Q1 2024 SiteOne Landscape Supply Inc Earnings Call

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Operator: Good morning, and welcome to the SiteOne Landscape Supply first quarter 2024 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to John Guthrie, CFO. Please go ahead. Thank you, and good morning.

Speaker Change: Good morning, and welcome to the site one landscape supply first quarter 2024 earnings call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing Star then zero on your telephone keypad.

Speaker Change: After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad.

Speaker Change: Withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to John Guthrie CFO. Please go ahead.

John T. Guthrie: Thank you and good morning everyone. We issued our first quarter 2024 earnings press release this morning and posted a slide presentation to the investor relations portion of our website at investors.siteone.com. I'm joined today by Doug Black, our Chairman and Chief Executive Officer, and Scott Salmon, Executive Vice President, Strategy and Development. Before we begin, I would like to remind everyone that today's press release, slide presentation, and the statements made during the call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

John T. Guthrie: Thank you and good morning, everyone. We issued our first quarter 2024 earnings press release, this morning, and posted a slide presentation to the Investor relations portion of our website at investors <unk> com.

John T. Guthrie: I'm joined today by Doug Black, our chairman and Chief Executive Officer, and Scott Salmon Executive Vice President strategy and development.

John T. Guthrie: Before we begin I would like to remind everyone that today's press release slide presentation and the statements made during the call include forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.

John T. Guthrie: These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. Thus, these risks and uncertainties include factors set forth in the earnings release and in our filings with the Securities and Exchange Commission. Additionally, during today's call, we will discuss non-GAAP measures, which we believe can be useful in evaluating our performance. A reconciliation of these measures can be found in our earnings release and in the slide presentation. I would now like to turn the call over to Doug Black.

John T. Guthrie: These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections.

John T. Guthrie: Such risks and uncertainties include factors set forth in the earnings release and in our filings with the Securities and Exchange Commission.

John T. Guthrie: Additionally, during today's call, we will discuss non-GAAP measures, which we believe can be useful in evaluating our performance.

John T. Guthrie: A reconciliation of these measures can be found in our earnings release and in our slide presentation.

John T. Guthrie: I would now like to turn the call over to Doug Black.

Doug Black: Thanks, John. Good morning, and thank you for joining us today. During the first quarter, our teams continued to execute well, overcoming persistent commodity price deflation and poor weather in our stronger construction markets to achieve positive organic daily sales growth and good overall growth in net sales. However, our near-term adjusted EBDA results were dampened during the traditionally slower first quarter. We believe that we will be able to expand our adjusted EBDA margin for the full year as we move through the selling season and recover from the price declines experienced during the second half of 2023.

Doug Black: Thanks, John Good morning, and thank you for joining us today during.

Doug Black: During the first quarter, our teams continued to execute well overcoming persistent commodity price deflation and poor weather in our stronger construction markets to achieve positive organic daily sales growth and good overall growth in net sales.

Doug Black: So our near term adjusted EBITDA results were dampened during the traditionally slower first quarter. We believe that we will be able to expand our adjusted EBITDA margin for the full year.

Doug Black: Through the selling season and last the price declines experienced during the second half of 2023.

Doug Black: We were also pleased and two high performing companies decide one in April.

Doug Black: We were also pleased to add two high-performing companies to SiteOne in April, including Devil Mountain, which is an exciting new platform for growth in our nursery product line in the western United States. Both companies have talented teams and strong customer relationships, and they expand our product lines and market presence in their respective markets. Through our acquisition strategy and our commercial and operational initiatives, we continue to build SiteOne for the long term as a world-class market leader while delivering consistent performance and growth in the near term.

Doug Black: Leading Devil Mountain, which is an exciting new platform for growth in our nursery product line in the Western United States.

Doug Black: Most companies have talented teams and strong customer relationships and expand our product lines and market presence in their respective markets.

Doug Black: Through our acquisition strategy and our commercial and operational initiatives. We continue to build site one for the long term as a world class market leader.

Doug Black: And consistent performance and growth in the near term.

Doug Black: With our well-balanced business, strong balance sheet, exceptional teams, improved capabilities, and robust acquisition pipeline, we remain confident in our ability to navigate the current environment and achieve continued success in 2024 and beyond. I will start today's call with a brief overview of our unique market position and our strategy, followed by some highlights from the quarter. John Guthrie will then walk you through our first quarter financial results in more detail and provide an update on our balance sheet and liquidity position.

Doug Black: With our well balanced business strong balance sheet exceptional teams improved capabilities and robust acquisition pipeline, we remain confident in our ability to navigate the current environment and achieve continued success in 2024 and beyond.

Doug Black: I will start today's call with a brief overview of our unique market position and our strategy.

Doug Black: Followed by some highlights from the quarter.

Doug Black: John Guthrie will then walk you through our first quarter financial results in more detail.

John T. Guthrie: And provide an update on our balance sheet and liquidity position.

Scott Salmon: Scott Salmon will discuss our acquisition strategy, and then I will come back to address our latest outlook before taking your questions. As shown on slide 4 of the earnings presentation, we have grown our footprint to more than 690 branches and four distribution centers across 45 U.S. states and six Canadian provinces.

John T. Guthrie: Scott Salmon will discuss our acquisition strategy and then I will come back to address our latest outlook before taking your questions.

John T. Guthrie: As shown on slide four of the earnings presentation, we have grown our footprint to more than 690 branches and four distribution centers across 45 U S States and six Canadian provinces.

Scott Salmon: We are the clear industry leader over three times the size of our nearest competitor and larger than two through 10 combined.

Doug Black: We are the clear industry leader, over three times the size of our nearest competitor and larger than two through ten combined. Yet, we estimate that we only have about a 17% share of the very fragmented $25 billion wholesale landscaping products distribution. Accordingly, our long-term growth opportunity remains significant. We have a balanced mix of business, with 65% focused on maintenance, repair, and upgrade. 21% focused on new residential construction, and 14% on new commercial and recreational construction.

Speaker Change: Yeah, we estimate that we only have about a 17% share of the very fragmented $25 billion wholesale landscaping products distribution market.

Speaker Change: Accordingly, our long term growth opportunity remains significant.

Speaker Change: We have a balanced mix of business, 65% focused on maintenance repair and upgrade.

Speaker Change: 21% focused on new residential construction and 14% on new commercial and recreational construction.

Speaker Change: As the only national full product line wholesale distributor in the market. We also have excellent balance across our product lines as well as geographically.

Doug Black: As the only national full-product line wholesale distributor in the market, we also have excellent balance across our product lines as well as geographically. Our strategy to fill in our product lines across the U.S. and Canada, both organically and through acquisition, further strengthens this balance over time. Overall, our end market mix, broad product portfolio, and geographic coverage offer us multiple avenues to grow and create value for our customers and suppliers, while providing important resiliency and softer markets. Turning to slide five, our strategy is to leverage the scale, resources, functional talent, and capabilities that we have as the largest company in our industry. All in support of our talented, experienced, and entrepreneurial local teams.

Speaker Change: Our strategy to fill out our product lines across the U S and Canada, both organically and through acquisition further strengthens this balance over time.

Speaker Change: Overall, our end market mix broad product portfolio and geographic coverage offers multiple avenues to grow and create value for our customers and suppliers, while providing important resiliency in softer markets.

Speaker Change: Turning to slide five our strategy is to leverage the scale resources functional talent and capabilities that we have as the largest company in our industry.

Speaker Change: All of the support of our talented experienced and entrepreneurial local teams.

Doug Black: We consistently deliver superior value to our customers and suppliers. We've come a long way in building SiteOne and executing our strategy, but we have more work to do as we develop into a true world-class company. Accordingly, we remain highly focused on our commercial and operational initiatives to further build our capability to create value for all our stakeholders. These initiatives are complemented by our acquisition strategy, which fills in our product portfolio, moves us into new geographic markets, and adds terrific new talent to SiteOne.

Distantly deliver superior value to our customers and suppliers.

Speaker Change: We've come a long way in building site one in executing our strategy, we have more work to do as we develop into a true world class company.

Accordingly, we remain highly focused on our commercial and operational initiatives to further build our capability to create value for all our stakeholders.

Speaker Change: These initiatives are complemented by our acquisition strategy, which fills in our product portfolio.

Speaker Change: It moves us into new geographic markets, and that's terrific new talent the sidewalk.

Doug Black: Taken all together, our strategy creates superior value for our shareholders through organic growth, acquisition growth, and EVDA Margin Expansion. If you turn to slide 6, you can see our strong track record of performance and growth over the last 8 years. Consistent Organic and Acquisition Growth and Solid EBDA Margin Expansion. We have done this while investing heavily in our teams and in these systems and technologies to build the foundation for SiteOne and to create superior capabilities for our customers and suppliers.

Speaker Change: They can altogether, our strategy creates superior value for our shareholders through organic growth acquisition growth and EBITDA margin expansion.

If you turn to slide six you can see our strong track record of performance and growth over the last eight years with consistent organic and acquisition growth and solid EBITDA margin expansion.

We have done this while investing heavily in our teams and in new systems and technologies to build the foundation for side, one and to create superior capabilities for our customers and suppliers.

Speaker Change: Shifting to current conditions, we're experiencing commodity price deflation, which causes a temporary negative impact on organic daily sales growth gross margin and adjusted EBITDA margin.

Doug Black: Adjusting to current conditions, we are experiencing commodity price deflation which has a temporary negative impact on organic daily sales growth, gross margin, and adjusted EBDA margin. We expect this negative impact to subside in the second half of 2024.

Speaker Change: We expect this negative impact to subside in the second half of 2024.

Speaker Change: Longer term, we have ample opportunities to increase our gross margin and improve our operating leverage through our commercial and operational initiatives.

Doug Black: Longer term, we have ample opportunities to increase our gross margin and improve our operating leverage through our commercial and operational initiatives. Accordingly, we remain confident in our strategy to drive revenue growth both organically and through acquisition, while expanding our adjusted EVDA margin toward our longer-term objective of 13% to 15%. We have now completed 93 acquisitions across all product lines since the start of 2014.

