WEBVTT - Why Brad Jacobs Is Spending $11 Billion on a Roofing Supply Business 0:00:02.720 --> 0:00:16.720 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:18.560 --> 0:00:21.720 Hello and welcome to another episode of the Ad Thoughts Podcast. 0:00:21.840 --> 0:00:23.320 I'm Tracy Allaway. 0:00:23.040 --> 0:00:24.239 And I'm Joe Wisenthal. 0:00:24.600 --> 0:00:26.360 Joe, do you think it's fair to say it's been 0:00:26.600 --> 0:00:30.639 kind of kind of a quiet year for big deals. 0:00:30.760 --> 0:00:31.560 I think that's fair. 0:00:31.640 --> 0:00:33.760 I feel you're like kind of a quiet year. Oh no, 0:00:34.040 --> 0:00:37.800 dot no for big deals. Yes, actually this has been 0:00:37.880 --> 0:00:40.640 kind of, you know, one of the big thematic surprises 0:00:40.680 --> 0:00:44.040 of twenty twenty five. Obviously when the new administration came in, 0:00:44.479 --> 0:00:47.240 like deals, and at least for now, I would say, 0:00:47.320 --> 0:00:50.800 largely you know, macro stuff, we actually have not gotten 0:00:50.840 --> 0:00:52.000 a big deals with so far. 0:00:52.320 --> 0:00:54.720 Right, the reason we haven't had that many deals is 0:00:54.760 --> 0:00:57.840 because there's been so much news arguably, right, there's all 0:00:57.840 --> 0:01:01.440 this uncertainty in the broader market. Yeah, people aren't really 0:01:01.480 --> 0:01:02.880 sure what they want to do if they want to 0:01:02.960 --> 0:01:05.639 risk it all. But that said, there is some stuff 0:01:05.680 --> 0:01:09.479 getting done, and in particular, there was recently a very 0:01:09.560 --> 0:01:13.240 very big deal, a blockbuster all cash deal, some have 0:01:13.360 --> 0:01:17.000 been saying, and it involves someone who's been on the show. 0:01:16.800 --> 0:01:18.559 Before, a friend of the podcast. 0:01:18.680 --> 0:01:23.679 That's right. So Brad Jacobs, his new company, QXO, bought 0:01:23.959 --> 0:01:27.360 Beacon Roofing for I think it was eleven billion, is 0:01:27.400 --> 0:01:31.440 that right? So again, an all cash deal for eleven 0:01:31.480 --> 0:01:34.760 billion dollars in this market kind of notable. We should 0:01:34.800 --> 0:01:35.399 talk about it. 0:01:35.959 --> 0:01:37.560 I love talking to Brad. We've talked to him a 0:01:37.600 --> 0:01:40.800 handful of times on the show. Often we've talked about 0:01:40.800 --> 0:01:44.920 his philosophy of buying companies, turning them around, turning them 0:01:44.920 --> 0:01:48.400 into billion dollar juggernauts. We talked to him about logistics 0:01:48.400 --> 0:01:50.800 and supply chains. But now we can talk about something 0:01:50.840 --> 0:01:53.520 specific on how he's going to turn one specific company around. 0:01:53.560 --> 0:01:54.920 So I'm excited exactly. 0:01:55.000 --> 0:01:58.600 Okay, so let's get into the specifics. We have Brad Jacobs, 0:01:58.680 --> 0:02:02.920 billionaire founder of XPO, g XO, QXO, as I mentioned, 0:02:03.000 --> 0:02:07.880 basically all the XO companies plus United Waste, lots and lots, 0:02:07.920 --> 0:02:10.760 a serial entrepreneur, let's just put it that way. Brad, 0:02:10.800 --> 0:02:12.600 thank you so much for coming back on all lots. 0:02:12.680 --> 0:02:14.880 Trace is great to be here, all right, So congrats 0:02:14.919 --> 0:02:15.480 on the deal. 0:02:15.840 --> 0:02:16.160 Thank you. 0:02:16.400 --> 0:02:18.440 From what I understand, this has been in the works 0:02:18.440 --> 0:02:20.040 for quite a while and there was a lot of 0:02:20.080 --> 0:02:20.760 back and forth. 