification of $15.2 million of interest income recorded in Other, net to Interest income (expense), net. |
| (c) | Refer to the table below for a summary of adjustments made to present TopBuild’s historical condensed consolidated statement of operations for the three months ended March 31, 2026 to conform with QXO: |
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| TopBuild Historical Condensed Consolidated Statements of Operations Line Items | QXO, Inc. Condensed Consolidated Statements of Operations Line Items | TopBuild | Reclassification | TopBuild Reclassified | ||||||||||||||
| Selling, general, and administrative expenses | Selling, general and administrative | $ | 225.2 | $ | (39.8 | ) | $ | 185.4 | ||||||||||
| Depreciation | — | 3.9 | 3.9 | |||||||||||||||
| Amortization | — | 35.9 | 35.9 | |||||||||||||||
| Interest expense | Interest income (expense), net | (36.6 | ) | 1.2 | (a) | (35.4 | ) | |||||||||||
| Other, net | Other income (expense), net | 1.3 | (1.2 | ) | (a) | 0.1 | ||||||||||||
| a) | Reclassification of $1.2 million of interest income recorded in Other, net to Interest income (expense), net. |
Note 5 – Preliminary purchase price allocation for TopBuild Acquisition
Preliminary Aggregate Acquisition Consideration
The following table summarizes the preliminary aggregate acquisition consideration for the TopBuild Acquisition as of March 31, 2026:
| Amount | ||||
| Estimated cash paid for outstanding TopBuild common stock (i) | $ | 6,368.1 | ||
| Estimated QXO consideration shares issued (ii) | 5,740.9 | |||
| Estimated converted equity awards attributable to pre-combination service (iii) | 26.2 | |||
| Estimated repayment of TopBuild debt, including accrued interest and breakage fees (iv) | 2,898.4 | |||
| Preliminary estimated aggregate acquisition consideration (v) | $ | 15,033.6 | ||
| (i) | The cash component of the preliminary estimated aggregate consideration is based on 12.6 million shares of outstanding common stock of TopBuild being exchanged as of May 11, 2026 and the $505.00 per share TopBuild Cash Consideration. The 12.6 million shares represents 45% of the total outstanding shares of common stock of TopBuild of 28.0 million. |
| (ii) | The TopBuild Stock Consideration component of the preliminary aggregate acquisition consideration is based on 311.3 million shares of outstanding QXO common stock issued to TopBuild stockholders at a per share price of $18.44, which was based on the QXO share price as of May 11, 2026. The 311.3 million shares represents 55% of the total outstanding common stock of TopBuild of 28.0 million multiplied by the TopBuild Stock Consideration exchange ratio. |
| (iii) | As discussed in “Description of the TopBuild Acquisition”, certain equity awards of TopBuild will be replaced by QXO’s equity awards with similar terms (and, with respect to each TopBuild PSU, with the performance-based vesting condition deemed satisfied at target and being converted into an award of QXO restricted stock units for which vesting is based solely on service-based conditions). This amount represents the estimated consideration for replacement of TopBuild’s equity awards. A portion of the fair value of QXO’s equity awards issued represents consideration transferred, while the remaining portion represents compensation expense based on the vesting terms of the converted awards. This includes estimated cash paid by QXO of $1.8 million to settle TopBuild RSUs for non-employee members of the TopBuild Board of Directors (the “TopBuild Board”), which are accelerated in full, cancelled and paid in either TopBuild Cash Consideration or TopBuild Stock Consideration at the election of the holder. For the purposes of the unaudited pro forma financial information, we have assumed that all non-employee members