QXO (QXO) Q3 2026 earnings review
Acquisitions lift QXO sales, but debt costs keep it unprofitable
QXO, a distributor of roofing, lumber and insulation, nearly doubled its sales by acquiring two major rivals while remaining unprofitable under standard accounting. Preliminary third-quarter sales jumped 79% from a year ago to $4.9 billion after chief executive Brad Jacobs closed the purchase of insulation installer TopBuild in July. Operating cash profit excluding one-offs rose faster than sales, but a quadrupling of interest costs to $163 million and heavy deal charges left a $123 million net loss.
| Preliminary net sales | $4.90B +79% from a year ago |
|---|---|
| Ebitda, excluding one-offs | $557M +85% from a year ago (11.4% of sales) |
| GAAP net loss | $123M $139M loss a year ago |
| Decade revenue target | Unchanged $50B annual goal (~$19.6B current run rate) |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because this preliminary release shows only the combined size of the new acquisitions without separating underlying branch performance. Folding in TopBuild lifted the operating cash profit rate to 11.4% of sales, its highest level since the roll-up began. One caution: interest expense alone now eats up 29% of that cash profit, and by our math the pre-tax loss widened by $139 million from a year ago.
The question now is whether the original Beacon roofing branches are growing on their own or if acquisitions are masking weak construction demand. Either the existing branches held their sales and margins during peak summer building season, or TopBuild and Kodiak supplied all the gains. The segment breakdown and cash flow statement in the full report on November 12 will settle it.
🐂 Bull Case
Acquisitions Lifted Sales to Nearly $5 Billion
QXO, a distributor of roofing, lumber and insulation, is attempting to build a $50 billion business within ten years by buying rivals. On July 1, chief executive Brad Jacobs closed the roughly $17 billion purchase of TopBuild, making the group "North America’s largest distributor and installer of insulation". This quarter also included a full three months of Kodiak Building Partners, a lumber distributor bought in April.
Adding those two businesses pushed preliminary third-quarter net sales up 79% from a year ago to $4.90 billion. Sales rose 51% from the second quarter alone. By our math, the third quarter puts the building-products group on an annualized sales pace of $19.6 billion, up from roughly $11 billion a year ago when it owned only Beacon Roofing Supply.
What to watch: the revenue split between TopBuild, Kodiak and the older Beacon roofing branches in the full report on November 12. That breakdown will show how much each deal contributed to the jump.
Operating Profit Margin Reached Its Highest Level Yet
Buying distributors only pays off if the combined business keeps its profit margins intact. QXO tracks its operating performance using Ebitda (earnings before interest, taxes, depreciation and amortization) excluding one-offs. In the third quarter, that measure rose 85% from a year ago to $557 million, more than doubling from $272 million in the second quarter.
That profit equalled 11.4% of sales, up 0.3 percentage points from the peak summer roofing season a year ago and up 3.0 percentage points from the second quarter. Adding TopBuild's insulation installation work lifted the group's profit rate above what the roofing business earned on its own last year.
What to watch: gross margin — the share of sales left after paying for the building products themselves — when the full financial statements arrive on November 12. A higher gross margin would confirm that insulation carries better pricing than roofing.
🐻 Bear Case
Interest Costs More Than Quadrupled on Deal Debt
QXO borrowed heavily to pay for its expansion, including $3.0 billion in senior notes issued ahead of the TopBuild closing. That debt sits on the income statement right below operating profit. In the third quarter, net interest expense jumped to $163 million, up from $37 million a year ago and $38 million in the second quarter.
By our math, interest costs grew from 1.4% of revenue a year ago to 3.3% this quarter, an increase of nearly 2 percentage points of sales. Interest alone consumed 29% of the company's $557 million in Ebitda excluding one-offs, up from 12% in the third quarter of last year. That cash drain leaves less money to pay down debt or fund the next deal.
What to watch: total debt, cash balances and preferred stock dividends in the full report on November 12. Preferred dividends took $54 million in the second quarter and sit below net income, adding a second financing bill on top of interest.
Deal Accounting and Stock Pay Kept Bottom Line Negative
QXO highlights Ebitda excluding one-offs as the measure of its core operations, and on that basis profit rose 85%. Standard accounting tells a different story. The distributor posted a preliminary GAAP net loss of $123 million, and only a $27 million tax benefit kept that loss smaller than last year's $139 million deficit. By our math, the loss before taxes widened to $150 million from $11 million a year ago.
- Amortization of acquired customer lists and brands: $288 million, up 1.6 percentage points of sales from a year ago
- Stock-based compensation for employees: $79 million, up from $31 million a year ago
- Transaction costs for buying companies: $40 million, ten times last year's $4 million
What to watch: diluted share count and per-share loss in the November 12 release. Paying employees in stock and issuing shares for acquisitions diluted common shareholders by 36% in the second quarter.
Preliminary Release Omits Growth From Existing Branches
QXO aims to reach its long-term revenue goal through both deals and sales from businesses it owned a year ago. Because the group acquired Beacon in April 2025, the third quarter of 2026 is the first full period where the Beacon roofing branches were in both the current quarter and the prior-year comparison.
Despite having that clean comparison for its roofing business, the company gave only combined totals in this preliminary update. Without separate figures for TopBuild and Kodiak, readers cannot tell whether sales at the existing roofing branches grew or shrank after management noted industry softness earlier this year. The distributor is "expected to report its full third quarter 2026 results on November 12, 2026".
What to watch: third-quarter sales for residential and non-residential roofing on November 12. Last year those two lines brought in $2.09 billion in the third quarter, giving a clear benchmark for underlying performance.
💲 Other KPIs
Combined spending on business overhauls and layoffs rose to $37 million from $32 million in the second quarter and $31 million a year ago. QXO excludes these bills from its headline profit measure, even though they include ongoing "costs incurred to invest in new technologies such as artificial intelligence" and IT upgrades.
Non-cash charges from marking acquired inventory to market value at closing dropped to $17 million, down from $51 million a year ago after the Beacon deal. These accounting charges temporarily raise cost of goods sold in the quarters right after an acquisition closes.
🔮 Guidance
Unchanged. The building-products group reiterated that it is "targeting $50 billion in annual revenue within the decade through accretive acquisitions and organic growth". By our math, the third quarter's $4.90 billion in sales puts QXO on a $19.6 billion annual run rate, about 39% of the way to its ten-year goal. The company did not provide a fourth-quarter or full-year 2026 outlook.
❓ Key Questions
Did legacy Beacon roofing sales grow in the third quarter?
The third quarter of 2026 is the first full quarter where QXO owned Beacon in both the current and year-ago periods. Investors need the standalone roofing sales figure on November 12 to see if the core business grew without acquisitions.
How much free cash flow did the combined business generate?
Operating cash flow was negative in the first half of 2026 due to seasonal inventory build-ups. The third quarter is peak construction season, so the full cash flow statement must show whether operating profit turned into cash after $163 million in interest.
What is total debt and preferred stock after closing TopBuild?
QXO held $6.22 billion in debt and nearly $3.0 billion in preferred equity at the end of June before completing the roughly $17 billion TopBuild deal. The November 12 balance sheet will reveal the full post-deal debt load and preferred dividend bill.
When will transformation and AI investments stop being treated as one-offs?
QXO has excluded $109 million in transformation costs from its headline profit over the last five quarters, a bucket that includes artificial intelligence investments and IT upgrades. Management has not said when technology spending becomes a normal operating cost.