SRS: $18.25 Billion for Roofing, Pool and LandscapeNarrow moat

Home Depot (HD) — moat facet

Home Depot paid $18.25 billion for a roofing and pool distributor that earns 2.5% on sales after amortisation.

In March 2024 Home Depot agreed to buy SRS Distribution for a total enterprise value of approximately $18.25 billion1. The deal closed on 18 June 2024, and the 10-K records total purchase consideration of $18,028 million: $17,707 million of cash and $321 million of stock2. That was about twice what Home Depot had paid for HD Supply, $8,692 million in 20203.

Roofing share of Other segment net sales (%)68%FY202453%FY202539%Q2 FY2026Home Depot Form 10-K fiscal 2025; Q2 fiscal 2026 Form 10-Q
Roofing diluted by what SRS bought next.

What it bought was a different business. SRS sells to specialty trade roofers, landscapers and pool contractors4, from branches rather than stores. At signing it had a 2,500-plus professional sales force, a 760-plus branch network across 47 states and a 4,000-plus truck fleet with jobsite delivery5. Home Depot said the purchase raised its addressable market to approximately $1 trillion, an increase of approximately $50 billion6.

SRS has grown fast since, partly by buying more. At the end of fiscal 2025 SRS, including GMS, operated over 1,250 locations7, and more than 1,340 by August 20268. Roofing was about 68% of Other segment sales in fiscal 2024 and about 53% in fiscal 20259, and about 39% in the second quarter of fiscal 202610.

The purchase added sales at a low margin. The Other segment earned $316 million of operating income on $12,717 million of sales in fiscal 202511, 2.5%12, after $398 million of amortisation of acquired intangibles13.

The purchase came with a sales force that the stores never had. SRS brought a 2,500-plus professional sales force and a 4,000-plus truck fleet14, and Decker said SRS's branch network, coupled with Home Depot's more than 2,000 American stores, gives the residential Pro more fulfillment and service options than ever before15. The branch network has since grown from 760-plus to more than 1,340 locations1617.

The purchase was partly paid in shares. Of the $18,028 million of consideration, $321 million was the fair value of Home Depot common stock issued18. That small share issue, together with the pause in buybacks, is why the diluted share count stopped falling after fiscal 202319.

SRS is a narrow position in a fragmented distribution market, not a moat of the kind the stores provide. Its organic growth, low single digits in fiscal 2025 according to management20, is the number that will decide whether $18 billion bought a growth engine or a bigger revenue line.

Moat trajectory: Widening

Over 1,340 locations by August 2026; roofing now under half of Other.

The number that tests this moat
Reported
Other segment net sales, latest quarter
$5,055M, +62% (Q2 fiscal 2026)

The distributors' growth, mostly acquired; organic growth near zero would mean the premium bought size, not momentum.