of the TopBuild Board have elected to receive the TopBuild Cash Consideration. This also includes an estimated $16.5 million of consideration for TopBuild Options that were not yet exercised and will be cancelled and converted into the right to receive shares of QXO common stock, determined in accordance with the terms of the TopBuild Merger Agreement. The estimated value is based on the QXO share price of $18.44 per share. The final value will be impacted by changes in the price of QXO common stock and the number of TopBuild awards outstanding at the actual date of the closing of the TopBuild Acquisition. |
| (iv) | The estimated cash paid by QXO to repay TopBuild’s term loan and senior notes as of March 31, 2026 of $1,206.3 million and $1,650.0 million, respectively. Additionally, accrued interest expense of $25.6 million as of March 31, 2026 and an estimated breakage fee of $16.5 million is estimated to be paid for early repayment of TopBuild’s debt. The actual treatment of such debt may vary and a portion thereof could be assumed. |
| (v) | No impact is reflected for customary working capital adjustments herein, as such amounts are not estimable at this time. |
The preliminary estimated merger consideration for the TopBuild Acquisition could significantly differ from the amounts presented due to movements in the price of QXO common stock up to the closing date of the TopBuild Acquisition (the “TopBuild Closing Date”). A sensitivity analysis related to the fluctuation of the price of shares of QXO common stock was performed to assess the impact a hypothetical change of 15% on the closing price of the QXO common stock would have on the preliminary estimated merger consideration for the TopBuild Acquisition as of the assumed TopBuild Closing Date (in millions, other than share price):
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| Share price | Fair value of QXO common stock issued to TopBuild | ||||||||
| Share price considered | $ | 18.44 | $ | 5,740.9 | |||||
| 15% increase | $ | 21.21 | $ | 6,602.0 | |||||
| 15% decrease | $ | 15.67 | $ | 4,879.8 | |||||
Preliminary Aggregate Acquisition Consideration Allocation for the TopBuild Acquisition
The accounting for the TopBuild Acquisition, including the preliminary aggregate acquisition consideration, is based on provisional amounts, and the associated purchase accounting is not final. The preliminary allocation of the purchase price to the acquired assets and assumed liabilities was based upon a preliminary estimate of fair values. For the preliminary estimate of fair values of assets acquired and liabilities assumed of TopBuild, QXO used publicly available benchmarking information as well as a variety of other assumptions, including market participant assumptions. QXO expects to use widely accepted income-based, market-based, or cost-based valuation approaches upon finalization of purchase accounting for the TopBuild Acquisition. Actual results may differ materially from the assumptions within the accompanying unaudited pro forma combined financial information. The unaudited pro forma adjustments are based upon available information and certain assumptions that QXO believes are reasonable under the circumstances. The purchase price adjustments relating to TopBuild and QXO combined financial information are preliminary and subject to change, as additional information becomes available and as additional analyses are performed. For purposes of the unaudited pro forma combined financial information, adjustments were recorded primarily to property and equipment, intangibles, goodwill and deferred income tax liabilities. QXO will continue to analyze the purchase price allocation in the future with regard to items such as favorable/unfavorable leases and inventory, among others.