Accordingly, we remain confident in our strategy to drive revenue growth, both organically and through acquisition.

Speaker Change: Expanding our adjusted EBITDA margin toward our longer term objective of 30.

Speaker Change: 14% to 15%.

Speaker Change: We've now completed 93 acquisitions across all product lines since the start of 2014.

Doug Black: Our pipeline of potential deals remains robust, and we expect to continue adding and integrating more new companies this year to support our growth. These companies strengthen SiteOne with excellent talent and new ideas for performance and growth. Given the fragmented nature of our industry and our modest market share, we have a significant opportunity to continue growing through acquisition for many years to come. Slide 7 shows the long runway that we have ahead of us in filling in our product portfolio, which we aim to do primarily through acquisition, especially in the nursery, hardscapes, and landscape supplies category.

Speaker Change: Our pipeline of potential deals remains robust and we expect to continue adding and integrate new companies this year to support our growth.

Speaker Change: The company's strengthened site, one with excellent talent and new ideas for our performance and growth.

Speaker Change: Given the fragmented nature of our industry and our modest market share we have a significant opportunity to continue growing through acquisition for many years to come.

Speaker Change: Slide seven shows the long runway that we have had in filling in our product portfolio, which we aim to do primarily through acquisition, especially in the nursery <unk> and landscape supplies categories.

Doug Black: We are well connected with the best companies in our industry and expect to continue expanding in these markets systematically over the next decade. I will now discuss some of our first quarter highlights, as shown on slide 8.

Speaker Change: Well connected with the best companies in our industry and expect to continue filling in these markets systematically over the next decade.

Speaker Change: I will now discuss some of our first quarter highlights as shown on slide eight.

Doug Black: We achieved 8% net sales growth in the first quarter, with organic daily sales growth of 1% and 7% added through acquisitions. Organic sales volume grew by 5% as our teams continued to gain market share to supplement the sluggish market demand. Overall pricing declined 4% for the quarter, as double-digit deflation in commodity products like fertilizer, seed, and PVC pipe more than offset very modest cost increases in our other product lines.

Speaker Change: We achieved 8% net sales growth in the first quarter with organic daily sales growth of 1%.

And 7% added through acquisition.

Speaker Change: Organic sales volume grew by 5% as our teams continued to gain market share to supplement the sluggish market demand.

Speaker Change: Overall pricing declined 4% for the quarter as double digit deflation in commodity products like fertilizer seed and PVC pipe more than offset very modest cost increases in our other product lines.

Speaker Change: Gross profit increased 5% driven by our acquisitions and our gross margin decreased 100 basis points to 33, 3%.

Doug Black: Gross profit increased 5% driven by our acquisitions, and our gross margin decreased 100 basis points to 33.3%. This result was in line with our expectations as the ongoing price deflation in commodity products continues to drive a near-term headwind to gross margins. Additionally, in the first quarter of 2023, we were still enjoying significant price inflation, which aided gross margins, thereby providing a tougher comparable.

Speaker Change: This result was in line with our expectations.

Speaker Change: Ongoing price deflation in commodity products continues to drive our near term headwind to gross margin.

Additionally, in the first quarter of 2023, we were still enjoying significant price inflation, which aided gross margin.

Speaker Change: Thereby providing a tougher comparison.

Doug Black: Acquisitions increased our gross margin in the first quarter as our mix of acquired companies operates with a higher gross margin and higher SG&A. Our SG&A, a percentage of net sales, increased by 140 basis points to 36.2%. This increase was driven by our acquisitions and by a significant increase in our healthcare costs in the base business. We expect the healthcare costs to stabilize during the remainder of the year, and we expect to gain good SG&A leverage on our base business as we move through the main selling season in the second and third quarters.

Speaker Change: Acquisitions increased our gross margin in the first quarter as our mix of acquired companies operate with a higher gross margin and higher SG&A.

Speaker Change: Our SG&A as a percentage of net sales increased by 140 basis points to 36, 2%.

Speaker Change: This increase was driven by our acquisitions and by a significant increase in our health care costs in the base business.

Speaker Change: We expect the health care cost to stabilize during the remainder of the year and we expect to gain good SG&A leverage on our base business as we move through the main selling season in the second and third quarters.

Doug Black: As a result, we expect to achieve SG&A operating leverage for the full year 2024. We have a significant opportunity to achieve further SG&A leverage over the coming years as we implement our commercial and operational initiatives. [inaudible] Adjusted EBITDA for the quarter declined 47% to $21.1 million, and adjusted EBDA margin declined by 250 basis points to 2.3%, as the combination of lower organic daily shales.

Speaker Change: As a result, we expect to achieve SG&A operating leverage for the full year 2024.

We got a significant opportunity to achieve further SG&A leverage over the coming years, as we implement our commercial and operational initiatives and grow our company.

Speaker Change: Adjusted EBITDA for the quarter declined 47% to $21 1 million.

Speaker Change: And adjusted EBITDA margin declined by 250 basis points to two 3% as.

Speaker Change: That's a combination of lower organic daily sales.

Doug Black: Lower gross margin and higher seasonal SG&A from acquisitions affected our short-term financial results. However, I would note that despite the reduction in adjusted EBDA for the quarter, our operating cash flow improved by $53 million versus the first quarter of 2023 with the benefit of our supply chain initiatives and good overall working capital management. In terms of initiatives, we continue to grow our small customers faster than our average while also driving growth in our private label brands and improving inbound freight costs through our transportation management system.

Speaker Change: Our gross margin and higher seasonal SG&A from acquisitions affecting our short term financial results.

Speaker Change: I would note that despite the reduction in adjusted EBITDA for the quarter, our operating cash flow improved by $53 million.

Speaker Change: She is the first quarter of 2023 with the benefit of our supply chain initiatives and good overall working capital management.

Speaker Change: In terms of initiatives, we continue to grow our small customers faster than our average.

Speaker Change: Also driving growth in our private label brands and improving inbound freight costs through our transportation management system.

Speaker Change: These initiatives are helping to mitigate the gross margin decline that we're experiencing in 2024 and should contribute to expanding gross margin in the future.

Doug Black: These initiatives are helping to mitigate the gross margin decline that we are experiencing in 2024 and should contribute to expanding gross margin in the future. We continue to increase our percentage of bi-legal branches, now at 60%, and are executing focused Hispanic marketing programs to create awareness among this important customer sector.

Speaker Change: We continue to increase our percentage of bilingual branches now at 60%.

Speaker Change: And are executing focused Hispanic marketing programs to create awareness among this important customer segment.

Doug Black: We are also making great progress in our sales force productivity as we leverage our CRM and establish more disciplined revenue-generating habits among our over 600 outside sales associates. Continued rollout of MobilePro and DispatchTrack allows us to offer better customer service while also increasing the productivity of our branch staff and delivery. Acquisition of Pioneer has allowed us to gain new functionality in bulk delivery and in our point of sale system.

Speaker Change: Also making great progress in our sales force productivity as we leverage our CRM and establish a more disciplined revenue generating habits, among our over 600 outside sales associates.

Speaker Change: The continued rollout of mobile pro and dispatch track allows us to offer better customer service, while also increasing the productivity of our branch staff and delivery fleet.

Speaker Change: Acquisition of pioneer has allowed us to gain new functionality and bulk delivery and in our point of sale system, which we plan to develop further and leverage with our existing business.

Doug Black: We plan to develop further and leverage our existing business. During the quarter, we continue to make good progress in growing our digital sales and cultivating regular users of SiteOne.com. This helps us increase market share while allowing our associates to focus more on creating value for our customers and less on transactional activities. We continue to introduce new functionality for SiteOne.com and are ahead of our goal to double sales online in 2024.

During the quarter, we continued to make good progress in growing our digital sales and cultivate irregular users a second one dot com.

Speaker Change: It helps us increase market share, while allowing our associates to focus more on creating value for our customers and less on transactional activity.

Speaker Change: We continue to introduce new functionality for side, one dot com and are ahead of our goal to double sales online in 2024.

Speaker Change: Taken altogether, we are continuing to prove our capability to drive organic growth increased gross margin and achieve operating leverage through our initiatives.

Doug Black: Taken all together, we are continuing to prove our capability to drive organic growth, increase gross margin, and achieve operating leverage through our initiative. On the acquisition front, as I mentioned, we added two excellent companies to our family after the quarter, with approximately $120 million in trailing 12-month sales added to SiteOne. With an experienced team, broad and deep relationships with the best companies, a strong balance sheet, and an exceptional reputation, we remain well positioned to grow consistently through acquisitions for many years.

Speaker Change: On the acquisition front as I mentioned, we added two excellent companies to our family after the quarter with approximately $120 million in trailing 12 month sales added to cite one.

Speaker Change: With an experienced team broad and deep relationships with the best companies strong balance sheet and exceptional reputation we remain well positioned to grow consistently through acquisitions for many years.

Speaker Change: In summary, our teams are doing a good job of managing through the near term headwinds.

Doug Black: In summary, our teams are doing a good job of managing through the near-term headwinds, leveraging our many opportunities for improvement, and building our company for the long term. Now John will walk you through the quarter in more detail. John?

Speaker Change: Leveraging our many opportunities for improvement and building our company for the long term.

Speaker Change: Now John will walk you through the quarter in more detail John.

John T. Guthrie: Thanks, Doug I'll begin on slide nine with some highlights from our first quarter results.

John T. Guthrie: Thanks, Doug. I'll begin on slide nine with some highlights from our first quarter results. We reported a net sales increase of 8% to $905 million for the quarter. There were 64 selling days in the first quarter, which is the same as the prior year period. Organic daily sales increased 1% in the first quarter compared to the prior year period as volume growth of 5% more than offset price deflation for commodity products. Similar to prior quarters, price deflation in the first quarter was driven by commodity products like PVC pipe, which was down 20%, and fertilizer and grassland, which were down 13% and 15%, respectively.

John T. Guthrie: We reported a net sales increase of 8% to $905 million for the quarter there.

