SITE - Earnings call transcript Q3 2020 | SiteOne Landscape Supply, Inc.

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Operator

Greetings and welcome to Siteone Landscape Supply, Inc.

Third Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. to conference like host, to now Mr. would turn over the your I Vice Financial and Guthrie, President John Executive Chief Officer. Please go ahead, sir.

John Guthrie

Development. Thank President, issued our Chief Scott our I am release morning, Chairman portion of everyone. and XXXX Investor today Strategy at to good Executive posted Salmon, press investors.siteone.com. website presentation and this you earnings and morning by Relations Executive slide the joined and Officer; our third Vice and quarter a We Doug Black,

differ we like and today's statements include and Before expectations would Litigation projections. press of These Securities earnings release, meaning with made to call Reform risks that and and I include uncertainties remind uncertainties everyone release filings Securities Commission. that forth XXXX. to the statements begin, from Such and and materially to could in the the within slide risks the the forward-looking factors Exchange are Private Act of subject results cause set presentation the our the in our actual statements during

during earnings slide now discuss to can which found be turn our call believe can Doug these in and our non-GAAP in would reconciliation be call, will evaluating Additionally, we useful measures performance. to over Black. in measures, presentation. A we I the release today's of the like

Doug Black

Thank you, us John. Good morning and joining thank you today. for

they at all as for to the and for I'm year-to-date. in of SiteOne of continued outstanding results tremendous quarter with challenges the face are our team pleased related stakeholders We very so proud to COVID-XX. our our extraordinary results have deliver

gaining shining build and during service competition and teamwork, crisis, to and strength this are our our execute capabilities versus of time we strategy. our culture is excellence as we strong of Our commitment

growth, review update has in recent third quarter detail actions restrictions, and highlights information third followed I to benefiting are which growth call. position. continued the sheet with all homeowners' from outdoor Guthrie since balance back revisiting a developments, come Salmon will COVID-XX trends before our and by last in for decade. and have well to these questions. coupled home and will of and Additionally, positioned I of trend excellence while take focus results the is to a through and our our SiteOne outlook quarter and living trends Scott the that are industry then the end consumers' our enjoy the spaces, their we building our been will you strategy over from strategy, brief on will desire by additional taken renewed for discuss our walk due company the term. on John we the and medium our advantage some performance address and markets we term taking long-term performance stakeholders and long financial outstanding position your last for delivering on liquidity our of provide in more then our acquisition seeing start

operating As we fortunate be SiteOne. associated to at COVID-XX, continue through very feel navigate here the to we challenges with

and and and and X balance facilities. and the market and distribution landscaping presentation, a industry upgrade attractive mix a our new commercial between in strong divided recreational remainder residential slides financially primary has very X we and remainder between see As construction nice leader sector The products the you of fragmented in very from X/X repair maintenance, commercial can approximately with market. construction attractive divided a investor an between and consolidator are

to and value for suppliers and our strategy better combine company our is deliver X, strength, providing our local customers of entrepreneurial the to resources technology opportunities superior Slide to to the turn and businesses growth financial with talent, large capabilities flexible while of you As a our fast, our associates. capabilities

a our provide all industry line win. to allow our to which help building in full which gives we ways We commercial in makes and unique landscaping stakeholders. performance are our more our improve the to products will customers with us believe us us steadily of operational initiatives, capability markets, complement very all We strategy and X our for

Finally, our designed our with acquisitions, team product we SiteOne strong given companies over distributors, growth, local along terrific and adding way. are X,XXX lines, the talent organic in and other adding fragmented expanded building to reach EBITDA to of nature deliver our our strategy our by regional is acquisition. best the expanding through the Overall, through growth industry and margin filling

X fourth I achieve inning our to we excellence you great the stakeholders. the building of only progress our made over years, have that our in would full capabilities are for remind we company developing past or While third and

strengthen market is must strong to priority. and COVID-XX and are so top Slide continue companies have keep welfare to terrific still our line that in internal X you full and to the product expand the position. to of I in building suppliers and as our capabilities end XX% times demand, both although offering is of we invest only seeing product adding in customers would markets. spreading example, our a to like we For our see continuing times, we in and the shows our that associates, full also challenging in why SiteOne, safety us That line communities, and emphasize our good

