SiteOne Landscape Supply, Inc. earnings

Management highlights

• Overcame weather and market-related softness, achieved 14% adjusted EBITDA growth with gross margin expansion and tight SG&A management. • Acquired Reinders, a strong market leader in the Midwest for irrigation, agronomics, and lighting products. • Volume improved in April with delayed spring season. • Macro-economic uncertainty may keep end markets soft, but pricing expected to be stronger. • Commercial and operational initiatives include private label product growth, increasing bilingual branches, improving Salesforce productivity, and working on focus branches for margin improvement.

Guidance

• Expect low single-digit organic daily sales growth for 2026 with 2%-3% pricing growth. • Gross margin expected to be higher than 2025 due to price realization and commercial initiatives, partially offset by higher freight and logistics costs. • Expect operating leverage in 2026, yielding solid improvement in adjusted EBDA margin. • Full-year adjusted EBDA for fiscal 2026 expected to be in the range of $425 million to $455 million, not factoring in unannounced acquisitions. • Extra week in 2026 expected to reduce adjusted EBDA by 4-5 million.

Segment performance

Net sales were 940 million, essentially flat year over year, with organic daily sales down 1%. Gross profit increased 3%, and gross margin improved by 90 basis points to 33.9%. SG&A as a percent of net sales increased 70 basis points to 37.2%. Adjusted EBDA for the quarter increased 14 percent to 25.5 million versus the prior year period, and adjusted EBDA margin expanded 30 basis points to 2.7%. Acquired grinders, a strong fifth-generation market leader in irrigation, agronomics, and landscape lighting in the Midwest, which will contribute to growth. Net sales contribution: maintenance 66%, new residential construction 20%, new commercial and recreational construction 14%.

Risks & headwinds

• Macroeconomic uncertainty could continue to affect end markets, especially new residential construction and repair and upgrade. • Energy volatility and higher interest rates may negatively impact the market. • Difficulty in quantifying the exact impact of weather on sales. • Uncertainty in passing through price increases to customers in a shaky demand environment.

Analyst Q&A

• Q: David Manthe with Baird asked about commercial and operational initiatives for long-term margin improvement and top impacts in 2026.

  A: Doug Black discussed private label, small customers, focus branches, delivery efficiency as key areas.

• Q: Ryan Merkle with William Blair asked about weather impact and macro on the quarter.

  A: Doug Black said weather affected volume and macro uncertainty led to modestly down market guide.

• Q: Mike Dahl with RBC Capital Markets asked about margin breakdown and SG&A dynamics.

  A: Doug Black said expected SG&A leverage in Q2-Q3, Q4 affected by extra week, gross margin expected to expand.

• Q: Keith Hughes with True Securities asked about price increase pass-through and PVC pipe.

  A: Doug Black said price increases have been passed through and working with suppliers.

• Q: Matthew Boulay with Barclays asked about gross margin from commercial initiatives and Rinders margin profile.

  A: Doug Black said private label and small customers contribute to gross margin and Rinders has synergies.

• Q: Jeffrey Stevenson with Loop Capital Markets asked about fertilizer shortages impact on maintenance demand and Rinders integration.

  A: Doug Black said fertilizer increase not affecting demand much and Rinders has synergies.

• Q: Charles Prone-Peach with Goldman Sachs asked about customers using digital tools and capital allocation.

  A: Doug Black said customers using digital more and capital allocation is opportunistic.

• Q: Sean Kalman with Bank of America asked about April volume improvement and price increase pull forward.

  A: Doug Black said volume improved and customers pull forward purchases.

• Q: Colin Perron with Deutsche Bank asked about inventory costs and freight expenses.

  A: Doug Black said inventory costs related to private label and freight expenses due to diesel and distribution.

• Q: Matt Johnson with UBS asked about fertilizer inventory and focus branches.

  A: Doug Black said fertilizer supply is good and focus branches can improve profitability.

• Q: Andrew Carter with Steeple asked about Rinders contribution to EBITDA.

  A: Doug Black said Rinders is expected to be profitable and adds flexibility to EBDA range.