John T. Guthrie: There were 64 selling days in the first quarter, which was the same as the prior year period.

John T. Guthrie: Organic daily sales increased 1% in the first quarter compared to the prior year period as volume growth of 5% more than offset price deflation for commodity products.

John T. Guthrie: Consistent with prior quarters price deflation in the first quarter was driven by commodity products like PVC pipe, which was down 20% and fertilizer and grass fleet, which were down 13% and 15% respectively.

John T. Guthrie: We expect price deflation to be a headwind but moderate through the third quarter of 2024 as we fully lap the price decreases of 2023, full year fiscal 2024. We now expect price deflation at the high end of our one to 2% range.

John T. Guthrie: We expect price deflation to be a headwind.

John T. Guthrie: Iterate through the third quarter of 2024, as we fully lap the price decreases of 2023.

John T. Guthrie: For the full year of fiscal 2024, we now expect price deflation at the high end of our 1% to 2% range.

John T. Guthrie: Organic daily sales for agronomic products, which includes fertilizer, control products, ice melt, and equipment, increased 10% for the first quarter due to strong volume growth resulting from lower prices, solid and market demand, market share gains, more snow events, and an earlier start to spring in many key northern markets. We saw double-digit volume growth for ice melt, equipment, fertilizer, and control products, which more than offset the price deflation in many of those same products.

John T. Guthrie: Organic daily sales for agronomic products, which includes fertilizer control products I smell and equipment increased 10% for the first quarter due to strong volume growth, resulting from lower prices solid end market demand market share gains more snow events and an earlier start to spring in many key northern markets.

John T. Guthrie: We saw double digit volume growth for ice snow equipment, fertilizer and control products, which more than offset the price deflation in many of those same products.

John T. Guthrie: Organic daily sales for landscaping products, which includes irrigation, nursery, hardscapes, outdoor lighting, and landscape accessories, decreased 2% for the first quarter due to lower prices for products like PVC pipe and unfavorable weather in many key construction markets. However, geographically, five out of our nine regions achieved positive organic daily sales growth in the first quarter. We saw double-digit organic sales growth in the Midwest, which benefited from solid demand, less rain, and an earlier start to the spring season. Conversely, we saw organic cells decline in southeast markets due to tough comps and less favorable weather.

John T. Guthrie: Organic daily sales for landscaping products, which includes irrigation nursery our escape.

<unk> lighting and landscape accessories decreased 2% for the first quarter due to lower prices for products like PVC pipe and unfavorable weather in many key construction markets.

John T. Guthrie: Geographically five out of our nine regions achieved positive organic daily sales growth in the first quarter we.

John T. Guthrie: We saw double digit organic sales growth in the Midwest, which benefited from solid demand less rain and an earlier start to the spring season.

John T. Guthrie: Conversely, we saw organic sales declined in.

John T. Guthrie: And southeast markets due to tough comps and less favorable weather.

John T. Guthrie: Acquisition sales, which reflect sales attributable to acquisitions completed in 2023 contributed approximately $62 million or 7% net sales growth.

John T. Guthrie: Acquisition sales, which reflect sales attributable to acquisitions completed in 2023, contributed approximately 62 million, or 7%, to net sales growth. Scott will provide more details regarding our acquisition strategy later in the call. Gross profit for the first quarter was $301 million, which was an increase of 5% compared to the prior year period. Gross margin decreased 100 basis points to 33.3%, primarily due to lower price realization, partially offset by the positive impact from acquisition, just as we benefited from a rapid rise in market prices relative to our lower inventory costs on the way up.

John T. Guthrie: Scott will provide more details regarding our acquisition strategy later in the call.

John T. Guthrie: Gross profit for the first quarter was $301 million, which was an increase of 5% compared to the prior year period.

John T. Guthrie: Gross margin decreased 100 basis points to 33, 3%, primarily due to lower price realization, partially offset by the positive impact from acquisitions.

John T. Guthrie: As we benefited from a rapid rise in market prices relative to our lower inventory costs on the way up the drop in market prices relative to our higher inventory costs has created a temporary headwind on the way down.

John T. Guthrie: The drop in market prices relative to our higher inventory costs has created a temporary headwind on the way down. We are managing through the headwind and expect year-over-year gross margin comparisons to improve as we move into the selling season. The first quarter of 2023 should be our toughest gross margin count for fiscal year 2024.

John T. Guthrie: We are managing through the headwinds and expect year over year gross margin comparisons to improve as we move into the selling season.

John T. Guthrie: The first quarter of 2023 should be our toughest gross margin comp for fiscal year 2024.

John T. Guthrie: Selling general and administrative expenses or SG&A increased 12% to $328 million for the first quarter SG&A as a percentage of net sales increased 140 basis points in the quarter to 36, 2%.

John T. Guthrie: Selling, General, and Administrative Expenses, or SG&A, increased 12% to $328 million for the first quarter. SG&A, as a percentage of net sales, increased 140 basis points in the quarter to 36.2%. The increase in both SG&A and SG&A as a percentage of net sales is primarily due to the impact of acquisitions. Including acquisitions, SG&A for our base business increased 2%, with most of that increase attributable to an increase in healthcare costs. In the first quarter, we recorded an income tax benefit of approximately $10 million compared to a benefit of approximately $3 million in the prior year period.

John T. Guthrie: The increase in both SG&A and SG&A as a percentage of net sales is primarily due to the impact of acquisitions.

John T. Guthrie: Excluding acquisitions SG&A for our base business increased 2% with most of that increase attributable to an increase in healthcare cost.

John T. Guthrie: For the first quarter, we recorded an income tax benefit of approximately $10 million compared to a benefit of approximately $3 million in the prior year period.

John T. Guthrie: The effective tax rate was 33.4% for the first quarter of 2024, compared to 37.5% for the prior year period. The change in the effective tax rate was primarily due to an increase in the amount of excess tax benefits from stock-based compensation. Excess tax benefits of $2.3 million were recognized for the first quarter of 2024, compared to $0.8 million for the prior year period. We continue to expect the 2024 fiscal year effective tax rate will be between 25 and 26 percent, excluding discrete items such as excess tax benefits.

John T. Guthrie: Active tax rate was 33, 4% for the first quarter of 2024 compared to 37, 5% for the prior year period. The change in the effective tax rate was primarily due to an increase in the amount of excess tax benefits from stock based compensation.

John T. Guthrie: Excess tax benefit of $2 3 million recognized for the first quarter of 2024 compared to 0.8 million for the prior year period.

John T. Guthrie: We continue to expect the 2020 for our fiscal year effective tax rate will be between 25, and 26% excluding discrete items such as excess tax benefit.

John T. Guthrie: We recorded a net loss of $19 3 million for the first quarter of 2024 compared to a net loss of $3 4 million for the prior year period, and net loss was attributable to our higher SG&A and reduced gross margin, partially offset by our increase in net sales.

John T. Guthrie: We recorded a net loss of $19.3 million for the first quarter of 2024 compared to a net loss of $3.4 million for the prior year period. The net loss was attributable to higher SG&A and a reduced gross margin, partially offset by our increase in net sales. Our weighted average diluted share count was $45.3 million compared to $45.0 million for the prior year period. The shares used in the calculation of diluted EPS for this quarter do not give any effect to any dilutive securities as their inclusion would decrease the net loss per common share.

John T. Guthrie: Our weighted average diluted share count was $45 3 million compared to 40 590 million for the prior year period. The shares used in the calculation of diluted EPS. This quarter do not give any effect to any dilutive securities as inclusion would decrease the net loss per common share.

John T. Guthrie: Adjusted EBITDA decreased 47% to $21 1 million for the first quarter of 2024 compared to $39 8 million for the prior year period.

John T. Guthrie: Adjusted EBITDA decreased 47% to $21.1 million for the first quarter of 2024, compared to $39.8 million for the prior year period. Adjusted EBITDA margin decreased 250 basis points to 2.3%. Now, I'd like to provide a brief update on our balance sheet and cash flow statement, as shown on slide 10. Working capital at the end of the first quarter was $910 million, compared to $960 million at the end of the prior year period.

John T. Guthrie: Adjusted EBITDA margin decreased 250 basis points to two 3%.

John T. Guthrie: Now I would like to provide a brief update on our balance sheet and cash flow statement as shown on slide 10.

John T. Guthrie: The decrease in networking capital is primarily attributable to our supply chain initiative. Inventory turns increased due to an improved replenishment and reduction of excess inventory. Cash use and operations decreased to approximately $99 million in the first quarter, compared to approximately $153 million in the prior period. The decrease in cash used in operations was primarily due to a lower seasonal inventory bill resulting from improved replenishment capability. We made cash investments of approximately $7 million for the first quarter, compared to approximately $40 million for the same quarter in 2023.

John T. Guthrie: Working capital at the end of the first quarter was $910 million compared to $960 million at the end of the prior year period.

John T. Guthrie: Decrease in net working capital was primarily attributable to our supply chain initiatives.

John T. Guthrie: Inventory turns increased due to an improved replenishment and reduction of excess inventory.

John T. Guthrie: Cash used in operations decreased to approximately $99 million in the first quarter compared to approximately $153 million in the prior year period.

John T. Guthrie: The decrease in cash used in operations was primarily due to a lower seasonal inventory build resulting from improved replenishment capabilities.

John T. Guthrie: We made cash investments of approximately $7 million for the first quarter compared to approximately $40 million for the same quarter in 2023. The decrease reflects the decline in acquisition investments in the first three months of 2024 compared to the same period of 2023.

John T. Guthrie: The decrease reflects a decline in acquisition investments in the first three months of 2024 compared to the same period of 2023. That debt at the end of the quarter was approximately $508 million compared to approximately $586 million at the end of the first quarter of 2023. Leverage at the end of the first quarter was 1.3 times our trailing 12-month adjusted EVTA, which was flat with our prior year period. As a reminder, our target year-end net debt to adjusted EVTA leverage range is 1 to 2 times.

