00:00QXL is a relatively new venture for you, and you've come out of the gate pretty fast.
00:03You bought Beacon, you made an agreement to buy Kodiak, and now TopBuild.
00:07What interested you most about TopBuild?
00:10TopBuild is the number one distributor and installer of insulation, and everybody needs insulation.
00:16That's not going into the metaverse. AI is not disrupting it.
00:19Every home, every commercial building is going to have insulation in it.
00:23So it's something that's very strong in demand.
00:26It's a well-managed company, but we can always make it better.
00:29A fresh set of eyes come in there and power them with technology.
00:32I think the combination of TopBuild and QXL is really unstoppable.
00:37Well, talk a little bit about the technology side of this, because that's been a big component of your acquisitions
00:43and sort of how you find those efficiencies. What do you do?
00:46So in technology, what I found getting it, and it's one of the reasons I got into the building products
00:50industry
00:50is because it's behind the times in terms of technology.
00:53If you compare that to transportation, for example, it's much more advanced than transportation.
00:58So generally speaking, in distribution, the warehouses, most of the industry doesn't use a WMS,
01:03a warehouse management system.
01:05So usually when goods come into a warehouse, you scan them, and then the system tells you where to slot
01:10them.
01:11This industry doesn't have that, so we're going to introduce that.
01:13What are they using, like paper books or something?
01:14Pretty much. The industry is kind of random.
01:16And most of the industry doesn't use a proper TMS, a transportation management system.
01:21So to do the routing and optimize the routing, huge efficiencies can be gained from that.
01:25And even the CRM, the Salesforce.com, most of the industry doesn't use it very much
01:31because they're not using the AI-enabled version of it.
01:34So the Salesforce looks at it as a problem rather than as a solution.
01:38So we're going to fix all that.
01:40I do want to talk a little bit about, you know, you think about some of your rivals, Home Depot,
01:44Lowe's.
01:45They've really stepped up their own deal-making in response to you entering this space.
01:49And I wonder, you know, whether you see a possibility that you could have one of your rivals come in
01:55and launch an offer for a top build.
01:57And if that were to happen, I mean, are you prepared to fight here?
02:01I have no idea what they're going to do.
02:02I'm in my boardroom, not their boardroom.
02:05I have a ton of respect for both those companies.
02:07Both Home Depot and Lowe's were huge customers of mine and my previous company,
02:12and they were just really terrific to work with.
02:14So I think the world of them.
02:16I don't know whether they'll come in and try to fight us for this deal.
02:18I have no idea.
02:19Well, let me re-ask the second part of that question.
02:21I mean, if we were to enter a situation like that one,
02:24is this your best and final four top build, or would you be willing to go back?
02:28Are you negotiating here, Katie?
02:29I'm just trying to suss you out.
02:31No, I think this deal will be ours.
02:33I think we'll make it to the finish line, and I'll leave it there.
02:35Well, to Katie's point, though, are you finding a little bit more competition in this space?
02:39I mean, what you saw, other people have also seen,
02:42and I'm sure they're kind of envious of some of the deals that you've managed to close.
02:46Well, I'm used to a lot more competition than we have here.
02:49In the waste business, we had lots of competition.
02:51The transportation business, a lot of competition.
02:53We have a little competition, but very much less than we used to have.
02:58So let's talk about that.
03:00Eleven months ago, Romain, we had zero revenue, forget it, zero profit in building products.
03:07Today, when this merger closes, we'll have $18 billion of revenue,
03:11and we'll have over $2 billion of EBITDA.
03:14So if there's competition that's holding us back, I'm not quite seeing it.
03:17So when we talk about some of the deals you've done,
03:19there's $17 billion, I think Beacon was like $11 billion or so,
03:23and Kodiak, a couple $2 or $3 billion here.
03:25It's a lot of money you've spent in a very short period of time,
03:28but that you're going to spend in a very short period of time.
03:30Do you plan to stop there?
03:32I mean, what's next for you?
03:33No.
03:33We want to get to $50 billion.
03:35That was a loaded question.
03:37We want to get to our next milestone.
03:40It's not the final one, by the way.
03:41Our next milestone is $50 billion in revenue and $7.5 billion at EBITDA.
03:47So we're making good progress for 11 months,
03:49but we're nowhere near where we're going to build this company.
03:51Are there certain areas that you're looking at that you're willing to talk about publicly?
03:54We're looking at every aspect of building products.
03:57There's no part of building products that's off the table for us.
03:59And our approach to M&A Remain is we look at a lot of things at the same time.
04:04We move them all forward and go through the funnel,
04:07and we see what makes it to the finish line, see where the stars line up.
04:09Let's talk about some of the funding behind your acquisition spree,
04:12because in January you said you were raising $1.8 billion from the likes of Apollo and a few others
04:19here.
04:19I mean, now that you've announced this deal, do you have intentions or plans to try to raise more funds?
04:26We don't need any money right now.
04:27This deal is fully funded.
04:3055% of it is in our stock, so we don't need any help with that.
04:34We just issue the stock.
04:36And the cash portion of it, we had some cash on hand.
04:39And you mentioned the financings we did with Apollo, Tomasek, the sovereign wealth fund of Singapore, and others.
04:47And we have a loan commitment from Wells Fargo, Morgan Stanley, and Barclay.
04:52So we're good on money.
04:53Good on money.
04:54Okay.
04:55Noted there.
04:56Well, let's talk a little bit about the ambition to build this to $50 billion in revenue.
05:00As you mentioned, I mean, compared to relatively a couple of months ago, it's quite a low starting point.
05:06Do you have any sort of timeline for when you'd like to get there?
05:10You've made three acquisitions to get you closer to that target.
05:13But is there a set date you have in mind where you'd like to be there?
05:16Sooner the better.
05:17Yeah.
05:17But no, there's not a set date.
05:19You have to do this in stages.
05:21You have to see how the acquisition is going.
05:23You have to see how the integration is going.
05:25You have to be measuring customer satisfaction, make sure that's getting better, not worse.
05:29You have to measure employee engagement, make sure that's going higher, not lower.
05:33And you have to look at the financial statistics.
05:35You have to look at is organic revenue growth improving?
05:38Is margins improving?
05:39And as we look at the businesses, we'll decide what's the right pace to go at.
05:44Any regulatory concerns that could sort of impede completing this?
05:48I mean, I can't speak for the government, but I don't see any really.
05:51We're not in insulation.
05:52We don't do insulation.
05:53So I don't think there's going to be an issue there.
05:55What is the regulatory environment like, particularly for someone like you and the strategy that
06:00you take?
06:01Is it better now than maybe what it was, I don't know, 10 years ago, 20 years ago?
06:0510 or 20 years ago, no, it's about the same.
06:07Yeah.
06:07It's better than it was two or three years ago under the previous administration.
06:11You know, it was tough to do deals, particularly large deals.
06:14Right now, it seems very favorable to M&A.
06:16And you think that's going to continue for some time?
06:18Sure looks that way.
06:19Yeah.
06:19So we should expect a lot more from you.
06:21I think so.
06:22All right.
06:22Take that.
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