QXO, Inc.
Roofing and insulation distributor at 4.6x net after TopBuild. Almost nothing stops QXO from putting secured debt ahead of the unsecured notes, and the term loan gives up only ~25-60bp of spread for a first lien.
- Sector
- Building Products Distribution
- View
- Overweight
- Ratings
- B2 / BB-
- Updated
- 24-Oct-26
Current View
QXO is now the second-largest roofing distributor and the largest insulation installer in North America (~$17bn of sales, ~$1.9bn of EBITDA), and about half of sales is repair and remodel. Distribution needs little capex (~1-1.5% of sales), and when sales fall the working capital comes back as cash. QXO closed its $15.0bn TopBuild acquisition on 7/1/26, paying with $6.0bn of new debt, $1.0bn of Series C and ~312mm shares. Pro forma net leverage is 4.6x, 3.0x secured.
The stock has fallen from $27.61 to ~$11 as legacy roofing kept weakening, and the 6.875% 2034s fell from 101-102 in August to ~95 as their spread widened ~100bp. After working through the covenants, I'd rather own the 2033 term loan. The October 2026 memo has the covenant tables, scenarios and recovery.
Overweight the 2033 Term Loan B at 97.6 (S+200), with a light starter in the 2034s at 94.7. I'd only add to the 2034s after the 11/5 print if there's no debt-funded deal or buyback and legacy margins stabilize. I'd sell the loan if new pari debt or a liability-management deal pushes pro forma net first lien above 4.0x, but hold through EBITDA-driven leverage while coverage stays above 1.5x and liquidity above $1.5bn. I'd sell the 2034s on any debt-funded deal or buyback.