John T. Guthrie: Net debt at the end of the quarter was approximately 508 million compared to approximately $586 million at the end of the first quarter of 2023.

John T. Guthrie: Leverage at the end of the first quarter was one three times, our trailing 12 months adjusted EBITDA, which was flat with our prior year period. As a reminder, our target year end net debt to adjusted EBITDA leverage range is one to two times.

John T. Guthrie: At the end of the quarter, we had available liquidity of approximately $539 million, which consisted of approximately $41 million in cash on hand and approximately $498 million in available capacity under our ABL facility. I will now turn the call over to Scott for an update on our acquisition strategy.

John T. Guthrie: At the end of the quarter, we had available liquidity of approximately $539 million, which consisted of approximately 41 million cash on hand, and approximately $498 million and available capacity under our ABL facility.

John T. Guthrie: I will now turn the call over to Scott for an update on our acquisition strategy.

Scott Salmon: Thanks, John. As shown on slide 11, we acquired two companies in April for a combined trailing 12-month net sales of approximately $120 million. Since 2014, we have acquired 93 companies with approximately $1.9 billion in trailing 12-month net sales added to SiteOne. Turning to slides 12 and 13, you will find information on our most recent acquisition. On April 26th, we acquired Egemeyer, a single-location wholesale distributor of bulk landscape supplies. The acquisition of Egemeyer complements our recent acquisitions of Whittlesea Landscape and Adams Wholesale, allowing us to provide bulk landscape supplies to our customers in the high-growth markets of San Antonio and Austin, Texas.

Scott Salmon: Thanks, Sean as shown on Slide 11, we acquired two companies in April for a combined trailing 12 month net sales of approximately $120 million since.

Scott Salmon: Since 2014, we have acquired 93 companies with approximately $1 9 billion and trailing 12 months net sales added to cite one.

Scott Salmon: Turning to slide 12, and 13, you will find information on our most recent acquisitions.

Scott Salmon: On April 26, we acquired Eggemeyer, a single location wholesale distributor of bulk landscape supplies.

Scott Salmon: The acquisition of a goodbye or complements our recent acquisitions of what Youll see landscape and Adam's wholesale, allowing us to provide bulk landscape supply to our customers and the high growth markets of San Antonio and Austin, Texas.

Scott Salmon: On April 30, we acquired a 75% interest in Devil Mountain Wholesale Nursery, a wholesale distributor and grower of nursery products with 14 locations across the state of California. The addition of Devil Mountain makes SiteOne the leader in wholesale nursery distribution in California and completes our full product line offering for our customers in the state. Devil Mountain is a high-performance company with a terrific team that will help spearhead our nursery growth, not only in California but also across the Pacific Northwest and mountain states where we currently have a very low nursery market share.

Scott Salmon: On April 30, we acquired a 75% interest in dental mountain wholesale nursery, a wholesale distributor and grower of nursery products with 14 locations across the state of California.

Scott Salmon: The addition of dental mountain make site one of the leader in wholesale nursery distribution in California, and completes our full product line offering for our customers in the state.

Mountain as a high performing company with a terrific team that will help spearhead our nursery growth not only in California, but also across the Pacific Northwest and Mountain States, where we currently have a very low nursery market share.

Scott Salmon: The transaction includes put and call options for the remaining interest in future years. Our acquisitions continue to add terrific talent to SiteOne and move us forward toward our goal of providing a full line of landscape products and services to our customers in all major U.S. and Canadian markets. As discussed on slide 14, our acquisition strategy continues to create significant value for SiteOne, a strong balance sheet, and a robust pipeline across all lines of business and geography.

Scott Salmon: The transaction includes put and call options for the remaining interest in future years.

Scott Salmon: Our acquisitions continue to add terrific talent to cite one and move us forward toward our goal of providing a full line of landscape products and services to our customers in all major U S and Canadian markets.

Scott Salmon: Summarizing on slide 14, our acquisition strategy continues to create significant value for site one.

Scott Salmon: With a strong balance sheet and a robust pipeline across all lines of business and geographies. We are confident that we will be able to continue adding more outstanding companies to cite one this year.

Scott Salmon: We are confident that we will be able to continue adding more outstanding companies to SiteOne this year. I want to thank the entire SiteOne team for their passion and commitment to making SiteOne a great place to work and for welcoming the newly acquired teams when they join the SiteOne family.

Speaker Change: I want to thank the entire site team for their passion and commitment to making <unk> a great place to work and for welcoming the newly acquired teams when they joined the <unk> family.

Speaker Change: I will now turn the call back to Doug.

Doug Black: Thanks Scott.

Scott Salmon: I'll wrap up on slide 15. With four months of 2024 behind us, our outlook for our end markets has not significantly changed, and we expect to continue gaining market share with our strong teams executing our commercial and operational initiatives. In terms of end markets, we continue to expect new residential construction, which comprises 21% of our sales, to grow modestly in 2024. Despite higher interest rates, builders are busy and optimistic for the full year, capitalizing on the continued shortage of homes and solid home demand.

Doug Black: I'll wrap up on slide 15.

Doug Black: With four months of 2024 behind us our outlook for our end markets has not significantly changed and.

Doug Black: And we expect to continue gaining market share with our strong teams executing our commercial and operational initiatives.

Doug Black: In terms of end markets, we continue to expect new residential construction, which comprises 21% of our sales to grow modestly in 2024.

Despite higher interest rates builders are busy and optimistic for the full year capitalizing on the continued shortage of homes and solid home demand.

Doug Black: This should produce growth for landscaping products in this end market, especially in the second half. New commercial construction, which represents 14% of our sales, has continued to be solid in 2024, and we believe it will remain steady for the full year. Feeding activity from our project services teams continues to be slightly positive, which is a good indicator of continued demand.

Doug Black: This should produce growth for landscaping products in this end market, especially in the second half.

Doug Black: New commercial construction, which represents 14% of our sales has continued to be solid in 2024, and we believe it will remain steady for the full year.

Doug Black: Bidding activity from our project services teams continues to be slightly positive, which is a good indicator of continued demand.

Doug Black: Our customer backlogs remain solid, and we believe that the commercial end market will be flat to slightly up this year. The repair and upgrade market, which represents 31% of our sales, continues to be soft but seems to have stabilized at lower levels of demand. Accordingly, we expect repair and upgrade demand to be slightly down this year. Finally, we have seen strong volume growth in the maintenance category, which represents 34% of our sales.

Doug Black: Our customer backlogs remained solid and we believe that the commercial end market will be flat to slightly up this year.

Doug Black: The repair and upgrade market, which represents 31% of our sales continued to be soft, but it seems to have stabilized at lower levels of demand.

Doug Black: Accordingly, we expect repair and upgrade demand to be slightly down this year.

Doug Black: Lastly, we have seen strong volume growth in the maintenance category, which represents 34% of ourselves.

Doug Black: We expect this market to grow in the low single digits in 2024, as contractors and end-users take advantage of lower commodity prices and continue to restore application rates from the depressed levels in 2022 and 2023. In terms of pricing, commodity product deflation has been a bit more persistent this year than we had previously expected, resulting in an overall 4% price decline for the first quarter.

Doug Black: We expect this market to grow in the low single digits in 2024 as contractors and end users to take advantage of lower commodity prices and continued to restore application rates from the depressed levels in 2022 and 2023.

Doug Black: In terms of pricing commodity product deflation has been a bit more persistent this year than we had previously expected.

Doug Black: <unk>, an overall, 4% price decline for the first quarter.

Doug Black: That said, as John mentioned, we still expect commodity price deflation to moderate in the second half. We lapped the price decreases in 2023. Overall, we now expect prices to be down approximately 2% in 2020.

Doug Black: That said as John mentioned, we still expect commodity price deflation to moderate in the second half as we lap the price decreases in 2023.

Doug Black: Overall, we now expect prices to be down approximately 2% and.

Doug Black: 2024.

Doug Black: With this backdrop, we still expect our organic daily sales growth to be in the low single digits for the full year 2024 with steady volume growth more than offsetting the 2% expected price declines for the year.

Doug Black: With this backdrop, we still expect our organic daily sales growth to be in the low single digits for the full year 2024, with steady volume growth more than offsetting the 2% expected price decline for the year. We now expect gross margin in 2024 to be similar to 2023. The negative effect of price depletion is offset by our initiatives and the impact of acquisitions. We expect to achieve SG&A leverage as we drive productivity improvements in the base business, more than offsetting the negative impact of higher SG&A in our acquisition.

Doug Black: We now expect gross margin in 2024 to be similar to 2023.

Doug Black: With the negative effect of price deflation offset by our initiatives and the impact of acquisitions.

Doug Black: We expect to achieve SG&A leverage as we drive productivity improvements in the base business more than offsetting the negative impact of higher SG&A and our acquisitions.

Doug Black: Accordingly, we expect to improve our full-year adjusted EBDA margin in 2024. In terms of acquisitions, as Scott mentioned, we have a strong pipeline of high-quality targets, and we will continue to add excellent companies to the SiteOne family as we move through the year. With all these factors in mind, we continue to expect our full-year adjusted EBDA for fiscal 2024 to be in the range of $420 million to $455 million. This range does not factor any contribution from unannounced acquisitions.

Doug Black: Accordingly, we expect to improve our full year adjusted EBITDA margin in 2024.

Doug Black: In terms of acquisitions as Scott mentioned, we have a strong pipeline of high quality targets and we will continue to add excellent companies to decide one family as we move through the year.

Doug Black: All of these factors in mind, we continue to expect our full year adjusted EBITDA for fiscal 2024 to be in the range of $420 million to $455 million.

Doug Black: This range does not factor any contribution from unannounced acquisitions.

Doug Black: While this does include the positive contribution from the two recent acquisitions, we are continuing to take a conservative approach as we navigate deflationary pressures and an uncertain macroeconomic environment.

