Q1 2026 SiteOne Landscape Supply Inc Earnings Call

April 29, 2026

Speaker #2: I will start today's call with a brief overview of our unique market position and our strategy. Followed by the highlights from the first quarter.

Operator: It is now my pleasure to introduce your host, Eric Elema, Chief Financial Officer. Thank you. You may begin.

Speaker #2: Eric will then walk you through our first quarter financial results in more detail and provide an update on our balance sheet and liquidity position.

Speaker #2: Daniel Laughlin will discuss our acquisition strategy and then I will come back to address our outlook and guidance for 2026 before taking your questions.

Operator: It is now my pleasure to introduce your host, Eric Elema, Chief Financial Officer. Thank you. You may begin.

Speaker #2: As shown on slide four of the earnings presentation, we have a strong footprint of more than 680 branches and five distribution centers across 45 U.S. states and five Canadian provinces.

Eric Elema: Thank you. Good morning, everyone. We issued our Q1 2026 earnings press release this morning and posted a slide presentation to the investor relations portion of our website at investors.siteone.com. I am joined today by Doug Black, our Chairman and Chief Executive Officer, and Daniel Laughlin, Senior 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 this call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. Such risks and uncertainties include the factors set forth in the earnings release and in our filings with the Securities and Exchange Commission.

Eric Elema: Thank you. Good morning, everyone. We issued our Q1 2026 earnings press release this morning and posted a slide presentation to the Investor Relations portion of our website at investors.siteone.com. I am joined today by Doug Black, our Chairman and Chief Executive Officer, and Daniel Laughlin, SVP, Strategy and Development. Before we begin, I would like to remind everyone that today's press release, slide presentation, and the statements made during this call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. Such risks and uncertainties include the factors set forth in the earnings release and in our filings with the Securities and Exchange Commission.

Speaker #2: We are the clear industry leader approximately three times the size of our nearest competitor, yet we estimate that we only have about a 19% share of the very fragmented 25 billion wholesale landscaping products distribution market.

Speaker #2: Accordingly, our long-term opportunity to grow and gain market share remains significant. We have a balanced mix of business with 66% focused on maintenance, repair, and upgrade, 20% focused on new residential construction, and 14% on new commercial and recreational construction.

Speaker #2: The only national full product line wholesale distributor in the market. We also have an excellent balance across our product lines as well as geographically.

Speaker #2: Our strategy to fill in our product lines across the US 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 multiple avenues to grow and create value for our customers and suppliers.

Eric Elema: 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.

Speaker #2: While providing important resilience in 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.

Doug Black: Thanks, Eric. Good morning, and thank you for joining us today. We're pleased with our first quarter 2026 performance as we overcame the weather and market-related softness in sales volume and delivered 14% adjusted EBITDA growth compared to the prior year period, with meaningful gross margin expansion and tight SG&A management. Furthermore, during the quarter, we acquired Reinders, a strong fifth-generation market leader in irrigation, agronomics, and landscape lighting in the Midwest, which will contribute to our growth this year. We have seen volume improve in April with the oncoming of a delayed spring season. However, with the recent increase in macroeconomic uncertainty, we believe that our end markets could continue to be soft this year. On the other hand, we expect pricing to be stronger, which will benefit organic sales growth and gross margin expansion.

Doug Black: Thanks, Eric. Good morning, and thank you for joining us today. We're pleased with our Q1 2026 performance as we overcame the weather and market-related softness in sales volume and delivered 14% adjusted EBITDA growth compared to the prior year period, with meaningful gross margin expansion and tight SG&A management. Furthermore, during the quarter, we acquired Reinders, a strong fifth-generation market leader in irrigation, agronomics, and landscape lighting in the Midwest, which will contribute to our growth this year. We have seen volume improve in April with the oncoming of a delayed spring season. However, with the recent increase in macroeconomic uncertainty, we believe that our end markets could continue to be soft this year. On the other hand, we expect pricing to be stronger, which will benefit organic sales growth and gross margin expansion.

Speaker #2: All in support of our talented, experienced, and entrepreneurial local teams. To 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 world-class company.

Speaker #2: The current challenging market conditions require us to adopt new processes and technologies faster and to be even more intentional in driving organic growth, improving our productivity, and mastering the unique aspects of each of our product lines.

Speaker #2: Accordingly, we remain highly focused on our commercial and operational initiatives to overcome near-term headwinds but more importantly to build a long-term competitive advantage for all our stakeholders.

Speaker #2: 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.

Doug Black: With the benefit of our commercial and operational initiatives, we remain confident in our ability to gain market share and expand our EBITDA margin in 2026. Coupled with a solid pipeline of potential acquisitions, we believe that we are well positioned to deliver solid performance and growth for our shareholders in 2026 and in the years to come. I will start today's call with a brief overview of our unique market position and our strategy, followed by the highlights from the Q1. Eric will walk you through our Q1 financial results in more detail and provide an update on our balance sheet and liquidity position. Daniel Laughlin will discuss our acquisition strategy, and then I will come back to address our outlook and guidance for 2026 before taking your questions.

Speaker #2: Taken all together, we expect our strategy to create superior value for our shareholders through organic growth, acquisition growth, and EBITDA margin expansion. On slide six, you can see our strong track record of performance and growth over the last 10 years.

Speaker #2: With consistent organic and acquisition growth. From an adjusted EBITDA margin perspective, we benefited from extraordinary price realization due to rapid inflation and commodity products during 2021 and '22.

Speaker #2: In 2023 and 2024, we experienced significant headwinds as commodity prices came down. In 2024, we also experienced further adjusted EBITDA dilution from the acquisition of Pioneer a large turnaround opportunity with great strategic fit.

Speaker #2: And from our other focus branches, which resulted from the post-COVID market headwinds. 2025 pricing improved from a 3% decline in 2024 to flat. And we achieved excellent progress with Pioneer and our other focus branches.

Doug Black: As shown on slide 4 of the earnings presentation, we have a strong footprint of more than 680 branches and 5 distribution centers across 45 US states and 5 Canadian provinces. We are the clear industry leader, approximately 3 times the size of our nearest competitor, yet we estimate that we only have about a 19% share of the very fragmented $25 billion wholesale landscaping products distribution market. Accordingly, our long-term opportunity to grow and gain market share remains significant. We have a balanced mix of business with 66% focused on maintenance, repair, and upgrade, 20% focused on new residential construction, and 14% on new commercial and recreational construction. The only national full product line wholesale distributor in the market, we also have an excellent balance across our product lines as well as geographically.

Doug Black: As shown on slide four of the earnings presentation, we have a strong footprint of more than 680 branches and five distribution centers across 45 US states and five Canadian provinces. We are the clear industry leader, approximately 3x the size of our nearest competitor, yet we estimate that we only have about a 19% share of the very fragmented $25 billion wholesale landscaping products distribution market. Accordingly, our long-term opportunity to grow and gain market share remains significant. We have a balanced mix of business with 66% focused on maintenance, repair, and upgrade, 20% focused on new residential construction, and 14% on new commercial and recreational construction. The only national full product line wholesale distributor in the market, we also have an excellent balance across our product lines as well as geographically.

Speaker #2: Both of which contributed significantly to our improvement in adjusted EBITDA margin despite the soft end markets. In 2026, we expect pricing to be up 2 to 3 percent.

Speaker #2: And we expect to continue achieving improvements with our focus branches. Accordingly, with the benefit of our other commercial and operational initiatives, we expect to continue expanding our adjusted EBITDA margin despite the continued market softness.

Speaker #2: For the longer term, we believe that we have significant room to improve our adjusted EBITDA margin as we execute our strategy and reach our full potential as a business.

Speaker #2: We have now completed 108 acquisitions across all product lines since the start of 2014, adding approximately $2.2 billion in trailing 12-month sales to SiteOne.

Doug Black: Our strategy to fill in our product lines across the US 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 resilience in softer markets. Turning to slide 5, 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 to 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 world-class company.

Speaker #2: Which demonstrates the strength and durability of our acquisition strategy. These companies expand our product line capabilities and strengthen SiteOne with excellent talent and new ideas for performance and growth.

Speaker #2: Our pipeline of potential deals remains robust, and we expect to continue adding and integrating more companies in 2026 to support our growth. Given the fragmented nature of our industry and our current market share, we believe that we have a significant opportunity to continue growing through acquisition for many years to come.

Speaker #2: Slide seven shows the long runway we have ahead in filling in our product portfolio which we aim to do primarily through acquisition especially in the nursery, hardscapes, and landscape supplies categories.

Doug Black: The current challenging market conditions require us to adopt new processes and technologies faster and to be even more intentional in driving organic growth, improving our productivity, and mastering the unique aspects of each of our product lines. Accordingly, we remain highly focused on our commercial and operational initiatives to overcome near-term headwinds, but more importantly, to build a long-term competitive advantage 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. Taken all together, we expect our strategy to create superior value for our shareholders through organic growth, acquisition growth, and EBITDA margin expansion. On slide 6, you can see our strong track record of performance and growth over the last 10 years with consistent organic and acquisition growth.

Speaker #2: We are well connected with the best companies in our industry and we expect to continue filling in these markets systematically over the next decade.

Speaker #2: I will now discuss some of our first quarter performance highlights as shown on slide eight. Net sales were $940 million essentially flat year over year.

Speaker #2: Organic daily sales were down 1%. Due to the timing of winter storms, the spring selling season was delayed in March. Additionally, we believe that increased macroeconomic uncertainty and higher interest rates are negatively affecting an already soft new residential construction market and the more resilient repair and upgrade market.

Speaker #2: These factors resulted in a 4% decline in organic sales volume for the quarter. Which was partially offset by 3% growth from pricing. Gross profit increased 3% and gross margin improved by 90 basis points to 33.9% driven by effective price realization and continued progress with our commercial initiatives including strong growth in private label products and with small customers.

Doug Black: From an adjusted EBITDA margin perspective, we benefited from extraordinary price realization due to rapid inflation in commodity products during 2021 and 2022. In 2023 and 2024, we experienced significant headwinds as commodity prices came down. In 2024, we also experienced further adjusted EBITDA dilution from the acquisition of Pioneer, a large turnaround opportunity with great strategic fit, and from our other focus branches which resulted from the post-COVID market headwinds. In 2025, pricing improved from a 3% decline in 2024 to flat, and we achieved excellent progress with Pioneer and our other focus branches, both of which contributed significantly to our improvement in adjusted EBITDA margin despite the soft end markets. In 2026, we expect pricing to be up 2% to 3%, and we expect to continue achieving improvements with our focus branches.

Doug Black: Accordingly, with the benefit of our other commercial and operational initiatives, we expect to continue expanding our adjusted EBITDA margin despite the continued market softness. For the longer term, we believe that we have significant room to improve our adjusted EBITDA margin as we execute our strategy and reach our full potential as a business. We have now completed 108 acquisitions across all product lines since the start of 2014, adding approximately $2.2 billion in trailing twelve-month sales to SiteOne, which demonstrates the strength and durability of our acquisition strategy. These companies expand our product line capabilities and strengthen SiteOne with excellent talent and new ideas for performance and growth. Our pipeline of potential deals remains robust, and we expect to continue adding and integrating more companies in 2026 to support our growth.

Doug Black: Given the fragmented nature of our industry and our current market share, we believe that we have a significant opportunity to continue growing through acquisition for many years to come. Slide seven shows the long runway we have ahead in filling in our product Portfolio, which we aim to do primarily through acquisition, especially in the nursery, hardscapes, and landscape supplies categories. We expect to continue filling in these markets systematically over the next decade. I will now discuss some of our first quarter performance highlights as shown on slide eight. Net sales were $940 million, essentially flat year over year, with Organic Daily Sales down 1%. Due to the timing of winter storms, the spring selling season was delayed in March.

