- Q: Why is technology such a central part of QXO’s thesis?
A: The building products distribution industry is under-digitized. Technology-enabled CRM,
routing, ERP, warehouse systems, invoice accuracy, service metrics, and demand visibility can significantly
improve procurement, labor productivity, cross-selling, customer retention, and other value-creation levers.
These technology applications are the backbone of the operating model.
- Q: What stands out in your technology assessment of the industry?
A: The most striking takeaway is the pervasive underinvestment in technology across the
industry. It shows up in three ways.First, core systems are often outdated or missing entirely—particularly in
areas like warehouse management, inventory planning, transportation, and CRM.Second, there’s limited focus on
the customer’s digital experience, which reduces stickiness and leaves upsell opportunities on the table.Third,
technology teams are typically understaffed and over-oriented toward maintenance rather than transformation.
- Q: Is QXO equipped to integrate and run this many moving parts?
A: Definitely. Brad leads the integrations together with a deep bench of experienced executives
across HR, finance, transportation, logistics, strategy, and operations. In addition, we believe in retaining
strong leaders from each of the acquired businesses. Technology has a major role in our integration playbook—it
resolves disconnections between operations and facilitates execution as one cohesive network with strong
vertical leadership.
- Q: What tech has QXO implemented so far?
A: Recent implementations include:
- Pricing tools (Pricefx)
- Demand forecasting and inventory management systems (S&OP)
- Consolidation of financial systems
- Lead generation tools
- AI negotiation capabi
- Asset management so
- AI procurement agents
- Cybersecurity enhancements
- Internal communication platforms
- Q: What tech is being rolled out next?
A: We’ll roll out a fully integrated digital platform across the business in waves, with target
completion dates of Q1 2027 for the Beacon operations and Q3 2027 for the rest. Components include:
- Enterprise resource planning (ERP)
- Point-of-sale (POS)
- Warehouse management (WMS)
- Transportation management (TMS)
- Human resources management (HRIS)
- Procure-to-Pay (P2P)
- Last mile delivery
Additionally, we have initiatives underway for AI-enabled CRM, an advanced business intelligence platform
(Looker), and a comprehensive e-commerce platform. The goal is a unified, highly efficient ecosystem that
dramatically improves productivity, pricing, inventory, and the customer experience.
Financial Model and Long-Term Growth Algorithm
- Q: How do you summarize QXO’s growth algorithm?
A: We aim to reach $50 billion of revenue within the decade. Our strategy is to drive that
growth through a mix of cross-selling and other share gains, pricing discipline, procurement efficiencies,
private label expansion, routing improvements, and best-in-class execution, rather than being dependent
primarily on macro tailwinds. Our business plan reflects annual topline growth in the mid- to high-single
digits, and approximately $300 million of synergies from the TopBuild combination by 2030. Based on the two
completed acquisitions to date and the anticipated TopBuild acquisition, the combined platform can generate
approximately $4 billion of EBITDA organically by 2030, and, if you include tuck-in acquisitions funded from
expected free cash flow, about $5.5 billion of EBITDA by 2030.
- Q: What drives gross margin improvement in the model?
A: Margin expansion comes from a combination of mix, pricing discipline, private label,
supplier terms, technology, and customer stickiness. The key difference between our drivers and those of
distribution in general is that we will be using technology at scale to amplify margin expansion—for
example, by reducing stock shrink to improve inventory productivity and optimizing route density to improve
transit efficiency.
- Q: What is the margin improvement opportunity for the combined company including Beacon,
Kodiak, and TopBuild?
A: Over time, we think it’s realistic to achieve more than 200 basis points of aggregate
margin improvement, alongside organic revenue growth in the mid-to-high single digits.
Capital Structure and Allocation Strategy
- Q: How were the recent acquisitions financed?
A: Financing for our latest deals came from four sources: $3 billion of Series C
convertible preferred shares carrying 4.75% yield, issuance of common shares, committed financing from our
bank partners, and cash on hand. We like the Series C investment led by Apollo and Temasek from both an
economic and a strategic perspective, because it added strong, long-term partners.
- Q: What about share buybacks?
A: Buybacks are not a priority today. Our capital is better deployed for organic growth,
margin expansion, technology development, and accretive M&A. However, we never take buybacks off the
table.
M&A Strategy and Investment Discipline
- Q: Are you now in digestion mode, or can you still do more M&A?
A: Our primary organizational focus has shifted from M&A execution to integration, but
that does not mean we are stepping away from M&A. We continue to evaluate attractive opportunities and
will pursue exceptional transactions where we believe they are in the long-term interest of shareholders,
including continuing TopBuild’s highly successful tuck-ins. In fact, the integration work underway today
should strengthen our ability to create value from future M&A, as our expanded job-site presence creates
a stronger platform for revenue synergies.
