Lead photo by Mike Hockett/MDM
At long last, the QXO-Beacon standoff is over.
A co-authored news release March 20 from both companies confirmed that they have agreed to terms, with QXO set to pay $124.35 per share for Beacon Roofing Supply in a deal valued at $11 billion.
From first glance, we know that it gains QXO North America’s largest publicly traded distributor of roofing materials and complementary building products.
The 30,000-foot view of Beacon shows that it’s a company with 580 branches across the U.S. and Canada, a base of nearly 110,000 customers and approximately 8,000 employees.
Here’s a financial snapshot:
- 2024 revenues of $9.76 billion — up 7.1% vs. 2023
- 2024 gross margin of 24.7% — unchanged vs. 2023
- 2024 net profit of $2.5 billion — up from 2023’s $2.3 billion
- 2024 adjusted EBITDA and margin of 9.5% of $930 million — the highest total company history and flat vs. 2023, with adjusted EBITDA margin of 9.5% that slid 70 basis points
QXO is paying $124.35 per share for Beacon, representing a 10.8X multiple of Beacon’s consensus full-year 2025 EBITDA, and 10.1X its consensus full-year 2026 EBITDA.
Those are the quick stats and what’s been shared in the companies’ news releases. Now, let’s take this to ground level to discuss the the attributes of Beacon that QXO found so valuable and compelling to acquire.
For starters, here’s what Joe Checkler, QXO’s Senior Vice President of Communications, told MDM and select other media outlets on March 20:
“We expect Beacon to be the first of many acquisitions, putting us on track toward our intended goal of $50 billion in revenue. Beacon is a great company in a large and growing industry, and we’re confident that the same playbook we used in waste management, equipment rental and transportation is completely applicable to Beacon’s business.”
Checkler cited the example of XPO Logistics — one of QXO Founder, Chairman and CEO Brad Jacobs’ other publicly traded companies — and how it acquired large companies Norbert Dentressangle and Con-way in 20215 and seamlessly integrated them into a cohesive, global organization. XPO went on to double each of those company’s profits between 2015 and 2018.
“We see similar opportunities with Beacon,” Checkler added.
Growth Mode
As Checkler alluded to above, QXO hasn’t been shy about its growth ambitions.
“We intend to make QXO very big — as quickly as possible — because it will benefit both our customers and our shareholders,” the company told media members March 20.
For its part, Beacon has considerably grown its footprint in recent years. In its 4Q24 financial report on Feb. 27, the company noted that its strong balance sheet enabled the flexibility to invest in future growth that included “high levels of growth-oriented capital expenditures and enhancements to our operational capabilities, including sales productivity, working capital management and our pricing model.”
In 2024, those investments supported the opening of 19 greenfield locations and the acquisition of 42 branches.
Meanwhile, Beacon outperformed the revenue target set when it announced its “Ambition 2025” in the fall of 2022. At that time, the company targeted $9 billion in 2025 sales and $1 billion in adjusted EBITDA — aggressive considering it was coming off of $6.6 billion and $655 million, respectively, in 2021.
Most recently, Beacon acquired California-based waterproofing distributor DM Figley earlier in March after and announced four new greenfield branches in late February. It made two acquisitions in 4Q24.
“Beacon continues to drive above market growth through footprint expansion via acquisitions and new greenfield branches,” the company said on Feb. 26. “Adding locations and teams to deepen customer service is an important element of our Ambition 2025 plan.”
Tech and Digitally-Driven
QXO brands itself as both a building materials distribution platform and technology solutions provider — with that latter point stated first and foremost on QXO.com. “QXO plans to become a tech-forward leader in the $800 billion building products distribution industry, with the goal of generating outsized shareholder value,” that homepage says.
This past November, Beacon partnered with CRM provider Leap to integrate its offering into the Beacon PRO+ eCommerce platform. The company said that addition allows contractors to purchase products seamlessly by removing a tedious process from their daily workflow.
A month earlier, Beacon likewise partnered with roofing and waterproofing manufacturer GAF to integrate its QuickMeasure reporting tool into Beacon PRO+, providing contractors with an added option to take guesswork out of measurement estimates.
And further on the eCommerce front, Beacon launched PRO+ in Canada this past September.
In 2Q24, digital sales represented about 26% of Beacon’s residential sales.
QXO undoubtedly saw these digital investments as a great sign of technology initiative from Beacon as a way to make its customers’ lives easier, and the infusion of QXO’s capital figures to only accelerate what Beacon can do on that front.
“Our goal is to invest in Beacon’s tech to accomplish two things: improve the customer experience and make the lives of our employees more efficient,” QXO said.
More specifically, Jacobs stated before the announced deal agreement that QXO intended to invest in several technology upgrades for Beacon that include:
- Dynamic pricing
- AI-powered demand forecasting
- Warehouse automation
- Advanced warehouse management system
- Fleet optimization
- eCommerce enhancements
That’s alongside a broader tech-boosted sales team.
“We’d agree on a big to-do list and make it happen in a methodical way,” Jacobs said. “We’re confident that we can double Beacon’s EBITDA over the next five years and drive significant value creation.”
In an open letter to Beacon employees on March 7, Jacobs wrote that QXO would begin these initiatives in the same way it approaches the rest of the company, which is by listening to the Beacon staff. Jacobs noted that the first thing he would do upon a deal is to embark on a “listening tour” to get answers to two key questions: 1) What has Beacon been doing really well? — things QXO would be crazy to change; and 2) What can be improved?
Checkler noted that this approach would likewise apply on the technology front.
Other Intangibles
Here’s some other points QXO voiced about what they saw in Beacon:
- 80% of Beacon’s business is repair & remodeling, which is highly stable, non-discretionary and less cyclical. Replacing a leaking or damaged roof is a necessity, not a decision.
- The average commercial building is over 50 years old, the average home is over 40 years old and there is a shortage of 4 million homes that need to be built. So lots of new construction is coming.
- There’s a major need for infrastructure repair across North America and Europe. In North America alone, an additional $2 trillion of spending will be required to keep the infrastructure safe over the next two decades.
- Beacon’s business is primarily “made in the USA, sold in the USA,” making its tariffs exposure minimal
The Final Word
In Beacon, there was a lot to like for QXO that aligned with the latter’s goals for scale and tech-mindedness. The market seems to agree, with QXO’s stock jumping as much as 7.3% upon the deal news on March 20 and Beacon’s climbing 4.8% since the start of March 17.
Beacon was already well on its way to upgrading its footprint and technology, and QXO figures to take that to another level.