Doug Black: Additionally, we believe that the increased macroeconomic uncertainty and higher interest rates are negatively affecting an already soft new residential construction market and the more resilient repair and upgrade market. These factors resulted in a 4% decline in organic sales volume for the quarter, which was partially offset by 3% growth from pricing. Gross profit increased 3% and gross margin improved by 90 basis points to 33.9%, driven by effective price realization and continued progress with our commercial initiatives, including strong growth in private label products and with small customers. SG&A, as a percent of net sales, increased 70 basis points to 37.2% due to the organic sales decline.

Doug Black: That said, we were pleased to have kept our base business SG&A flat versus prior year on an adjusted basis during the quarter, as we benefited from the 2025 branch consolidations and closures and continued to execute our operational initiatives. Adjusted EBITDA for the quarter increased 14% to $25.5 million versus the prior year period, and adjusted EBITDA margin expanded 30 basis points to 2.7% despite the flat sales, demonstrating our ability to successfully navigate the market headwinds with disciplined execution of our strategy and initiatives. In terms of initiatives, we made good progress during the quarter executing specific actions to improve our customer experience, accelerate organic growth, expand gross margin, and increase SG&A leverage.

As we benefited from the 2025 Branch consolidations, enclosures and continue to execute our operational initiatives.

Adjusted ebda for the quarter increased 14% to 25.5 million versus the prior year period.

And adjusted, EBA margin, expanded 30 basis points to 2.7% despite the flat sales.

Demonstrating our abilities to successfully navigate the market headwinds.

with this discipline execution of our strategy and initiatives,

In terms of initiatives, we made good progress during the quarter, executing specific actions to improve our customer experience.

Accelerate organic growth.

Doug Black: For gross margin improvement, we achieved positive organic daily sales growth with small customers and grew our private label product sales by over 40% during the quarter, both contributing to our strong gross margin expansion. These two initiatives not only help us expand gross margin but also help us gain market share and outperform the market. To further drive organic growth, we increased our percentage of bilingual branches from 67% of branches to 68% of branches during the quarter while continuing to execute our Hispanic marketing programs. We are also continuing to make good progress with our sales force productivity as we leverage our CRM to focus on disciplined revenue-generating actions from our inside sales associates and over 600 outside sales associates.

And growth margin and increased sgna Leverage.

Our gross margin Improvement. We achieved positive organic daily sales growth with small customers.

These 2 initiatives not only help us expand gross margin, but also help us gain market, share, and outperform the market.

We further Drive organic growth, we increase our percentage of bilingual branches from 67% of branches.

The 68% of branches during the quarter.

While continuing to execute our Hispanic marketing programs.

We are also continuing to make good progress with our sales force productivity. As we leverage our CRM to focus on disciplined revenue—generating actions from our inside sales associates.

And over 600 outside sales, associates.

Doug Black: We increased our digital sales on SiteOne.com by over 60% in Q1 versus the prior year period, while also increasing regular active users by approximately 60%. We believe we are gaining market share with the customers who are engaged with us digitally as we achieve strong positive total sales growth with these customers during Q1. SiteOne.com helps customers to be more efficient and helps us to increase market share while making our associates more productive. A true win-win-win. On the SG&A front, we continued to lower our net delivery expenses during Q1, driven by delivery associate and equipment efficiency gains along with improved pricing. Note that our teams have done a good job of working with our customers to pass through fuel surcharges to mitigate the significant near-term increases in fuel cost.

Increased our digital sales on site, 1.com by over 60% in the first quarter, versus the prior year period. While also increasing regular active users by approximately 60%.

We believe We Are gaining market share with the customers who are engaged with us digitally

as we achieve strong, positive total sales growth with these customers during the quarter,

SiteOne helps customers to be more efficient.

And helps us to increase market share while making our associates more productive.

A true win win win.

On the sgna front, we continued to lower our net delivery expenses during the first quarter driven by delivery associate and Equipment efficiency, gains, along with improved pricing.

Doug Black: We expect to reduce net delivery expense in 2026 and for the next several years as we execute our local market delivery strategy and best practices. We also continue to achieve improved profitability with our underperforming branches or Focus Branches during the quarter, though they were also negatively affected by the delayed start to the spring season. As a reminder, we achieved an over 200 basis point improvement in adjusted EBITDA margin of our Focus Branches in 2025 and are looking for strong improvement with these branches once again in 2026. In total, we are making great progress on our commercial and operational initiatives, which will help us gain market share, drive organic sales growth, improve gross margin, and achieve operating leverage in 2026 despite low sales growth.

Note that our teams have done a good job of working with our customers to pass through fuel surges to mitigate the significant near-term increases in fuel cost.

We expect to reduce net delivery expense in 2026. And for the next several years, as we execute our local market delivery strategy and best practices,

we also continue to achieve improved profitability with our underperforming branches or Focus branches during the quarter.

Though, they were also negatively affected by the delayed, start to the spring season.

as a reminder, we achieved an over 200 basis, points Improvement, and adjusted ebda margin of our Focus branches in 2025,

And are looking for strong improvement with these branches once again in 2026.

In total, we are making great progress on our commercial and operational initiatives.

Doug Black: These initiatives will help us expand our adjusted EBITDA margin over the next several years towards our long-term objectives. On the acquisition front, we've added two companies to our family so far in 2026, with approximately $110 million in trailing twelve months sales, including Reinders, a strong market leader in the Midwest for irrigation, agronomics, and lighting products. Reinders is a good example of a company that we have been courting for many years before they decided to sell their fifth-generation family business late last year. The Reinders family carefully considered their options and chose SiteOne as the best long-term home for their company. We have built a solid backlog of additional companies, and we expect to close more acquisitions during the year, yielding a more typical year in terms of total sales acquired.

Which will help us gain market share, drive organic sales growth, improve gross margin, and achieve operating leverage in 2026, despite low sales growth.

Furthermore, these initiatives will help us expand our adjusted EBITDA margin over the next several years towards our long-term objectives.

On the acquisition front, we've added 2 companies, to our families so far in 20126 with approximately 110 million in trailing 12 months sales.

Including reinders a strong market leader in the Midwest for irrigation agronomics, and lighting Products.

Grinders is a good example of a company that we have been courting from many years,

Before they decided to sell their fifth-generation family business late last year.

The rinder's family carefully, considered their options and chose site 1 as the best long-term home for their company.

Doug Black: With an experienced acquisition team, broad and deep relationships with the best companies, a strong balance sheet, and an exceptional reputation as the acquirer of choice, we remain well-positioned to grow consistently through acquisition for many years in the very fragmented wholesale landscape supply and distribution market. In terms of our acquisition team, I'd like to take a moment to recognize Scott Salmon, who retired from his role last month after leading our strategy and acquisition team for the last 7 years. Over that period, we added over 70 companies with over $1.3 billion in trailing twelve months sales to SiteOne, while significantly improving our integration processes. Scott has been a tremendous leader and colleague, and we are very grateful for his significant contributions to SiteOne.

We have built a solid backlog of additional companies and we expect to close more Acquisitions during the year, yielding, a more typical year, in terms of total sales, acquired

Reputation as the acquire of choice, we remain. Well, positioned to grow consistently through acquisition for many years.

in the very fragmented, wholesale landscape supply distribution Market,

In terms of our acquisition team, I'd like to take a moment to recognize Scott Salmon.

Who retired from his role last month after leading our strategy and acquisition team for the last 7 years.

Over that period. We added over 70 companies, with over 1.3 billion in trailing 12 months, sales to site 1.

While significantly improving our integration processes.

Doug Black: Fortunately, we have a very strong successor for Scott with Daniel Laughlin, stepping into the role to lead our strategy and acquisition efforts going forward. Daniel was a critical member of our acquisition team, leading some of the most successful acquisitions from 2014 through 2021. He recently rejoined us in January and has been part of a smooth leadership transition. We're very confident in Daniel's experience, capability, and deep knowledge of SiteOne and our industry, and we look forward to further executing our acquisition strategy under his leadership in the coming years as we build on the strong foundation that's been established. Eric will walk you through the quarter in more detail. Eric?

God has been a tremendous leader and colleague, and we are very grateful for his significant contributions to site 1.

Fortunately, we have a very strong successor for Scott with Daniel wafflin.

Stepping into the role to lead our strategy and acquisition efforts going forward.

Daniel was a critical member of our acquisition team leading, some of the most successful Acquisitions from 2014 through 2021.

Recently rejoined us in January and has been part of a smooth leadership transition.

We're very confident in Daniel's experience capability and deep knowledge of sight, 1 and our industry. And we look forward to further, executing our acquisition strategy under his leadership in the coming years. As we build on the strong Foundation that's been established.

Now, Eric will walk you through the quarter in more detail.

Eric Elema: Thanks, Doug. I'll begin on slide 9 with some highlights of our Q1 results. Net sales were approximately $940 million, up modestly from the $939 million for the Q1 of last year. There were 64 selling days in the Q1, which is the same as the prior year period. Organic Daily Sales decreased 1% as a result of a 4% decline in volume, partially offset by a 3% increase in pricing. February and most of March were particularly slow from a sales perspective as winter storms across several regions limited customer activity and delayed applications, driving a weaker volume result. We saw increased sales activity toward the end of the quarter with better weather conditions. As Doug mentioned, sales volume has improved in April compared to the Q1. Pricing performance was strong and broad-based.

Eric.

Thanks Doug. I'll begin on slide 9 with some highlights of our first quarter results.

Net sales were approximately 940 million. Oh, modestly from the 939 million for the first quarter of last year.

There were 64 selling days in the first quarter, which is the same as the prior-year period.

Organic daily sales decreased 1% as a result of a 4% decline in volume.

Partially offset by a 3% increase in pricing.

February and most of March were particularly slow from a sales perspective, as winter storms across several regions limited customer activity and delayed applications.

Driving a weaker volume result.

We saw increased sales activity toward the end of the quarter with better weather conditions.

As Doug mentioned, sales volume has improved in April compared to the first quarter.

Eric Elema: While we continue to see deflation in grass seed and PVC pipe, which were down 10% and 8% respectively in the quarter, the collective magnitude has moderated versus prior periods and was more than offset by price increases across other product lines. In addition, at the start of April, we implemented price increases for products such as fertilizer that have been impacted by supply disruptions resulting from the conflict in the Middle East. Accordingly, we now expect prices to contribute 2% to 3% to 2026 sales growth while acknowledging the ongoing global uncertainty. Organic Daily Sales for agronomic products, which include fertilizer and control products, ice melt, and equipment, increased 2% for Q1, due to improved pricing, partially offset by the later start to the spring selling season, which delayed applications.

Pricing performance was strong and broad-based.

While we continue to see deflation in grass, seed, and PVC pipe.

Which were down, 10% and 8% respectively in the quarter, the collective magnitude has moderated versus prior periods. It was more than offset by price increases across other product lines.

In addition at the start of April, we implemented price increases for products such as fertilizer.

That have been impacted by Supply, disruptions resulting from the conflict, in the Middle East.

