QXO Inc., a recent entrant into the building products distribution industry, has made an offer to acquire Beacon Roofing Supply Inc., a publicly traded distributor with a market value of about $6.2 billion, according to a report in the Wall Street Journal citing unnamed sources. Neither company has commented on that report.
Acquiring Beacon, however, would fit into QXO’s strategy of growing through digital commerce.
Greenwich, Connecticut-based QXO is a digital technology-focused company out to modernize the $800 building products distribution industry.
QXO has raised $5 billion for acquisitions
“We’ve raised $5 billion to make acquisitions of building materials distributors,” a spokesman says, adding, “We’re planning on building the company through mergers and acquisitions to $50 billion over the next decade.
Brad Jacobs, CEO, QXO Inc.
QXO CEO Brad Jacobs is a digital entrepreneur who founded and built the construction industry equipment marketplace United Rentals and the online transportation and logistics services company XPO. QXO recently appointed former Target Corp. AI executive Ashwin Rao as its chief AI officer and, in May, hired former Barclays head of M&A Ihsan Essaid as its chief financial officer.
Beacon Roofing Supply — which lets industry buyers order products and manage customer accounts online — would bring QXO extensive experience in digital commerce technology and related growth strategies for the building products industry.
Beacon’s digital sales improve overall performance
Julian Francis, president and CEO, Beacon Roofing Supply Inc.
Julian Francis, president and CEO of Herndon, Virginia-based Beacon, said in a recent third-quarter earnings call that his company’s digital sales grew approximately 28% year over year for the period ended Sept. 30, helping to drive Q3 total net sales up 7.3% year over year to $2.78 billion. For the nine months ended Sept. 30, Beacon said net sales grew 7.9% to $73.6 million. Beacon did not break out digital sales but said they were important to overall financial performance.
Beacon lets buyers order products and manage customer accounts through its Beacon Pro+ digital commerce platform. Among Beacon Pro+ features are online product displays personalized to buyers’ interests, contract pricing, and a weather map that shows contractors where inclement weather may increase demand for building products and work crews.
“Digital sales to our residential customers were once again a highlight as we achieved our highest quarterly adoption ever at more than 28%,” Francis said on the earnings call, according to a Seeking Alpha transcript, adding, “Our online capability continues to be a clear competitive advantage for Beacon, and sales through our digital platform increase customer loyalty, generate larger basket sizes, and enhance margin by roughly 150 basis points when compared with offline channels.”
Beacon integrates ecommerce and CRM
Prithvi Gandhi, Beacon’s chief financial officer, noted that “higher sales through our digital channel and growth of our private label products continue to be accretive to Beacon’s gross margin. He added that Beacon’s Q3 gross margin was 26.3%, up 30 basis points year over year.
Beacon operates more than 530 locations across the U.S. and Canada and lets buyers order supplies for pick-up at their nearest Beacon facility. On its website, Beacon says it offers Beacon Pro+ offers a “suite of digital resources like automated order workflows, live pricing, material ordering, and mobile delivery tracking.”
Yesterday, Beacon said it enhanced the BeaconPro+ ecommerce platform by integrating it with Leap CRM, a customer relationship management software system designed to help home improvement contractors manage their customer projects.
Paul Demery is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy. paul@digitalcommerce360.com.
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