QXO Has Big Growth Plans. Most Echo What Jacobs' Predecessors Planned in 2018 and 2022

Analysis by Craig Webb

Potential investors in QXO impressed by the game plan Chairman and CEO Brad Jacobs laid out would do well to note how similar Jacobs' vision is to what the CEOs of QXO's predecessor Beacon Building Products presented four and eight years ago.

Powerpoint slides from analyst days in 2018 and 2022 contain much of the same road map that Jacobs put in his latest investor Q&A, in which he projects QXO growing rapidly and more than doubling EBITDA by 2030.

One difference is that QXO is more than just the Beacon operation it purchased last year. QXO acquired Kodiak Building Partners and TopBuild earlier this year, becoming roughly an $18 billion company. Beacon also grew rapidly, but almost exclusively by buying roofing and waterproof companies.

Perhaps a bigger difference is that Jacobs has turbocharged operations before. The question now is whether he, unlike his predecessors, can succeed in executing the same general ideas.

For instance, on May 11 Jacobs issued an investor Q&A in which he stressed tech advancements, improving the customer experience, and boosting profit margins. That echoes what Beacon's then-CEO, Julian Francis, laid out in 2022 in a project called "Beacon Ambition 2025." Here are two slides from that presentation:

Go four years earlier, to then-CEO Paul Isabella's presentation at Beacon's 2018 investor day, and you'll see Jacobs-like touts for going beyond shingles to selling a variety of exterior and interior products. Beacon back then also was into technology, and that era's big moves were into digital sales, an online catalog, and ways to help contractors be more productive.

Here were Beacon's five-year goals as of the December 2018 presentation:

Jacobs also has spoken highly of private-label sales. As far back as eight years ago, Beacon was touting its Tri-Built brand:

Isabella also was a fan of synergistic acquisitions, higher gross margins, and improved operations:

Francis promoted similar gross margin levels in 2022. That presentation four years ago also described getting a better database, hiring more outside reps, and using a call center to drive activity. One of Jacobs' move soon after buying Beacon was to hire people to call dormant accounts and put more people in the field.

Francis, like Jacobs, also touted improved customer and KPI reporting.

All of this isn't to declare that Jacobs' QXO will fail to fly because his predecessors couldn't achieve what they envisioned. Neither Isabella nor Francis had access at Beacon to the billions of dollars Jacobs has raised to buy and grow QXO. Neither could move as quickly on tech advances, if only because today's AI world makes it possible to do far more faster than just a few years ago.

The playbook remains largely the same. It likely will take several years to know whether Jacobs' QXO can executive what Isabella and Francis could not.