SiteOne Landscape Supply, Inc.

and welcome to the Site 1 Landscape Supply Second Quarter 2025 Earnings Call. At this time, all participants are in a listen-only mode. A -and-answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, John Guthrie, Executive VP and Chief Financial Officer. Thank you. You may begin.

Thank you and good morning, everyone. We issued our second quarter 2025 earnings press release this morning. We posted a slide presentation to the investor relations portion of our website at .site1.com. I am joined today by Doug Black, our Chairman and Chief Executive Officer, and Scott Salmon, Executive Vice President, Strategy and Development. Before we begin, I would like to remind everyone that today's press release slide presentation and the statements made during 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. 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. Thanks, John. Good morning and thank you for joining us today. We are pleased to achieve continued solid results during the second quarter with 3% net sales growth and 8% growth in adjusted EBTA despite broader economic uncertainty and softness in our end markets. Our teams are executing our initiatives well, yielding excellent SG&A leverage, good gross margin improvement, and meaningful market share gains. We also benefited from a more favorable price-cost environment with overall flat pricing for the quarter. Finally, we added two excellent companies to Site 1 in July, expanding our full product line capability in those local markets. Overall, with strong teams, a winning strategy, and excellent execution of our commercial and operational initiatives, we are delivering solid performance and growth in 2025 despite softer end markets and are in a strong position to accelerate our performance and growth in the coming years. I will start today's call with a brief overview of our unique market position and our strategy, followed by some highlights from the quarter. John Guthrie will then walk you through our second quarter financial results in more detail and provide an update on our balance sheet and liquidity position. Scott Salomon will discuss our acquisition strategy, and then I will come back to address our latest outlook before taking your questions. As shown on slide 4 of the earnings presentation, we have a strong footprint of more than 680 branches and four distribution centers across 45 United States and six Canadian provinces. We are the clear industry leader, over three times the size of our nearest competitor, and larger than 2 through 10 combined. Yet we estimate that we only have about an 18 percent 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 65 percent focused on maintenance, repair, and upgrade, 21 percent focused on new residential construction, and 14 percent on new commercial and recreational construction. As 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. Our strategy to fill in our product lines across the U.S. and Canada, both organically and through acquisition, further strengthens this balance over time. Overall, our end-market mix, broad product portfolio, and geographic coverage offer us multiple avenues to grow and create value for our customers and suppliers, while providing important 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, all in support of our talented, experienced, and entrepreneurial local teams to consistently deliver superior value to our customers and suppliers. We have come a long way in building Site One and putting the teams and systems in place to fully execute our strategy at a high level across each of our product lines. In the current challenging market environment, we are making good progress in leveraging our capabilities to drive tangible results with consistent market share gains, improved SG&A leverage, and steady gross margin improvement. Through our commercial and operational initiatives, we believe that we are delivering industry-leading value for our customers and suppliers, and solid performance improvement and growth for our shareholders this year. Importantly, we are gaining momentum for continued success in the years to come. 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 Site One. Taken all together, we believe our strategy creates superior value for our shareholders through organic growth, acquisition growth, and EBDA margin expansion. On slide six, you can see our strong track record of performance and growth over the last eight years. From an adjusted EBDA 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 those commodity prices have come down. In 2024, we also experienced further adjusted EBDA margin dilution from the acquisition of Pioneer, a large turnaround opportunity with great strategic fit, and from our other focus branches as a result of the post-COVID market headwinds. We expect pricing to transition in 2025 from a negative 1% in the first quarter to a positive 1 to 2% in the fourth quarter, setting us up for more normal inflation and price realization in 2026. Furthermore, we are achieving excellent progress with Pioneer and our other focus branches -to-date and expect to continue achieving improvements over the next several years as we bring their performance up to the Site One average. In summary, we are positioned to drive good adjusted EBDA margin improvement in 2025 and in the coming years as we execute our initiatives and as the market headwinds turn to tailwinds. We completed our 100th acquisition in March with over $2 billion in acquired revenue added since the start of 2014. These milestones demonstrate the strength and durability of our acquisition strategy. Our pipeline of potential deals remains robust, and we expect to continue adding more companies in 2025 to support our growth. These companies strengthen Site One with excellent talent and new ideas for performance and growth. Given the fragmented nature of our industry and our modest market share, we have a significant opportunity to continue growing through acquisition for many years to come. Flight 7 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 are well connected with the best companies in our industry and expect to continue filling in these markets systematically over the next decade. I will now discuss some of our second quarter highlights as shown on Slide 8. We achieved 3% net sales growth in the second quarter with flat organic daily sales and 3% growth due to acquisitions. Organic sales volume was flat during the second quarter, reflecting broader end-market softness offset by continued share gains. Pricing was also flat, which was in line with expectations as we benefited from a more favorable price-cost dynamic as the quarter progressed. As expected, the growth and maintenance-related demand remained