SiteOne Landscape Supply, Inc. Q4 FY2025 earnings call

• In 2025, the company achieved solid results with 4% net sales growth, 1% Organic Daily Sales growth, and 10% growth in adjusted EBITDA despite flat pricing and lower end market demand. - Key initiatives include improving customer experience, accelerating organic growth, expanding gross margin, and increasing SG&A leverage. For gross margin, they focus on increasing sales to small customers, growing private label brands, and improving inbound freight costs. - The company increased the percentage of bilingual branches and executed Hispanic marketing programs. Digital initiatives with siteone.com helped drive Organic Daily Sales growth. - They consolidated and closed 20 branches in the fourth quarter of 2025 and plan to serve existing customers at a lower cost. - The company completed 8 acquisitions in 2025 and had its first acquisition in 2026, with a robust pipeline of potential deals.

In the fourth quarter of 2025, SiteOne achieved 3% net sales growth, with Organic Daily Sales up 2%. For the full year 2025, net sales grew 4%, Organic Daily Sales increased 1%, and adjusted EBITDA rose 10% to $414.2 million. The company's product mix is balanced with 66% focused on maintenance, repair and upgrade, 20% on new residential construction, and 14% on new commercial and recreational construction. Gross profit for 2025 increased 5%, and gross margin improved 40 basis points to 34.8%. SG&A as a percentage of net sales decreased 40 basis points to 30.1% for the full year.

• For 2026, pricing is expected to be up 1% to 3% Organic Daily Sales. - The company expects full year adjusted EBITDA to be in the range of $425 million to $455 million, excluding contributions from unannounced acquisitions. - There is an extra week in 2026 which is seasonally slow, resulting in a $4 million to $5 million EBITDA headwind. - They anticipate low single-digit organic growth for 2026, with maintenance end market expected to grow steadily and new residential construction expected to be down.

• End market uncertainty remains a risk. - Competitive market conditions could impact market share. - Inflation, including in wages and SG&A, poses a risk. - The extra week in December 2026 has a negative impact on EBITDA as it is a slow sales period. - Branch closures may have some initial negative impacts on SG&A, though they typically retain most sales.

Q: David Manthey with Baird asked about EBITDA contribution margins and 2026 guidance.

A: Doug Black stated that they are able to get strong EBITDA contribution margins due to improving gross margin, SG&A leverage, and focus branch improvements, and expect similar in 2026 with low single-digit organic growth implying mid- to high-teens EBITDA improvement.

Q: Ryan Merkel with William Blair inquired about 1Q outlook and share gains.

A: Doug Black said growth is expected to be balanced, with stronger pricing in the first half, and they are confident in gaining market share despite a competitive market.

Q: Jeffrey Stevenson with Loop Capital Markets asked about operating leverage benefits and private label growth.

A: Eric Elema said focus branches will continue to contribute, and Doug Black mentioned a long-term target of 25%-30% private label sales.

Q: Collin Verron with Deutsche Bank asked about maintenance sales growth and new resi declines.

A: Eric Elema said agronomics growth in maintenance was 7% in 2025, and Doug Black noted new resi is 20% of business and expected to be down, with maintenance balancing it out.

Q: Michael Dahl with RBC Capital Markets asked about branch closures and extra week impact.

A: Doug Black said they typically retain 75%-80% of sales from closures, and Eric Elema said the extra week in December has a 100 basis point negative drag on full-year organic growth.

Q: Elaine Ku with Barclays asked about private label categories and price realization.

A: Doug Black mentioned private label categories like LESCO, Pro-Trade, Solstice Stone, and Portfolio, and Eric Elema said price realization is tracking as expected with some commodities stabilizing.

Q: Charles Perron-Piché with Goldman Sachs asked about M&A pipeline and fifth distribution center.

A: Scott Salmon said M&A activity is expected to normalize, and Doug Black discussed the benefit of the fifth distribution center in Wisconsin for improving margins and service.

Q: Shaun Calnan with Bank of America asked about M&A capital deployment and repair and upgrade stability.

A: Doug Black said they aim to maintain leverage ratio, and discussed the stability of repair and upgrade market with some stabilization seen in certain segments.