QXO

• The team delivered a record fourth quarter with net sales, adjusted EBITDA, and cash flow records, driven by execution on the Ambition 2025 plan.
• The Ambition 2025 plan has been effective, with the company growing top and bottom lines despite challenges like inflation and supply chain issues.
• Greenfields contributed nearly $22 million to EBIT in 2024, and acquisitions in the class of 2022 delivered double-digit EBITDA margins.
• Digital sales grew approximately 20% YOY in Q4, with digital sales as a percentage of total sales reaching ~16%. Private label sales increased ~7% in Q4.
• The bottom quintile branch process added over $7 million of EBITDA year-over-year in Q4. The share buyback program has deployed over $1.5 billion since the start of Ambition 2025, reducing the as-converted share count by over 23%.

• First quarter sales per day expected to be down 3-5% YOY compared to prior year quarter due to harsh weather.
• Full year net sales growth is expected in the mid-single-digit percent range, including contributions from acquisitions.
• Gross margin is expected to be price cost neutral, resulting in a full year gross margin percentage in line with prior year. Adjusted EBITDA is expected to range between $950 million and $1.03 billion.
• Cash flow is expected to be in the range of $500 million to $600 million. The company plans to open 15 to 20 new greenfield locations and continue executing on its acquisition pipeline.

In the fourth quarter, total net sales reached over $2.4 billion, up 4.5% driven by acquisitions. Residential roofing faced a slowdown in certain regions, while nonresidential sales per day increased nearly 4% due to the commercial acceleration initiative. Complementary sales per day rose approximately 10% driven by acquisitions, including new waterproofing branches. Gross margin was 25.7%, unchanged from the prior year quarter but at the high end of expectations. Adjusted operating expense increased, but sales per hour worked in existing branches jumped 6% year-over-year.

• Weather patterns can impact demand timing, as seen in the first quarter with harsh weather affecting sales.
• Market dynamics, including sluggish housing starts, historically low existing home sales, and commercial new construction challenges, pose risks.
• Interest rates and potential tariffs can affect input costs and market sentiment, creating uncertainty.

Q: About the sluggish start to the year and full year guide A: Julian mentioned January and February were tough due to weather, but recent days show improving demand. Prith noted first quarter sales per day expected flat to last year, and full year net sales mid-single digits including M&A, price, and above-market growth Q: On SG&A and 17% target A: Julian said need to digest acquisitions and greenfields, but existing business cost management will help. Prith added about $60 million additional expense from acquisitions and greenfields, but existing business has cost management Q: Nonres demand new vs R&R A: Julian said new commercial construction is down, repair and replace cycle is steady. Prith mentioned focusing on gaining share and growing above market in commercial with 25 new markets Q: Residential pricing A: Prith said assuming similar realization as prior years for April price increase, price cost neutral full year. Julian noted underlying demand is strong despite choppy markets Q: Bottom quintile branch initiative A: Julian said it was $20 million benefit in 2024, bottom quintile branch profitability has improved from ~3% to nearly double-digits, continuing to improve bottom 20% branches