Our face guidelines, proved. execution CDC and of well coverings now daily associate screenings, wearing the of are

and paid bonus for extra in and while million them to during they allowing customers We also carried sick associates onetime service stay by exceptional the our burden this using continue PTO. way providing if took all to summer. our for their the thanking and a take In are have without step as they a was August, home spring support we them. of off to $X.X or them frontline special of time care further that This provided a a associates investment

has like low to of everyone in associates our the to market our our this third during Finally, travel from as continued terrific increase summarizes we the producing continue second through in to attending Concurrently, number focus tremendous are and school associates a who working residential quarter has the home with limit sales have far. fully and The X% COVID-XX on the families to quarter to recovery growth on public, commitment third work double-digit would the of quarter we outdoor construction exposure renewed year and/or growth going for company support thank reported recovered order had October to of keep SiteOne the our in organic COVID-XX and of nonessential I highlights possible. spurred home our first low their field These home investments air from and that along and The to due the we quarter. in quarter interest living. helped so XXXX. additional into rates new internal our market organic results. top that achieve initiatives, daily customers us ownership. with X factors, sales our for growth third daily from Slide the since as

broad has Additionally, for select is the both though point, quarter At product was availability our categories. across the situation improved by product and constrained of customers very the in geographically shortages, labor supply based growth lack by our market now and in third this October. supplier significantly being product the

lowering with pricing initiatives. management during to gross growth. good we freight improvements management our private to were in transportation quarter excellent We benefited also We system, able our drive third the costs continue and new margin from label from contributions supply continue through product and category chain,

margin our and Additionally, business, gross recent nursery at also our operate of to base hardscape than the higher contributed which a improvement. acquisition companies, gross margin

I which XX increasing our would of On discretionary leverage XXXX as and in have the SG&A side, from all December benefited excellent we achieved business, highlight in We TMS, operating better invest from serve and avoided travel expenses and even care Promoter our XX once costs. to we this we continued such grow that COVID-XX-related currently. the to capability achieved lower siteone.com as trends to Net leverage like we an customers leverage our of in to achieve MobilePro, this again as operating in year are managed achieved tightly increase and better, Score organically health future.

April. XX%. margin I'm we we XX the EBITDA very margin our EBITDA progress of hold deals that also by Our low our points M&A of growth, basis sizes with growth up and gross organic points. service great we by during XX% strong toward combination XX pleased and Year-to-date, adjusted to are X customers good back SG&A providing of our and improvement adjusted This NPS continuous to improvement EBITDA years reflects in and sales XXs margin was segments. leverage had quarter, to milestone program allowed our The on midterm ago. third solid picking that all making our restart in put deliver daily the expand able consistent were increase and in have excellent expanded basis us

able SiteOne, these hardscapes to focused powerful X Like add were outdoor market-leading companies benefiting in from trends and last the the and Over long-term are living. companies X months, supply. bulk short- we landscape on

during mentioned potential our we importantly, of active, performing earlier our Very to our healthy deals that pipeline and last is acquisition a added we well and deals closing strong this year XXXX. last year results. while in XXXX call, continue are and we very expect the to backlog As carrying contributing into companies

from could along range. cash down from The with We leverage net reduced third Xx equity in at reduce during the us at order prior move to equity ratio strategically are robust ensure along year the make to This we spurred in end an our during ratio that our to end also quarter the with without the debt-to-adjusted year-to-date the net EBITDA execute uncertainty acquisitions of continue brought X downturn. order to on of our our economic to to third COVID-XX, the X.Xx the invest acquisitions, offering, in the flow, of quarter to period. has outstanding to pipeline pleased EBITDA range constraints X.Xx operating Xx continued to offering debt-to-adjusted this by X

strategy We flexibility good in are set and with up maximum times. to tougher times our execute now