0:02:21.080 --> 0:02:23.919 Yeah, so before we even did Beacon. We were looking 0:02:24.000 --> 0:02:25.640 at fifty five, as you know because I was on 0:02:25.639 --> 0:02:28.680 the podcast, looking at fifty five different industries and trying 0:02:28.680 --> 0:02:30.840 to pick the one that matches our skill set, that 0:02:30.880 --> 0:02:33.520 matches our playbook, the best, the things that worked for 0:02:33.600 --> 0:02:36.160 us at all the companies that you mentioned before. And 0:02:36.200 --> 0:02:39.280 then we settled on building products distribution because we liked 0:02:39.280 --> 0:02:42.720 it a lot, the size, the growth, the fragmentation, the 0:02:42.760 --> 0:02:45.720 opportunity to apply technology. And then we zeroed in on 0:02:45.800 --> 0:02:48.639 Beacon and we said, Beacon is the one that's that's 0:02:48.680 --> 0:02:51.040 the girl I want to marry Becon and we said, 0:02:51.040 --> 0:02:53.440 this is like a perfect match for what we do, 0:02:53.960 --> 0:02:56.680 and unfortunately they didn't want to sell, so we had 0:02:56.720 --> 0:02:58.920 to do a little hostile there. But we're past that 0:02:59.000 --> 0:03:00.840 and now we have a friend, the deal and really 0:03:00.840 --> 0:03:01.880 looking forward to closing it. 0:03:02.320 --> 0:03:05.280 Tell us about Beacon, what is the actual assets that 0:03:05.320 --> 0:03:06.480 they have that you're acquaring. 0:03:06.560 --> 0:03:10.120 So Beacon's a distributor. It's a distributor of mostly roofing, 0:03:10.760 --> 0:03:13.280 but they also do waterproofing and other ancillary products, but 0:03:13.280 --> 0:03:16.640 it's mostly roofing. And what I like about that is 0:03:16.800 --> 0:03:19.359 everyone has a roof. The roof's not going anywhere they're 0:03:19.360 --> 0:03:22.320 not going into the metaverse. They're not going to weigh 0:03:22.320 --> 0:03:25.119 to AI. I mean, all structure is gonna need a roof, 0:03:25.120 --> 0:03:27.640 and there's gonna be more roofs needed next year, and 0:03:27.680 --> 0:03:29.240 the following year and the following year. In ten years 0:03:29.320 --> 0:03:31.640 now there's more, So there's underlying growth. 0:03:31.680 --> 0:03:34.079 I love this simplicit everyone needs a roof. It's like, yeah, 0:03:34.120 --> 0:03:35.840 I actually can't argue with that. All right, keep going. 0:03:35.840 --> 0:03:38.280 Not only does everyone need a roof, but everyone has 0:03:38.320 --> 0:03:40.880 to fix their roof every once in a while, so 0:03:41.080 --> 0:03:43.640 roofs break. You know, fifteen twenty years you need a 0:03:43.720 --> 0:03:47.840 new roof, and you have hurricanes and storms, and if 0:03:47.840 --> 0:03:51.160 your roof is leaking, it's not a discretionary choice. You 0:03:51.240 --> 0:03:54.640 have to fix the roof. So eighty percent of Beacon 0:03:54.720 --> 0:03:57.840 sales is non discretionary if someone needs to fix their roof. 0:03:58.280 --> 0:04:00.760 That's what I like about the business. It's a largely 0:04:00.800 --> 0:04:04.600 nondiscretion stuff foot print. The footprint is North America, so 0:04:04.640 --> 0:04:08.120 it's ninety seven percent United States of America, three percent 0:04:08.120 --> 0:04:12.680 in Canada. Almost everything is manufactured and sold in the US, 0:04:12.800 --> 0:04:15.560 and the stuff that's in Canada is manufactured for the 0:04:15.600 --> 0:04:18.240 most part, and so there's not a tariff issue. So 0:04:18.400 --> 0:04:20.880 it's an interesting business. It's a well positioned business. 0:04:20.920 --> 0:04:22.280 And what do you plan to do with it now 0:04:22.279 --> 0:04:22.720 that you have it. 0:04:22.880 --> 0:04:25.680 I'm going to double the profit the same thing we do, 0:04:26.160 --> 0:04:29.039 the same thing we did at Conway, at XPO, we 0:04:29.200 --> 0:04:31.919 double the profits in three years. Same thing we did 0:04:31.960 --> 0:04:34.160 with norber Dontresongle in Europe, which is a very well 0:04:34.160 --> 0:04:36.919 managed premier company there. We double the profits again in 0:04:36.960 --> 0:04:39.440 three years. We're gonna apply the same playbook. We're going 0:04:39.520 --> 0:04:43.560 to start with communicating and talking to all the people. 0:04:43.640 --> 0:04:46.800 And we announced the deal on Thursday morning, and at 0:04:46.760 --> 0:04:50.000 eleven o'clock we had an all employees zoom and I 0:04:50.040 --> 0:04:52.479 had the privilege and the honor and just the wonderful 0:04:52.520 --> 0:04:55.600 experience of doing the zoom with thousands and thousands of 0:04:56.080 --> 0:04:59.520 Beacon employees. And it was less me lecturing and giving 0:04:59.520 --> 0:05:02.080 a speech and more asking questions and starting to learn 0:05:02.120 --> 0:05:02.560 the business. 