The following table summarized the preliminary aggregate acquisition consideration allocation, as if the acquisition had been completed on March 31, 2026:
| Preliminary Allocation | ||||
| Assets: | ||||
| Cash and cash equivalents | $ | 268.8 | ||
| Accounts receivable | 930.5 | |||
| Inventories | 515.2 | |||
| Prepaid expenses and other current assets | 42.2 | |||
| Property and equipment | 361.4 | |||
| Goodwill (i) | 9,046.4 | |||
| Intangibles (ii) | 6,330.0 | |||
| Operating lease right-of-use assets | 277.4 | |||
| Other assets | 10.6 | |||
| Liabilities: | ||||
| Accounts payable | (471.2 | ) | ||
| Accrued expenses | (226.4 | ) | ||
| Current portion of operating lease liabilities | (87.3 | ) | ||
| Current portion of finance lease liabilities | (6.6 | ) | ||
| Deferred income tax liabilities (iii) | (1,695.9 | ) | ||
| Operating lease liabilities | (190.1 | ) | ||
| Finance lease liabilities | (11.0 | ) | ||
| Other long-term liabilities | (60.4 | ) | ||
| Preliminary aggregate acquisition consideration | $ | 15,033.6 | ||
| (i) | Goodwill represents excess of the estimated aggregate acquisition consideration over the preliminary fair value of the underlying TopBuild assets acquired and liabilities assumed. |
| (ii) | Preliminary identifiable intangible assets in the unaudited pro forma combined financial information consist of the following: |
| Preliminary Fair Value | Estimated
Useful | |||||||
| Preliminary fair value of intangible assets acquired: | ||||||||
| Trade names and customer trademarks | $ | 230.0 | 5 | |||||
| Customer relationships | $ | 6,100.0 | 10 | |||||
A 10% change in the valuation of intangible assets would cause a corresponding increase or decrease in amortization expense of approximately $65.6 million and $16.4 million for the year ended December 31, 2025 and the three months ended March 31, 2026, respectively. Pro forma amortization is preliminary and based on the use of straight-line amortization. The amount of amortization following the TopBuild Acquisition may differ significantly between periods based upon the final value assigned and amortization methodology used for each identifiable intangible asset.
| (iii) | Deferred tax liabilities were derived based on incremental differences in the book and tax basis created from the preliminary purchase allocation. The deferred tax liability was derived using a statutory tax rate of 26.0%. |
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Note 6 – Adjustments to the Unaudited Pro Forma Combined Balance Sheet for the TopBuild Acquisition
Adjustments included in the TopBuild Acquisition Transaction Accounting Adjustments column and the TopBuild Acquisition Financing Transaction Accounting Adjustments column in the accompanying unaudited pro forma combined balance sheet as of March 31, 2026 are as follows:
| (a) | Reflects the adjustment to Cash and cash equivalents: |
As
of | ||||
| Pro forma TopBuild Acquisition transaction accounting and financing transaction adjustments: | ||||
| Estimated cash paid for outstanding TopBuild common stock (i) | $ | (6,368.1 | ) | |
| Estimated cash paid for TopBuild Board RSAs (ii) | (1.8 | ) | ||
| Estimated payment of TopBuild debt, including accrued interest and breakage fees (iii) | (2,898.4 | ) | ||
| Pro forma TopBuild Acquisition transaction accounting adjustment to Cash and cash equivalents | $ | (9,268.3 | ) | |
| Estimated cash proceeds from the TopBuild Series C Preferred Stock Issuance | $ | 1,000.0 | ||
| Estimated issuance fees from the TopBuild Series C Preferred Stock Issuance | (3.3 | ) | ||
| Estimated proceeds from the issuance of TopBuild Debt Financings | 6,000.0 | |||
| Estimated discount on New Term Loan Facility | (15.0 | ) | ||
| Estimated issuance fees from the TopBuild Debt Financings | (83.8 | ) | ||
| Pro forma TopBuild Acquisition financing transaction accounting adjustment to Cash and cash equivalents | $ | 6,897.9 | ||