other To our outstanding our excellence report care do safe, stakeholders. all to and of and forward. take go happy which a consistent way. achieving SiteOne a of everyone customers, practices benchmark results capabilities first still great building communicate deliver good and already how each associates serve the work were at going we extraordinary neighbor this is of and our team and very summarize, and proud our and on governance Environmental, in pleased metrics all I'm results has programs, to support we all way outlines to best that our to are ensure our practices of are and in introduce to communities. teams social responsibility that part DNA, our the to publish terrific Lastly, SiteOne very recently siteone.com, have performed financial actions keep our work for in We place environment a to long SiteOne the full along set our and of for a

in battled and However, a remain strong even drive with and XXXX in company the excellent we we long-term excited great team operating COVID-XX. short-term performance having are and the challenges and to winning significant year associated building We short- both made progress with strategy. about as our opportunities our have have growth

Now John John? will more walk you the quarter in detail. through

John Guthrie

I'll X. begin net Slide on from some quarter. to the in Doug. with Thanks, highlights our of a We results quarter sales $XXX XX% million increase reported third third

to to quarter, increased product across Geographically, the of the invest the of gains. also, daily which living with prior demand solid as period. strong for the lines products, solid double-digit unchanged backyards reflecting sales for and, strong during achieving hardscapes, accessories, and consumers X% daily landscaping daily saw and continued outdoor continued demand sales XX% includes days, which share products, in to for in country the as melt the XX%, includes had we fertilizer, quarter. to again their During also nursery, agronomic their we Organic we sales ice growth experienced market sales across saw third some We outdoor spaces. Organic XX home out patios. compared growth. consumers quarter X regions irrigation, year. lawn Organic experienced grew believe compared we strong lighting and and selling Hardscapes increased which products, last products landscape third XX very were in the quarter XX% equipment, control maintenance year upgrade

X the the moderated Doug organic trend sales As have last has positive October. sales into daily for mentioned, somewhat But weeks. continued

we in quarter, In double-digit November faced X% including growth of last comp organic sales of addition, daily strong the year. in fourth a

percentage the X additional would to X% the impact X% year of fourth low it quarter daily of an days month for also X% context, and this points. XXXX days that been X quarter our prior sales we X To the compared in We organic by week, the year daily projected in because to sales seasonally have organic December the same in year-to-date we the X% growth growth the this for to the X December, sales further reduced additional expect increased negatively year. impact of with as had if approximately period. have Prices in to quarter provide and

For full acquisitions sales, expect we reflect in third XXXX, contributed and million completed XXXX, to between which both quarter the year X%. attributable inflation rate. growth sales Acquisition price the XXXX or X% to X% overall the approximately $XX and

higher increased XX.X%. our We to ahead later for lower quarter administrative general contributions from details are of our acquisition the in in percentage decreased third as $XXX Scott performance Similar pleased margin. acquisitions, the percentage freight management. and costs expanded quarter. SG&A Gross reflects a as regarding and the or the increase which by increased with in driven a collectively margin to QX, to acquisitions, organic sales margin XX.X%. which will gross expense, growth from operating strategy to XX% points of our net gross basis plan $XXX million was of third The the excellent provide SG&A, sales quarter, the combined sales XX% resulting are with reduction net carry the to call. cost in in SG&A Selling, leverage profit XX basis gross year-to-date. solid and million points XX more of

million $XX income compared million rate third tax for leverage XX.X% period. quarter to improvement. of growth, approximately margin period. the $XX million recorded to quarter, $XX year for quarter gross approximately The tax period. year primarily sales of effective an was We strong SG&A prior reported the was XX.X% during prior for million we year $XX by net compared expense the in The For driven the the third income the improvement and compared to prior

primarily million diluted quarter August. the for EBITDA for count share due XX.X year. same XX.X our offering increase compared equity to was average The Adjusted in weighted million Our the period completed last year. basis to for was million improved million to operating the and margin quarter by compared gross improvement. to $XX to XX% XX.X%, prior Adjusted period the reflecting in XX margin third leverage same for the our points EBITDA $XX increased third

balance the our cash capital as to at the was is increase sheet end to Slide attributable flow of third increase to to quarter brief quarter update from primarily pandemic. provide $XXX compared XX. a decision of on like flexibility on to on hand Now resulting market uncertainty COVID-XX I'd enhance financial our $XXX the end million the of working XXXX. the statement, to and response at the cash shown Net The our our in million