0:05:03.080 --> 0:05:07.559 I'm really curious this wasn't officially a hostile takeover, although 0:05:07.600 --> 0:05:10.760 as you mentioned it was, parts of it were hostile ish, 0:05:10.920 --> 0:05:14.680 let's say hostile adjacent. So when you come into a 0:05:14.720 --> 0:05:19.600 company like that that initially resisted your overtures for marriage. 0:05:19.640 --> 0:05:22.279 As you put it, does that make it difficult to 0:05:22.520 --> 0:05:26.200 actually start to integrate this, start to change the business model? 0:05:26.240 --> 0:05:29.000 What is the relationship actually like with the workers? 0:05:29.520 --> 0:05:32.720 Well, it does make it a harder start for about 0:05:32.760 --> 0:05:35.279 ten seconds, but after everyone realizes, Okay, this is done. 0:05:35.279 --> 0:05:37.520 We're buying, we're married, we're getting married here, we're engaged. 0:05:37.720 --> 0:05:40.160 We have to make this work. That's history, that's past, 0:05:40.320 --> 0:05:43.080 and the resistance is more on the senior levels. I've 0:05:43.080 --> 0:05:46.720 been doing zooms since that Thursday. All employees zoom. One 0:05:46.720 --> 0:05:48.800 of the reasons, well, the only reason my voice is 0:05:49.080 --> 0:05:51.560 horse is because I've been doing NonStop zooms. I've been 0:05:51.600 --> 0:05:55.480 doing zooms with fifteen or twenty branch managers and salespeople 0:05:55.520 --> 0:05:58.279 and others at a time for an hour two hours, 0:05:58.440 --> 0:06:01.800 learning the business and reaching out and really understanding two things, 0:06:02.320 --> 0:06:06.680 which are one, what's going great in the company that 0:06:06.760 --> 0:06:09.880 we'd be crazy to change, Like help us understand, like 0:06:09.920 --> 0:06:13.080 what's the strengths of the company that is fantastic. You know, 0:06:13.279 --> 0:06:15.920 it's a ninety seven year old company, it's a serious company. 0:06:16.279 --> 0:06:17.880 What are the good things about it there that we 0:06:17.960 --> 0:06:20.359 got to keep? And then the second question is what 0:06:20.440 --> 0:06:22.719 can we improve what can we do better? What are 0:06:22.760 --> 0:06:24.560 your needs? What are your gaps? How can we help you? 0:06:25.120 --> 0:06:27.120 And we try to keep it simple, and all these 0:06:27.200 --> 0:06:29.960 zooms and town halls we're having, we're trying to just 0:06:30.000 --> 0:06:32.960 ask those two questions. And we sound a survey to 0:06:33.120 --> 0:06:36.599 every employee at Beacon who has an email address, and 0:06:36.640 --> 0:06:40.240 we ask them those two questions. We asked them, what's 0:06:40.279 --> 0:06:43.080 working really well and what's your single best idea to 0:06:43.080 --> 0:06:45.719 improve the company. We're going to read all those thousands 0:06:45.720 --> 0:06:48.800 of responses and we ask them another question. We ask 0:06:48.880 --> 0:06:52.600 them rate your job satisfaction on a scale of one 0:06:52.640 --> 0:06:54.919 to ten, with ten being the most one being the least, 0:06:55.480 --> 0:06:58.000 and we track that. So that's the baseline. So we're 0:06:58.000 --> 0:07:00.600 going to keep surveying the employees and figure out are 0:07:00.640 --> 0:07:03.440 we doing our job in terms of making people happy. 0:07:03.720 --> 0:07:06.479 Are we doing our job of making people want to 0:07:06.480 --> 0:07:08.960 come into work every day and really loving being part 0:07:09.040 --> 0:07:11.480 of this organization. And if we take care of that, 0:07:11.600 --> 0:07:12.960 if we get them a rale up, if we get 0:07:13.000 --> 0:07:16.040 the engagement up, usually everything else falls in place. 