B2B Distributors Beat DJIA and S&P 500
Q4 Tech Leaders and Laggards Report
Hi everyone,
With all of the excitement in the back half of this quarter, we didn’t get to our quarterly Tech Leaders & Laggard update!
As a reminder, we’ve created a proprietary index of large, publicly traded B2B Distributors and tracked their performance over many years. We broke them up into two cohorts: those that publicly disclose and prioritize digital commerce (leaders) and those that don’t (laggards).
The cohorts have remained static ever since its inception and we haven’t ever disclosed the members of the index. However, with the upcoming Beacon acquisition, we’ll have to make our first-ever adjustment.
Looking at our EV/EBITDA chart below, it perfectly sums up Brad Jacobs’ thesis on BECN:
BECN’s EV/EBITDA ratio has been historically at or below the Laggards’ average
QXO bought BECN for a ~12x EV/EBITDA depending on how you normalize the numbers. A 12X is roughly right in the middle between the Leaders’ and Laggards’ averages
Through technology investment and new management, QXO will look to bring Beacon’s EV/EBITDA in line with the Leaders which would increase Beacon’s value by about a third. And, they can use it as a platform to expand into other building products verticals
Other notable news:
PartsTech acquired by OE Connection
BuildOps $127M Fundraise, Unicorn Status
IngramMicro Using AI to become a Platform company, shed title of a Distributor
Lot of buzzwords in here, yes. Here’s the full story – in an interview with IngramMicro’s President of Global Platform, he talked about how the $48B revenue IT distributor is using AI to solve age-old problems that have plagued their industry. The excerpts below are applicable to all of B2B distribution and we thought were notable to highlight:
“Today, it takes months or even years to integrate systems between [distributor customers] and vendors,” Sahoo explained. “Our Integrations Hub can instantly connect partners, eliminating those lengthy integration processes.”
“We can now use AI to understand which customers have a higher conversion potential, whether it’s for an AI PC or a hardware solution,” he said. “We’re creating a win-win scenario for vendors, distributors, resellers, and end customers.”
“Data is the most important thing for supply chain,” said Sahoo. “We cannot simply take orders and fulfill them. We need to link demand and supply through intelligent data analysis.”