We think we’re executing very well on that. We see that in our numbers. So we believe we can grow. Obviously, the Greenfield strategy is core to that, but acquisitions certainly will help. Now the flip side to that is we’ll be lapping coastal, which was the largest one that we’ve done. So that’s not going to provide it. They have to now continue to grow in their markets in order to generate additional growth year-over-year, but we think they can do that as well.
Frank Lonegro: Hey, Phil, so maybe it’s helpful for me to dimensionalize Q3 for you a little bit and then talk about Q4 on M&A. So the $114 million of M&A Q3 year-over-year about — let me just break it down by LOB, because I think it would be helpful for you. There’s probably about $25 million of that, that’s in the resi side, $10 million or so, just a little less than that on the non-res side. And then predominantly, it’s $80 million, $85 million of complementary. The majority of that is Coastal. So obviously, we’re going to lap that to Julian’s point a second ago. But I think it gives you a little bit of an LOB mix that will be helpful. We’ve added at least recently, Garvin and H&H that Julian mentioned, some of the other ones that Julian mentioned in his prepared remarks. So you’re probably in the $60 million range, $55 million, $60 million range in Q4 on a year-over-year basis for acquisitions.
Philip Ng: Okay. Great.
Operator: Thank you for your question. The next question is from the line of Marius Morar with Zelman & Associates. Your line is now open.
Marius Morar: Good evening. Thank you for taking my question. Just a quick one on non-res. Are you seeing any grade down to lower-priced products, let’s say, liquid supplied, where you’re going to build up growth?
Julian Francis: Marius, thanks for the question. No, I don’t believe that we’re seeing any abnormal shifts towards lower-priced products right now. We think that overall, we obviously came into the year and underestimated the amount of inventory that was at the contractor level. We’ve seen that. But that was primarily in the product categories of the insulation and the single-ply membranes. Obviously, that’s been worked through. We’ve seen steady improvements in our overall marketplace. And as we said, we now see positive growth in the fourth quarter, as we expected. But we haven’t seen any particular shift that I would call notable or noteworthy in terms of the types of products that are being used and certainly not one, where I would say it’s clearly trending towards lower priced products.
Frank Lonegro: Marius, the only thing we did see was as the contractors had primary products and destocked, they oftentimes came to us for adhesives or fasteners or cover boards or things like that, that go into items that we don’t necessarily track as tightly as we do single-ply and ISO. So we — that was very consistent with what we’ve been saying about contractor destocking, but nothing that’s sort of a quantum shift in what’s happening in the marketplace itself.
Marius Morar: Thank you. Appreciate it.
Operator: Thank you for your question. The next question is from the line of Truman Patterson with Wolfe Research. Your line is now open.
Truman Patterson: Hey, good evening guys. Thanks for taking my question. You all have been able to grow your digital sales. I think you said it’s 22% of residential now. Is there any way you could put out a target of where you think you could get that percentage to of the segment over time? And then also, what are some of the digital advantages that you all offer that some of your smaller competitors don’t replicate or can’t offer?
Julian Francis: Sure, Truman. Thanks for the question. First of all, if you go back to our Ambition 2025 plan, we indicated that our target for the digital sales through our platform was around 25% of total sales. So if you think about the $9 billion that we said we were kind of targeting 25% of that $9 billion. What we’ve seen is residential sales to that have continued to grow and have been growing quickly. What we did see during the challenges on the supply chain side in the commercial product lines was an actual decline in that because of the supply chain, we believe, the tightness, people are actually picking up and calling and trying to get a hold of what was actually in inventory, shopping it around. So it was much less certain for people to — for our contractor customers to come in and be certain that they could get all the products they wanted because things are so tight.
So we actually saw a bifurcation in those two categories. So res has continued to grow. I think we also learned that we need to enhance our offering on the digital side in the commercial space, as well as some things that we learned through that whole process that suggest that we need to reinvest in that, and we are doing that. So hopefully, that gives you a sense. We’re really targeting north of $2 billion of sales through that channel in our Ambition 2025 target. The longer-term target, look, we continue to see res grow fast. We need to pick it up. I don’t see why it can’t be north of 40%, 50% over the next five years, 10 years is — I don’t think there’s any reason why not and probably beyond that. It’s clear by the growth even in the residential side, particularly with integrations and things that are happening on direct connect to contractors that are becoming more sophisticated, that there is a real desire for it to go that way.
So where the end game is on this, I mean it’s — I don’t know that we know that it’s anything less than 100, but it’s certainly more than where we are today. In terms of the differentiation, I think that’s really important. Look, when you can leverage the type of spend that you need to make across 500-plus locations, you can bring it into our acquisitions quickly. One of the key things that we hear from both acquisition targets and the companies that sell to us, is it something that they could not do. It wasn’t a — hey, we were trying it. It’s just the investment is too large to make to scale over one, two, five, 10 branches. It just doesn’t justify the return and their customers were demanding it. So it’s one of the key — the key differentiation point, now the smaller customers — sorry, the smaller competitors that we have just aren’t going to do it.
When it comes to some of the larger space customers, obviously, they’re going to build their digital capabilities. It’s incumbent upon us to continue to maintain that lead. We think we have the most complete offering. We think that the learnings that we’ve had from being in it longer, give us an advantage by giving us greater insight. We’ve got more data that’s going through it. This is something that Beacon is known for in the contractor base, and it’s something that particularly the larger contractors value, they want that integration. They want to drive efficiencies in their operations. And they know they can get that with us because we have the most complete offering from quoting, all the way through to payment. So it’s really a full service offering that we have.
And we believe we’ve — we’ll continue to build on that lead. And as you rightly said, it’s a — it is a significant differentiator for us, particularly against the smaller competitors, but also, we believe against our larger competitors.
Truman Patterson: Great. Thank you all.
Operator: Thank you for your question. The next question is from the line of David MacGregor with Longbow Research. Your line is now open.