0:07:16.480 --> 0:07:19.840 Whether it was your initial due diligence sort of discovering 0:07:20.040 --> 0:07:24.680 Beacon or in your zoom's post acquiring Beacon. What are 0:07:24.760 --> 0:07:26.240 the weaknesses that you believe you. 0:07:26.160 --> 0:07:29.280 Confess So I don't like the word weakness. Okay, what 0:07:29.400 --> 0:07:34.040 are the opportunity? Thanks. That's a subtle reforming, but it's 0:07:34.080 --> 0:07:36.320 important one because you don't want to go into a 0:07:36.320 --> 0:07:39.200 company and demortalize. People say what's wrong with you? You want 0:07:39.200 --> 0:07:41.440 to you want to talk about where can we do better? 0:07:41.840 --> 0:07:42.960 It's working, Okay. 0:07:43.360 --> 0:07:45.480 We can do better under your under your management. 0:07:45.520 --> 0:07:48.920 So the honest answer is I have a lot of hypotheses. 0:07:48.960 --> 0:07:50.760 I have a lot of ideas of things that have 0:07:50.800 --> 0:07:53.040 worked in the other companies that we've run, and this 0:07:53.160 --> 0:07:57.080 so well. But I don't totally know yet such as 0:07:57.880 --> 0:08:00.560 I'm going to do. But I will know in a 0:08:00.560 --> 0:08:02.600 month from now. And the reason I'm going to note 0:08:02.640 --> 0:08:04.240 for a month from now is we're going to get 0:08:04.280 --> 0:08:08.320 the input from thousands of thousands of Beacon employees who 0:08:08.360 --> 0:08:09.840 are in the game every day and have been in 0:08:09.880 --> 0:08:12.200 the running. So I was on a zoom with branch 0:08:12.240 --> 0:08:15.520 managers yesterday from the Northeast where I grew up, and 0:08:16.120 --> 0:08:18.040 some of those branch managers were there for thirty years, 0:08:18.040 --> 0:08:19.800 thirty five years, and we say they're very long in 0:08:19.840 --> 0:08:21.760 the tooth in this business. They get it. They've been 0:08:21.800 --> 0:08:24.240 through all the trials and tribulations, they've run the business 0:08:24.240 --> 0:08:26.920 in good times and bad times, et cetera. I'm learning 0:08:26.920 --> 0:08:28.400 from them, so we're going to modify it. But let 0:08:28.440 --> 0:08:30.360 me ask you a question. So when we go into 0:08:30.360 --> 0:08:32.640 a company, so, how did we double the profits of Conway? 0:08:32.880 --> 0:08:35.880 How do we double the profits at Norbear? It starts 0:08:35.880 --> 0:08:40.280 with the people. It starts with creating an atmosphere, a culture, 0:08:40.400 --> 0:08:45.200 a vibe in the organization where people genuinely, sincerely feel 0:08:45.240 --> 0:08:48.320 their value, they're respected, they're part of it, they're an 0:08:48.360 --> 0:08:51.240 important part of it, and they're an essential part of it. 0:08:51.640 --> 0:08:55.720 And that there's feedback loops. There's two way communication between 0:08:56.080 --> 0:08:59.240 us and every part of the organization. So we're very 0:08:59.640 --> 0:09:02.760 highly self aware organization. That's very critical. That's really the 0:09:02.800 --> 0:09:06.480 first step. The second step is figuring out okay, So 0:09:06.520 --> 0:09:09.240 like Beaking, for example, has a little over eight thousand 0:09:09.280 --> 0:09:12.560 employees who wants to stay so well, Annette will get 0:09:12.600 --> 0:09:14.680 all this input from everybody from all the town halls 0:09:14.679 --> 0:09:17.120 and the zooms and the surveys, and then we'll give 0:09:17.160 --> 0:09:19.280 a first iteration of what we heard and what we 0:09:19.360 --> 0:09:22.040 think we should do to double the profits of the company, 0:09:22.440 --> 0:09:25.160 and then we'll get more feedback and we'll get more iteration, 0:09:25.240 --> 0:09:27.400 and then we'll have a final, final plan that'll be 0:09:27.400 --> 0:09:30.200 the plan. Then we ask everybody, are you on board? 0:09:30.440 --> 0:09:32.000 Do you like the plan? Is this something you have 0:09:32.000 --> 0:09:34.120 your heart into. Is this something you want to spend 0:09:34.240 --> 0:09:36.400 your next many years of your life doing. Is this 0:09:36.440 --> 0:09:40.000 something that gets you inspired and motivated and uplifted and engaged. 0:09:40.040 --> 0:09:41.920 And if so, come out on the pool. Let's join 0:09:42.000 --> 0:09:43.679 the party. And if it's something like you know, I 0:09:43.720 --> 0:09:45.520 don't want to be part of a high performance culture. 