Introducing QXO

QXO’s strategy

QXO provides technology solutions, primarily to clients in the manufacturing, distribution and service sectors. The company provides consulting and professional services, specialized programming, training and technical support. As a value-added reseller of business application software, QXO offers solutions for accounting, financial reporting, enterprise resource planning, warehouse management systems, customer relationship management, business intelligence and other applications.  Additionally, QXO develops and publishes its own proprietary software.
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QXO plans to become a tech-forward leader in the $800 billion building products distribution industry, with the goal of generating outsized shareholder value. The company is targeting tens of billions of dollars of annual revenue in the next decade through accretive acquisitions and organic growth.
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The building products distribution industry’s nascent use of technology, particularly AI and B2B e-commerce, represents a compelling opportunity for QXO as a tech-focused entrant. QXO’s combination of scale and innovation should elevate the customer experience, increase sales force effectiveness and enable margin expansion.
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According to industry data, e-commerce represents only a single- to mid-single-digit percentage of total revenue. This share is expected to triple by 2030. Technology can further transform distributors’ businesses via price optimization, demand forecasting, warehouse automation and robotics, automated inventory management, route optimization for delivery fleets, supply chain visibility, and end-to-end digital customer connectivity. QXO’s strategy anticipates that these drivers, among others, will be central to the company’s goal of outsized shareholder value creation.

The building products distribution industry highlights

The building products distribution industry is highly fragmented, with approximately 7,000 distributors in North America and 13,000 in Europe, according to industry observers. Distributors of building products offer materials, finished goods, value-added solutions and expertise to a broad range of customers across residential, nonresidential, industrial and infrastructure end-markets. The products are used extensively in new construction and in repair and remodeling. Illustrative categories include access control, construction supplies, doors and windows, electrical, HVAC, infrastructure, lumber, plumbing, siding and decking, wallboard and ceiling tiles, and waterworks, among others.
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The industry has generated compound annual revenue growth of 7% over the last five years, based on industry data, and continues to benefit from powerful secular growth drivers. For example, industry reports estimate that the current supply of U.S. homes is 3 million units short of demand, potentially creating long-term tailwinds for both new construction and the repair and remodeling of aging homes. In the nonresidential sector, long-term demand is expected to be driven by growth across multiple industrial and commercial verticals, according to industry sources. America’s public transportation, utility and communication systems, among other types of infrastructure, also require repair or replacement.
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These market dynamics offer a significant opportunity to unlock QXO’s growth potential through scale and technology. National distributors can serve large customers across multiple geographies and project types with standardized efficiencies, providing consistent, data-driven customer services across a broad operating scope. Additionally, a scaled technology ecosystem can expand the array of value-added services offered to builders and other customers, such as jobsite visibility into product consumption, digital configuration tools for custom ordering and tracking, and virtual design capabilities that interface with product order flow.

Leadership

QXO’s chairman and CEO, Brad Jacobs, has built five multibillion-dollar, publicly traded companies prior to QXO. They are: XPO, Inc. (NYSE: XPO), one of the largest providers of less-than-truckload services in North America; GXO Logistics, Inc. (NYSE: GXO), the largest pure-play contract logistics provider in the world; RXO, Inc. (NYSE: RXO), a leading tech-enabled freight brokerage platform; United Rentals, Inc. (NYSE: URI), the world’s largest equipment rental company; and United Waste Systems, Inc., the fifth largest U.S. waste management company at the time of its sale.
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Each of these companies has a history of attracting world-class talent, establishing advantages through technology, and scaling up through accretive M&A and organic growth. Over the course of his career, Jacobs and his teams have completed approximately 500 acquisitions across multiple industries.
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This decades-long track record should position QXO to acquire exceptional businesses and integrate them effectively, deliver top-tier service to forge long-term customer relationships, sustain a highly engaged workplace culture, improve margins and generate high returns on capital.