| (i) | The cash component of the preliminary estimated aggregate acquisition consideration is based on 12.6 million shares of outstanding common stock of TopBuild being exchanged as of May 11, 2026 and the $505.00 per share TopBuild Cash Consideration. The 12.6 million shares represents 45% of the total outstanding shares of common stock of TopBuild of 28.0 million. |
| (ii) | The estimated cash paid by QXO to settle TopBuild RSAs for non-employee members of the TopBuild Board, which are accelerated in full, cancelled and assumed to be paid in cash for $505.00 per share. |
| (iii) | The estimated cash paid by QXO to repay TopBuild’s term loan and senior notes of $1,206.3 million, and $1,650.0 million, respectively. Additionally, accrued interest expense of $25.6 million and an estimated breakage fee of $16.5 million are estimated to be paid for early repayment of TopBuild’s debt. The actual treatment of such debt may vary and a portion thereof could be assumed. |
| (b) | Reflects the preliminary purchase accounting adjustment for estimated property and equipment based on the acquisition method of accounting: |
As of March 31, 2026 | ||||
| Pro forma TopBuild Acquisition transaction accounting adjustments: | ||||
| Elimination of TopBuild’s historical net book value of property and equipment, including finance leases | $ | (286.5 | ) | |
| Preliminary fair value of acquired property and equipment, including finance leases (Note 5) | 361.4 | |||
| Net pro forma TopBuild Acquisition transaction accounting adjustment to Property and equipment, net | $ | 74.9 | ||
| (c) | Preliminary goodwill adjustment, which represents the elimination of historical goodwill and excess of the aggregate acquisition consideration over the preliminary fair value of the underlying assets acquired and liabilities assumed: |
As of March 31, 2026 | ||||
| Pro forma TopBuild Acquisition transaction accounting adjustments: | ||||
| Elimination of TopBuild’s historical goodwill | $ | (3,070.9 | ) | |
| Preliminary goodwill per purchase price allocation (Note 5) | 9,046.4 | |||
| Net pro forma TopBuild Acquisition transaction accounting adjustment to Goodwill | $ | 5,975.5 | ||
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| (d) | Reflects the preliminary purchase accounting adjustment for estimated intangibles based on the acquisition method of accounting: |
As of March 31, 2026 | ||||
| Pro forma TopBuild Acquisition transaction accounting adjustments: | ||||
| Elimination of TopBuild’s historical intangible assets | $ | (1,325.0 | ) | |
| Preliminary fair value of acquired intangibles (Note 5) | 6,330.0 | |||
| Net pro forma TopBuild Acquisition transaction accounting adjustment to Intangibles, net | $ | 5,005.0 | ||
| (e) | Reflects the preliminary purchase accounting adjustment to remeasure the operating lease right-of-use asset: |
As of March 31, 2026 | ||||
| Pro forma TopBuild Acquisition transaction accounting adjustments: | ||||
| TopBuild historical operating lease right-of-use assets | $ | (261.5 | ) | |
| TopBuild historical operating lease liabilities | 277.4 | |||
| Net pro forma TopBuild Acquisition transaction accounting adjustment to Operating lease right-of-use assets, net | $ | 15.9 | ||
| (f) | Represents the adjustment to deferred income tax liabilities of $1,300.1 million, net of a historical TopBuild deferred tax liability that was re-valued in the preliminary acquisition accounting for the TopBuild Acquisition, associated with the incremental differences in the book and tax basis created from the preliminary purchase price allocation, primarily resulting from the preliminary fair value of intangible assets and property and equipment. These adjustments were based on the applicable statutory tax rate of 26.0% with the respective estimated purchase price allocation. The effective tax rate of the combined company could be significantly different (either higher or lower) depending on post-acquisition activities, including cash needs, the geographical mix of income and changes in tax law. Because the tax rates used for the unaudited pro forma combined financial information are estimated, the rate will likely vary from the actual effective rate in periods subsequent to completion of the TopBuild Acquisition. This determination is preliminary and subject to change based upon the final determination of the fair value of the acquired assets and assumed liabilities. |