Doug Black: While this does include the positive contribution from the two recent acquisitions, we are continuing to take a conservative approach as we navigate deflationary pressures and an uncertain macroeconomic environment. In closing, I would like to sincerely thank all our SiteOne associates who continue to amaze me with their passion, commitment, teamwork, and selfless service. We have a tremendous team, and it is an honor to be working with them as we deliver increasing value for all our stakeholders. I would also like to... Thank you to our suppliers for supporting us so strongly and our customers for allowing us to be part of their lives. Operator, please open the line for questions.

Speaker Change: In closing I would like to sincerely. Thank all our site one associates, who continue to amaze me with their passion commitment teamwork and selfless service.

Speaker Change: We have a tremendous team and it is an honor to be joined with them as we deliver increased value for all our stakeholders.

Speaker Change: I would like to also thank our suppliers for supporting us so strongly and our customers for allowing us to be their partner.

Speaker Change: Operator, please open the line for questions.

Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been answered and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Ryan Merkel, with William Blair. Please go ahead.

Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad. If you are using a speakerphone. Please pick up your handset before pressing the keys if at any time. Your question has been addressed and you would like to withdraw.

Speaker Change: Your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.

Speaker Change: The first question comes from Ryan Merkel with William Blair. Please go ahead.

Ryan James Merkel: Hey, everyone. Good morning.

Ryan James Merkel: Hey, everyone. Good morning, I wanted to start off just getting some context on our first quarter Miss relative to the street.

Ryan James Merkel: I wanted to start off just getting some context on the first quarter miss relative to the street. It looks like it's SG&A and then also price deflation. I'm curious. Did you guys expect SG&A to be as heavy as it was in the first quarter? And then put the price deflation in some context, because it sounds like it's only a little worse than you expected, but correct me if I'm wrong on that. SG&A, in general, came in...

Ryan James Merkel: It looks like its SG&A and then also price deflation.

Ryan James Merkel: I'm curious did.

Ryan James Merkel: Did you guys expect SG&A as heavy as it was in the first quarter and then put the price deflation some context, because it sounds like it's only a little worse than you expected.

Ryan James Merkel: But correct me if I'm wrong on that.

John T. Guthrie: SG&A in general came in where we thought it was going to be for the year when you factor in the acquisitions. But, as we talked about in our base business, it grew only 2% from that perspective. And that was – we didn't, as we mentioned, we did have higher health insurance claims. That was a little unexpected, a couple million – or several million dollars there. But in general, I would say SG&A came in largely in line with expectations from us. But I think it's important to remember this is the shoulder quarter. So historically, we're carrying more – we don't have the same –

Ryan James Merkel: SG&A in general came in where we thought it was going to be for the year when you factor in the acquisitions.

Ryan James Merkel: As we've talked about in our base business. A grew grew only 2% upfront from that perspective and that was we didn't as we mentioned we did have higher health insurance claims that was a little unexpected a couple million dollars or several million dollars there.

Ryan James Merkel: But but in general I would say SG&A came in largely in line with expectations from US I think it's important to remember this is a shoulder quarter. So you know historically, you know where we're carrying a a more more.

Ryan James Merkel: We don't have the sales obviously, because it was before the spring season. So so that kind of makes US you know the leverage pretty high on the operating leverage.

John T. Guthrie: And then in terms of pricing, yeah, you know, the pricing did. Deflation was a little more persistent than we thought it was going to be. We thought it would stair-step down a little further in the first quarter.

Ryan James Merkel: And then in terms of pricing, yes, you know.

Ryan James Merkel: The pricing did.

Ryan James Merkel: Deflation was a little more persistent than we thought it was going to we thought it would stair step down a little further in the first quarter.

John T. Guthrie: And it hasn't, you know, PVC pipe took another leg down, and some of the commodities, but we see that stabilizing now at the lower level in our forecast, as we start to lap that, you know, starting in the second quarter, more in the second half of the year. We still think that will come back positive in the second half, as we noted. We put a range for the full year of 1% to 2%.

Ryan James Merkel: And it Hasnt PVC pipe took another leg down in some of the commodities, but we see that stabilizing now at the lower level and our forecast as we start to lap that starting in the second quarter, but more in the second half of the year, we still think that will come back positive and.

Ryan James Merkel: Second half as we noted.

Ryan James Merkel: We put a range for the full year of 1% to 2%. We may not think pricing is going to be down 2% and that's that reflects the.

John T. Guthrie: We now think pricing is going to be down 2%, and that reflects the... for, I guess, persistent deflation achieved in the first quarter. And, of course, that affects growth margin, and we were up against tough comp from last year. Last year, we were still experiencing inflation. We had material variance or price realization working for us in the first quarter of last year. Of course, that went negative as we went through the year. So you're not only negative, but you're up against the toughest competition of the year. So those are the factors.

Ryan James Merkel: The more I guess persistent deflation that we achieved in the first quarter and of course that affects gross margin and we were up against.

Ryan James Merkel: Tough comp from last year and last year, we were still experiencing inflation.

Ryan James Merkel: We had a material pass through the price realization working for us in the first quarter of last year of course that win.

Ryan James Merkel: Negative as we went through the year.

Ryan James Merkel: So you're not only negative but you are up against the toughest comp of the year. So those are the factors. So I would say it was a little more.

John T. Guthrie: So I would say it was a little more. Gross margin was affected a little more than we had expected. For the full year, we think the overall gross margin will end up being similar to $2,000.

Ryan James Merkel: Gross margin was affected a little more than we had expected.

Ryan James Merkel: For the full year, we think the overall gross margin blends of being similar to 2023.

John T. Guthrie: Okay, that's helpful context. When I saw the headline, I was surprised you didn't lower the full-year guide. But now that you've explained that, that makes sense. Let me just ask about gross margins. Then, I think, John, you said it would increase in the selling season. Should we interpret that as 2Q? You should have gross margins flat year over year, maybe up, and just speak to the drivers.

Speaker Change: Okay. That's that's helpful context, when I saw the headline I was surprised you didn't lower the full year guide, but yeah, you'd explain that makes sense.

Speaker Change: Let me just ask on gross margins that I think John you said it would increase in the selling season.

Speaker Change: Should we interpret that as to Q you you should have gross margins flat year over year, maybe up and just speak to the drivers.

John T. Guthrie: Yeah, I think what we will be.

John T. Guthrie: Yeah, I think we'll be much closer to flat than the 100 basis points we saw this quarter. And I think the primary driver is that we're getting into the selling season. Even as we went through the quarter, when we started selling into kind of our normal product lines, gross margins improved. We also would see kind of more of a normal seasonal increase in gross margins. Last year, as we mentioned, Q1 was very high, and then Q2 we started to see the impact of deflation hit our gross margins. So this year, we're expecting that to kind of be more normal, and so rather than the 100 basis points we put in this year, we'll be closer to flat in the second quarter.

John T. Guthrie: Much closer to flat than the 100 basis points, we saw right right this quarter and I say I think the private primary driver as we're getting into the selling season is that even as we went through the quarter. When we started getting selling into kind of our normal product lines gross.

<unk> improved we also you know would seem kind of more of a normal seasonal increase in gross margins last year. As we mentioned Q1 was very high and then in Q2, we started to see the impact of deflation hit our gross margins. So this year.

John T. Guthrie: We're expecting that to key kind of be a more normal and so we'll be we'll be more more rather than the 100 basis points. What we put in this way it will be closer to flat in the second quarter.

Speaker Change: Got it I appreciate the help and pass it on.

Ryan James Merkel: Got it. Appreciate the help. Pass it on.

Operator: The next question comes from David Manthey with Baird. Please go ahead.

Speaker Change: The next question comes from David Manthey with Baird. Please go ahead.

David John Manthey: Hey guys, good morning.

David John Manthey: Oh, Hey, guys. Good morning, I'm on this gross margin issue.

David John Manthey: On this gross margin issue, the street had gross margins up 70 basis points in the first quarter, but I believe, John, you told us last quarter it would be lower. So, setting that mismodeling issue aside, could you give us a magnitude of just how far off relative to your expectations gross margin was? Clearly the street had it wrong, but where were they relative to how you were thinking about it?

David John Manthey: The Street had gross margins up 70 basis points in the first quarter, but I believe John you told us last quarter it would be lower so setting that mis modeling issue aside.

David John Manthey: Could you give us a magnitude or just like how far off relative to your expectations, where gross margin clearly the street had it wrong, but where were they relative to how you are thinking about it.

John T. Guthrie: We were probably about 30 to 40 basis points slower than we thought, most of that realized really in the first two months of the year, in January and February, from that perspective. But we had it down pretty significantly already in our analysis.

John T. Guthrie: Oh, we were probably about 30 to 40 basis points lower than than we thought most of that realized really and in the first two months of the year in January and February Hum.

John T. Guthrie: From that perspective, but we had we had it down pretty significantly already and in our analysis.

John T. Guthrie: Yeah.

John T. Guthrie: And speaking of the month, I think you said in January you were down mid-single digits and then you finished up 1% for the quarter overall, which would imply a slight acceleration through the quarter. Can you make any comment on April trends or anything else, any topics we should be thinking about looking ahead?

John T. Guthrie:

John T. Guthrie: Speaking of the month I think you said in January you were down mid single digits with menu finished up 1% for the quarter overall, which would imply a slight acceleration through the quarter can you make any comment on the April trends or anything else any comp issue, we should be thinking about looking.

John T. Guthrie: [noise] ahead.

John T. Guthrie: Well looking at April you know April actually has started out a little a little weaker is improved through the through the month.

John T. Guthrie: Looking at April, you know, April actually started out a little weaker, but it's improved through the month, and we like the trend that's going now. So I think

John T. Guthrie: And we liked the trend that's going now so I think.

John T. Guthrie: When we look at the full year and how the season is playing out we feel good about the volume that we're going to get that volume growth that we need for the full year.

John T. Guthrie: When we look at the full year and how the season's playing out, we feel good about the volume, that we're going to get that volume growth that we need for the full year to offset, more than offset, inflation. So we're still forecasting. You know, low single-digit organic growth for the year. We feel pretty good about that. Teams are doing a good job. As we noted, we'll have 2% inflation or deflation for the year, and you know, we'll end up with... low single-digit positive organic growth. So what we see, you know, March and April are the spring season. When we look at those together, we see, you know, we feel pretty good about the year.

