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 can succeed in executing at QXO the same general ideas that his predecessors pursued and often achieved.

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.

By the time it entered 2025, the last year of the plan it launched in 2022, Beacon's sales had grown to $9 billion, EBITDA was about $950 million, and the share price had nearly tripled, from $34 to nearly $99 when Jacobs made his first $124.25-per-share offer in November 2024.

On Jan. 15, 2025 Jacobs wrote to Beacon Board Chairman Stuart Randle arguing that Beacon's board "appears to have priorities that do not include capturing a compelling premium and creating significant, immediate value for Beacon shareholders." Jacobs added later in the letter: "Consensus forecasts currently expect Beacon to fall short of key elements of your Ambition 2025 plan. Notably, consensus calls for 2025 EBITDA margin of 9.8%, versus your plan’s target of 11%."

The fact that Jacobs had to launch a hostile takeover of Beacon implies that its board wasn't initially in a mood to sell. Since then, Jacobs in effect has promised to make Beacon perform even better than what Isabella and Francis achieved. That's possible in part because neither Isabella nor Francis had access at Beacon to the billions of dollars Jacobs has raised to buy and grow QXO. And 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 succeed with it.