steady in Q2, and with the benefit of market share gains, we achieved 7% organic daily sales growth with our agronomic products. The repair and upgrade market remained soft as expected, and the new residential construction market was also down, especially in markets that were strong last year like Texas, Florida, Arizona, and California. Accordingly, our landscaping products were down 1% for the quarter, which we also believe reflects some market share gains. Overall, we believe that we are continuing to outperform the market consistently through our commercial initiatives, which with the recovery in pricing will allow us to achieve positive organic daily sales growth for the remainder of the year, even in a down market. Our gross profit increased 4% and gross margin improved by 30 basis points to .4% due to higher price realization, gains from our initiatives, and contributions from acquisitions. Our acquisitions, which were primarily nursery and hardscapes businesses, operated at a higher gross margin, but also operated at a higher SG&A. Our SG&A as a percent of net sales decreased 40 basis points to .9% compared to the prior year period. For the base business, SG&A as a percent of net sales on an adjusted basis decreased approximately 60 basis points, demonstrating our strong execution and follow through on key initiatives despite the flat organic daily sales. With disciplined expense management, improved operating leverage, and good progress with our focus branches, we were able to achieve meaningful leverage in our business. We are excited to continue gaining leverage through our initiatives, aided in the second half by improved pricing and expected positive organic daily sales growth. Adjusted EBDA for the quarter increased 8% to 226.7 million, and adjusted EBDA margin improved 60 basis points to .5% due to higher net sales, improved gross margin, and increased SG&A leverage. With pricing continuing to normalize and with our commercial and operational initiatives yielding stronger results, we are pleased to resume adjusted EBDA margin expansion this year and expect continued improvement in the coming years. In terms of initiatives, we are executing specific actions to improve our customer excellence, accelerate organic growth, expand gross margin, and increase SG&A leverage. For gross margin improvement, we continue to increase sales with our small customers faster than our company average, drive growth in our private label brands, and improve inbound freight costs through our transportation management system. These initiatives not only improve our gross margin, but also add to our organic growth as we gain market share in the small customer segment, as well as across product lines with our competitive private label brands like Pro Trade, Solstice Stone, and Portfolio. Collectively, these three brands grew by over 30% in the first half of this year. To further drive organic growth, we continued to increase our percentage of bilingual branches from 63% to 67% during the first half of the year, and are executing Hispanic marketing programs to create awareness among this important customer segment. We are also making great progress with our Salesforce productivity as we leverage our CRM and establish more disciplined revenue generating habits and processes among our inside sales associates and our over 590 outside sales associates. This year, our outside Salesforce is covering approximately 10% more revenue than in 2024 with no additional headcount, allowing us to achieve higher organic sales growth at a lower cost. Our digital initiative with SiteOne.com is also helping us to drive organic daily sales growth as customers who are engaged with us digitally grow significantly faster than those who are not. We've grown digital sales by over 130% in the first half of 2025. We continue to cultivate thousands of new regular users of SiteOne.com, helping customers to be more efficient and helping us to increase market share while making our associates more productive. A true -win-win. Through SiteOne.com and our other digital tools, we are accelerating organic growth and we believe we are outperforming the market. With the benefit of DispatchTrack, which allows us to more closely manage our customer delivery, we are now able to improve both associate and equipment efficiency for delivery while more accurately pricing this service. We believe that we can significantly lower our net delivery expense while improving the experience for our customers. So far this year, we have reduced our net delivery expense by over 40 basis points on delivered sales, which represents approximately one-third of our total sales. This is a major initiative and we expect to make significant progress this year in the next two to three years. Last year, we mentioned that we are intensely managing our underperforming branches or focus branches to ensure that they have the right teams, the right support, and are executing our best practices to bring their performance up to or above the SiteOne average. As a part of these aggressive efforts, we consolidated or closed 22 locations in 2024 to strengthen our operations and better serve our customers at a reduced cost. In the first half, we improved the adjusted EPDA margin of our focus branches by over 200 basis points, and we expect to gain a meaningful adjusted EPDA margin lift for SiteOne in the coming years as we improve the performance of these branches. Taken all together, we are gaining momentum with our commercial and operational initiatives, which are improving our capability to drive organic growth, increase gross margin, and achieve operating leverage. On the acquisition front, as I mentioned, we added two excellent companies to our family in July and have added four companies and approximately 30 million in trailing 12-month sales to SiteOne so far in 2025. We're having conversations with a lot of companies, but many of the more advanced discussions are with smaller companies. So we expect that 2025 will be a lighter than normal year in terms of acquired revenue, even as we are aggressively cultivating key targets for future years. We remain well positioned to grow consistently through acquisition for many years with an experienced acquisition team, broad and deep relationships with the best companies in the industry, and a strong balance sheet and an exceptional reputation for being a great long-term home for companies in our industry. In summary, our teams are doing a good job of managing through the near-term market environment, leveraging our many opportunities for improvement, frequently adding new companies to SiteOne through acquisition, and building our company for the long term. Now John will walk you through the four in more detail. John?