0:09:45.600 --> 0:09:47.320 I don't want to move that fast, well. 0:09:47.200 --> 0:09:49.560 Then you know it sounds like you have an intuition 0:09:49.720 --> 0:09:52.800 that the business could run as well as it is 0:09:52.800 --> 0:09:54.840 without as many employees as it has. 0:09:55.160 --> 0:09:56.120 Well, I don't know that yet. 0:09:56.240 --> 0:09:58.480 I mean it sounds like that's sort of what's implies. 0:09:58.840 --> 0:10:01.040 I never want to he really wants to stay. 0:10:01.280 --> 0:10:03.480 No, no, no, I want to be clear about this. 0:10:04.160 --> 0:10:06.439 It's a mistake for me if I would go into 0:10:06.520 --> 0:10:09.720 a company that I bought with final conclusions before I 0:10:09.760 --> 0:10:13.520 have the information. And most of the time you can 0:10:13.640 --> 0:10:16.760 pair back the headcount mostly in the mid and upper 0:10:16.920 --> 0:10:19.560 not in the field. The field often is understaffed because 0:10:19.600 --> 0:10:22.320 companies do these rifts, they do these reductions in force, 0:10:22.360 --> 0:10:25.840 which basically is a HR speak for firing people, and 0:10:26.200 --> 0:10:28.960 they bear the brunt of the cutbacks. And sometimes you 0:10:28.960 --> 0:10:31.360 have to actually add people. You don't have enough salespeople, 0:10:31.720 --> 0:10:34.079 you don't have enough drivers, you don't have enough of 0:10:34.280 --> 0:10:37.360 basic functions. But we're not a private equity firm that 0:10:37.440 --> 0:10:40.040 goes in and just slashes and burns to try to 0:10:40.080 --> 0:10:42.719 get short term profit improvement, because that doesn't work, that's 0:10:42.760 --> 0:10:45.760 not sustainable long term. There'll be places where we need 0:10:45.800 --> 0:10:48.040 to add, there'll be places we need to subtract, and 0:10:48.120 --> 0:10:52.720 we will look. We will do a zero based, blank 0:10:52.760 --> 0:10:56.520 slate analysis of every single position, every single person, every 0:10:56.520 --> 0:11:01.080 single function, to say, is this a headcount that we 0:11:01.160 --> 0:11:03.560 must have, Like we need safety people, like, you can't 0:11:03.559 --> 0:11:07.000 cut back safety people. Is this you need a branch manager? 0:11:07.000 --> 0:11:09.080 They have six hundred branches almost, so they need six 0:11:09.200 --> 0:11:13.200 hundred branch managers. You can't reduce branch managers. So or 0:11:13.240 --> 0:11:15.480 is this something that's a nice to have, so then 0:11:15.520 --> 0:11:18.360 you know, if we have some big extra profits, maybe 0:11:18.360 --> 0:11:20.720 we can have this. But and then the third category 0:11:20.800 --> 0:11:24.080 is like we really don't need this. Somehow Goold got 0:11:24.120 --> 0:11:27.600 into the organization really doesn't belong there. And then we'll 0:11:27.600 --> 0:11:30.320 modify the organization structure. Now I don't know. I really 0:11:30.400 --> 0:11:34.000 don't know whether that'll be a radical restructuring or a 0:11:34.080 --> 0:11:36.800 minor restructuring almost nothing. I don't know yet. We got 0:11:36.800 --> 0:11:39.960 to get into it. We've been outside in until last Thursday. 0:11:40.160 --> 0:11:42.720 But we'll find out. So they answer you your earlier question. 0:11:43.040 --> 0:11:45.480 So people is the first thing. We figure out what 0:11:45.559 --> 0:11:47.240 is the plan? Who wants to be part of this? 0:11:47.960 --> 0:11:51.400 Then we figure out, okay, what are the levers, what 0:11:51.440 --> 0:11:54.079 are the steps, what are the things we got to 0:11:54.200 --> 0:11:57.160 do in order to double the profits? And then who's 0:11:57.200 --> 0:11:59.720 going to be in charge of what? And then we 0:11:59.760 --> 0:12:03.920 take the compensation programs and we align the incentives to 0:12:04.000 --> 0:12:07.720 achieving those metrics for very objective, very concrete things, so 0:12:07.760 --> 0:12:10.840 that once we know the plan and we know the levers, 0:12:11.520 --> 0:12:15.600 we can attach owners to different levers and pay them 0:12:15.679 --> 0:12:18.640 if they succeed. This is the most satisfying thing to 0:12:18.679 --> 0:12:20.760 be paying huge bonuses because the only way you're paying 0:12:20.800 --> 0:12:23.640 those huge bonuses is if you're succeeding. So that's what 0:12:23.679 --> 0:12:25.679 we're trying to do. We're trying to win. So the 0:12:25.720 --> 0:12:28.400 first step is all this people's stuff, all the people's stuff. 