Accordingly. We now expect prices to contribute 2% to 3% to 2026 sales growth, while acknowledging the ongoing Global uncertainty

Eric Elema: Organic Daily Sales for landscaping products, which include irrigation, nursery, hardscapes, outdoor lighting, and landscape accessories, decreased 3% for Q1 due to adverse weather and soft demand in the new residential construction and repair and upgrade end markets. Geographically, our eastern regions were more affected by weather, where persistent storms materially disrupted early-season customer activity. More broadly, sales were down for Q1 in 5 of our 8 regions compared to the prior year period. Our central region was a bright spot, achieving double-digit organic sales growth with solid demand and less disruption from winter storms. Acquisition sales, which include sales attributable to acquisitions completed in 2025 and 2026, contributed approximately $12 million, or 1% to net sales growth. Daniel will provide additional details regarding our acquisition strategy later in the call.

Organic daily sales for agronomic products, which include fertilizer and control products, ice melt, and equipment, increased 2% for the first quarter due to improved pricing, partially offset by the later start to the spring selling season, which delayed applications.

Organic daily sales for landscaping products, which include irrigation, nursery, hardscapes, outdoor lighting, and landscape accessories.

Decreased 3%, for the first quarter due to adverse weather and soft demand in the new residential construction and repair and upgrade and markets.

Geographically, our Eastern regions were more affected by weather, with persistent storms materially disrupting early season customer activity.

More broadly, sales were down for the first quarter in 5 of our 8 regions compared to the prior year period.

Our Central region was a bright spot, achieving double-digit organic sales growth with solid demand and less disruption from winter storms.

Acquisition sales, which includes sales attributable to acquisitions completed in 2025 and 2026, contributed approximately $12 million, or 1%, to net sales growth.

Eric Elema: Gross profit increased 3% to $319 million, and gross margin improved 90 basis points to 33.9% for Q1. The year-over-year improvement reflects strong execution of our commercial initiatives, including continued momentum in private label sales and growth with small customers, along with solid price realization and vendor support. These gains were partially offset by higher freight and distribution costs, as well as continued deflation in certain commodity products. Selling, general, and administrative expenses increased to $350 million for Q1 from $343 million for the prior year period. SG&A, as a percentage of net sales, increased approximately 70 basis points to 37.2%, driven primarily by the decline in organic daily sales during the quarter. Despite the sales headwind, we continue to tightly manage cost and drive productivity across the business.

Daniel will provide additional details regarding our acquisition strategy later in the call.

33.9% for the first quarter.

The year-over-year Improvement, reflects strong execution of our commercial initiatives, including continued, momentum in private labeled sales.

And growth with small, customers along with solid price, realization and vendor support.

These gains were partially offset by higher freight and distribution costs, as well as continued deflation in certain commodity products.

Selling, general, and administrative expenses increased to $350 million for the first quarter from $343 million for the prior year period.

Sgna is a percentage of net sales increased approximately 70 basis points to 37.2% driven primarily by the decline in organic daily sales during the quarter.

Despite the sales headwind, we continue to tightly manage costs and drive productivity across the business.

Eric Elema: SG&A in the base business on an adjusted basis was flat for Q1 compared to the prior year period. The effective tax rate was 28.9% for Q1, compared to 25.5% for the prior year period, primarily due to an increase in excess tax benefits from stock-based compensation year over year. We continue to expect the effective tax rate for fiscal 2026 will be between 25% and 26%, excluding discrete items such as excess tax benefits. Net loss attributable to SiteOne was $26.6 million for Q1, compared to $27.3 million for the prior year period, primarily reflecting higher gross profit, partially offset by higher SG&A.

Sgna and the base business on an adjusted basis was flat to the first quarter compared to the prior year period.

The effective tax rate was 28.9% for the first quarter compared to 25.5% for the prior-year period, primarily due to a decrease in excess tax benefits from stock-based compensation year-over-year.

We continue to expect the effective tax rate for fiscal 2026 will be between 25% and 26%, excluding discrete items such as excess tax benefits.

Net loss attributable. Site 1 with 26.6 million for the first quarter compared to 27.3%.

Eric Elema: Our weighted average diluted share count was approximately 44.6 million during Q1, compared to approximately 45.1 million for the prior year period. In Q1, we repurchased approximately 155,000 shares for approximately $20 million, at an average price of $128.90 per share. Post quarter end, we repurchased an additional 6,000 shares for approximately $800,000. Adjusted EBITDA increased 14% to $25.5 million for Q1, and adjusted EBITDA margin expanded 30 basis points to 2.7%, reflecting the improvement in gross margin and disciplined cost management during the quarter. Adjusted EBITDA for Q1 includes adjusted EBITDA attributable to non-controlling interest of $700,000.

Primarily reflecting higher gross profit partially offset by her STNA.

Our weighted average diluted share count was approximately 44.6 million during the first quarter, compared to approximately 45.1 million for the prior-year period.

In the first quarter, we repurchased approximately 155,000 shares.

For approximately 20 million and an average price of 128.90 per share.

Both quarter end, we repurchased an additional 6,000 shares for approximately 800,000.

Adjusted EBA increased 14% to 25.59 for the first quarter and adjusted. Even a margin expanded 30 basis points to 2 2.7% reflecting the Improvement in gross margin in discipline cost management during the quarter.

Adjusted, even if for the first quarter, includes adjusted IBA attributable to non-controlling interest of $700,000.

Eric Elema: I'll provide a brief update on our balance sheet and cash flow statement, as shown on slide 10. Working capital at the end of the quarter was approximately $1.1 billion, compared to $1.0 billion at the end of the same quarter last year. Cash used in operating activities decreased approximately $8 million to $122 million, due primarily to a modestly lower net loss and the effect of working capital changes. We made cash investments of approximately $102 million for the first quarter, compared to approximately $21 million for the same period last year. The increase primarily reflects the acquisition of Reinders, as well as higher capital expenditures. Capital expenditures for the quarter were $23 million, compared to $15 million for the same period last year due to increased investments in our branch locations.

Now, I'll provide a brief update on our balance sheet and cash flow statement as shown on slide 10.

Working capital, at the end of the quarter, was approximately $1.1 billion compared to $1.0 billion at the end of the same quarter last year.

Cash used in operating activities decreased approximately 8 million to 122 million due primarily to a modestly lower net loss.

and the effect of working capital changes,

we made cash Investments of approximately 102 million for the first quarter compared to approximately 21 million for the same period last year.

The increase primarily reflects the acquisition of binders, as well as higher Capital expenditures.

Eric Elema: Net debt at quarter-end was $585 million, and net debt to trailing twelve-month adjusted EBITDA was 1.4x, which is within our targeted range of 1x to 2x and lower than the 1.5x at the end of Q1 of last year. Available liquidity at the end of the quarter was approximately $502 million, consisting of $84 million of cash on hand and $418 million in available borrowing capacity under our ABL facility. Post quarter-end, we amended our ABL facility and extended the maturity date to April 2031. As a reminder, our priority from a balance sheet and liquidity perspective is to maintain our financial strength and flexibility so that we can execute our growth strategy in all market environments.

Capital expenditures for the quarter were $23 million compared to $15 million for the same period last year, due to increased investments in our branch locations.

Net debt at quarter, end was 585 million and that debt to trailing 12-month adjusted ibido was 1.4 times.

which is within our targeted range of 1 to 2 times and lower than the 1.5 times at the end of the first quarter of last year,

Available liquidity. At the end of the quarter was approximately 502 million consisting of 84 million of cash on hand.

And 418 million in available borrowing, capacity under our abl facility.

Post quarter end, we amended our abl facility and extended the maturity date to April 2301.

As a reminder, our priority from a balance sheet and liquidity perspective is to maintain our financial strength and flexibility.

Eric Elema: I will now turn the call over to Daniel for an update on our acquisition strategy.

So that we can execute our growth strategy in all market environments.

Daniel Laughlin: Thanks, Eric. As shown on slides 12 and 13, we completed two acquisitions during Q1, representing approximately $110 million of trailing twelve-month net sales. Both of these companies align well with our strategy of expanding our product offering, strengthening our presence in attractive local markets, and adding high-quality teams to SiteOne. On 13 January, we completed the acquisition of Bourget Flagstone Company, a wholesale distributor of hardscape products with 1 location in Santa Monica, California. This acquisition establishes our presence in the Santa Monica market and the surrounding Malibu and Pacific Palisades areas, and provides a strategically located site to expand our hardscapes offering in Southern California. Bourget Flagstone brings a long history in the market, strong customer relationships, and deep expertise in natural stone and hardscape products.

I will now turn the call over to Daniel for an update on our acquisition strategy.

Thanks Eric. As shown on the slides 12 and 13. We completed 2 acquisition during the first quarter representing approximately 110 million of trailing 12 months in that sales.

Strategy of expanding our product offering.

Strengthening our presence and attractive local markets, and adding high quality teams to site 1.

On January 13th, we completed the acquisition of Bourj Flagstone Company, a wholesale distributor of hardscape products with one location in Santa Monica, California.

This acquisition establishes our presence in the Santa Monica Market in the surrounding Malibu and Pacific Palisades areas.

And provides a strategically located site to expand our heartscapes offering in Southern California.

For J, flagstone brings a long history in the market.

Daniel Laughlin: On 16 March, we completed the acquisition of Reinders, a leading fifth-generation family-owned distributor of irrigation, agronomics, holiday and landscape lighting, and landscape supplies with 12 locations across the Midwest. Reinders significantly expands our presence in the Midwest and strengthens our capabilities in irrigation and agronomics, supported by a team known for technical expertise, on-site diagnostics, and strong customer service. The Reinders leadership team will remain with the business, preserving its legacy and customer relationships while benefiting from SiteOne's scale, resources, and infrastructure. 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. Looking back, since 2014, we have completed over 100 acquisitions, representing approximately $2.2 billion of trailing 12-month net sales added to SiteOne.

Strong customer relationships and deep expertise in Natural Stone, and Hardscape products.

On March 16th, we completed the acquisition of Grinders, a leading fifth-generation, family-owned distributor of irrigation, agronomics, holiday and landscape lighting, and landscape supplies with 12 locations across the Midwest.

Rinder's significantly expands our presence in the Midwest and our capabilities in irrigation and agronomics.

Supported by a team known for technical, expertise on site, Diagnostics and strong, customer service.

The Grinders leadership team will remain with the business preserving its Legacy and customer relationships. While benefiting from site 1, scale, resources and infrastructure.

I want to thank the entire Site 1 team for their passion and commitment to making Site 1 a great place to work, and for welcoming the newly acquired teams when they join the Site 1 family.

Daniel Laughlin: These companies have steadily expanded the number of markets where we can offer a full product line while strengthening our local teams. Summarizing on slide 14, our acquisition pipeline remains active, supported by long-standing relationships across the industry in a disciplined, consistent approach to evaluating opportunities. While many factors can influence timing, our focus is unchanged, partnering with well-run businesses that fit strategically, align culturally, and create long-term value for our customers, suppliers, associates, and shareholders. With a strong balance sheet, a dedicated acquisition team, and a proven integration model, we remain confident in our ability to continue executing our M&A strategy and supporting SiteOne's growth in 2026 and the years to come. I will now turn the call back to Doug.

Looking back since 2014, we've completed over 100 acquisitions, representing approximately $2.2 billion of trailing 12 months' net sales added to SiteOne.

These companies have steadily expanded. The number of markets where we can offer a full product line while strengthening our local teams has increased.

Summarizing on slide 14, our acquisition pipeline remains active supported by long-standing relationships across the industry in a disciplined consistent approach to evaluating opportunities.