Source: Home Depot Form 10-Q, Q2 fiscal 2026 ↗
⚠ Threats to the moat
⚠ THREAT 01
Shingle Shipments Fell 28%
Industry shingle shipments fell 28% in a quarter, and Home Depot's roofing distributor earned 0.4% on sales the quarter after.
References
  1. ReportedIn March 2024 Home Depot agreed to buy SRS Distribution for a total enterprise value of approximately $18.25 billion.
    The Home Depot release announcing the SRS Distribution agreement, Form 8-K exhibit 99.1 - enterprise value of about $18.25 billion, 760-plus branches, 2,500-plus sales force, 4,000-plus trucks. — March 2024 · publ. 28 March 2024 · source ↗
  2. ReportedThe deal closed on 18 June 2024, and the 10-K records total purchase consideration of $18,028 million: $17,707 million of cash and $321 million of stock.
    The Home Depot Form 10-K for fiscal 2024 (53 weeks ended 2 February 2025) - the SRS purchase consideration, the 53rd week and total sales per retail square foot of $599.92. — Fiscal 2024 · publ. March 2025 · source ↗
  3. ReportedThat was about twice what Home Depot had paid for HD Supply, $8,692 million in 2020.
    The Home Depot Form 10-K for fiscal 2020 - the HD Supply acquisition (total consideration $8,692 million) and comparable sales of 19.7%. — Fiscal 2020 · publ. March 2021 · source ↗
  4. ReportedSRS sells to specialty trade roofers, landscapers and pool contractors, from branches rather than stores.
    The Home Depot Form 10-K for fiscal 2025 (the 52 weeks ended 1 February 2026) - Item 1 business and Item 2 properties: stores, real estate, supply chain and workforce. — Fiscal 2025 · publ. 18 March 2026 · source ↗
  5. ReportedAt signing it had a 2,500-plus professional sales force, a 760-plus branch network across 47 states and a 4,000-plus truck fleet with jobsite delivery.
    The Home Depot release announcing the SRS Distribution agreement, Form 8-K exhibit 99.1 - enterprise value of about $18.25 billion, 760-plus branches, 2,500-plus sales force, 4,000-plus trucks. — March 2024 · publ. 28 March 2024 · source ↗
  6. ReportedHome Depot said the purchase raised its addressable market to approximately $1 trillion, an increase of approximately $50 billion.
    The Home Depot release announcing the SRS Distribution agreement, Form 8-K exhibit 99.1 - enterprise value of about $18.25 billion, 760-plus branches, 2,500-plus sales force, 4,000-plus trucks. — March 2024 · publ. 28 March 2024 · source ↗
  7. ReportedAt the end of fiscal 2025 SRS, including GMS, operated over 1,250 locations, and more than 1,340 by August 2026.
    The Home Depot Form 10-K for fiscal 2025 (the 52 weeks ended 1 February 2026) - Item 1 business and Item 2 properties: stores, Pros, SRS, competition and supply chain. — Fiscal 2025 · publ. 18 March 2026 · source ↗
  8. ReportedAt the end of fiscal 2025 SRS, including GMS, operated over 1,250 locations, and more than 1,340 by August 2026.
    The Home Depot second-quarter fiscal 2026 results release, Form 8-K exhibit 99.1 - sales, comparable sales, transactions, ticket, earnings, reaffirmed guidance and the balance sheet. — Q2 fiscal 2026 · publ. 18 August 2026 · source ↗
  9. ReportedRoofing was about 68% of Other segment sales in fiscal 2024 and about 53% in fiscal 2025, and about 39% in the second quarter of fiscal 2026.
    The Home Depot Form 10-K for fiscal 2025 (the 52 weeks ended 1 February 2026) - Item 7 MD&A: segments, comparable sales, transactions, product lines, margins and ROIC. — Fiscal 2025 · publ. 18 March 2026 · source ↗
  10. ReportedRoofing was about 68% of Other segment sales in fiscal 2024 and about 53% in fiscal 2025, and about 39% in the second quarter of fiscal 2026.
    The Home Depot Form 10-Q for the quarter ended 2 August 2026 - segment results, product lines, online sales, IEEPA tariff refunds, the Mingledorff's acquisition and trailing ROIC of 24.8%. — Q2 fiscal 2026 · publ. 25 August 2026 · source ↗
  11. ReportedThe Other segment earned $316 million of operating income on $12,717 million of sales in fiscal 2025, 2.5%, after $398 million of amortisation of acquired intangibles.
    The Home Depot Form 10-K for fiscal 2025 (the 52 weeks ended 1 February 2026) - financial statements and notes: earnings, cash flow, balance sheet, debt and acquisitions. — Fiscal 2025 · publ. 18 March 2026 · source ↗
