Brad Jacobs is turning his attention to building products distribution.
The man who built XPO, now an LTL-specific carrier but which had been a large logistics-focused conglomerate before spinoffs, is sticking with the X in the name of his new venture: QXO.
The two publicly traded spinoffs from XPO (NYSE: XPO) also feature X in their names: 3PL RXO (NYSE: RXO) and contract logistics provider GXO (NYSE: GXO). Jacobs remains executive chairman of XPO and nonexecutive chairman of the other two companies.
In a prepared statement released Monday, building products distribution was announced as the focus of QXO. It’s an industry that the statement said is “highly fragmented, with approximately 7,000 distributors in North America and 13,000 in Europe.” Jacobs decided on that industry after what was said to be a yearlong search.
“QXO’s strategy is to create a tech-forward leader in the building products distribution industry through accretive M&A and organic growth, including greenfield openings, with the goal of generating outsized stockholder value,” Jacobs said in the statement.
“We expect to achieve a revenue run-rate of at least $1 billion by the end of year one, at least $5 billion within three years, and tens of billions of dollars over the next decade,” Jacobs said in the statement.
For perspective, a publication called ProSales in 2019 ranked the largest building products distributors. The list does not appear to have been updated since then. Sitting at the top of that list was privately held ABC Supply. ABC has said it has $12 billion in sales. Sales of $1 billion in the first year would put QXO near the top 10 rankings.
The smallest company on the list, ranking No. 100, had sales of approximately $13 million.
Activities under the banner of building products distribution, according to the statement, include access control, construction supplies, doors and windows, electrical components, fencing and decking, HVAC, infrastructure, landscaping, lumber, plumbing, pools, roofing, siding and water.
The platform Jacobs will use for this growth is the publicly traded SilverSun Technologies (NASDAQ: SSNT). Jacobs led a group that pumped $1 billion into the company, which in turn will spin off its existing software operations into a privately held company. The shell company that is left will be rechristened QXO and Jacobs will be chairman and CEO.
Jacobs has said in the past that he prefers to operate in public markets.
The prepared statement suggests that building products distribution is lagging in technology adoption.
That “fragmented” industry offers “a significant opportunity to unlock growth potential through scale and technology,” the statement said. “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.”
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