While many factors can influence. Timing, our focus is on changed.

partnering, with well-run businesses that fit strategically, align, culturally and create long-term value for our customers, suppliers, Associates, and shareholders,

With a strong balance sheet, a dedicated acquisition team. And a proven integration model, we remain confident in our ability to continue executing. Our m&a strategy in supporting site, 1's growth in 2026 and the years to come

Doug Black: Thanks, Daniel. I'll wrap up on slide 15. As mentioned, the spring season was delayed in March, and we have seen improved sales volume and overall positive Organic Daily Sales growth in April so far. However, the recent energy volatility and higher interest rates have increased the macroeconomic uncertainty, and we believe this is having a negative effect on the already weak new residential construction end market and the more resilient repair and upgrade end market. On the positive side, as mentioned earlier, we now expect to achieve 2% to 3% growth in pricing, which will support Organic Daily Sales growth and gross margin expansion. Overall, we continue to expect low single-digit growth in Organic Daily Sales over the year.

I will now turn the call back to Doug.

Thanks, Danielle. I'll wrap up on slide 15.

As mentioned, the spring season was delayed in March and we have seen improved sales volume and overall positive organic daily sales growth in April so far.

However, the recent energy volatility and higher interest rates have increased the macroeconomic uncertainty.

And we believe this is having a negative effect on the already weak new residential construction and market, and the more resilient repair and upgrade market.

On the positive side as mentioned earlier, we now expect to achieve 2% to 3% growth in pricing.

Which will support organic daily sales growth and gross margin expansion.

Overall, we continue to expect low single-digit growth in organic daily sales.

There.

Doug Black: In terms of end markets, we are experiencing weakness in new residential construction demand, which comprises 20% of our sales, and we expect this market to be down for the full year 2026. New commercial construction demand, which represents 14% of our sales, was solid in 2025, and we believe it will remain flat in 2026. Leading activity from our project services teams continues to be slightly positive compared to the prior year, which is a good indicator of continued demand. The ABI index has improved recently, and our customers remain bullish for the remainder of the year. We believe that this end market will be flat this year. We believe the repair and upgrade market, which represents 30% of our sales, was down in 2025, but seemed to have stabilized during the H2.

In terms of end markets, we are experiencing weakness in new residential construction demand.

which comprises 20% of our sales.

And we expect this Market to be down for the full year, 2026.

New commercial construction, demand which represents 14% of our sales with solid in 2025 and we believe it will remain flat in 2026.

Million activity from our project Services teams continues to be slightly positive compared to the prior year which is a good indicator of continued demand.

The ABI index has improved recently and our customers remain bullish for the remainder of the year.

We believe that this end Market will be flat this year.

Doug Black: Far this year, the repair and upgrade market has been resilient but sluggish, with lower consumer confidence. While the long-term fundamentals for repair and upgrade are strong, we believe that repair and upgrade demand will be down slightly this year due to the increase in macroeconomic uncertainty. Lastly, in the maintenance end market, which represents 36% of our sales, we achieved excellent sales volume growth in 2025 as our teams gained profitable market share on top of steady demand growth. We have seen the same trends this year so far, and we expect the maintenance end market to continue growing steadily in 2026. In total, after almost 4 months of activity, we expect end market demand to be down modestly this year, with weakness in new residential construction and repair and upgrade more than offsetting growth in maintenance.

We believe the repair and upgrade market, which represents 30% of our sales, was down in 2025 but seemed to have stabilized during the second half.

So far this year, the repair and upgrade Market has been resilient but sluggish with lower consumer confidence.

Lastly, in the maintenance and Market, which represents 36% of our sales, we achieved. Excellent sales volume growth in 2025 as our teams, gained profitable market share on top of steady demand growth.

We have seen the same Trends this year so far, and we expect the maintenance and market to continue growing steadily in 2026.

Doug Black: Given this backdrop, and with the benefit of our commercial initiatives, we expect flat sales volume, which when coupled with 2% to 3% growth in pricing, is expected to yield low single-digit Organic Daily Sales growth for the full year 2026. We expect gross margin in 2026 to be higher than 2025, driven by price realization and our commercial initiatives, partially offset by higher freight and logistics costs supporting our growth. With our continued strong actions to improve our productivity and by continuing to address our focus branches, we expect to achieve operating leverage in 2026, yielding solid improvement in our adjusted EBITDA margin. In terms of acquisitions, as Daniel mentioned, we have a good pipeline of high-quality targets, and we expect to add more excellent companies to SiteOne throughout 2026.

In total after almost 4 months of activity we expect and market demand to be down modestly this year with weakness in new residential construction and repair and upgrade more than offsetting growth in maintenance.

Given this backdrop, and with the benefit of our commercial initiatives, we expect flat sales volume. Which when coupled with 2% to 3% growth, in pricing is expected to yield low single digit organic. Daily sales growth, are the 4 year 2026

Expect gross margin in 2026 to be higher than 2025 driven by Price realization and our commercial initiatives.

Partially offset by higher Freight and Logistics costs supporting our growth.

With our continued, strong actions to improve our productivity and by continuing to address our Focus branches.

We expect to achieve operating leverage in 2026, yielding solid improvement in our adjusted ebda margin.

In terms of Acquisitions. As Daniel mentioned, we have a good pipeline of high-quality targets.

And we expect to add more, excellent companies to cite 1 through 2026.

Doug Black: Lastly, we have an extra week in 2026. Unfortunately, this extra week occurs in fiscal December during a very slow sales period, which is a traditionally loss-making period for SiteOne. As a result, we expect the extra week will reduce our adjusted EBITDA by $4 to 5 million. With all these factors in mind, and including the negative effect of the 53rd week, we expect our full year adjusted EBITDA for fiscal 2026 to be in the range of $425 million to $455 million. This range does not factor in any contribution from unannounced acquisitions. 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.

Lastly, we have an extra week in 20206.

Unfortunately, this extra week, occurs in fiscal December during a very slow sales period, which is a traditionally loss-making period for site 1.

As a result, we expect the extra week will reduce our adjusted evda by 4 to 5 million.

with all these factors in mind and including the negative effect of the 53rd week, we expect our full year, adjusted ebda for fiscal 2026

To begin the range of 425 million to 455 million.

This range does not factor in any contribution from unannounced acquisitions.

Doug Black: We have a tremendous team, and it is an honor to be joined with them as we deliver increasing value for all our stakeholders. I would also like to thank our suppliers for supporting us so strongly and our customers for allowing us to be their partner. Operator, please open the line for questions.

In closing, I would like to sincerely. Thank all our site 1 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 joined with them as we deliver increasing value for all our stakeholders.

I would like to thank our suppliers for supporting us, so strongly, and our customers for allowing us to be their partner.

Operator, please open the line for questions.

Operator: Our first question comes from David Manthey with Baird. Please proceed with your question.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue.

You may press start if you would like to remove your question from the queue.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

We asked that analysts limit themselves to 1, Main question and 1, follow-up in the interest of Time 1 moment, please while we pull for questions.

Operator: Our first question comes from David Manthey with Baird. Please proceed with your question.

David Manthey: Thank you. Good morning, everyone. First off, Doug, I'm most interested in your commercial and operational initiatives, of course, in this sort of slow period. I was hoping maybe you could scale the long-term margin improvement opportunity here, say, next 3 to 5 years. What do you think you can drive out of these many efforts that you have going on? As it relates to 2026, maybe if you could highlight the top two or three that'll have the biggest impact this year.

Our first question comes from David manthy with beard. Please proceed with your question.

Thank you. Good morning, everyone. Um, first off, Doug, I'm most interested in your commercial and operational initiatives—of course, in this sort of, uh, slow period. Was hoping maybe you could scale the long-term margin improvement opportunity here—say, over the next three to five years. What do you think you can drop?

Out of these many efforts that you have going on, and then as it relates to 2026, maybe if you could highlight the top two or three that’ll have the biggest impact this year.

Doug Black: Yeah. Thanks, David. You know, longer term, we have a, you know, our path to 13%, and that's been our target for a while, and we feel good that we can get there with the combination of our, you know, commercial initiatives driving organic growth, gross margin expansion, and then SG&A efficiency or leverage. The biggest opportunities to drive that, I would say on the gross margin side, private label is obviously a big one, and we've got great progress going on there. We're also penetrating with small customers. You know, we have lower share with small customers than we have with the larger customers. As we penetrate those small customers, that's a good gross margin driver for us.

Yeah. Thanks David. Um, you know, longer term we have a uh, you know, we have have our path to 13%. Um and that's been our Target for a while and we feel good that that we can get there with the combination of our you know, commercial initiatives driving organic growth.

Uh, gross margin expansion and then sgna.

um,

Efficiency, or leverage. And so, the biggest opportunities to drive that—

Um, I would say on the gross margin side.

Of a private label.

Is is obviously a big 1 and uh, we've got a great.

Progress going on there.

Doug Black: On the SG&A side, we have our focus branches. That's a big opportunity for us. We made a lot of progress last year. We aim to continue to make progress over the next two to three years with those lower performing branches as we raise them up. That's largely SG&A reduction. Our delivery efficiency is a big opportunity for us to reduce our last leg of delivery expense. As you know, over the years, we've worked on our inbound freight and our supply chain. We're now putting a lot of focus on our outbound delivery from the branches. Those are some of the bigger opportunities.

And as we've penetrated, those small customers. That's a, that's a a good gross. Margin driver for us, uh, on the sgna side, we have our Focus branches. That's a, that's a big opportunity for us. We made a lot of progress last year.

Uh, we aim to continue to make progress over the next two to three years with those, uh, lower performing branches as we raise them up. That's largely SG&A reduction.

And our, uh, delivery.

Doug Black: Of course, just the general leverage we get by driving organic growth, which, you know, the aiders there are digital is a big driver. Our sales force performance efforts. Then, you know, private label and small customers would also contribute to organic growth. You put those together, we have lots of opportunity. We're mining those, you know, this year, to drive our business longer term. We feel like that can get us up into the double digits on toward that 13% objective.

Um efficiency is a um is a big opportunity for us to reduce our our last leg of delivery expense as you know, over the years we've worked on our inbound Freight and our supply chain. Um, we're now putting in a lot of focus on our outbound delivery from the branches. And so those are some of the bigger

opportunities, and of course, just the general leverage we get by driving organic growth.

Which um, which you know the aers there are are digital.

Driver, our sales force performance efforts.

And then uh, you know, private label and small customers would also contribute to organic growth. So you put those together, we have lots of opportunity, we're mining those, you know, this year,

Uh, to drive our business longer term.

We feel like that can get us up into the double digits on for that, 13% objective.

David Manthey: That's great. Thanks for that detail, Doug. Maybe I could double-click on the private label. I believe you said it grew 40%. Maybe I heard that wrong. What percentage of total sales are private label as we sit here today? Could you talk about just what are the key products that are driving the outsized growth there?

That's great. Thanks for that detailed Doug. Um maybe I could double click on the private label, I believe you said it, grew, 40%, maybe I heard that wrong. But um what percentage of total sales are private label as we sit here today and and then, could you talk about just

Doug Black: Yeah. I want to clarify that the 40% were our high growth private label product lines, which are Pro-Trade, the lead there, that's in lighting and landscape supplies. Portfolio is our nursery private label, and Solstice Stone is our hardscapes private label. When you take those three, they grew at 40%. If you add in LESCO and our total private label, it grew at 10% in the quarter, so still moving ahead. We're approximately 15% private label, and we're looking to increase that by 100 basis points a year. We accomplished that last year, and we aim to, you know, keep ticking that up over the next, you know, 5 to 10 years, quite frankly. Our goal there would ultimately be kinda 25%, 30% private label.

What, what are the key products that are driving the outsized growth there?