| (g) | Reflects the removal of TopBuild’s accrued interest as of March 31, 2026 and the accrual of estimated transaction costs incurred by QXO subsequent to March 31, 2026 to consummate the TopBuild Acquisition: |
As of March 31, 2026 | ||||
| Pro forma TopBuild Acquisition transaction accounting adjustments: | ||||
| Removal of TopBuild historical accrued interest | $ | (25.6 | ) | |
| Estimated transaction costs incurred by QXO related to TopBuild Acquisition | 54.8 | |||
| Net pro forma TopBuild Acquisition transaction accounting adjustment to Accrued expenses | $ | 29.2 | ||
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| (h) | Reflects the impact of the repayment of TopBuild’s historical debt balances and impact of the TopBuild Debt Financings. The terms of the New Term Loan Facility, the Senior Unsecured Bridge Facilities and/or the Permanent Financing are subject to change and will be finalized prior to the closing of the TopBuild Acquisition, and the pro forma adjustments may change accordingly. QXO does not currently expect to draw on the Senior Unsecured Bridge Facilities and intends to replace the Senior Unsecured Bridge Facilities with the Permanent Financing; accordingly, the principal amounts, financing fees and related interest expense reflected herein are estimated to approximate the principal amount, fees and interest expense expected to be incurred in connection with the Permanent Financing. Actual results may differ materially from the assumptions within the accompanying unaudited pro forma combined financial information. The adjustment to current and long-term debt as of March 31, 2026, is comprised of the following items: |
| Current portion of long-term debt | Long term debt | Total | ||||||||||
| Pro forma TopBuild Acquisition transaction accounting adjustments: | ||||||||||||
| Repayment of historical TopBuild term loan | $ | (62.5 | ) | $ | (1,143.8 | ) | $ | (1,206.3 | ) | |||
| Repayment of historical TopBuild senior notes | — | (1,650.0 | ) | (1,650.0 | ) | |||||||
| Unamortized debt discount/premium and debt issuance costs | — | 23.9 | 23.9 | |||||||||
| Net pro forma TopBuild Acquisition transaction accounting adjustments to debt | $ | (62.5 | ) | $ | (2,769.9 | ) | $ | (2,832.4 | ) | |||
| Pro forma TopBuild Acquisition financing transaction accounting adjustments: | ||||||||||||
| New Term Loan Facility | $ | 30.0 | $ | 2,970.0 | $ | 3,000.0 | ||||||
| Estimated discount on New Term Loan Facility | — | (15.0 | ) | (15.0 | ) | |||||||
| Permanent Financing | — | 3,000.0 | 3,000.0 | |||||||||
| Debt issuance costs related to New Term Loan Facility | — | (40.0 | ) | (40.0 | ) | |||||||
| Debt issuance costs related to Permanent Financing | — | (43.8 | ) | (43.8 | ) | |||||||
| Net pro forma TopBuild Acquisition financing transaction accounting adjustments to current portion of long-term debt and long-term debt | $ | 30.0 | $ | 5,871.2 | $ | 5,901.2 | ||||||
| (i) | Reflects adjustments to Mezzanine equity and Stockholders’ equity as of March 31, 2026: |
| Mezzanine equity | Common stock |
Treasury | Additional paid-in capital | Retained earnings | Accumulated other comprehensive loss | |||||||||||||||||||
| Pro forma TopBuild Acquisition transaction accounting adjustments: | ||||||||||||||||||||||||
| Elimination of TopBuild’s historical equity | $ | — | $ | (0.4 | ) | $ | 2,142.2 | $ | (950.3 | ) | $ | (3,620.1 | ) | $ | 24.2 | |||||||||
| QXO transaction costs (i) | — | — | — | — | (54.8 | ) | — | |||||||||||||||||
| Merger consideration | — | — | — | 5,765.3 | — | — | ||||||||||||||||||
| Net pro forma TopBuild Acquisition transaction accounting adjustments to stockholders’ equity | $ | — | $ | (0.4 | ) | $ | 2,142.2 | $ | 4,815.0 | $ | (3,674.9 | ) | $ | 24.2 | ||||||||||
| Pro forma TopBuild Acquisition financing transaction accounting adjustments: | ||||||||||||||||||||||||
| TopBuild Series C Preferred Stock Issuance (ii) | $ | 1,000.0 | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