in outstanding facility started our we've and As reducing million the XX. $XXX process principal stabilized, of a hand markets September have term reduction down cash paying our the on loan our on the including debt, under outstanding

compared well decreased capital this Last working the levels resulting net hand, in period. quarter, maintained in on year COVID-XX supply mentioned up XX% we to how interruptions environment, cash have our to Receivable prior shortages. have collections inventory and with year flat available prior product held period. the the some we causing Excluding were chain from challenging $XXX million

to year. the course still to capital was Over $XX the Cash strong product due in the quarter increases the the million end operations sales to we working our growth. $XX of fewer some last prior shortages, of though to quarter, through support year expect saw the million in by we period for provided compared

raised We XXXX. use offering By X.XX million The believe environments. at strong is will same increase our million year. period more offering strategy future proceeds execute $XXX management. enable of $XXX investments and quarter cash million have debt operations of year. capital our be acquisition the improved us to compared quarter the the to compared to acquisition higher of a of to for activity end we to opportunistic in increase we working We growth the $XX increase which our fund primarily from cash compared million and the from increased to Net quarter third equity the liquidity to reducing the for $XX million net $XXX.X in acquisitions. income stock. XXXX. we during was all last of months, still was the X leverage, $XX first X, of reduce For compared due common macroeconomic increased third $XXX made operational our and the of intend August shares an cash quarter very million at in flow prior proceeds flexibility, to of million investments the million end same On net reflects the The leverage,

we the our months to a no have maturities strong XXXX. the As X.Xx to our reminder, trailing and third due our operating to profitability reflects XX The XXXX. of increased decreased equity and cash X.Xx adjusted the Leverage EBITDA at debt compared debt leverage lower until raise reduction of flow. end quarter

and net We strength of year-end our increase to target previous Xx. X to have leverage reduced financial our our X and from EBITDA to our decision lower Xx strategic operational to leverage flexibility. The and range reduction debt-to-adjusted range reflects

We year-end depending in slightly fourth acquisition activity quarter. range be or that expect below to upon the at at

credit these of of a liquidity approximately we ABL our hand under As Facility. result changes, of in on rating Moody's family consisted to our capacity million $XXX cash from debt $XXX of upgraded available million, and had million quarter, the third At end $XXX BX. BaX corporate which in the

without million. term our I maximize used uncertain growth strategy. and turn for long-term As of will I reduce and priority our balance sheet on to from now $XXX cash $XXX the XX, we financial the on acquisition call summary, our the loan during market to earlier, facility flexibility update Scott time million under September In a our strength mentioned opportunities. to to over is this sacrificing on principal an hand perspective

Scott Salmon

teams add our Thanks, as ability XX-month strategy able left $XXX paid seamlessly the everyone our John. we we in trailing strategy end approximately with and August, up we pause of where confidence our acquisition stability gained conducted in while markets after off our companies The we resumed were a our sales to pick more pause dividends and In by X customers safe. net work saw keeping excellent development to million. as during X-month and serve

have X of with million. net companies net year-to-date, $XXX XX-month Slide XX As shown XXXX, sales. surpassed on since acquired XX, more have and trailing And than in we companies acquired $X billion sales approximately acquired we

leading on locations - provinces, establishing products Canadian acquired which And fourth a landscaping and acquired we we Landscape X October hardscapes landscaping across quarter, with X, you the our on Atlanta our to Western XX, August greater find Turning which platform. and hardscapes recent landscaping Minneapolis leading expanding leading Modern supplies through our will metro another and the hardscapes information October in and California. BURNCO greater Builders area, with leading Centres agronomics position in locations market, growing X, landscape Supply X XX, enhancing most On establishes Alliance the significantly X complements acquired our locations business In August the position slides Stone, acquired XX, greater area. there. on XX San we X XX and yet On finally, we acquisitions. products irrigation Hedberg metropolitan in in platform, Southern products Diego with hardscapes