Yeah, I want to clarify that the 40% were our high growth, uh private label product lines, which are protrades the, the lead there, um, that's in lighting and landscape supplies. Um, portfolio is our Nursery private label and Solstice stone is our Hardscape private label? When you take those 3, they grew at 40%, if you add in lascaux and our total private label, it grew at 10% in the quarter. So still moving ahead.

For approximately 15%.

Private label. And we're looking to increase that by 100 basis points.

Doug Black: We've got a good start this year to being on that same pace heading toward that goal.

A year. And so we, uh, we accomplished that last year, and we aim to, you know, keep ticking that up over the next, you know, 5 to 10 years, quite frankly. Uh, our goal there would ultimately be kind of 25-30% of private label.

Doug Black: We've got a good start this year to being on that same pace heading toward that goal.

and so, um,

so we've got a good start this year to, uh, being on that same Pace heading toward that goal.

David Manthey: That's perfect. Thank you very much.

It's perfect. Thank you very much.

Doug Black: Thanks, Ed.

Operator: Our next question comes from Ryan Merkel with William Blair. Please proceed with your question.

Thanks.

Ryan Merkel: Hey, everyone. Thanks for the question. I wanna start off with the quarter. Doug, can you talk about what was the impact of weather? You missed the street by about $40 million. I know that's difficult, but any help there, you know, would be helpful. How much was macro being a weaker in the quarter? You called out new resi construction. Just curious what you saw there.

Our next question comes from Ryan Merkel with William Blair please proceed with your question.

Doug Black: Right. Well, it's, it's kind of hard to discern, 'cause both are happening at the same time. I would say that, you know, maintenance is, you know, 36% of our business, and that's the one that gets the most deferred, you know, as we're, as we're moving, kind of from quarter to quarter based on when the spring starts. As we mentioned, and we've seen the volumes improve in April. We haven't caught all the way back up to where we've, you know, we aim to be for the year. We've seen that improvement, and that's largely that maintenance, you know, and some of the new construction kicking in seasonally. On the macro side, you know, you can see that we've dropped our guide for the market.

Hey everyone, thanks for the question. Um, I want to start off with the quarter dog. Can you talk about how, what was the impact of whether, um, you you missed the street by about 40 million? I know, that's difficult. But any help there, you know, would be helpful and then how much was macro being a weaker and a quarter? You called out new resi construction. Just curious what? What you saw there.

Right. Well, it's kind of hard to discern, um, because both are happening at the same time.

Uh, I would say that, you know, maintenance is, you know, 36% of our business and that's that's the 1 that gets the most deferred, you know, as we're as we're moving, uh, kind of from a quarter to quarter based on when, uh, when the uh,

Spring starts. And so as we mentioned, and we've seen the volumes improve. Um, in April, we haven't caught all the way back up to where we, you know.

And to be for the year, but uh, we've seen that Improvement and that's largely that uh, that maintenance. Um, you know, and some of the new construction kicking in

Doug Black: You know, we would've initially said it was flat, now we're saying it's gonna be modestly down. I think that's, you know, that quantifies the macro uncertainty. We, we feel like we're seeing that and that we'll continue to see that throughout the year. You know, consumer confidence is low, gas prices are up. You know, it's just, it's not a great environment, and that makes the weakness in new res a little bit worse. We've seen some of that, and it, you know, it weakens the repair and remodel market, which, you know, we've seen some of that. It's mixed, you know, it's not falling off a cliff. We, we still believe that the, remodel market is resilient. You, you can certainly see some jobs being deferred and there's weakness here and there in that market.

The, uh, the macro side, you know, we just we you can see that we we dropped our our guide for the market, you know? We we would have initially said, it was flat. Now, we're saying it's going to be modestly down. I think that's the, you know, that quantifies the macro.

Uncertainty. Um we we feel like we're seeing that and that will continue to see that throughout the year. You know consumer confidence is slow gas prices are up, you know it's just it's not a great environment.

And that um that makes the the weakness in new res, a little bit worse.

Um and we've seen some of that and it you know it it weakens the repair and remodel Market which you know we've seen some of that it's mixed you know it's not falling off a cliff.

Ryan Merkel: Okay. No, that's fair. I know quantifying weather's difficult, so I appreciate that. My second question's on price. You're raising it a little bit, but I thought you might raise it more. I'm curious, like, is the cadence just sort of 3% across each of the quarters the rest of the year? What are you assuming now for PVC and fertilizers? Because I think there's probably some inflation there.

And, and there's weakness here and there in that market.

Eric Elema: Yeah. Good question, Ryan. You know, when we talked to you last quarter, we were thinking 3 in Q1, stepping down to 2, then 1 in H2, we were comping the increases, in June, May-June timeframe of last year. Our thinking now is 3, you know, we did 3 in Q1. We see a continuation with that, and it's probably even a little firmer, 3 here in Q2. Then, you know, there's some uncertainty. You know, we think 2 maybe, in H2, gets you kinda midpoint of that 2 to 3. There is some upside. There's also some uncertainty. You know, we're still evaluating PVC.

Okay, now that's fair. I know quantifying whether it's difficult, so I appreciate that. Uh, my second question is on price, uh, you're raising it a little bit but I, I thought you might raise it more. Um, so I'm curious like is the Cadence just sort of 3% across each of the quarters, the rest of the year, and what, what are you assuming now, for PVC and fertilizers because I think there's probably some inflation there.

Yeah, good question. Ryan. Um,

We were thinking.

Eric Elema: We're working closely with our suppliers, expecting those price increases here during the quarter, and you know, monitoring overall price increases across the rest of our supplier base. Just, you know, there's a lot of uncertainty looking out in the rest of the year, and you know. I think 2 to 3 is a fairly conservative point right now for where we sit. Certainly there are some upside opportunity in the rest of the year, and we'll have a better view of that as we progress through the Q2.

3 in the first quarter stepping down to 2 and then in 1 in the second half. We were comping, the increases, uh, in June and May June time frame the last year, our thinking now, is it it 3? You know, we did 3 in q1, we see a continuation with that. It's probably even a little firmer free here in the second quarter and then, you know, there's some uncertainty. So you know we think 2 maybe uh in the second half, gets you kind of midpoint of that 2 to 3 there is some upside and but there's also some uncertainty, um, you know, we're still evaluating PBC, we're working closely with our with our suppliers.

Expecting those price increases here during the quarter. And, uh, you know, monitoring, um, overall price increases across, uh, the rest of our supplier base,

um, just, you know, there's just a

a lot of uncertainty looking out in in the rest of the year. And, you know, so I think 2 to 3 is a fairly conservative point right now for where we sit. Um, certainly there are some upside opportunity um in the rusty year and and we'll have a better view of that as we progress through the second quarter.

Ryan Merkel: Got it. That's great. I'll pass it on. Thanks.

Doug Black: Thanks, Ryan.

Got it. That's great. I'll pass it on. Thanks.

Operator: Our next question comes from Mike Dahl with RBC Capital Markets. Please proceed with your question.

Thanks Ryan.

Our next question comes from Mike doll with RBC Capital markets. Please proceed with your question.

Mike Dahl: Thanks for taking my question. Just to touch on kind of the margin breakdown. I think last quarter you articulated that, you know, within the year-on-year composition, like the gross margin and SG&A contribution would be relatively similar. Just given the moving pieces, price better, volume a little worse, good start to the year on gross margin. Can you just help us understand kind of within your expectation today how you would think about the breakdown between, you know, gross margin and SG&A leverage this year?

For taking my question um just to uh just to touch on kind of the margin breakdown. I think last quarter you articulated that you know within the year year on year composition like the gross margin and sgna contribution would be relatively

Eric Elema: Yeah. We still expect to get SG&A leverage for the full year. You know, we're looking at Q2 and Q3 for that to occur. Q4, we have the extra week, that will be dilutive. We don't expect to get SG&A leverage in Q4. To your point, we do believe that gross margin now expected to be higher. You can see what we did here in Q1. Expect to expand gross margin in Q2. We were thinking more flat on gross margin the H2 of the year when the year started, so there's some upside opportunity. I would say Q3 probably a little better than we thought. Q4, unknown. SG&A, right. You know, a little bit of a change in the end market outlook.

Similar. Um, just given the moving pieces—price better, volume a little worse. Good start to the year on gross margin. Can you just help us understand, kind of within your expectations today, how you would think about the breakdown between, um, you know, gross margin and SG&A leverage this year?

Yeah, we still expect to get SG&A leverage for the full year. Um, you know, we're looking at Q2 and Q3 for that to occur. Q4, we have the, uh, the extra week, um, so that will be dilutive. So we don't expect to get SG&A leverage in the fourth quarter. Uh, but

To, to your point.

Believe that gross margin now. Um, expected to be higher. You can see what we did here in q1. Um, expect expand gross margin in Q2, we were thinking more flat and gross margin the second half of the year when the year started. So there's some upside opportunity I would say Q3 probably a little better than, than we thought Q4 on known, uh, sgna, right? Um, you know, with the

Eric Elema: You know, SG&A gets a little bit harder to leverage. We feel like we're doing a really good job managing the cost side of it, but, you know, organic, you know, we still believe low single digits. I would say it's probably tilted a little more in favor in gross margin at this point. You know, we thought 50/50 contribution when the year started, and I would say that's, you know, that shifted up in favor of gross margin.

A little bit of a change in the N market outlook. So, um, you know, SG&A gets a little bit harder to leverage. We feel like we're doing a really good job managing the cost side of it. But, you know, uh, organic, um,

You know, we we still believe low single digits.

I would say it's probably tilted a little more in favor in gross margin at this point. Um, you know, we thought 50/50 contribution when the year started and I would say that's, you know, that shifted it up uh, in favor of a gross margin.

Mike Dahl: Okay. That's helpful color. Just as a follow-up on the SG&A dynamic, I mean, with the more subdued outlook on kind of market dynamics, obviously you have all the initiatives in place, but is there anything else kind of more discreet or incremental that you're now contemplating in terms of further cost out actions?

Doug Black: Yeah, I think we always when if the market's tougher or if volumes are lower, you know, we'll take action to, you know, manage labor tightly, other expenses more tightly, et cetera. There are certain actions we can take. As Eric mentioned, SG&A leverage is certainly more challenging as the, as the volume goes down. You know, we would expect a little bit less leverage, more on the gross margin side for the remainder of the year. If things get tougher, we can certainly fight, you know, to maintain that leverage. You know, we'll continue to manage it tightly in any case, and then see how it works out on the volume side.

Okay. That's that's helpful color. And and just as a follow up on on the sgna dynamic and I mean with the more subdued outlook on, on kind of market dynamics, obviously you have all the initiatives in in place. But is there anything else kind of more discreet or incremental that you're now contemplating in terms of further costs out actions?

Yeah, I think we always win if the market's tougher. If volumes are lower, you know, we will take action.

To uh, you know, manage, uh, labor, tightly, other expenses, more tightly Etc. So there's certain actions we can take

um, but as

Eric mentioned sgna, leverages certainly more challenging as as the volume goes down. So, you know, we would expect a little bit more less leverage, more on the gross margin side.

For the remainder of the year, um, if they

Get tougher, we can certainly fight, you know, to to maintain that Leverage.

Um, and you know, we'll continue to manage it tightly in any case. Um.

See how it works out on the volume side.

Eric Elema: The other point I'd add too.

Mike Dahl: Okay.

Eric Elema: On SG&A is the rising fuel costs for delivery goes through SG&A. We've talked about fuel surcharges that we implemented at the end of March. The charge for that is in sales, so you can see a little bit of a negative impact on SG&A from the dollar side.