0:12:28.880 --> 0:12:31.600 The second step is the actual blood and guts of 0:12:31.600 --> 0:12:35.520 the business. So we're a distributor. Beacon is in the 0:12:35.520 --> 0:12:40.360 middle between a manufacturer who makes shingles and other building products, 0:12:40.679 --> 0:12:43.240 and on the other side the general contractors and the 0:12:43.280 --> 0:12:46.280 home builders who buy these things. So when you just 0:12:46.320 --> 0:12:48.520 step back and look at the business model, it's a 0:12:48.520 --> 0:12:51.040 pretty simple supply chain. So what do you have to do. 0:12:51.520 --> 0:12:53.640 You have to figure out a way that you can 0:12:53.800 --> 0:12:56.960 optimize your procurement. You have to go to your vendors 0:12:57.320 --> 0:13:00.440 and say you can't just go to your vendors and say, hey, 0:13:00.440 --> 0:13:02.280 give me exp percent discount. They're going to say, well, 0:13:02.360 --> 0:13:03.920 like why, like why should they give you better tothing? 0:13:03.960 --> 0:13:07.240 So you have to really understand what would they value, 0:13:07.280 --> 0:13:10.880 what would the OEMs, the original equipment manufacturers, what would 0:13:10.880 --> 0:13:13.400 they appreciate, and what would help them save money so 0:13:13.840 --> 0:13:16.320 you earn a lower price, you get a bigger rebate. 0:13:16.760 --> 0:13:19.800 And so for instance, United Rentals when it bought United Rentals, 0:13:19.880 --> 0:13:22.400 we started buying hundreds of companies. We went to the 0:13:22.840 --> 0:13:26.040 manufacturers of the skid steers and the generators and white 0:13:26.040 --> 0:13:28.000 towers and so forth, and we said, what do we 0:13:28.040 --> 0:13:29.640 got to do to get big discounts on the price, 0:13:29.679 --> 0:13:31.719 because we really want you know, we're bigger. How can 0:13:31.720 --> 0:13:34.079 we get a bigger discount? And they said, well, one 0:13:34.080 --> 0:13:36.280 thing you could do is you could consolidate your vendor 0:13:36.320 --> 0:13:39.120 base so that you know, you have bigger orders with us. 0:13:39.520 --> 0:13:41.480 And the other thing you could do is you give 0:13:41.559 --> 0:13:43.360 us more advanced notice that we can plan more because 0:13:43.360 --> 0:13:45.600 that would save them cost. And so we said, good, 0:13:45.720 --> 0:13:48.640 that's a great partnership. We reduced all those vendors, so 0:13:48.640 --> 0:13:51.640 for instance, area lifts and booms, the scissors, we reduced 0:13:51.640 --> 0:13:54.600 it down to two Genie and JLG. I think they're 0:13:54.640 --> 0:13:57.160 still the only two main vendors for aeral listing, not 0:13:57.240 --> 0:13:59.719 of rentals twenty something years later. So we got big 0:13:59.720 --> 0:14:02.440 discs counts and the manufacturers like, do this. We're gonna 0:14:02.440 --> 0:14:04.640 have to do a similar process with the manufacturers here. 0:14:04.679 --> 0:14:06.400 And then you have on the other end of the 0:14:06.480 --> 0:14:10.760 equation selling. So we're selling all those to customers. Are 0:14:10.800 --> 0:14:14.640 we pricing them right? Are we pricing it methodically scientifically? 0:14:15.040 --> 0:14:17.559 Are we using algorithms? Are we using technology to figure 0:14:17.559 --> 0:14:21.000 out elasticity to figure out if we raise pricing, this 0:14:21.080 --> 0:14:23.000 is how much business will lose, but this is what 0:14:23.040 --> 0:14:25.280 we'll do to profit. If we lower pricing, this is 0:14:25.320 --> 0:14:26.840 how much we will increase volume with. This is due 0:14:26.880 --> 0:14:29.360 to profit and so forth. And the third category of 0:14:29.360 --> 0:14:32.000 stuff to do, Joe is everything in the middle. Making 0:14:32.000 --> 0:14:35.640 sure our cost structure is appropriate, not too lean, but 0:14:35.720 --> 0:14:36.360 not excessive. 