  12. Moat Explorer calcThe Other segment earned $316 million of operating income on $12,717 million of sales in fiscal 2025, 2.5%, after $398 million of amortisation of acquired intangibles.
    Moat Explorer calculation from The Home Depot's filings and market data ($ millions unless stated; fiscal years as Home Depot names them, fiscal 2025 = year to 1 February 2026). Segments: Primary net sales 151,966 / 152,669 - 1 = -0.5% (fiscal 2023 to 2025); Primary operating income 20,574 / 21,689 - 1 = -5.1%; Primary operating margin 21,689 / 152,669 = 14.2% (fiscal 2023), 21,313 / 153,108 = 13.9% (fiscal 2024), 20,574 / 151,966 = 13.5% (fiscal 2025); Other operating margin 213 / 6,406 = 3.3% (fiscal 2024), 316 / 12,717 = 2.5% (fiscal 2025); Other before intangible amortisation 316 + 398 = 714, 714 / 12,717 = 5.6%; Other share of net sales 12,717 / 164,683 = 7.7%; Other share of operating income 316 / 20,890 = 1.5%. Q2 fiscal 2026: Primary 42,806 / 42,157 - 1 = +1.5%, margin 6,592 / 42,806 = 15.4%; Other 5,055 / 3,120 - 1 = +62%, margin 247 / 5,055 = 4.9%; Q2 fiscal 2025 margins: Primary 6,354 / 42,157 = 15.1%, Other 201 / 3,120 = 6.4%; Q1 fiscal 2026 Primary 80,569 - 42,806 = 37,763 and 11,557 - 6,592 = 4,965, margin 13.1%; Other 9,057 - 5,055 = 4,002 and 263 - 247 = 16, margin 0.4%. Pro acquisitions 8,692 + 18,028 + 5,081 + about 1,100 = about 32,900 (HD Supply, SRS, GMS, Mingledorff's). Growth: net sales 164,683 - 159,514 = 5,169 in fiscal 2025 against about 6,300 contributed by acquisitions; fiscal 2025 over fiscal 2023 164,683 - 152,669 = 12,014, of which Other 12,717. Net sales fiscal 2017 to fiscal 2025 164,683 / 100,904 - 1 = +63%; stores 2,359 - 2,284 = 75, 75 / 2,284 = +3.3%. Traffic: transactions 1,601.5 / 1,500.8 - 1 = +6.7% (fiscal 2015 to 2025); 1,601.5 / 1,759.7 - 1 = -9.0% (fiscal 2021 to 2025); average ticket 90.56 / 58.77 - 1 = +54%. Net sales per store 164,683 / 2,359 is not meaningful because Other has no stores; Primary 151,966 / 2,359 = 64.4 per store. Margins: operating margin 21,689 / 152,669 = 14.2%, 21,526 / 159,514 = 13.5%, 20,890 / 164,683 = 12.7%; SG&A 30,702 / 28,748 - 1 = +6.8% against net sales +3.2%; Primary SG&A 28,885 / 27,822 - 1 = +3.8% against Primary net sales 151,966 / 153,108 - 1 = -0.7%; interest expense 2,412 / 1,943 - 1 = +24%; operating income / interest 20,890 / 2,412 = 8.7 times. Departments: Lighting 4,006 / 4,549 - 1 = -11.9%; Flooring 8,232 / 8,703 - 1 = -5.4%; Storage and Organization 5,054 / 4,881 - 1 = +3.5%; Appliances 13,987 / 164,683 = 8.5%. Classes fiscal 2025: 52,439 + 51,679 + 47,848 = 151,966 = Primary net sales. Net margin 14,156 / 164,683 = 8.6%; Lowe's 6.63 / 90.43 = 7.3%; Lowe's price to sales 106.20 / 90.43 = 1.17 against 1.73; Primary share 151,966 / 164,683 = 92.3%; cost of sales 164,683 - 54,865 = 109,818. Primary share Q2 fiscal 2026 42,806 / 47,861 = 89.4%; H1 net sales increase 89.6 - 85.1 = 4.5bn, GMS 2.8 / 4.5 = 62%; average ticket 89.31 / 90.36 - 1 = -1.2%; equity build 14,156 - 9,152 = 5,004; buyback authorization 11.66 / 292.52 = 4.0% of market value; depreciation and amortisation as a share of sales, Other 715 / 12,717 = 5.6%, Primary 3,344 / 151,966 = 2.2%. US share 152,170 / 164,683 = 92.4%. Mexico stores 2,359 - 2,035 - 182 = 142. Other share of net sales 6,406 / 159,514 = 4.0% (fiscal 2024), 5,055 / 47,861 = 10.6% (Q2 fiscal 2026). Sales per retail square foot 627.17 / 454.82 - 1 = +38% (fiscal 2019 to 2022), 599.92 / 627.17 - 1 = -4.3% (fiscal 2022 to 2024). Tariff refunds 685 / 47,861 = 1.4% of Q2 net sales; 685 / 16,115 = 4.3% of Q2 gross profit; refunds in inventory cost 730 - 685 = about 45. Receivables 5,597 / 4,903 - 1 = +14.2%. Capital: net debt 4,464 + 4,967 + 46,341 - 1,389 = 54,383 (1 February 2026); 316 + 4,582 + 48,485 - 1,659 = 51,724 (2 February 2025); 4,248 + 4,697 + 43,951 - 2,085 = 50,811 (2 August 2026); net debt / equity 54,383 / 12,813 = 4.2 times; goodwill and intangibles 22,344 + 10,329 = 32,673, 32,673 / 105,095 = 31.1% of total assets. Free cash flow 16,325 - 3,679 = 12,646 (fiscal 2025), 19,810 - 3,485 = 16,325 (fiscal 2024), 21,172 - 3,226 = 17,946 (fiscal 2023); dividends paid / free cash flow 9,152 / 12,646 = 72.4%; dividend per share / diluted EPS 9.20 / 14.23 = 64.7%; capex / net sales 3,679 / 164,683 = 2.2%. Average debt and equity 61,914 / 44,955 - 1 = +38%; SRS + GMS 18,028 + 5,081 = 23,109; interest expense 2,412 - 1,943 = 469; operating cash flow / dividends paid 16,325 / 9,152 = 1.8 times; free cash flow 12,646 / 17,946 - 1 = -30%; dividend per share 9.00 / 8.36 - 1 = +7.7%, 9.20 / 9.00 - 1 = +2.2%, 2.33 / 2.30 - 1 = +1.3%. Repurchases fiscal 2015-2023: 7,000 + 7,000 + 8,002 + 10,000 + 7,000 + 597 + 15,001 + 6,504 + 8,074 = 69,178; diluted shares 995 / 1,283 - 1 = -22%. H1 fiscal 2026 EPS 8.09 / 14.23 = 57%. Market: 292.52 / 14.26 = 20.5 times trailing earnings; 292.52 / 169.18 = 1.73 times sales; 292.52 / 433.37 - 1 = -32.5% from the end-2021 value; Lowe's 106.20 / 292.52 = 36%, 90.43 / 169.18 = 53% of revenue; dividend yield 9.32 / 293.20 = 3.2%; trailing diluted EPS 14.23 + 8.09 - (3.45 + 4.58) = 14.29; trailing net income 292.52 / 20.52 = about 14.26bn - balance sheet, cash flow, capital returns and valuation. — Fiscal 2015-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in The Home Depot's Forms 10-K and 10-Q, results releases and market data; operands shown in the source line.
  13. ReportedThe Other segment earned $316 million of operating income on $12,717 million of sales in fiscal 2025, 2.5%, after $398 million of amortisation of acquired intangibles.
    The Home Depot Form 10-K for fiscal 2025 (the 52 weeks ended 1 February 2026) - financial statements and notes: earnings, cash flow, balance sheet, debt and acquisitions. — Fiscal 2025 · publ. 18 March 2026 · source ↗
  14. ReportedSRS brought a 2,500-plus professional sales force and a 4,000-plus truck fleet, and Decker said SRS's branch network, coupled with Home Depot's more than 2,000 American stores, gives the residential Pro more fulfillment and service options than ever before.
    The Home Depot release announcing the SRS Distribution agreement, Form 8-K exhibit 99.1 - enterprise value of about $18.25 billion, 760-plus branches, 2,500-plus sales force, 4,000-plus trucks. — March 2024 · publ. 28 March 2024 · source ↗
  15. ReportedSRS brought a 2,500-plus professional sales force and a 4,000-plus truck fleet, and Decker said SRS's branch network, coupled with Home Depot's more than 2,000 American stores, gives the residential Pro more fulfillment and service options than ever before.
    The Home Depot release announcing the SRS Distribution agreement, Form 8-K exhibit 99.1 - enterprise value of about $18.25 billion, 760-plus branches, 2,500-plus sales force, 4,000-plus trucks. — March 2024 · publ. 28 March 2024 · source ↗
  16. ReportedThe branch network has since grown from 760-plus to more than 1,340 locations.
    The Home Depot release announcing the SRS Distribution agreement, Form 8-K exhibit 99.1 - enterprise value of about $18.25 billion, 760-plus branches, 2,500-plus sales force, 4,000-plus trucks. — March 2024 · publ. 28 March 2024 · source ↗
  17. ReportedThe branch network has since grown from 760-plus to more than 1,340 locations.
    The Home Depot second-quarter fiscal 2026 results release, Form 8-K exhibit 99.1 - sales, comparable sales, transactions, ticket, earnings, reaffirmed guidance and the balance sheet. — Q2 fiscal 2026 · publ. 18 August 2026 · source ↗
  18. ReportedOf the $18,028 million of consideration, $321 million was the fair value of Home Depot common stock issued.
    The Home Depot Form 10-K for fiscal 2024 (53 weeks ended 2 February 2025) - the SRS purchase consideration, the 53rd week and total sales per retail square foot of $599.92. — Fiscal 2024 · publ. March 2025 · source ↗
  19. ReportedThat small share issue, together with the pause in buybacks, is why the diluted share count stopped falling after fiscal 2023.
    The Home Depot Form 10-K for fiscal 2025 (the 52 weeks ended 1 February 2026) - financial statements and notes: earnings, cash flow, balance sheet, debt and acquisitions. — Fiscal 2025 · publ. 18 March 2026 · source ↗
  20. ReportedIts organic growth, low single digits in fiscal 2025 according to management, is the number that will decide whether $18 billion bought a growth engine or a bigger revenue line.
    CNBC on Home Depot's fourth quarter of fiscal 2025: shingle shipments down 28%, repair rather than replace, tariffs, and no single foreign country above 10% of purchases. — Q4 fiscal 2025 · publ. 24 February 2026 · source ↗
Sources
Generated September 26, 2026