The other point I'd add to that on sgna is, you know, the rising fuel costs for delivery goes through sgna. And um, you know, we we talked about fuel source that we implemented at the end of March.

The charge for that, you know, is in sales. So, you know, you can see a little bit of a negative impact on SG&A, uh, from the dollar side.

Mike Dahl: Got it. Okay. All right. Thanks, Eric. Thanks, Doug.

Doug Black: Thank you.

Got it. Okay. All right. Thanks Eric. Thanks Doug.

Operator: Our next question comes from Keith Hughes with Truist Securities. Please proceed with your question.

Thank you.

Our next question comes from Keith Hughes with truth Securities. Please proceed with your question.

Keith Hughes: Thank you. We talked a lot about inflation on this call. Are you seeing any signs that you're not able to get any of these price increases through on customers, given what's, you know, kind of a shaky demand environment right now?

Thank you. So, you talked a lot about inflation on this call. Um, are you seeing any signs that you're not able to get any of these price increases through on customers, given what's, you know, kind of a shaky demand environment right now?

Doug Black: You know, our market's pretty efficient, and it's been traditionally pretty efficient at passing through price increases. You know, so far, you know, obviously we work with our customers on that, but so far, we've been able to pass through price increases, and we feel pretty confident that we can continue to do that. You know, working with our customers and suppliers to make it, you know, as seamless as possible for our customers. Our market tends to be pretty efficient there, and we don't expect that to change.

You know, our market's pretty efficient—it's been traditionally pretty efficient at passing through.

Price increases so, you know, so far, you know, we're obviously we work with our customers on that. But, uh, so far

Uh we've been able to pass through price increases and we feel feel pretty confident that we can continue.

uh to do that, you know, working with our customers and suppliers to uh

To, uh, make it, you know, as seamless as possible.

um, for our customers but um,

Keith Hughes: Okay. I mean, there are some categories where there could be a lot more inflation, particularly PVC pipe. When you get increases from your suppliers, how long does that take to get implemented? Is there usually any drag when numbers go up notably?

Our Market tends to be pretty efficient there, and we don't expect that to change.

Okay, and I mean, there are some categories where there could be a lot more inflation, particularly TVC pipe. Um.

When you get increases from your suppliers, how long does that take to get implemented? It is or usually in any Draft when when know what numbers go up notably.

Eric Elema: It's pretty much concurrently. We're in contact with suppliers, we've been signaled ahead of time, and we plan accordingly and provide notice to our customers in advance of those price increases.

no, it it's pretty much concurrently we're, we're in contact with

Some.

We've been signal that ahead of time and we, we plan a quarterly and, and, and provide notice to our customers.

Doug Black: Especially with things like pipe and fertilizer and products that move around, you know, the market. There's a good communication in the market where we can give the customers a heads-up, and we're given a heads-up by the suppliers, and it happens pretty quickly.

In advance of those price increases, especially with things like pipe and fertilizer and products that move around, um,

you know, the the

The market. There's a a good communication.

In the market where we can give the customers a heads up and we're we're giving a heads up on the suppliers and it happens.

Eric Elema: Yeah, and.

Keith Hughes: And we still-

Eric Elema: We're in the.

Keith Hughes: Correct. Sorry.

Eric Elema: Sorry, Keith.

Keith Hughes: Go ahead.

Pretty quickly. Yeah. And we're, we're in the highest. Sorry. Sorry. Sorry.

Eric Elema: I was gonna say, we're in the height of the fertilizer season, you know, this price increases has been in effect since 1 April, so we've managed through that. You know, nothing significant to call out. I would say it's fairly inelastic and, you know, PVC pipe, you know, we'll work through that in the coming months, but would like to highlight, you know, last three years, 2023, 2024, 2025, there have been significant declines in PVC pipe in price. We wouldn't expect these increases that are being contemplated, you know, to be an elasticity issue.

Go ahead, go ahead.

I was gonna say we're in the height of the fertilizer season. So, you know, this price increases has been in effect since 41. So we've managed through that and um, you know nothing significant call out. I would say it's fairly inelastic and uh, you know, PVC pipe. Um you know,

We'll work through that in the coming months, but would like to highlight, you know, the last 3 years, 23 24, 25. There have been significant declines in TVC pipes, uh, in price. So, um, we wouldn't expect these increases that are being contemplated, you know.

Keith Hughes: Okay, just final one on grass seed. Looking for grass seed, you know, whatever price does there, it's still a Q3 result. Is that still the case?

To be elasticity issue.

Eric Elema: That's correct.

Okay, just a final one on grass seeds. Still looking for Grassy. You know, whatever price does there. It's still a third quarter reset. Is that still the case?

Keith Hughes: Okay. Thank you.

Thank you.

Operator: Our next question comes from Matthew Bouley with Barclays. Please proceed with your question.

Matthew Bouley: Morning, everyone. Thank you for taking the questions. On the gross margin, you have that 10% growth in private label and sounded like success with smaller customers. Seems like that would move the needle a bit on margins. You have the 90 basis points there. Question is, I wanna see if you can quantify how much of the margin expansion is coming from some of these commercial initiatives that presumably are more structural in nature versus if there's any kind of temporary benefit that you sometimes see due to inflation. You have the 3% price. Just to sort of help us kind of dial in gross margin forecasts in a more normal environment. Thank you.

Our next question comes from Matthew. Buy with Barclays, please proceed with your question.

Good morning everyone. Thank you for taking the questions. Um, so on the uh gross margin. Uh you have that 10% growth in private label and and uh it sounded like success in smaller customers. Uh, so seems like that would move the needle a bit on margins. Um, you have the 90 basis points there. So, uh, question is, I want to see if you can quantify how much of the margin expansion is coming from some of these commercial initiatives that that you know, presumably are more structural in nature uh versus if there's any kind of temporary.

Benefit that that you sometimes see due to inflation. You know, you have the 3% price, uh, just to sort of help help us uh, kind of dial in gross margin forecast in a more normal environment. Thank you.

Doug Black: Yeah, we typically don't give a breakdown, you know, specific by initiative. I don't think we can offer any help there. It's just I would say that private label small customers contributing strongly, as is the price realization that we're getting on the other side. Yeah. Yeah, I think of this quarter as, you know, if we look in the light of Q3, Q4, in the line of the basis point contribution, you can see where price has been benefiting us. You know, we're a little bit better there. You know, I would say that we've had a pretty good run right now with private label contributing to gross margin expansion for a number of quarters.

Yeah, we typically don't give a breakdown, you know, specific by initiative. Um,

and so I don't think we can offer any help there. It's just the I would say that um, private label small customers contributing strongly as is the price.

Realization, um, that we're getting on the other side. I don't anything to comment on that.

Margin expansion for a number of quarters.

Matthew Bouley: Okay. Got it. Yeah. That's helpful. Yeah. Sometimes in the past you guys have quantified at least the temporary benefit. I guess the second question is on Reinders, just because it's a fairly large deal. Obviously, in the past, some of the bigger deals, you guys have taken a little bit of time to sort of integrate them into the whole system. Just any color on kind of the margin profile of this business and, you know, if there is opportunity for you to expand margins further with this business as you do integrate it into SiteOne. Thank you.

Doug Black: Yeah, no, Reinders is a strong company. We're excited to have them join. There are pretty significant synergies with Reinders. They're in irrigation, agronomics, lighting, landscape supplies, and so on those product lines, we tend to have higher synergies. There's good synergies there. We'll get some of those synergies this year. We are, you know, system-wise, we'll integrate them next year, but we are, you know, syncing up with their teams and capturing some of those opportunities. We do expect them to be, you know, nice and profitable this year around, probably around where we are. In the future, there's significant upside there, you know, as our synergies fully kick in. Excited about the deal. It's a strong company.

Okay. Got it. Yeah that that's helpful. Yeah sometimes in the past you guys have Quantified at least the the temporary benefit but um I guess the the second question is on uh reinders just because it's a fairly large deal. Obviously in in the past some of the bigger deals you guys have taken a little bit of time to sort of integrate them into the whole system. So just any caller on kind of the margin profile of of this business and you know, if there is opportunity for you to expand margins further with this business as you do integrated into sight 1. Thank you.

Yeah, I know. Reinders um.

Strong company, we're excited to have them join.

um, there are, you know, pretty significant synergies with reinders, they're they're in irrigation aeronomics lighting landscape supplies and so the, um, those product lines

Uh, we tend to have higher synergies and so there's there's good synergies there.

Oh, we'll get some of those synergies this year. We are, you know, system wise, we'll integrate them next year but we are, you know, syncing up with their teams and

capturing some of those opportunities, we do expect them to, to be, you know, you know,

Nice and profitable this year around. Probably around where we are.

Doug Black: They've got a great team, and we can certainly add value. They actually do a lot of digital. They're probably one of the leaders in the market with digital, and so we're gonna take our time integrating with their digital and ours. It's good to join forces with a company that's more progressive, you know, relative to other companies in the industry, and Reinders is one of those companies.

And in the future, um, there's significant upside there, you know, as our synergies fully kick in. So, excited about the deal. It's a strong company, they've got a great team, and we can certainly add value.

They actually do a lot of digital. Um,

They're both 1 of the leaders in the market uh with digital. And so we're going to take our time integrating with their digital and ours but uh

It's good to join forces with a.

A company that's that's more Progressive, you know, relative to other companies in the industry and reinders is 1 of those companies.

Matthew Bouley: Great. Well, thanks, guys. Good luck.

Doug Black: Thank you.

Right. Well, thanks guys. Good luck.

Thank you.

Operator: Our next question comes from Jeffrey Stevenson with Loop Capital Markets. Please proceed with your question.

Our next question comes from Jeffrey Stevenson with loop capital markets. Please proceed with your question.

Jeffrey Stevenson: Hey, thanks for taking my questions today. Are there any concerns that fertilizer shortages or potential inflation pressures and other commodity products such as PVC piping could have an impact on maintenance demand similar to a couple years ago when customers were holding off on certain maintenance projects due to elevated commodity price levels?

Hey, thanks for taking my questions today.

Doug Black: Right. Yeah. You know, you're referring to the kind of COVID where prices moved, you know, significantly, in fertilizer and that did hurt demand in that year. I forget exactly which year it was. The nature of the increase, you know, around 5% for fertilizer is not to the magnitude that we feel like it'll create any kind of demand degradation. Fertilizer does move around from, you know, routinely, you know, a couple percent here and there. You know, 5% isn't a tremendous move, and we feel like our customers will be able to, you know, handle that and it won't affect the applications. In terms of supply shortages, you know, we've got a great supply chain. We've got multiple sources for most of our products.

Are there any concerns of fertilizer shortages or potential inflation pressures and other commodity products? Such as PVC piping, could have an impact on maintenance demand similar to a couple years ago when customers were holding off on certain maintenance, projects, due to elevated commodity price levels.

Right. Yeah, you know it, and you're referring to the kind of company where prices move, you know, significantly, um, in fertilizer, and that did hurt demand. Um.

in in that year, I forget exactly which year it was, but the, the nature of the increase, um, you know, around 5% for fertilizer is not

to the magnitude that we feel like it’ll create any kind of demand degradation.