| Series C Preferred Stock commitment fees (iii) | (15.8 | ) | — | — | 15.8 | — | — | |||||||||||||||||
| TopBuild Series C Preferred Stock Issuance estimated issuance fees (iv) | (3.3 | ) | — | — | — | — | — | |||||||||||||||||
Net pro forma TopBuild Acquisition financing transaction accounting adjustments to mezzanine equity and stockholders’ equity | $ | 980.9 | $ | — | $ | — | $ | 15.8 | $ | — | $ | — | ||||||||||||
| (i) | These costs consist of estimated financial advisory, legal advisory, accounting and consulting costs of QXO expected to be incurred subsequent to March 31, 2026. |
| (ii) | For purposes of the unaudited pro forma combined financial information, management assumed that the fair value of the Series C Preferred Stock to be issued in the TopBuild Series C Preferred Stock Issuance equals the gross cash proceeds of $1.0 billion. |
| (iii) | The $15.8 million adjustment represents a reclassification from additional paid-in capital to mezzanine equity to present the pro rata portion of fees paid prior to March 31, 2026 by QXO for the commitment to issue the Series C Preferred Stock to investors upon a Qualifying Acquisition. |
| (iv) | The $3.3 million adjustment represents estimated fees incurred in connection with the TopBuild Series C Preferred Stock Issuance, which are recorded as a reduction to mezzanine equity. |
26
Note 7 – Adjustments to the Unaudited Pro Forma Combined Statements of Operations for the TopBuild Acquisition
Adjustments included in the TopBuild Acquisition Transaction Accounting Adjustments column and the TopBuild Acquisition Financing Transaction Accounting Adjustments column in the accompanying unaudited pro forma combined statements of operations for the fiscal year ended December 31, 2025 and for the three months ended March 31, 2026 are as follows:
| (a) | Reflects the incremental adjustments to Cost of products sold relating to the remeasurement of Property and equipment, net to fair value: |
For
the | For
the | |||||||
| Pro forma TopBuild Acquisition transaction accounting adjustments: | ||||||||
| Removal of TopBuild's historical depreciation of property and equipment | $ | (62.0 | ) | $ | (16.5 | ) | ||
| Pro forma depreciation of property and equipment | 84.1 | 21.0 | ||||||
| Net pro forma TopBuild Acquisition transaction accounting adjustment to Depreciation | $ | 22.1 | $ | 4.5 | ||||
| (b) | Reflects the adjustments to Selling, general and administrative expenses: |
For
the | For
the | |||||||
| Pro forma TopBuild Acquisition transaction accounting adjustments: | ||||||||
| Estimated transaction costs incurred by QXO related to the TopBuild Acquisition (i) | $ | 54.8 | $ | — | ||||
| Removal of historical TopBuild stock-compensation expense for replacement equity awards | (16.6 | ) | (4.6 | ) | ||||
| Record pro-forma stock-based compensation expense for replacement equity awards | 19.9 | 3.3 | ||||||
| Net pro forma TopBuild Acquisition transaction accounting adjustment to Selling, general and administrative expenses | $ | 58.1 | $ | (1.3 | ) | |||
| (i) | Represents additional transaction costs to be incurred by QXO subsequent to March 31, 2026. These costs will not affect QXO’s combined statement of operations beyond twelve months after the acquisition date. TopBuild’s expected transaction costs of $135.0 million are not included in the unaudited pro forma combined statement of operations. |
| (c) | Reflects the incremental adjustments to Depreciation relating to the remeasurement of Property and equipment, net to fair value: |
For
the | For
the | |||||||
| Pro forma TopBuild Acquisition transaction accounting adjustments: | ||||||||
| Removal of TopBuild's historical depreciation of property and equipment | $ | (12.1 | ) | $ | (3.9 | ) | ||
| Pro forma depreciation of property and equipment | 16.4 | 5.0 | ||||||
| Net pro forma TopBuild Acquisition transaction accounting adjustment to Depreciation | $ | 4.3 | $ | 1.1 | ||||
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| (d) | Reflects the adjustments to Amortization for the estimated fair value of intangibles: |