- Q: What are the core principles that guide your acquisitions?
A: We have two non-negotiable criteria. The deal must be strategically compelling, and it
must be highly accretive financially. We prioritize deals where the combination can immediately increase
earnings per share and provide substantial long-term value for customers and shareholders.
- Q: How disciplined will you remain on M&A valuation?
A: Extremely disciplined. We never knowingly do a dilutive deal or even a marginally
accretive one. Brad and his teams have led over 500 acquisitions and have M&A down to a science. Value
creation depends on first buying a target at an attractive spread relative to cost of capital, then
continuously improving the business in sustainable ways post-close.
- Q: Does your deal with TopBuild raise the bar for future acquisitions because it fills such
a meaningful strategic need?
A: We’ve always had a high bar. Beacon, Kodiak, and TopBuild each fit our strategy in
different ways, and collectively they raise the hurdle for what comes next. We expect that future M&A
deals will create additional product synergies, procurement leverage, and network effects in the right
geographies for growth. With the platform we’ve already assembled, those benefits will come more readily.
- Q: Do you eventually intend to own manufacturing capabilities?
A: We’ll always be open-minded and rational when it comes to creating outsized shareholder
value, but while vertical integration is a possibility, it’s not an immediate priority. For now, procurement
leverage and selective private label can generate strong economics. Manufacturing has advantages, but it’s
asset-intensive and can create supplier and customer conflicts. We would need to study it carefully.
Beacon Update and the Roofing Customer Experience
- Q: What progress has been made with the Beacon integration so far?
A: We’ve implemented a number of positive changes for the team and the operations, with
many more to follow. The most significant to date include:
- Reducing organizational layers from nine to four
- Upgrading approximately 2,500 of 8,300 employees onboarded
- Hiring for dedicated “hunter” sales roles
- Launching a call center to contact prospective new customers and reactivate 25,000 dormant accounts
- Centralizing procurement, moving from about 1,600 buyers to a more controlled structure
- Improving pricing discipline by using data and dispersion analysis
- Reconfiguring inventory management processes to increase in-stock levels of fast-moving items
- Bringing selective transportation in-house to reduce cost and improve control
- Introducing new employee training programs
- Q: Is the pricing opportunity at Beacon mainly manufacturer pass-through, or is it
something more durable?
A: It’s more durable. Buying better and selling better on a market-neutral basis are
distinct value creation levers, compared with routine manufacturer price increases that often flow passively
through the system. The gateway is customer satisfaction.
- Q: What drives customer choice of suppliers in the roofing industry?
A: Based on extensive feedback, customers are willing to pay a modest premium (estimated at
2%–7%) for strong performance across the five factors they value most:
- Product availability
- Speed of quoting
- Accuracy of invoicing
- On-time and in-full delivery
- Well-trained, quality sales and support people
- Q: How is QXO improving the roofing customer experience?
A: Our key initiatives related to roofing customer service include:
- Reconfiguring inventory into A/B/C categories to improve availability
- Reducing quote times with new pricing technology
- Improving invoice accuracy toward best-in-class levels
- Enhancing delivery performance with transportation management technology
- Investing heavily in training and our service culture
- Q: If a contractor needed roof shingles today, what is broken in the industry, and what
would QXO do differently?
A: The main barriers to availability in the industry are inventory visibility and inventory
management, both of which impact procurement and service quality. Many distributors still operate with poor
systems, weak data, and no real warehouse management capabilities, leading to bad forecasting, overstocks of
slow-moving inventory, and understocks of in-demand SKUs. The fixes are better technology and centralized
data for demand forecasting, trend analysis, and more disciplined operating processes.
Cautionary Statement Regarding Forward-Looking Information
This communication contains forward-looking statements. Statements that are not historical facts, including
statements about beliefs, expectations, targets or goals, the expected timing of the closing of the proposed
acquisition, the anticipated benefits of the proposed acquisition, including synergies, and expected future
financial position, total addressable market, positions in building product verticals and results of operations,
are forward-looking statements. These statements are based on plans, estimates, expectations and/or goals at the
time the statements are made, and readers should not place undue reliance on them. In some cases, readers can
identify forward-looking statements by the use of forward-looking terms such as “may,” “will,” “should,”
“expect,” “opportunity,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,”
“target,” “goal,” or “continue,” or the negative of these terms or other comparable terms. Forward-looking
statements involve inherent risks and uncertainties and readers are cautioned that a number of important factors
could cause actual results to differ materially from those contained in any such forward-looking statements.