Um, your fertilizer does move around from, you know,

Routinely, you know, a couple percent here and there. So, you know, 5% is in a tremendous move and we feel like our customers will be able to

Doug Black: We don't anticipate, at least at this time, that there will be any shortages in supply that will, you know, drive additional inflation. We feel pretty good about where we are and, you know, the ability of the market to absorb some of these price increases that are, you know, obviously we never enjoy absorbing price increases into a market, but 5 percent's a manageable level there.

handle that and it won't affect the applications in terms of supply shortages. You know, we've got a great supply chain. Um we've got multiple sources for most of our products. Um

But we don't anticipate, at least at this time, that there will be any.

uh, shortages in Supply. Um,

That will you know, Drive?

Additional inflation. So,

We feel pretty good about, uh, where we are and, you know, the ability of the market to absorb some of these price increases that are—

you know, obviously we never

Um, enjoy absorbing price increases into a market, but 5% is a manageable level there.

Jeffrey Stevenson: Okay. No, that's very helpful, Doug. I just wondered if you could quantify any more the, you know, magnitude of, you know, expected new residential declines this year. On top of that, kind of what you're hearing so far from, you know, builders during the spring selling season. If I remember correctly, typically there's, you know, an 8 or 9-month lag between, you know, when there's a single-family housing start and, you know, when that shows up in demand. If that's the case, you know, if there's any improvement in starts as we move through the year, is that gonna be more of a kind of late 2026, 2027, you know, when it'll show up in demand?

Doug Black: Right. Yeah, you're correct. I mean, we go by completions, not starts. You know, there is a lag there, you know, 6 months, 6 to 9 months, et cetera. You know, we feel like the new res market is gonna be down mid to high single digits this year. We're getting mixed, you know, there's mixed messages from builders. Some are more positive, some are less positive. Our view is that we're probably not gonna see much improvement this year. If starts do improve this year, that will certainly help us in 2027, but not in 2026.

Okay. No, that's very helpful. But again, then I just wondered, if you could quantify any more of the, you know, magnitude of, you know, expect a new residential declines this year and then, you know, on top of that kind of what you're hearing so far from, you know, Builders during the Spring selling season and, you know, if I remember correctly, typically, there's, you know, an 8 or 9 months lag between, you know, when there's a single family housing start and you know, when that shows up and and demand and um, you know, if that's the case, you know, if there's any Improvement and starts as we move through the year, is that going to be more of a kind of late 26th 2027, um, you know, when it'll show up and and demand

Right. Yeah, you're correct. I mean, we we we go by completions.

Not starts and you know, there is a lag there, you know, 6.

On six and nine months, etc. Um, so you know,

We feel like that new res Market is going to be down, mid to high single digits.

And we’re getting mixed—you know, there's mixed messages from builders.

Some are more positive, some are less positive.

but our view is that we're probably

not going to see much uh, Improvement this year.

Starts due improved this year. That was certainly um help us in 2027, but not in 2026.

Jeffrey Stevenson: Great. Thank you.

Great. Thank you.

Operator: Our next question comes from Charles Prone Peach with Goldman Sachs. Please proceed with your question.

Charles Prone Peach: Thank you. Good morning. First question. As your customers look to drive efficiencies, are you seeing them leaning more into sites, digital and delivery tools in a higher freight cost environment? More broadly, how can you, your investment in technology help you against the current backdrop?

Charles Perron-Piché: Thank you. Good morning. First question. As your customers look to drive efficiencies, are you seeing them leaning more into sites, digital and delivery tools in a higher freight cost environment? More broadly, how can you, your investment in technology help you against the current backdrop?

Our next question comes from Charles prone Peach with Goldman Sachs, please proceed with your question.

Thank you. Good morning. Um, first question as you look to drive a fish as your customers? Look to drive efficiency are you seeing them leaning more into sites digital and delivery Tools in a higher freight, cost environment and more broadly? How can you your investment in technology help you against the current backdrop?

Doug Black: In terms of our customers, yeah, we do see them using digital more. As we mentioned, our digital sales are up 60% in the quarter. We expect them to be up substantially this year. More and more customers are utilizing, you know, digital just to make their, you know, ordering and interactions and transactions with us more efficient. In terms of, you know, fuel prices are up. You know, Eric mentioned that we've implemented fuel surcharges. We work with our customers, you know, routinely to get the product to their job sites at the lowest possible cost. Yes, our delivery capability gives us a ways of working with our customers and getting it there in a low-cost fashion.

Um, in terms of our uh, customers. Yeah? We we do see them using digital more. Um,

And uh you as we mentioned, our digital sales are up 60% the quarter. Uh, we expect them to be up, um, substantially this year and more and more customers are utilizing, you know, digital just to make their, you know, ordering and interactions and transactions with us more efficient.

in terms of um you know, fuel prices are up, you know, Eric mentioned that we've implemented fuel s charges

we work with our customers. Um,

Routinely to, to get the product to their job, sites at the lowest possible cost.

And um, and so yes, our delivery capability.

Is a ways of working with our customers and getting it there.

Doug Black: You know, we have about a third of our business is delivered. You know, we see that going up as things get tougher, you know, and customers, you know, kind of rely on us to help them get the materials there and get the job done at a lower cost.

you know, low cost fashion and

um, and so we have

a fair bit of, you know, we have about a third of our business is delivered.

And um, you know, we see that going up as things, get tougher, you know, and, and customers, you know, kind of

them.

Get the materials there and and get the job done that at a lower cost.

Charles Prone Peach: Got you. That's a good color, Doug. Shifting gear to capital allocation, you know, you repurchased $20 million of shares in Q1, which is quite high relative to the other first quarters in the last few years. How does it inform your willingness to do more? At the same time, can you talk a little bit more about the M&A pipeline and your confidence to close more deals in 2026?

Charles Perron-Piché: Got you. That's a good color, Doug. Shifting gear to capital allocation, you know, you repurchased $20 million of shares in Q1, which is quite high relative to the other first quarters in the last few years. How does it inform your willingness to do more? At the same time, can you talk a little bit more about the M&A pipeline and your confidence to close more deals in 2026?

Eric Elema: Yeah, I'll take the first part of that. We continue to be opportunistic. We're gonna look at the whole year and making sure we're first focused on growth, M&A. You know, we had good visibility that the Reinders' acquisition was gonna close in Q1. You know, a seasonal slow quarter for us, but obviously where the stock is represents a good buying opportunity. We're gonna continue to be opportunistic the rest of this year to pursue that balanced capital approach. We did close to $100 million in repurchases last year. Depending on where M&A turns out, you know, we'll balance that out in how we buy back shares. We'll continue to be opportunistic again, you know, with where the price is.

Got you that that's a good caller. Doug and shifting gear to Capital, allocation, you know, you repurchase 20 million dollars of shares in q1, uh, which is quite high for the relative to the other first quarters in the last few years. Uh, how does he inform your willingness to do more and at the same time, can you talk a little bit more about the m&a pipeline in your confidence to close more deals in 2026?

Yeah, I'll take the first part of that. Um it we continue to be opportunistic. We're going to look at the the whole year and uh making sure we're that we're first for focused on growth m&a. Um, you know, we we had good visibility that the reinders uh acquisition was going to close in q1.

You know, a seasonal slow quarter for us, but obviously where the stock is represents a good buying opportunity. We're going to continue to be opportunistic the rest of this year. If you see that balanced capital approach, and we did close to $100 million in repurchases last year. So,

Um, you know, depending on where m&a turns out, um, you know, we we'll balance that out in in how we buy back shares, but uh, we'll continue to be opportunistic again. Um, you know, with where the price is.

Doug Black: Yeah. In regards to M&A, the pipeline's healthy. We're constantly in discussion with owners, and confident we can continue to have success for the rest of 2006 and beyond.

yeah and in regards to the m&a pipeline's healthy um we

got, we're constantly in discussion with owners, uh,

We can continue to have success for the rest of 2006 and Beyond.

Charles Prone Peach: Sounds good. Thank you for the color, guys, and good luck.

Charles Perron-Piché: Sounds good. Thank you for the color, guys, and good luck.

Doug Black: Thanks.

Sounds good, thank you for the color, guys. And good luck.

Operator: Our next question comes from Shaun Calnan with Bank of America. Please proceed with your question.

Our next question comes from Sean calman with Bank of America, please proceed with your question.

Shaun Calnan: Hi, guys. Thank you for taking my questions. Just first, can you kind of quantify the improvement in volumes that you're seeing in April? Should we expect Q2 to be the highest growth quarter, just given the shift in sales from Q1 to Q2, and then the fertilizer pricing increase with April being a big month for that?

Hi guys. Thank you for taking my questions. Uh, just first, can you kind of quantify the Improvement in volumes that you're seeing, in April, and should we expect 2 Q to be the highest growth quarter? Just given the shift in sales from 1 Q to 2 q. And then the fertilizer pricing increase with April being a big month for that.

Doug Black: Yeah. I would just say that volumes have improved. You know, volumes aren't positive in April, but they have improved versus where they were in Q1. In terms of volume by quarter, you know, there's no real gauge that would make the Q2. I mean, obviously, if the Q1 is lower, you do some catch-up in the Q2, it's gonna tend to be higher. We're talking percentage, you know, 1 or 2 percentages. The Q3 and Q4 also kind of split by the season. You know, spring season is September, October, obviously, that's Q3 and Q4. It's really hard to call volume growth by quarter.

Yeah, I would just say that uh, volumes have uh, have improved um, you know, volumes aren't positive in the first in April, but they have improved versus where they were in.

uh in uh, the first quarter, and in terms of

Volume by quarter. You know, there's no there's no real

Um, gauge that would make the second quarter. I mean, obviously if the first quarter is lower, you do some catch-up in the second quarter, it's going to tend to be higher but we're talking

1 or 2 percentages.

Um,

And the third and fourth quarter also kind of split by the season. You know, the spring season is September October.

Doug Black: What makes more sense to us is kinda half year, you know, what it is at the end of June and what it is at the end of the year is a better way to kinda think about volume, because you get the full spring season, and you get the full fall season if you take that look. We'll see how the spring continues to evolve, and we'll have a better read when we get to June.

Uh, volume growth by quarter.

What makes more sense to us? Is kind of half your

what it is at the end of June and what it is. At the end of the year is, is a better way to kind of, think about volume.

And because you get the full screen season and you get the full fall season if you take that low. So we'll see how the spring continues to evolve. Um,

and we'll have a better read, uh, when we get to June,

Shaun Calnan: Okay, great. When you have expectations for price increases, like we have right now, do you typically see customers try to get ahead of those price increases and pull forward their purchases?

Doug Black: Sure. That tends to happen, especially, you know, around fertilizer or pipe and net. Keep in mind our customers don't have massive storage. They, you know, they're taking some product to the extent that they can. We work with customers on commercial jobs that are already in progress. Yes, you know, some of that goes on whenever there's a price pass-through, and that's why we give our customers as much lead time as possible so that they can adjust and do their purchasing to try to, you know, get ahead of it themselves.

Okay, great. And then when you have expectations for price increases, um like we have right now, do you typically see customers, try to get ahead of those price increases and pull forward their purchases.

um, sure that that that tends to happen, especially

You know around, fertilizer or piping it but, you know, keep in mind our customers, don't have massive storage.

so they, you know, they're, they're taking some product to the extent that they can and we work with customers on

a commercial jobs.

Uh, that are already in progress.

so um, so yes, you know, some of that goes on

Uh, whenever there's a price pass-through, and that's why we give our customers as much lead time as possible so that they can, uh, they can adjust and do their purchasing to try to, you know, get ahead of it themselves.

Shaun Calnan: Okay, great. Thank you.

Okay, great. Thank you.

Operator: Our next question comes from Collin Verron with Deutsche Bank. Please proceed with your question.

Our next question comes from Colin Peron with Deutsche Bank, please proceed with your question.