For
the | For
the | |||||||
| Pro forma TopBuild Acquisition transaction accounting adjustments: | ||||||||
| Removal of TopBuild's historical amortization of intangible assets | $ | (95.3 | ) | $ | (35.9 | ) | ||
| Pro forma amortization of intangible assets | 656.0 | 164.0 | ||||||
| Net pro forma TopBuild Acquisition transaction accounting adjustment to Amortization | $ | 560.7 | $ | 128.1 | ||||
| (e) | Reflects the adjustments to Interest income (expense), net: |
| For the Year Ended December 31, 2025 |
For the Three Months Ended March 31, 2026 |
|||||||
| Pro forma TopBuild Acquisition transaction accounting adjustments: | ||||||||
| Removal of TopBuild historical interest expense (i) | $ | 103.8 | $ | 36.6 | ||||
| Net pro forma TopBuild acquisition transaction accounting adjustment to Interest income (expense), net | $ | 103.8 | $ | 36.6 | ||||
| Pro forma TopBuild Acquisition financing transaction accounting adjustments: | ||||||||
| New interest expense on transaction financing for TopBuild Acquisition: | ||||||||
| New Term Loan Facility (ii) | $ | (176.2 | ) | $ | (43.9 | ) | ||
| Permanent Financing (ii) | (215.5 | ) | (53.9 | ) | ||||
| Net pro forma TopBuild Acquisition financing transaction accounting adjustments to Interest income (expense), net | $ | (391.7 | ) | $ | (97.8 | ) | ||
| (i) | This pro forma acquisition transaction accounting adjustment reflects the removal of historical interest expense associated with TopBuild’s existing indebtedness, which management assumes will be extinguished upon consummation of the TopBuild Acquisition. The TopBuild Acquisition will be partially funded by QXO’s historical cash on hand. QXO’s historical interest income has not been removed as a pro forma adjustment herein. QXO’s interest income in future periods may be materially lower than the amounts recognized for the year ended December 31, 2025 and for three months ended March 31, 2026. |
| (ii) | The new interest expense on TopBuild Acquisition financing transaction accounting adjustments included in the unaudited pro forma combined statements of operations reflect the interest expense and amortization of debt issuance costs associated with the TopBuild Debt Financings. Adjustments reflect a blended interest rate as of March 31, 2026 at an assumed rate of 6.33% per annum for the New Term Loan Facility and the Permanent Financing. |
A sensitivity analysis on interest expense for the year ended December 31, 2025 and the three months ended March 31, 2026 has been performed to assess the effect of a 0.125% change of the hypothetical interest on the TopBuild Debt Financings as the terms of the TopBuild Debt Financings are subject to change and will be finalized prior to the closing of the TopBuild Acquisition. Management is also presenting an additional sensitivity analysis on interest expense to assess the effect of a 1% change of the hypothetical interest on the TopBuild Debt Financings. The following table shows the change in the interest expense for TopBuild Debt Financings described above:
For
the | For
the | |||||||
| Interest expense impact assuming: | ||||||||
| Increase of 0.125% | $ | 7.4 | $ | 1.9 | ||||
| Decrease of 0.125% | $ | (7.5 | ) | $ | (1.8 | ) | ||
| Increase of 1.0% | $ | 59.6 | $ | 14.9 | ||||
| Decrease of 1.0% | $ | (59.7 | ) | $ | (14.8 | ) | ||
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| (f) | To record the income tax impact of the pro forma adjustments utilizing a statutory tax rate of 26.0% for both the year ended December 31, 2025 and the three months ended March 31, 2026. The effective tax rate of the combined company could be significantly different (either higher or lower) depending on post-acquisition activities, including cash needs, the geographical mix of income and changes in tax law. Because the tax rates used for the pro forma financial information are estimated, the rate will likely vary from the actual effective rate in periods subsequent to completion of the TopBuild Acquisition. This determination is preliminary and subject to change based upon the final determination of the fair value of the acquired assets and assumed liabilities. |