John T. Guthrie: To offset more than offset the inflation. So we're still forecasting you know.

John T. Guthrie: A low single digit organic growth for the year, we feel pretty good about that teams are doing a good job as we noted we will have 2% inflation or deflation for the year and you wind up with that.

John T. Guthrie: Low single digit positive organic growth so what we see March and April as the spring season.

John T. Guthrie: Look at those together, we see you know we feel pretty good about the year.

David John Manthey: Yep, sounds good. Thanks a lot, guys.

Speaker Change: Okay sounds good thanks, a lot guys.

Speaker Change: Yeah.

Operator: The next question comes from Damian Karas with UBS. Please go ahead.

Speaker Change: The next question comes from Damian Karas with UBS. Please go ahead.

Damian Karas: All right, good morning, everyone. All right.

Damian Karas: Hi, good morning, everyone.

Damian Karas: Got it alright.

Damian Karas: You shared some of your numbers around the PVC and fertilizer price impacts you saw in the first quarter. Could you just give us a sense for thinking about the down two points price expectation for the entire year? What are you kind of factoring in for the 80% non-commodity product versus all the commodities? Could you just kind of break that out for us?

Damian Karas: You shared some of your numbers around.

Damian Karas: P D C and end sort of lives or.

Damian Karas: Price and perhaps you saw in the first quarter.

Could you just give us a sense for thinking about the.

Damian Karas: Balancing points price expectation for the year entirety.

Damian Karas: What are you kind of factoring in for the 80% non commodity product versus.

Damian Karas: All of the commodities could you just kind of break that out for us.

John T. Guthrie: Yeah, well, I don't have that specific breakdown, but what we have done is we've taken kind of the price, our current prices as they are today and known prices, changes that are coming up into the season. And I should say most of the price changes we see for the non-commodity products are already built into that model, so they generally happen once a year. So we take those and we run those out and extend them out based on volumes for the rest of the year and then do that comparison.

Speaker Change: Yeah, Oh, well I, just don't have that specific breakout, but upbeat shall we well we have done is we've taken kind of the price.

Speaker Change: Our current prices in as they are today and known pricing changes that are coming up into the season and I should say most of the price changes we see for the non commodity products are already built into that that model. So they generally happen once a year. So we take those.

Speaker Change: And we run those out and extend them out based upon volumes for the rest of the year and then do this do that comparison.

John T. Guthrie: We haven't really seen a lot of large decreases in prices this year, other than PVC pipe. Fertilizer prices have been relatively stable going into this year, and we haven't seen another decrease like there from that standpoint. So that's how we come up with a number with known price changes that are being built into the system, and then we extend those out for the rest of the year.

Speaker Change: We haven't really seen a lot of large decreases in prices this year other than PVC pipe fertilizer prices have.

Speaker Change: Have been relatively stable going into this year, we haven't seen another another down like there from that standpoint. So so that's how we that's how we come up with a number with no known known price changes that are that are being built into the system and then extend those out.

Speaker Change: For the rest of the year.

John T. Guthrie: Got it. That makes total sense. And then, obviously...

Speaker Change: Got it that makes total sense.

Speaker Change: And then obviously.

Doug Black: There's been a lot of investor questions related to your largest competitor getting acquired by Home Depot. Is it fair to assume that you're going to see more competition on the M&A front? Maybe you could just more generally share with us your thoughts on that ownership change and how you see it impacting your business.

Speaker Change: There's been a lot of investor questions related to your largest competitor or getting acquired by home depot.

Speaker Change: Is it fair to assume that youre going to see more competition on the M&A front.

Speaker Change: Maybe you could just just more generally share with us your thoughts on that ownership change and how you see that.

Speaker Change: In your business.

Doug Black: Yeah, no, yeah, there's a lot of questions around that. I'll just start with SRS, which is Phones Heritage, which is our competitor, has been in the market for three or four years, and they've been very aggressive. You know, they were trying to build a... a division trying to build a landscaping part of their company, and they were trying to do it quickly. So they're out.

Speaker Change: Yeah, no yeah, Theres a lot of a lot of questions around that I'll just start with a S. R. S.

Speaker Change: Which is owns heritage wishes are competitor you know it has been in the market for three or four years and they've been very aggressive.

Speaker Change: You know they they were trying to build a.

Speaker Change: Division are trying to build that landscape part of their company.

Speaker Change: And I would.

Speaker Change: And they were trying to do it quickly so that they're out.

Doug Black: And then on the competitive front, you know, in terms of organic competition, Heritage is also one of the more aggressive competitors in the market in terms of, you know, just being competitive price, et cetera, et cetera. So, you know, we've been competing against them for several years, and we really wouldn't see that dynamic changing. You know, they're already on the aggressive end of the spectrum.

Speaker Change: In force and have been for several years and so and then on the competitive front.

Speaker Change: In terms of organic competition.

Heritage is also one of the more aggressive competitors in the market in terms of.

Speaker Change: You know I'm, just just being competitive prices et cetera et cetera. So you know we've been competing against them for several years.

Speaker Change: And we really wouldn't see that dynamic changing there already on the aggressive end of that.

Doug Black: On the M&A front, you know, still 80-90% of our deals are negotiated, and they're not option situations. We know the owner. They want to join SiteOne, and we think we have an advantage there because we're 100% focused on landscaping, and we're building a great company, and some owners find that to be more attractive. And so, we're confident on the M&A side, and then on the organic side, again, given their kind of nature, we would expect that to continue.

Speaker Change: The spectrum, if you will on the M&A front, you know still 80, 90% of our deals are negotiated and theyre not auction situations, there, where we know the owner.

Speaker Change: And they want to join Taiwan, and we think we have an advantage there because we're 100% focused on landscaping and we're building a great company and some owners found that to be more attractive and so we're confident on M&A side and then on the organic side again, given their kind of nature.

Speaker Change: We would expect that to continue you know home depot said, they're going to run them as a stand alone.

Doug Black: Home Depot said they're going to run them as a standalone business. We believe that. They're a strong team, and they're going to continue to run the business how they feel it creates the most value. They were owned by strong private equity, they had strong funding before, and those supporters and sponsors were heavily invested. You know, they were creating as much value as they could with the business. So I think Home Depot will do the exact same thing.

Speaker Change: We believe that they've got a strong team and they're going to continue to run the business how they feel it creates the most value you know they were owned by strong private equity that had strong finding before and those supporters and sponsors were heavily.

Speaker Change: They were creating as much value as they could with the visits and so I think home depot will do the exact same thing.

Damian Karas: I really appreciate your thoughts. I'll pass them along. Thanks.

Speaker Change: Really appreciate your thoughts I'll pass it along thanks.

Operator: The next question comes from Keith Hughes with Truist. Please go ahead.

Speaker Change: The next question comes from Keith Hughes with Truest. Please go ahead.

Keith Brian Hughes: Thank you. Just getting back to the SG&A issue, you talked about getting at least a little bit of leverage for the year. Would we start to see that in the second quarter? Is there enough time? Is that enough time to start seeing the leverage, or is that more of a second half of the year issue?

Keith Brian Hughes: Thank you just going back to the SG&A issue, you talked about getting them at least a little bit of leverage I think for the year would we start to see that in the second quarter is there enough.

Speaker Change: No. It was not enough time to start seeing the leverage was that more of a second half of the year.

John T. Guthrie: And certainly, uh, certainly, weighted towards the second half of the year, but we'll be in a much better position once we get into the selling season, where it could be flattish to slightly have some slight leverage in the second quarter.

Speaker Change: Certainly certainly.

Speaker Change: Weighted towards the second half of the year, but we'll be in a much better position once we get into the selling season, where it could be could be flattish to slightly up.

Speaker Change: Some slight leverage in the second quarter.

Keith Brian Hughes: Okay, and then on the SG&A in the quarter, was there any one or two specific deals that drove a pretty significant increase?

Speaker Change: Okay.

Speaker Change: And then on the SG&A in the quarter was there any one or two specific deals that drove.

Speaker Change: Pretty significant increase.

In the period.

Speaker Change: Well. They are you know the nature of some of the acquisitions that we did especially let's say the.

John T. Guthrie: Well, the, you know, the nature of some of the acquisitions that we did, especially, let's say the Pioneer acquisition added a more seasonal mix to our business. So, the answer would be yes, you know, when you take Pioneer and then a couple of the..., you know, the larger deals that we had up in the north.

Speaker Change: The pioneer acquisition.

Speaker Change: Added a more seasonal mix to our business.

Speaker Change: So the answer would be yes, you know when you take pioneer and then a couple of US you know the the larger deals that we had up in the north.

John T. Guthrie: Those, you know, are heavily weighted toward, you know, their profits all happen in the... kind of the summer and fall or, you know, their later spring season. The other impact on the base business was the healthcare claims; we had some, had some unusual claims that kind of hit. And that was, you know, three or four million dollars in a shoulder quarter that had a bigger effect. So we had a couple things going on there.

Speaker Change: Those are heavily weighted toward their profits all happened in the.

Speaker Change: And that kind of the summer and fall.

Speaker Change: There are later spring season that kind of summer and fall. So yes that had an impact.

Speaker Change: The other impact on the base business was that the health care claims we had some we.

Speaker Change: As some unusual claims that kind of hits and.

Speaker Change: And that was three or $4 million in a shoulder quarter that has a bigger effect. So we had a couple of things going on there.

Keith Brian Hughes: Yeah, to your point on Pioneer and some of the acquisitions, you're a pretty heavy seasonal business. Are they even more seasonal than the rest of SiteOne?

To your point on pioneer pioneer and some of the acquisitions are pretty heavy seasonal business are they even more seasonal than the rest of the slide one.

Speaker Change: That would be more seasonal yes.

John T. Guthrie: There would be more seasons,

Speaker Change: Alright, thank you.