the target Slide Our our forward of since joined have to the deep us acquisition XX. activities. restarted importantly, executing pipeline remain tremendous new as family SiteOne joined want our high, ever-expanding. turn field acquirer communities the our and attract I relationships our to our leaders, who companies partners a work. And support better our dynamic us on who our support who leaders field look choice will the our to our entrepreneurs and expand to we to and the confident and I our will team, capability, you unbreakable and by further be the in Summarizing evidenced the truly Doug. pipeline thank SiteOne entire more M&A great make of We years from strategy, over continuing is promoting many dozens team have call in and strategy to stronger, growth. continue continues build approach. help to very product our who companies back every We and now quality teams, us the make and of Together, place new, the performance customers day. serve their and to

Doug Black

up on wrap Slide Scott. Thanks, XX. I'll

safety and operate First continue will we associates, environment. coronavirus our a we the ensure and in foremost, communities suppliers customers, as to of

pandemic, customers our overcome country ability critical our safely priority. the a suppliers our this to ability and and As to works operate of remains

And, in fourth somewhat are quarter as That though particularly quarter November last month. represents year mentioned, and months previously have throughout of In mentioned, the seen the impacted our the trend we terms was said, October, continue the John outlook, November have more approximately of demand third of XX% December October as moderated typically weather. strong. into sales sales. by daily organic sales

expect would the high excluding mid altogether, be organic extra the we in in daily fourth the quarter to sales digits, week. taken to growth single So

growth. In terms of to we comprises with looks quarter, reinstated steady end restrictions single-digit would XX% markets, in XX% of of business, the Residential which which stay-at-home are comprises maintenance, new fourth remain our to significant significant to to the construction, business, home customers low, year expect XX% remain our our of not as which our on strong and strong the is new Repair meet through backlogs business, higher work XXXX. to upgrade, demand. end create carry builders of with into is inventory and very assuming

yet to adjust the Finally, these we would with teams businesses factors retail we in management as be to pare move efficiently near the as market all good back hospitality sectors. finish of into to bonus will higher payouts entertainment, in a Taking the expenses the commissions commercial the continue steady some to year up impacts we we the restaurant, market commercial XXXX growth discretionary to year. term very safely solid into expect and and operate up organic weakness our XXXX. tight going Against and expect with finish builders of our backdrop, and together, projects support and this as end of

continue commercial will and sales We operational and management, category performance, chain, initiatives to in force also operational excellence. drive supply our pricing, marketing

We gross setting and gain improve market allow expect us while in our for of to initiatives margin these up strong share growth in to us organic support XXXX. our performance

We to will also key the TMS. raised all to to continue and make these capabilities in investments EBITDA for margin we future siteone.com our progress achieve include in good adjusted factors, have our Considering guidance. expect this year and

In to turned a terms the additional be year of acquisitions, solid before as SiteOne Scott what mentioned, finishing pause. to to add companies we expect year-end, out despite X-month has very acquisition

XXXX pipeline added XXXX optimistic will and quarters We our growth year us adjusted deals, us and beyond. acquisitions for in active good third contribute that numerous in a have up be in mind another SiteOne. to strong believe year but fourth meaningfully will set not which Keep welcoming EBITDA and to the very make companies this we in growth could new strong that

full With third end raising XXXX, we adjusted XXXX that guidance million, to our million range our XXXX. million by the markets, the million million. adjusted We reduces are $X $XXX to the prior be our million increased now extra end be which EBITDA to $XXX visibility as and to expect to our approximately $XXX weeks reduces $XXX of EBITDA this $X in mind our EBITDA that point. strong year for to adjusted organic John pleased of X loss-making in as range have by we of high on range Keep compared approximately quarter percentage the for in includes exceeding growth daily sales performance range mentioned, December, and

does Additionally, to stay-at-home me I In of who range teamwork it restrictions to not services. their our all passion, associates our economic selfless broad while thank with that commitment, amaze service. includes like SiteOne would landscaping and any closing, continue reinstatement limit include uncertainty, would sincerely

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

Operator

question Instructions] of Baird. first [Operator Your the Manthey David comes from with line