Factors that could cause actual results to differ materially from those described herein include, among others:
(i) the risk that the proposed acquisition of TopBuild may not be completed on the anticipated terms in a timely
manner or at all; (ii) the failure to satisfy any of the conditions to the consummation of the proposed
acquisition, including the risk that the required shareholder approvals may not be obtained; (iii) the effect of
the pendency of the proposed acquisition on each of QXO’s and TopBuild’s business relationships with employees,
customers, or suppliers, or on operating results or the businesses generally; (iv) the occurrence of any event,
change or other circumstance or condition that could give rise to the termination of the acquisition agreement
for TopBuild, including circumstances that require the payment of a termination fee; (v) the possibility that
the proposed acquisition may be more expensive to complete than anticipated, including as a result of unexpected
factors or events, significant transaction costs or unknown liabilities; (vi) potential litigation and/or
regulatory action relating to the proposed acquisition; (vii) the risk that the anticipated benefits of the
proposed acquisition may not be fully realized or may take longer to realize than expected; (viii) the impacts
of legislative, regulatory, economic, competitive or technological changes; (ix) QXO’s ability to finance the
proposed acquisition; (x) unknown liabilities and uncertainties regarding general economic, market sector,
competitive, legal, regulatory, tax and geopolitical conditions; and (xi) those risks and uncertainties set
forth in QXO’s and TopBuild’s filings with the Securities and Exchange Commission (the “SEC”), including each
company’s Annual Report on Form 10-K for the year ended December 31, 2025 and any subsequent Quarterly Reports
on Form 10-Q. Forward-looking statements should not be relied on as predictions of future events, and these
statements are not guarantees of performance or results. Forward-looking statements herein speak only as of the
date each statement is made. Neither QXO nor TopBuild undertakes any obligation to update any of these
statements in light of new information or future events, except to the extent required by applicable law.
Important Information for Investors and Stockholders
In connection with the proposed acquisition, QXO expects to file a registration statement on Form S-4 with
the SEC containing a preliminary prospectus of QXO that also constitutes a preliminary joint proxy statement of
each of QXO and TopBuild. After the registration statement is declared effective, each of QXO and TopBuild will
mail a definitive joint proxy statement/prospectus to stockholders of QXO and TopBuild, respectively. This
communication is not a substitute for the joint proxy statement/prospectus or registration statement or for any
other document that QXO or TopBuild may file with the SEC in connection with the proposed acquisition. INVESTORS
AND SECURITY HOLDERS OF QXO AND TOPBUILD ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER
DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE
DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. Investors and security holders will be able to obtain free copies of the joint proxy
statement/prospectus (when available) and other documents filed with the SEC by QXO or TopBuild through the
website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by QXO will be
available free of charge on QXO’s website at https://investors.qxo.com and copies of the documents filed with
the SEC by TopBuild will be available free of charge on TopBuild’s website at
https://www.topbuild.com/investors. Additionally, copies may be obtained by contacting the investor relations
department of QXO or TopBuild.
No Offer or Solicitation
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or
a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which
such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities
laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as amended.
Participants in the Solicitation
QXO and certain of its directors and executive officers may be deemed to be participants in the solicitation of
proxies from QXO’s stockholders in connection with the proposed acquisition. Information regarding QXO’s
directors and its executive officers, including a description of their direct or indirect interests, by security
holdings or otherwise, can be found under the captions “Security Ownership of Certain Beneficial Owners and
Management,” “Executive Compensation,” and “Director Compensation” contained in QXO’s definitive proxy statement
on Schedule 14A for QXO’s 2026 annual meeting of stockholders, which was filed with the SEC on March 24,
2026. To the extent holdings of QXO’s securities by its directors or executive officers have changed
since the applicable “as of” date described in its 2026 proxy statement, such changes will be reflected on
Statements of Beneficial Ownership on Form 4 filed with the SEC.
TopBuild and certain of its directors and executive officers may be deemed to be participants in the solicitation
of proxies from TopBuild’s stockholders in connection with the proposed acquisition. Information regarding
TopBuild’s directors and its executive officers, including a description of their direct or indirect interests,
by security holdings or otherwise, can be found under the captions “Common Stock Ownership of Officers,
Directors and Significant Shareholders,” “Compensation Committee Report,” and “Director Compensation” contained
in TopBuild’s definitive proxy statement on Schedule 14A for TopBuild’s 2026 annual meeting of stockholders,
which was filed with the SEC on March 17,
2026. To the extent holdings of TopBuild’s securities by its directors or executive officers have
changed since the applicable “as of” date described in its 2026 proxy statement, such changes will be reflected
on Statements of Beneficial Ownership on Form 4 filed with the SEC.
The information regarding the interests of such participants in the solicitation of proxies in respect of the
proposed acquisition will be included in the registration statement and joint proxy statement/prospectus and
other relevant materials to be filed with the SEC when they become available.