0:14:52.520 --> 0:14:54.760 You know, I mentioned in the intro that it's been 0:14:55.040 --> 0:14:57.880 relatively quiet for M and A and deals so far 0:14:57.920 --> 0:15:01.320 this year. I think volumes are act up slightly, but 0:15:01.560 --> 0:15:04.880 certainly we have not seen the deal boom that a 0:15:04.880 --> 0:15:08.760 lot of people were expecting with the new administration. When 0:15:08.760 --> 0:15:11.880 you announced your deal, you said you already have antitrust 0:15:12.000 --> 0:15:15.480 clearance from both the US and Canada. I'm curious what's 0:15:15.560 --> 0:15:20.080 the general vibe from this administration when it comes to 0:15:20.160 --> 0:15:24.400 deal making versus previous administrations. I know you have a 0:15:24.520 --> 0:15:27.760 very very long history of doing deals and you've seen 0:15:27.960 --> 0:15:31.320 lots of different administrations come and go. What was it 0:15:31.440 --> 0:15:32.680 like this time around. 0:15:32.840 --> 0:15:34.840 My teams and I have done over five hundred acquisitions. 0:15:34.840 --> 0:15:37.960 We've never had one deal blocked. We've had a deal 0:15:38.000 --> 0:15:40.480 here there with regulars. They why don't you promise not 0:15:40.520 --> 0:15:43.200 to raise pricing on this category of customer, or we 0:15:43.200 --> 0:15:45.320 can you divest this little part of the business. But 0:15:45.360 --> 0:15:47.960 generally speaking, we haven't had a problem with that here. 0:15:48.400 --> 0:15:50.680 It was very easy to get anti trust clearance. And 0:15:50.680 --> 0:15:52.640 by the way, it was with the previous administration that 0:15:53.400 --> 0:15:56.480 because we don't have any we don't have any existing distributor, 0:15:56.520 --> 0:15:58.520 so it's not like we had a bit we had 0:15:58.560 --> 0:16:01.080 a roofing distributor and buying a roof and distributor, and 0:16:01.120 --> 0:16:02.600 now we're going to get twice the markets here in 0:16:02.600 --> 0:16:04.360 the market where we're entering it for the first time. 0:16:04.640 --> 0:16:06.800 So there really weren't any antitrust considerations. 0:16:07.240 --> 0:16:10.320 What is it about the nature of roofing supplies such 0:16:10.440 --> 0:16:12.920 that they're still domestically made. It seems pretty good that 0:16:12.920 --> 0:16:15.520 you're entering a business in which tariff risk isn't going 0:16:15.600 --> 0:16:18.760 to be much of a risk factor for the business. 0:16:19.120 --> 0:16:22.760 Why are roofing supplies still in twenty twenty five more 0:16:22.880 --> 0:16:24.800 or less built where they're used? 0:16:25.200 --> 0:16:26.800 You know, it's just the way it worked out. It 0:16:26.880 --> 0:16:29.720 worked out over time that American manufacturers figured out a 0:16:29.720 --> 0:16:34.040 way even though we have higher labor costs than overseas 0:16:34.080 --> 0:16:38.040 countries to produce singles that the American consumer wanted, which 0:16:38.080 --> 0:16:40.000 is a little bit different. You go country to country 0:16:40.000 --> 0:16:42.240 in Europe, even they have different specs for the shingles. 0:16:42.360 --> 0:16:44.160 You go in Age, they have different specs because there's 0:16:44.160 --> 0:16:48.400 different environments, there's different climates, there's different cultural there's different appearances, 0:16:48.440 --> 0:16:51.480 there's different colors and textures and so forth. And American 0:16:51.560 --> 0:16:54.400 manufacturers did a real good job at that. Now maybe 0:16:54.400 --> 0:16:56.160 that's a good model. Maybe that's a good model for 0:16:56.200 --> 0:16:59.840 other manufacturing that went overseas over the last few decades 0:16:59.840 --> 0:17:03.120 that maybe those manufacturers need up their game and figure 0:17:03.120 --> 0:17:05.920 out what is it that's our specially, what's our strength. 