David Manthey

First question to expenses. operating related is

that other companies initial and of they and executive of summer, XXX(k) normal but those actively XXXX, this they're stage the sort T&E we the quarter expense would now through and back pull feather be and expense the the on, a and get the the to lower levers. pandemic back things, many back fourth could not just pulled in comp stuff items During And environment the into of pulling into that line. on match starting as number

third Given the reductions unusual strong or and that the far just XXXX? will so fourth in sales to quarter that any quarter added are this us, year, you the second can tell you've seen need there into SG&A be back in

John Guthrie

projects, onetime that's items. would our specifically of QX some operating say digital there any in QX kind and hitting highlight. item primary there, a expenses. investments especially year items is that'll weren't in the don't were I I with with accrual are that But like There I people hitting in the other think QX. I is David. guess be made is also, and some QX, mean, and those to any of year. like would this some first I we've of increasing this industry something taking actually the half onetime -- those common that's I haven't PTO QX. in policy, X specifically will we've or major across item But our extended think Thanks, the are regards items regards the there be -- vacation only And in been to strategy

Doug Black

additional stay home costs add. PTO quarantine. to we when have go would have on of associates incentive are no some that our associates take they without Those Yes, not as just taking David, sick. that I them having we that they're care to We're so carry

also bonus the which you that thank associates. was kind made special of our to We -- are a onetime

But pulled up items. and So seeing than other down prudent very We've continued the are in and you're fourth about our just trends. folks travel, costs any setting obviously been just ourselves XXXX. is quarter investment we naturally the back in what insurance given that, haven't for

David Manthey

customer question are today shifting will we playing in Makes all the second we big the the about outdoor seeing current is second, seeing these sense. demand that move And difficult October. sports you're come in into about you've against currently and market XXXX sands. into the prime level And XXXX trends and quarters? third distributors are of you What you and XXXX the got the -- the up selling you're for durability that we as a comparisons telling talked of as in see strong season hangover discussions

Doug Black

Yes.

robust, is and continued. demand the that's So

customers Especially a living big busy. still unfortunately, us market, next have with outdoor know, and with COVID-XX, and are remodel in And us will the you backlog probably Our is there's as They be there. year. repair backlogs. into market,

And labor remodel. at so backlogs first we demand. carryover repair good We're going anticipate so, that in into good in part least constrained some and there are will market, and that of some the be year, there the half

robust. drive construction, know, you as is And about business. X/X together, those home our New of

feel good it. about we So

we've area the next having good feel where this customers year, are good Our weakness some into there's They is and going seen about years of half. Commercial at weakness, that the year. first one this least year.

us the out. solid markets, in of We durable. But a feel COVID April. residential bias living will the toward add seems in repair trend flattened had to drop, construction the has comp. momentum with next Our half. I actually those into and are has pretty just the big been be markets, strong for first and to going But activity year. That that pretty be we it that somewhat new we our And the remodel, a favorable expect and while. given remember, would residential strength both would the obviously, down outdoor like

And that board Officer the new really digital Marketing We're so about Hispanic and strategy a may down, is as drive taper we're wallet. markets. while seeing to excited success. that underlying And gain focusing on we've to those customer Chief certainly share higher And got we're gaining some some expect customer we're With got launching ways with share growth. some organic on engine. strategy, well self-help in small there, which our an share of to gain that we then we've it our now coming

good thinking do or in beyond activity. of kind if we COVID will, feel certainly our we how growth those And we're about sustain So bump any initiatives. you about wave,

Operator

comes question line Ryan the William Blair. next Your Merkel with of from

Ryan Merkel

quarter. nice a on Congrats

Doug Black

Thanks, Ryan.