Collin Verron: Good morning. Thank you for taking my questions. I just want to dive into the cost a little bit more. It looks like inventory costs and the COGS line dipped around 3% in the quarter, despite the total sales being relatively flat. Can you just walk us through the moving pieces there? Is that the mix improvement toward private label showing up, or are there some other factors in there that we should be considering? How are you thinking about that going forward? Is there any reason that that year-over-year decline might move throughout the year?

Good morning. Uh, thank you for taking my questions. I just want to dive into the cost a little bit more. Um, it looks like inventory costs and the cogs and uh, line dipped around 3% in the quarter uh, despite the total sales being relatively flat. So can you just walk us through the moving pieces? There is that the mix Improvement toward private label showing up or are there some other factors in there that we should be considering? And and how are you thinking about that going forward? Is there any reason that that year of your decline might move throughout the year?

Eric Elema: Yeah, I think.

Doug Black: You hit on it. It, you know, it's private label. It, you know, it's product mix, but we also have we were fully stocked for the spring selling season with fertilizer in particular. I would say that continues a bit into Q2, but beyond that, I would expect that not to continue.

Eric Elema: You hit on it. It, you know, it's private label. It, you know, it's product mix, but we also have we were fully stocked for the spring selling season with fertilizer in particular. I would say that continues a bit into Q2, but beyond that, I would expect that not to continue.

Yeah, I think you hit on it at, um, you know, it's a, it's private label, it, you know, it's a product mix but um, we we also have the lower. We had, we were fully, uh, stock for the spring selling season, um, with fertilizer. Um, you know, in particular. So I, I would say that that continues that that into Q2. But, um, you know, beyond that, um, I would expect that, you know, that, that not to continue.

Collin Verron: Great. That's helpful. Just on the freight handling distribution expenses, that's all a sizable increase. I know it's a small piece of the COGS bucket, it was just a notable headwind in Q1. Can you just talk about what was driving that inflation and sort of the magnitude that you're baking into the guidance for your freight handling distribution expenses in that bucket?

Great, that's helpful and then I just on the freight handling, distribution expenses, that's all that's sizable, increase. I know it's a small piece of the cogs bucket but it was just a noticeable headwind in the first quarter. So you can just talk about what was driving that inflation and sort of the magnitude that you're baking into the guidance for for your Freight, handling, distribution expenses in that boat.

Doug Black: Yeah. There's the rising cost of diesel in there for Q1. You know, that's in March. You know, that's a component. We've got international freight too, related to our private label products. We got the increase there. Also keep in mind that we have our fifth DC in the cost there with that not in the Q1 prior year. You know, we mentioned that too in the last call that we would have an increase in distribution costs. That's in there as well.

Eric Elema: Yeah. There's the rising cost of diesel in there for Q1. You know, that's in March. You know, that's a component. We've got international freight too, related to our private label products. We got the increase there. Also keep in mind that we have our fifth DC in the cost there with that not in the Q1 prior year. You know, we mentioned that too in the last call that we would have an increase in distribution costs. That's in there as well.

It. Yeah. So there's there's a, there's the rising cost to of diesel in there for, for q1. Um, you know, that's in March. You know, that's a component. We've got International Freight to, um, uh, related to our private label products. We got the increase there, but also keep in mind that, uh, we have our fift DC, um, in in the cost there with with, with that.

Not in the uh q1 prior year. So uh you know we mentioned that too in the last call that we would have an increase in distribution costs.

That's in there as well.

[Analyst] (Deutsche Bank): Great. Appreciate you taking the call, the questions.

Collin Verron: Great. Appreciate you taking the call, the questions.

Great, appreciate you taking the call, uh, the questions.

Operator: Our next question comes from Matthew Johnson with UBS. Please proceed with your question.

Matthew Johnson: Hey, good morning, guys. Appreciate the time. I guess first off, if we could just dive into the fertilizer piece a little more. I know it's given the disruption in the Middle East, it sounds like you guys took a 5% price increase there. Could you just give us an update on how much inventory you guys have in your distribution centers? I guess, assuming that urea prices stay at these levels, I think they're up somewhere around 40% to 50% year over year. How should we think about the impact of fertilizer costs for you guys as that starts to come through?

Our next question comes from Matt Johnson with UBS. Please. Proceed with your question.

Hey, good morning guys, appreciate the time I guess first off um if we could just dive into the fertilizer piece a little more. Um I was given the disruption in the Middle East, it sounds like you guys took a 5% price increase there. But could you just give us an update on how much inventory you guys have in your distribution centers? And then, I guess assuming that urea prices stay at these levels. I think they're up somewhere around, 40 to 50% year-over-year. But how should we think about the impact of fertilizer costs for you guys, as that starts to come through?

Doug Black: Yeah. You know, urea is up substantially. Keep in mind that it's only, you know, one component of fertilizer. We can actually move components around in fertilizer, so there is some latitude there. We, you know, we take advantage of that to try to, you know, to try to minimize the effect on our customers. You know, the 5%, as I said, is a reasonable reflection of us passing through costs, maintaining our margin. You know, we obviously, that price increase is mid-season, we have, you know, we stock up for the season, we obviously have some product in our branches that we're, you know, shipping.

Yeah, so, um, you know, urea is up substantially. Keep in mind that it's only one, you know, one component of fertilizer. And, um,

And we can actually move components around and fertilizer. So there is some latitude there and, and we

and we, you know, we take advantage of that to try to, you know, to try to minimize the effect on our customers.

You know, the 5%.

Um, as I said, is a is a reasonable reflection of of passing through. Cost maintaining our our margin

You know, we obviously that price increase is mid-season. So we have

you know, we we stock up for the season and and

Doug Black: As I mentioned, so far we've not experienced any supply shortages that would not have us have product available for our customers or allow us to gain market share. We feel like we're in pretty good shape there, and we think it'll be, you know, it'll continue to be a successful season.

and as I mentioned,

Eric Elema: Yeah, I, you know, I think we're in a good place on supply. You know, we're working with our category team leaders. You know, we feel good not only about the season, but into the fall. You know, as we get later in the year, you know, we'll continue to evaluate, you know, those opportunities.

we so far we've not experienced any supply shortages that would that would not have us have product available for our customers or allow us to, to, to gain market share. So we feel like we're in pretty good shape there and um, we think it'll be, you know, it'll continue to be a successful season.

Yeah, I, you know, I think we're in a good good place on Supply. You know, we're working with our category, uh, Team, uh, with leaders. So uh, you know, we feel good not only about the season but into the fall and uh you know as we get later in the year you know, we'll continue evaluate

You know, those opportunities.

Matthew Johnson: That's great. Appreciate that. I guess if we could just talk a little more about the focus branches. I think you guys drove a little over 200 basis points of EBITDA margin improvement at those branches in 2025. I guess, just given all the kind of disruption and noise in the market right now, how do you guys feel about your ability to achieve a similar result this year at those focus branches?

That's great, appreciate that. And then, I guess if we could just talk a little more about the focus branches, I think you guys drove a little over 200 basis points of e, that margin Improvement at those branches in 2025, I guess, just given all the kind of disruption and noise in the market right now. How do you guys feel about your ability to achieve a similar result this year at those Focus branches?

Doug Black: Yeah. Well, we feel good about it. I mean, obviously, if the market turns out to be tougher and, you know, we're lower on volume, that will affect the focus branches. We had improvement in the focus branches, you know, good improvement in Q1. We feel very good about our, you know, being able to turn those branches, improve the profitability, even in a soft market condition. We feel good at this point. The tougher the market gets, the tougher that gets, we can move the needle even in the softer market there.

Yeah, well, we feel good about it, I mean, obviously if if the market turns out to be tougher and, you know, we we're we're lower on volume. That will affect the the focus branches. But but we, uh, we had Improvement in the focus branches.

A good Improvement, um, in the first quarter. And, uh, we feel very good about our, you know, being able to to turn those branches improve the profitability even in a sophomore Market.

Condition. So,

Uh, we feel good at this point. The tougher the market gets the tougher that gets but but we can, um, we can move the needle.

Even in the softer Market there.

Matthew Johnson: Thanks, guys.

Thanks guys.

Operator: Our next question comes from Andrew Carter with Stifel. Please proceed with your question.

Andrew Carter: Thank you. Good morning. Just wanted to follow back up on Reinders. It's $100 million incremental, and you said it's similar to company margins, and you also acquired it right ahead of the spring season. Why shouldn't this be an $8 million or $9 million kind of type contribution to EBITDA for the year? Your kind of EBITDA range has some added flexibility. Thanks.

Our next question comes from Andrew Carter with the steeple please proceed with your question.

Doug Black: Yeah, you kinda, you kinda nailed it. That's what we expect. Yes, it provides, you know, I guess, more insurance for our range. You know, keep in mind that, you know, obviously, we won't reflect the full $100 million. We did miss, you know, almost 3 months of that. Yeah, we do expect it to be profitable along the lines of what you're saying there. That helps us have confidence in our range, you know, given kind of softer market conditions and overall uncertainty that we need to keep in mind.

Thank you. Good morning. Uh just want to follow back up on reindeer. Uh it's hundred million dollars incremental and you said it's it's similar to company margins and you're also acquired it right before, right? Ahead of the spring season. So why shouldn't this be an 8 or 9 million kind of type contribution to even off for the year? Therefore you're kind of I range has some uh, added flexibility. Thanks.

Yeah, you kind of you kind of nailed it.

That, that's what we expect. And, and yes, it, it provides, you know, I guess more insurance.

Um, for our range.

You know, keep in mind that, you know, we won't reflect the full 100 million.

We did Miss.

You know, almost 3 months of that.

Andrew Carter: Sounds good. I appreciate the candid answer. I'll pass it on.

But, um, but yeah, we, we do expect it to be profitable along the lines of what you're saying there and, um, and that helps us have confidence in our range. You know, given kind of softer market conditions and overall uncertainty that we need to keep in mind.

Uh, sounds good. I appreciate the candid answer. I'll pass it on.

Operator: We have reached the end of our question and answer session. I would now like to turn the floor back over to Doug Black for closing comments.

We have reached the end of our question and answer session. I would now like to turn the floor back over to Doug black for closing comments.

Doug Black: Well, thank you all for joining us again today. Before I conclude, I wanna highlight an upcoming event we have. We're hosting our 2026 SiteOne Investor Day on June 23rd and 24th in Atlanta. We'll be going through a comprehensive update on our performance, our strategy, our long-term initiatives, and offer investors an opportunity to engage with our executive leadership team, which we're quite proud of. We look forward to welcoming investors and analysts to our event in June. We appreciate your interest in SiteOne and look forward to speaking to you again at the end of the next quarter. Again, a big thank you to our terrific associates, and to our customers for allowing us to be your partner and to our suppliers for supporting us. Thank you.

Well, thank you all for, uh, joining us again today. Uh, before I conclude, I want to highlight an upcoming event. We have for hosting our 2026 site, 1 investment, and 24th in Atlanta. Um we'll be going through a comprehensive update on our performance, our strategy, our long-term initiatives

and uh offer investors an opportunity to engage with our executive leadership team, which we're quite proud of. And so we

Look forward to welcoming investors and analysts to um our event in June.

Um, we appreciate your interest in SiteOne and look forward to speaking to you again at the end of the next quarter. Again, a big thank you to our terrific associates.

Um, and to our customers for allowing them to supposed to be our partner and to our suppliers for supporting us.

Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Thank you.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Q1 2026 SiteOne Landscape Supply Inc Earnings Call

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