0:17:06.200 --> 0:17:08.720 What is it that even with higher labor costs here 0:17:08.760 --> 0:17:11.120 in the United States, we can please the customer more. 0:17:11.440 --> 0:17:14.160 And the other advantage of American manufacturers selling in America 0:17:14.240 --> 0:17:17.040 is you don't have all this transportation costs. It costs 0:17:17.080 --> 0:17:19.760 a lot of money to move goods thousands of thousands 0:17:19.800 --> 0:17:22.520 of miles, and you also have shorter lead times because 0:17:22.560 --> 0:17:26.400 you're right here. So I actually am bullish about American manufacturing. 0:17:26.720 --> 0:17:30.200 I think American manufacturing fast forward five years from now, 0:17:30.359 --> 0:17:31.880 ten years from I think it's been a lot more 0:17:32.040 --> 0:17:32.800 here on shore. 0:17:33.680 --> 0:17:37.439 Your initial takeover target, though, was a company called Rexul, 0:17:37.480 --> 0:17:41.720 which I think is a French electric equipment supplier. Is 0:17:41.760 --> 0:17:45.080 that right, okay? And they said no, they rejected you, 0:17:45.720 --> 0:17:49.040 and you've moved on pretty quickly. Why did you change 0:17:49.040 --> 0:17:51.119 your minds on that one? Is it the case that 0:17:51.359 --> 0:17:54.159 French companies are harder to buy than American ones or 0:17:54.200 --> 0:17:57.320 are you worried perhaps about how tariffs would impact that 0:17:57.440 --> 0:17:59.159 business versus something like roofing. 0:18:00.080 --> 0:18:02.520 Well, we never confirmed that we were talking to that 0:18:02.560 --> 0:18:10.679 company publicly. Somehow some reporter got that through journalism. But 0:18:11.160 --> 0:18:14.280 when we were reportedly looking at that French based company, 0:18:14.280 --> 0:18:16.720 which has a lot of its biggest countries the United States. Actions, 0:18:16.760 --> 0:18:18.840 when we were looking at that, we're reportedly looking at that. 0:18:19.560 --> 0:18:21.959 This was still in the previous administration. There wasn't tariffs 0:18:22.200 --> 0:18:25.400 wasn't really in the air, So it really wasn't about terriffs. 0:18:25.520 --> 0:18:28.600 It wasn't that some other company was not good. The 0:18:28.600 --> 0:18:31.639 company mentions actually a really good company and has great prospects. 0:18:32.040 --> 0:18:34.639 But Beacon was perfect for us. I mean, Beacon is 0:18:34.680 --> 0:18:37.720 absolutely perfect for our particular skill set, the kind of 0:18:37.720 --> 0:18:40.640 things we do to increase the profits of a company. 0:18:41.080 --> 0:18:43.720 This applies to Beacon, which is why I did, which 0:18:43.760 --> 0:18:45.600 I is something I've only done once before in my 0:18:45.640 --> 0:18:47.879 life out of more than five hundred acquisitions, which is 0:18:48.480 --> 0:18:52.040 I did an unsolicited a takeover. We proposed an alternative slate, 0:18:52.119 --> 0:18:54.720 and we did a proxy solicitation, and it was because 0:18:54.800 --> 0:18:56.840 it was such a good match. It was a match 0:18:56.880 --> 0:18:59.200 made in heaven that we should just not run away from. 0:18:59.680 --> 0:19:03.400 Yes, speaking of this, so you raised your offer right 0:19:03.480 --> 0:19:06.600 after the initial rejection. And right now I am looking 0:19:06.720 --> 0:19:10.560 at a chart of shares of a company called James Hardy. 0:19:10.960 --> 0:19:14.080 It's an Australian company and they just announced that they 0:19:14.119 --> 0:19:19.760 were buying something and their stock has tanked because people 0:19:19.800 --> 0:19:22.679 are worried that they've overpaid for a US asset in 0:19:22.720 --> 0:19:25.480 the current environment. Do you worry at all that you've 0:19:25.520 --> 0:19:29.159 overpaid after adding on you know, pretty decent premium. 0:19:29.600 --> 0:19:31.639 Well, I'm not in the reads that deal because that's 0:19:31.640 --> 0:19:33.680 the manufacturers and I'll follow it as closely, but from 0:19:33.720 --> 0:19:35.800 what I've read, it looks like they paid something like 0:19:35.880 --> 0:19:39.040 nineteen times ibadah and we paid ten and a half 0:19:39.040 --> 0:19:42.320