| (g) | As discussed above, the impact of the TopBuild Series C Preferred Stock Issuance has been adjusted within the unaudited pro forma combined statements of operations as if it occurred on January 1, 2025 in the calculation of Net income (loss) attributable to common stockholders. To reflect the terms of the Series C Preferred Stock for the year ended December 31, 2025 and the three months ended March 31, 2026, Net income (loss) attributable to common stockholders was adjusted by $47.5 million and $11.9 million, respectively, to reflect an assumed cash payment based on the 4.75% dividend rate on the Series C Preferred Stock to be issued in the TopBuild Series C Preferred Stock Issuance. Note that QXO has the option to pay the dividend in cash, in kind, or in the form of QXO common stock. For the purposes of the unaudited pro forma financial information, QXO assumed that the dividend was paid in cash. |
Note 8 – Pro Forma Earnings Per Share
The pro forma basic and diluted weighted-average shares outstanding are a combination of historical weighted-average shares outstanding of QXO common stock and adjustments to reflect the impact of the Transactions for the entirety of the year ended December 31, 2025 and the three months ended March 31, 2026. This resulted in an increase to weighted-average shares outstanding as a result of the issuance of QXO common stock from the Beacon Acquisition Equity Financings, May 2025 Equity Financing, June 2025 Equity Financing, and January 2026 Equity Financing, as well as equity issued in connection with the Kodiak Acquisition and TopBuild Acquisition. Further, in connection with the Beacon Acquisition and the TopBuild Acquisition, QXO agreed to convert certain equity awards held by Beacon employees and TopBuild employees, respectively, into QXO equity awards, which increased pro forma weighted average shares outstanding as these awards are assumed to have vested during the periods presented in the pro forma combined financial information. The pro forma basic and diluted weighted average shares outstanding are as follows:
| (millions of shares) | For
the | For the Three Months Ended March 31, 2026 | ||||||
| Pro forma basic and diluted weighted-average shares: | ||||||||
| Historical QXO weighted-average shares outstanding – basic and diluted | 613.0 | 744.4 | ||||||
| Financing adjustment – Beacon Acquisition Equity Financings | 34.5 | — | ||||||
| Financing adjustment – May 2025 Equity Financing (Note 2(g)) | 21.4 | — | ||||||
| Financing adjustment – June 2025 Equity Financing | 44.1 | — | ||||||
| Financing adjustment – January 2026 Equity Financing | 31.6 | 6.7 | ||||||
| Kodiak consideration shares issued (Note 3) | 13.2 | 13.2 | ||||||
| Beacon replacement awards vesting and Option Exercises | 2.2 | 1.0 | ||||||
| TopBuild Stock Consideration (Note 5) | 311.3 | 311.3 | ||||||
| TopBuild replacement awards vesting | 0.4 | 0.6 | ||||||
| Pro forma weighted-average shares - basic and diluted (i) | 1,071.7 | 1,077.2 | ||||||
| (i) | As described in the “Description of the TopBuild Acquisition,” QXO may increase the Maximum Stock Election Number if upon receipt of the TopBuild stockholders’ elections, the TopBuild Stock Consideration elections are in excess of 55%. For each 5% increase in the TopBuild Stock Consideration, an additional 28.3 million shares of QXO common stock will be issued to TopBuild stockholders. |
The following table summarizes securities that, if exercised, would have an antidilutive effect on diluted loss per share attributable to the common stockholder:
| (millions of shares) | For
the | For
the | ||||||
| Stock-based awards | 23.5 | 25.6 | ||||||
| Warrants | 219.0 | 219.0 | ||||||
| Convertible Preferred Stock | 219.0 | 219.0 | ||||||
| Mandatory Convertible Preferred Stock | 32.7 | 28.4 | ||||||
| Series C Preferred Stock | 129.0 | 129.0 | ||||||
| Total potential dilutive securities not included in loss per common share | 623.2 | 621.0 | ||||||
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