Operator: The next question comes from Mike Dahl with RBC Capital Markets. Please go ahead.

Speaker Change: The next question comes from Mike Dahl with RBC capital markets. Please go ahead.

Michael Glaser Dahl: Morning, thanks for taking my questions, and on the pricing side, I think you said maybe you saw another step down in some commodities. And then I wasn't clear if you were saying you had already seen signs of bottoming and sequential improvement or that that's still your expectation in the months ahead. So maybe could you just clarify what you've seen on pricing and on a sequential basis kind of, you know, into and leaving April? Yeah. Yeah,

Michael Glaser Dahl: Good morning, Thanks for taking my questions.

Michael Glaser Dahl: First one just on the.

Michael Glaser Dahl: On the pricing side.

I think he said, yes, maybe you saw another step down in some commodities.

Michael Glaser Dahl: And then I wasn't clear if you were saying you have already seen signs of bottoming and sequential improvement or that that's still your expectation in the months ahead. So maybe could you just clarify.

Michael Glaser Dahl: You know what you've seen.

Michael Glaser Dahl: On pricing.

Michael Glaser Dahl: So a basis kind of.

Michael Glaser Dahl: Into and exiting April.

Yeah, we've seen it improve on a year over year basis in in April so far if we were at 4%.

John T. Guthrie: Yeah, we've seen it improve on a year-over-year basis in April so far. If we were at 4%, we would be expecting to be closer to, you know, a 3% number in Q2 and then, you know, 1 to 2 in Q3 and then kind of positive, probably positive pricing.

We would be expecting to be closer to a 3% number.

Michael Glaser Dahl: Hum.

Michael Glaser Dahl: In Q2, and then you know a one to two in Q3, and then kind of positive probably positive pricing in the fourth quarter.

John T. Guthrie: And that down three is effectively flat sequentially if you're down three year on year. Uh, um...

And that debt down three is that.

Michael Glaser Dahl: Actively flat sequentially.

Michael Glaser Dahl: If you're down three year on year.

Michael Glaser Dahl: Yeah.

John T. Guthrie: Yeah, I think sequentially it would be flattish from that standpoint. In general, I think the two dynamics here are one, we're not seeing as much bottoming this year with regard to deflation. The other dynamic that is going on is we're not seeing as many price increases from that standpoint. I think we saw a lot of suppliers come in with flat to very low single-digit price increases from that standpoint. The only thing is that, sequentially, we saw a relatively large decrease in this quarter.

Speaker Change: Yeah, I think sequentially, a it would be flattish upfront from that standpoint in general.

Speaker Change: I think the two dynamics here as ones, we're not seeing as much bottoming. This year with regards to the deflation. The other the other dynamic that is going on is we're not seeing as many price increases.

Speaker Change: From that standpoint, so so I think we see a lot of we saw a lot of our suppliers come in with flat to very low single digit price increases Amit, which from that standpoint is as and when the only thing sequentially, we saw really kind of relatively.

Speaker Change: The large decrease in this quarter.

Speaker Change: Relatively significant was in PVC pipe, where we did see another leg down.

Michael Glaser Dahl: Okay, and then just shifting gears, I'm sorry to harp on the SG&A side, but you know it sounds like maybe it was less different versus your expectations than ours or street expectations, but starting out this way and now you are layering in You know, what seems to be a relatively large deal, you know, it doesn't seem like the easiest putt to get leverage on SG&A, especially if your overall organic sales growth is going to be limited by the pricing side. So, is there just, as you think through the year and talk about kind of the leverage that you could generate in 2Q, 3Q, maybe just elaborate a little more on whether it's kind of help us understand the added costs coming through from the incremental M&A or on the base business, you know, other actions that you might be taking to try to control that base business SG&A better. Yeah. Great.

Amit: Got it Okay, and then just shifting gears.

Speaker Change: I'm, sorry to harp on the SG&A side, but yes.

It sounds like maybe it was less different versus your expectations than ours or street expectations, but starting out this way.

Speaker Change: And now you are layering in that.

Yeah, what seems to be a relatively large deal.

Speaker Change: It doesn't seem like the easiest part to get leverage on that.

Speaker Change: SG&A, especially if your your overall organic sales growth is going to be limited by that.

Speaker Change: The pricing side.

Speaker Change: So is there just as you think through the year and thoughts about kind of the leverage that you could generate in Q2 Q3 Q4.

Speaker Change: Maybe just.

Speaker Change: Elaborate a little more on whether it's kind of help us understand the added cost coming through from the incremental M&A or on the base business.

Speaker Change: Other actions that you might be taking.

Speaker Change: But try to control that that base business SG&A better.

Yeah.

Doug Black: Yeah, well, we have, you know, good control on the base business, and we're going to get strong leverage there. You know, we mentioned kind of the health care extra cost in the first quarter, and costs like that and shoulder quarters make a much bigger difference than they do full year. But we, you know, we know our base business. We can see one site there for getting significant.

We have good control on the base business and we're going to get strong leverage there.

Speaker Change: You know, we mentioned kind of the health care.

Speaker Change:

Speaker Change: Extra cost in the first quarter and costs like that and in shoulder quarters, making a much bigger difference than I do.

Speaker Change: And in the full year, but you know we know our base business.

Speaker Change: We can see lots of upside there for getting a significant.

Doug Black: Leverage in our SG&A. And then you're right, as we layer in acquisitions, you know, we anticipate that. But we feel confident that we're going to cover that and achieve SG&A leverage because of the leverage we're getting in the base business. And, you know, there we've taken steps to, you know, make our labor more productive. Some of the initiatives that we did last year, we're coming into the year with a better outcome, a better base.

Speaker Change: Leverage in our SG&A and then you're right as we layer in acquisitions, you know we anticipate that.

Speaker Change: But we feel confident that we're going to cover that and achieve.

Speaker Change: SG&A leverage because of the leverage we're getting in the base business and you know there we've taken steps to.

Speaker Change: You know make our labor more protected product productive some of the initiatives that we did last year, we're coming into the year with a better a better base. We just the seasonal aspect of our acquisitions moves around and so I think the first quarter books looks worse you know obviously.

Doug Black: The seasonal aspect of our acquisitions moves around. And so I think the first quarter looks worse, you know, obviously, that overemphasizes the..., overcome, you know, the acquisition effect which we have every year to achieve that leverage by the year end.

Speaker Change: At over emphasizes the.

Speaker Change: The cost you know when youre in a shoulder quarter like we got in the first so we feel good about our ability to.

To overcome the acquisition effect, which we have every year and achieve that leverage by year end.

Michael Glaser Dahl: Okay. Thanks, Doug, and John.

Speaker Change: Okay. Thanks, John.

Speaker Change: Yeah.

Operator: Again, if you have a question, please press star, then 1. The next question comes from Matthew Bouley with Barclays. Please go ahead.

Speaker Change: Again, if you have a question. Please press Star then one.

Speaker Change: The next question comes from Matthew Bouley with Barclays. Please go ahead.

Matthew Adrien Bouley: Morning, everyone. Following up on Mike's question there on OPEX, there are two parts. I mean, number one, the assumption on the base business SG&A that you would be, you know, to hit the guide, sort of modeling an outright decline going forward, assuming you get past these healthcare issues here from Q1. And then, I think Mike had mentioned this, but if you could put a little more color on the Devil Mountain margin profile and how that will play into it as well. Thank you.

Good morning, everyone. Yeah. Following up on Mike's question, there on Opex I guess two parts I mean number one is is the assumption on the base business SG&A that you would be.

Matthew Adrien Bouley: To hit the guide sort of modeling an outright decline going forward.

Matthew Adrien Bouley: Assuming you get past these health care issues here from Q1, and then I think.

Matthew Adrien Bouley: Mike had mentioned this but if you could put a little more color on the Devil mountain margin profile and how that will play into it as well. Thank you.

John T. Guthrie: We would expect that the rest of the year on our base business, that it would probably be up slightly year over year relative to the prior year from that perspective. So yes, we do expect the rest of the year to be up slightly with regard to base business. I should say the full implementation throughout our P&L on Double Mountain is not necessarily fully factored. We have factored in the EBITDA in our guidance, but Double Mountain and the detail, how it flows through, this is why Doug referenced the base business, are not completely factored into either our gross margin or our SG&A.

Matthew Adrien Bouley: Hum, we would expect the rest of the year on an honor our base business.

Matthew Adrien Bouley: That that it would be probably up likely.

Matthew Adrien Bouley: Year over year on a on a relative to prior year.

Matthew Adrien Bouley: From that perspective, Oh, so yes, we do we do expect rest of the year to be to be up slightly with regard to base business double mountain.

Matthew Adrien Bouley: I should say the full implementation throughout our P&L on double mountain is not necessarily fully factored we have factored in the EBITDA in our guidance, but double mountain.

Matthew Adrien Bouley: And the details of how it flows through.

Matthew Adrien Bouley: Doug referenced the base business is not completely factored into both our gross margin or SG&A discussion since we just got the closed yesterday from that perspective, but the Devil mountain deal, they're a high performing it's a nursery business, it's a terrific business.

Doug Black: The Devil Mountain deal is a high-performance nursery business; it's a terrific business. It will run higher SG&A, and higher gross margin. Many of the acquisitions that we've done, as we've said, run at that higher SG&A, higher gross margin, hardscapes, and nursery business. But it's a high performer, and we expect it to contribute strongly. We're excited about it. It not only gives us full coverage of California, kind of with one deal, but also a leader and a team that can help us expand our nursery, you know, into the mountain states, into the Pacific Northwest, which is exciting for us because we have a very low market share and a presence in those territories.

Matthew Adrien Bouley: It will run higher SG&A higher gross margin right. So you know and again many of the acquisitions that we've done as we said right at that you know the kind of higher SG&A higher gross margin and Hardscape and nursery businesses, but it's a high performer and we expect it to contribute.

Matthew Adrien Bouley: <unk>, we're excited about it not only gives us full coverage of California.

Matthew Adrien Bouley: All of them with one deal, but also a leader in a team that can help us expand our nursery.

