SiteOne Landscape Supply, Inc.

Greetings and welcome to Site 1 Landscape Supply first quarter 2026 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 Elma, Chief Financial Officer. Thank you. You may begin.

Thank you, and good morning, everyone. We issued our first quarter 2026 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 Daniel Laughlin, SBP 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, 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 and 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 grinders 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 will benefit organic sales growth and gross margin expansion. With the benefit of our commercial and operational initiatives, we remain confident in our ability to gain market share and expand our EBDA 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 first quarter. 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. 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. 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. 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. 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. 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 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 we have more work to do as we develop into a world-class company. The 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 extraordinary price realization due to rapid inflation in commodity products during 2021 and 22. In 2023 and 2024, we experienced significant headwinds as commodity prices came down. In 2024, we also experienced further adjusted EVDA 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 EBDA margin despite the soft end markets. In 2026, we expect pricing to be up 2 to 3 percent, 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 EBDA margin despite the continued market softness. For the longer term, we believe that we have significant room to improve our adjusted EBDA 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 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 Site 1 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, partscapes, and landscape supplies categories. 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. 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. 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. 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 continue to execute our operational initiatives. Adjusted EBDA for the quarter increased 14 percent to 25.5 million versus the prior year period. And adjusted EBDA margin expanded 30 basis points to 2.7 percent, 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. 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 Salesforce productivity as we leverage our CRM focus on disciplined revenue generating actions from our inside sales associates and over 600 outside sales associates. We increased our digital sales on SiteOne.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.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 the first quarter, 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. 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 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, 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 two companies to our family so far in 2026 with approximately $110 million in trailing 12-month 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. 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 distribution market. In terms of our acquisition team, I'd like to take a moment to recognize Scott Solomon, who retired from his role last month after leading our strategy and acquisition team for the last seven years. Over that period, we added over 70 companies with over $1.3 billion in trailing 12-month sales to Site 1, while significantly improving our integration processes. Scott 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 Laughlin, stepping into the role to lead our strategy and acquisition efforts going forward. Daniel is 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 Site 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.