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Investing.com -- QXO Inc (NYSE:QXO), which recently completed its $11 billion acquisition of Beacon Roofing Supply (NASDAQ:BECN), outlined its ambitious growth strategy on Tuesday. CEO Brad Jacobs, the company’s driving force, announced plans to transform QXO into a tech-enabled leader in the $800 billion building products distribution industry, aiming for $50 billion in annual revenue over the next decade.
During a presentation in New York, Jacobs detailed seven core themes that will underpin the company’s strategy. These include delivering exceptional shareholder value by building a profitable $50 billion revenue business, leveraging the substantial total addressable market with durable demand drivers, and applying a disciplined approach to mergers and acquisitions (M&A). QXO plans to at least double Beacon’s legacy EBITDA organically and pursue further growth through acquisitions in existing and adjacent verticals.
QXO’s business strategy is focused on consolidating the highly fragmented building products distribution industry. The company intends to apply the same successful playbook used in previous ventures, such as United Waste, United Rentals (NYSE:URI), and XPO, to drive organic growth and expand margins. This approach has historically generated significant free cash flow, which QXO plans to reinvest in continued M&A activities.
The selection of the building products distribution industry is based on its strong fundamentals, including secular tailwinds from the undersupplied U.S. housing market and substantial infrastructure investment. Jacobs highlighted the resilience of Beacon, a leading national platform in exterior building products, which has demonstrated robust performance through economic cycles and is poised to serve as a launchpad for QXO’s ambitious revenue goals.
QXO’s plan to double Beacon’s EBITDA organically within five years involves nine major workstreams, including organizational optimization, talent emphasis, procurement, inventory management, and technology enhancements. The early integration efforts following the acquisition of Beacon have already shown promising results, with initiatives in sales, pricing, and procurement delivering early revenue and EBITDA improvements.
The company’s leadership team, which brings a wealth of expertise across various skill sets, is deeply engaged in executing this strategy. Additionally, QXO has established a compensation structure that closely aligns the interests of its management with shareholder value, with significant equity stakes held by the CEO and senior leaders, and performance-based incentives tied to exceeding the S&P 500’s 55th percentile.
In conclusion, Jacobs expressed confidence in QXO’s strategy to become a global leader in tech-enabled building products distribution, with the acquisition of Beacon marking a strategic first step towards achieving the company’s long-term financial goals.