Matthew Adrien Bouley: Into the into the mountain states into the Pacific Northwest, which is exciting for us because we have a very low market share.

Matthew Adrien Bouley: Nursery in those territories.

Doug Black: You know, we're excited that we can get, you know, significant organic growth and also acquisition growth with Devil Mountain as a platform. And certainly, they bring a nice profitable business to SiteOne, if you feel like it'll help us. In 2024, you know, our guide, as John mentioned, we just did the deal, so, you know, we didn't move our guidance, but we would certainly expect Devil Mountain. We hope to see a positive impact on our full-year EBIT, our full-year profit.

Matthew Adrien Bouley: We're excited that we can get you know a significant organic growth.

Matthew Adrien Bouley: Also our acquisition growth with Delaware Mountain as a platform.

Matthew Adrien Bouley: And certainly they bring a nice profitable business to decide one so we do feel like it'll help us.

Matthew Adrien Bouley: In 2020 for you our guide as John mentioned, we just did the deal. So we didnt, we didnt move our guidance, but we would certainly expect to have a mountain to be a positive impact on our full year EBIT or for your full year profit.

Matthew Adrien Bouley: Outcome.

Speaker Change: Got it okay. That's helpful. Thanks. Thank you both for that and then secondly, just back up to the end markets.

Matthew Adrien Bouley: Got it. Okay, that's helpful. Thank you both for that.

Matthew Adrien Bouley: And then secondly, just back up to the end markets. I think you mentioned the repair and upgrade side to be slightly down, if I heard you correctly. You know, obviously, there's been a progression of interest rates here over the past few weeks and maybe a little less recovery potential and existing home turnover, of course. So, any finer point on what you're seeing with the sort of more discretionary repair and upgrade portion of the landscaping business. Thank you.

Speaker Change: He mentioned in the repair and upgrade side to be a slightly down if I heard you correctly, yeah, obviously, there's been a.

Speaker Change: Progression of interest rates here over the past few weeks, maybe a little less recovery potential in existing home turnover of course, so just any finer point on what you're seeing what the sort of more discretionary repair and upgrade our portion of the landscaping business. Thank you.

Doug Black: Yeah, I think the repair and upgrade, what we've seen, is kind of stable. It's at lower levels.

Speaker Change: Yeah, I think there are a fair enough great. What we've seen is it kind of stable at that lower lower levels.

Doug Black: Obviously, last year, that market was down. Coming into this year, we think it's been, you know, I'd call it sluggish but stable, and so. So we feel like it will continue to be kind of consistent at all levels. You know, if you do the math, it ends up slightly down. We don't see it dropping further. You know, it's stable at lower levels. I guess that's how I would sum it up.

Speaker Change: Last year that that market was down coming into this year. We think it's been you know kind of I'll call. It sluggish.

Speaker Change: But but stable and so you know.

Speaker Change: So we feel like it'll continue to be kind of consistent at low levels.

Speaker Change: You know if you do the math it ends up slightly down.

Speaker Change: We don't see it dropping further.

Speaker Change: Yeah, it's stable at the lower levels I guess is how it's coming up.

Matthew Adrien Bouley: Got it. Thanks, Doug. Good luck, guys.

Speaker Change: Got it thanks, Doug.

Operator: The next question comes from Andrew Carter with CFL. Please go ahead.

Speaker Change: The next question comes from Andrew Carter with Stifel. Please go ahead.

William Andrew Carter: Hey, thank you. Good morning.

William Andrew Carter: Hey, Thank you good morning wanted to ask about the weather overall for the quarter or was it a net tailwind because you mentioned you'd helped the maintenance it hurt in the south in terms of the precipitation, but you also had heavy precipitation and then absent the topline did the kind of weather mix I think boring to maintenance products hurt the gross margin as well.

William Andrew Carter: I wanted to ask about the weather overall for the quarter. Was it a net tailwind? Because you mentioned it helped with maintenance. It hurt in the south in terms of precipitation, but you also had heavy precipitation. And then, absent the top line, did the kind of weather mix, I think more into maintenance products, hurt the gross margin as well this quarter? And if so, how much of the 100 basis points was that, if you have an estimate?

William Andrew Carter: Well this quarter and if so how much of the 100 basis points. What is that if you have an estimate.

Speaker Change: We don't have a specific estimate I haven't bifurcated by by whether you hit on you hit on the on the on the important thing that I would say in landscape products. You know the weather you know, Florida I'm on here in the South East.

John T. Guthrie: We don't have a specific estimate. I have it bifurcated by weather. You hit on the important things, I would say, in landscape products, the weather. Florida and here in the southeast were negatively impacted, and they were also coming off very strong last year. In the Midwest, specifically and northeast, they had pretty strong marches because of somewhat warmer some warmer weather. So we don't have it.

Speaker Change: Were negatively impacted and and they were also coming off very strong last year's if you're in the Midwest specifically.

Speaker Change: Specifically in North East they had pretty strong marches because of somewhat warmer.

Speaker Change: Some warmer weather. So we don't have it there was a little bit of a mix, but it's honestly very difficult to bifurcate a quarter.

John T. Guthrie: There was a little bit of a mix, but it's honestly very difficult to bifurcate a quarter like this before the selling season by weather that way.

Speaker Change: Quarter like this before.

Speaker Change: Before the selling season.

Speaker Change: By weather that way.

Speaker Change: Thanks, and then a second question on the on the M&A you've done Devils Mountain now that's $100 million plus platform. He just did pioneer I think I think it was 170 million correct me if I'm wrong. There, there's two pretty large platforms, you're digesting kind of within any ear does it kind of do you have the capacity to do this does Devils mountain run independently longer.

William Andrew Carter: Thanks. And then a second question on the M&A. You've done Devil's Mountain now. That's a $100 million plus platform. You just did Pioneer. I think it was $170 million. Correct me if I'm wrong there.

William Andrew Carter: So it's two pretty large platforms you're digesting kind of within a year. Does it kind of – do you have the capacity to do this? Does Devil's Mountain run independently longer? And kind of what's your capacity to do more deals? Can they only be bolt-ons, or could you swallow another kind of platform this size in the near term? Thanks.

Speaker Change: And kind of what's your capacity to do more deals can they only be bolt ons or could you swallow another kind of platform the size in the near term. Thanks.

Doug Black: Yeah, no, great question. You know, it's interesting how the smaller deals and larger deals all take the same, you know, same things to integrate. You know, we integrated 16 companies last year. So, you know.

Speaker Change: Yeah, No great question, Yeah, it's interesting how the smaller deals and larger deals all take the same.

Speaker Change: Same things to integrate we integrated 16 companies last year or so.

Doug Black: We've gotten very good at that. Pioneer, specifically, is going quite well. We've got great focus on that. They brought in a solid team.

Speaker Change: We've gotten very good at that Pioneer's, specifically is going quite well.

Speaker Change: Got you know a great focus on that they brought a solid team we had some some really terrific leaders in that space.

Doug Black: We have some really terrific leaders in that space, in the southern part of their business, that are helping us there, and so, you know, that's going well. You did call it right, Devil Mountain will kind of run standalone, and that's typically how we do deals, is we let them run for a year or so as we learn them and they learn us. So, you know, we'll be on a lighter touch, although there are really good synergies there that we're going to capture right away.

Speaker Change: In the southern part of their business that are helping us there and so.

Speaker Change: That's going well.

Speaker Change: You did call it right in Delaware Mountain will kind of run Standalone and that's typically how we do deals as we let them run for a year or so and as we learn them and they learn us and so we'll be on a lighter touch although theres really good synergies there that we're going to capture right away.

Speaker Change: And so you know taken altogether.

Doug Black: And so, you know, taken all together, it's very manageable, you know, in our system, and we're, we're executing, you know, we're integrating. Page PAGE of NUMPAGES www.verbalink.com Page PAGE of NUMPAGES, and Pioneer, by the way, is..., is down the line, you know, further down the line. We'll integrate Pioneer system-wise this year, but we've got all that planned and are working on that. Devil Mountain, you know, system-wise, we may not integrate them for several years while we're running together as partners. And so, again, all very magical. One other thing I'd add is that they're also in different geographies with different

Speaker Change: It's it's very manageable and our system you know when we're we're executing how we're integrating.

Speaker Change: So 10 to 15 companies the large ones come in and that might be the equivalent of two of them or whatever but.

Speaker Change: Two a very manageable so we feel good about.

Speaker Change: Again pioneered by the way is.

Speaker Change: It's down the line.

Speaker Change: Further down the line, we will integrate the pioneer system wise.

Speaker Change: This year.

Speaker Change: But we've got all of that plan and are working on that Delaware Mountain system Wise, we may not integrate them for several years.

Speaker Change: Well, we're running together as partners and so again, all very manageable.

Doug Black: One other thing I'd add is they're also in different geographies with different leadership and different lines of business. So yeah, our leadership is very, you know, well-versed in integrating these. So, you know, there's no overlap there, which helps.

Speaker Change: The thing I'd add is there also in different geographies with different leadership in different lines of business. So yes, our leadership is very well versed in.

Speaker Change: Integrating the east so it.

Speaker Change: No overlap there which helps.

Speaker Change: Is it as well.

Speaker Change: Thanks ill pass it on.

Speaker Change: Okay.

Operator: This concludes our question and answer session. I would like to turn the conference back over to Doug Black for any closing remarks.

Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Doug Black for any closing remarks.

Doug Black: Okay. Thank you and thank you all again for joining us we very much appreciate your interest in site, one and look forward to speaking to you again.

Doug Black: Okay, thank you, and thank you all again for joining us. We very much appreciate your interest in SiteOne, and look forward to speaking to you again after the next quarter. I want to again thank our terrific associates for all they're doing, our customers, and our suppliers for helping us to be successful.

Doug Black: After the next quarter I want to again things are a terrific associates for all they're doing our customers and our suppliers for helping us to be successful.

Doug Black: Yeah.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Speaker Change: Yeah.

Speaker Change: [music].