SiteOne Landscape Supply, Inc.

Greetings and welcome to Site 1 Landscape Supply in fourth quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, 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, Eric Halima, Chief Financial Officer. Thank you. Please begin.

Thank you, and good morning, everyone. We issued our fourth quarter and full year 2025 earnings press release this morning and posted a slide presentation to the investor relations portion of our website at investors.site1.com. I am joined today by Doug Black, our Chairman and Chief Executive Officer, and Scott Selman, EVP Strategy and Development. Before we begin, I would like to remind everyone that today's press release, slide presentation, and 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, Eric. Good morning, and thank you for joining us today. We're pleased to deliver solid results in the fourth quarter with 3% net sales growth, 2% organic daily sales growth, and 18% growth in adjusted EBITDA versus the prior year period, closing out a good year of performance and growth in 2025. For the full year of 2025, we achieved 4% net sales growth 1 percent organic daily sales growth, and 10 percent growth in adjusted EBDA, despite flat pricing and lower end market demand compared to 2024. As we enter 2026, we have solid momentum with the benefit of positive pricing coupled with the strong cost reduction actions that we took in 2025, including 20 branch consolidations and closures during the fourth quarter. Our teams are executing our commercial and operational initiatives at a high level, and we expect to benefit from the eight acquisitions that we completed in 2025, along with our first acquisition completed in 2026. While there continues to be end market uncertainty, we enter 2026 with stronger teams, a more cost-effective branch network, good momentum with our commercial and operational initiatives, and a robust pipeline of potential acquisitions. Accordingly, we remain confident in our ability to deliver superior value to our customers and suppliers and achieve solid performance and growth for our shareholders in 2026 and in the years to come. I will start today's call with a brief review of our unique market position and our strategy. followed by highlights from 2025. Eric Alma, who was recently appointed Chief Financial Officer, will then walk you through our fourth quarter and full-year financial results in more detail and provide an update on our balance sheet and liquidity position. Scott Solomon will discuss our acquisition strategy, and then I will come back to address our outlook and guidance for 2026 before taking your questions. As shown on slide four of the earnings presentation, we have a strong footprint of more than 670 branches and five distribution centers across 45 U.S. states and five Canadian provinces. 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 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 66% focused on maintenance, repair, and upgrade, 20% focused on new residential construction, and 14% 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 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. providing important resilience in software 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've come a long way in building Site 1 and executing our strategy, but have more work to do as we develop into a world-class company. Current challenging market conditions requires 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 Site 1. 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 with consistent organic and acquisition growth. From an adjusted EBDA margin perspective, we benefited from the 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 EBDA 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. Over the past two years, our pricing transitioned from negative 3% in 2024 to flat in 2025, and we anticipate that pricing will be up 1 percent to 3 percent in 2026. Furthermore, we achieved excellent progress with Pioneer and our other focus branches in 2025 and expect to continue achieving improvements over the next several years as we bring their performance up to the Site 1 average. In summary, we expect to drive continued adjusted EBITDA margin improvement in 2026 and beyond as we execute our initiatives and as the market headwinds slowly turn to tailwinds. We have now completed 107 acquisitions across all product lines since the start of 2014, adding approximately $2.1 billion in trailing 12-month sales to Site 1, 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. 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're 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 full year 2025 performance highlights as shown on slide eight. We achieved 4% net sales growth in 2025 with an organic daily sales increase of 1%. Organic sales volume grew 1% during the year as our teams continued to gain market share, which more than offset the decline in our end markets. As I mentioned, pricing was flat in 2025, which was a significant improvement from the 3% decline we experienced in 2024. Pricing was up 2 percent in the fourth quarter, and with most of the commodity product deflation behind us, we expect that trend to continue into 2026, supporting stronger organic daily sales growth. Gross profit for 2025 increased 5 percent, and gross margin increased 40 basis points to 34.8 percent. The increase in gross margin was driven by improved price realization benefits from our commercial initiatives, and a positive contribution from acquisitions, partially offset by higher freight and logistics costs to support our growth, including the establishment of our fifth distribution center during the fourth quarter. SG&A as a percentage of net sales decreased 40 basis points to 30.1%, as our strong actions to reduce SG&A in the base business partially offset by the addition of acquisitions with higher operating costs. SG&A for the base business decreased 50 basis points compared to 2024 on an adjusted EBDA basis. As we continue to optimize our branch network, reduce our net customer delivery expense, and closely manage labor and expenses in relation to sales volume. We reduced the cost of our branch network further in the fourth quarter and expect to continue achieving SG&A leverage in 2026. Adjusted EBDA in 2025 increased 10 percent year-over-year to $414.2 million, and adjusted EBDA margin for the year improved 50 basis points to 8.8 percent, reflecting positive organic daily sales growth, gross margin improvement, solid operating leverage, and good contributions from acquisitions. Given the challenging markets, we were pleased to achieve solid adjusted EBDA margin expansion and expect to continue driving our EBDA margins toward our longer-term objectives in the coming years. In terms of initiatives, our teams are executing specific actions to improve our customer experience, accelerate organic growth, expand gross margin, and increase SG&A leverage. 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 private label brands like Lesco, ProTrade, Solstice Stone, and Portfolio. In 2025, we increased our mix of private label products by over 100 basis points, from 14% to 15% of total sales. To further drive organic growth, we increased our percentage of bilingual branches from 62% of branches to 67% of branches, while executing Hispanic marketing programs to create awareness among this important customer segment. We're 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 600 outside sales associates. Our digital initiative with SiteOne.com is also helping us drive organic daily sales growth, as our results have shown that customers who are engaged with us digitally grow significantly faster than those who are not. In 2025, we increased digital sales by over 120% while adding thousands of new regular users. SiteOne.com helps customers be more efficient and helps us increase market share while making our associates more productive. A true win-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 dispatch track, which allows us to more closely manage our customer delivery, we improved both associate and equipment efficiency for delivery in 2025, while more consistently pricing this service. As a result, we 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 again in 2026 and over the next two to three years. In 2025, we focused intensely on 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 Site 1 average. We were pleased to achieve an over 200 basis point improvement in the adjusted EBDA margin of our focus branches in 2025. Going forward, we expect to gain a meaningful adjusted EBDA margin lift for Site 1 in the coming years as we continue to improve the performance of these branches. For further progress in 2026, in the face of continued soft markets, we consolidated and closed 20 branches in the fourth quarter of 2025, and plan to serve existing customers through our remaining branch network at a lower cost. Taken all together, we executed well in 2025 and are gaining momentum with our commercial and operational initiatives to drive organic growth, increase gross margin, and achieve operating leverage in 2026 and beyond. On the acquisition front, as I mentioned, we added eight companies to our family in 2025 with approximately $55 million in trailing 12-month sales added to Site 1. With the market uncertainty and with all our acquisitions being small, 2025 was a lighter year than typical in terms of acquired revenue. Given our current backlog and discussions, We expect 2026 to be a more typical year in terms of average deal size. With an experienced acquisition team, broad and deep relationships with the best companies, 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 distribution market. In summary, our teams did a good job in 2025 managing through the headwinds, executing our strategy, leveraging our breadth of commercial and operational initiatives, and creating momentum as we move into 2026. After three years with no price benefit, we are pleased to be entering 2026 with positive pricing, and we are confident in our ability to continue outperforming the market and expanding our adjusted EBDA margin as we grow. We are excited about our future, and we continue to build our company and deliver superior value for our customers, suppliers, and shareholders for the long term. Now, Eric will walk you through the quarter and full year in more detail. Eric?