Ryan Merkel

So first X%, question, X% off, this, and guide, organic you call be sort today's up, sales back on of the from I if or extra week, answered add the it, X%. X% the but would XQ

should somewhat, pace? know reading predict? and November December the hard we environment You weeks a mentioned quarter Or that off being fourth be predict. hard I more are is to to the moderating demand last and rapid is about But off-season X slowed and this the

Doug Black

Yes.

a big latter. is you again, the December. and starts large more of part on the And into a Weather November country down. it's think I Mason-Dixon impactor up when get to from close

year and double-digit as of a So we get they good November We comp. And a had last had kind get smaller very more good volatile. the numbers very weather.

to being cautiously the optimistic negative, be start So and or just we're seems winter that throw effect, favorable quickly. but weather still it, demand to just take underlying about have can reading strong, those the shutdowns numbers, you into pretty

take we set guidance. into we our all consideration So when that

Ryan Merkel

And then days, I know can of what about that just e-commerce, acceleration ask them, thought. That's just do upon see it's expand impacted digital wanted how to I I barcoding, And XXXX? year? this MobilePro, some you in but tools. early Okay. you

Doug Black

pushed good me Obviously, across barcoding that We very a really talk literally yard this about folks out check and cetera. in et and because they company stay to people usage year that's advanced. the allowing one the while became of us Right. accelerated be out Well, let that truck the that's tool, with the the check and that. the MobilePro, in most able to COVID-XX,

So branches. customers that's out across to the used. be of and faster, and our majority to get it's helping It's helping associates It's more our us efficient. in being

SG&A feel being we of leverage So like is part our by aided MobilePro.

excited that. quite about we're So

We to continue benefit at out and that going us. look you rolled If that's this to -- so year.

additional year, it, benefit. we going give grooved Next us and be to well think we'll in it's

those the year customer great make use. next for to we customers on gain making And If a might an yet midsized really it we're upgrading to we're in account go we easy online, wallet guest a for but it's and checkout, that is you to kind as tool, there and a not focusing And small It's us. sure We're solid to tool test of siteone.com take siteone.com will. through SiteOne, gain you have adding expect to many customers it traction siteone.com, frankly. quite share, target buy more out prime upgrading if ways. for

share small segment. all with is If our organic in small segments us sustain growth, a about overall, growth. about we X%, customers. see, the we're So can fortify help our and our have customer to way share that, lowest XX% good market the of only XX%, organic X% of that -- continue we We're we

we of So see of and area an doing that up, can that. we level siteone.com a and it's kind way gain know we share as

have freight inbound from in on our margin Transportation that. and that's System freight, Additionally, that cost put -- our we our Management and the you benefited we see being

when on Now scheduled. we way, can the is can their them be load's to on we're where give customers their delivery piece We working notify updates. going when outbound the

a we're service to up customer that pilots The doesn't speak. And We're are results going X we good. our industry. exist the move finishing Just then terrific across in as country. that tool

making today, time. we'll on another be on midsized them updated to keeping there, fully track be they're -- just So kind for call that they'll counting that's those small have them are automated that and and to of sure customers down and tool there deliveries

all lower time. digital will servicing and share company and we're that about more a excited much together, us those help at XXXX, So our in that gain advanced to put the cost going of same we're be

Operator

Truist. of line the from comes Keith question next Hughes Your with

Judy Merrick

Hughes. This is for Judy Merrick Keith

your you does Is the there market been a the by on delayed? back. kind the is? sector follow-up they're Just in on markets, it paring on more what has said just change a bidding? Or commercial vary where comments that end is Or of there projects getting -- anything

Doug Black

that to COVID as on, activity. hit, those bidding to if you exactly going tell hard we and as just end But what's are continue will. to It's is really we Yes. future, out commercial but trying there watch metric figure the the overall were users see project delays

growth, project provides out. while bids that were we've for our starting group a contractor And have seen the that we services flatten We year with customers.

dipped let's it it's down as COVID May, in then -- in did and it April, been, to it, initially flat, call hit Now it and came back flattish.

-- lack some delayed delays, a cancellations, our new in coming mostly the projects it's that's think main addition to talking of I and projects customers. So combination on. of and project and But to

Judy Merrick

Got you.

it strong, when And being about you seeing any talk else? or here? labor like there anything anything or strong, any maybe residential Are anticipating Okay. is the or constraints construction shifts new being so you very you're lags

Doug Black

Well, full but when was up, or of ramped starts in. up labor X a speed, limit ramp builders when that little last bit ramp we country they've the a up in activity, we're of constraints. at because a the environment, back assess took less if of there's and dip lag always But you can back constraints. to where given work back kind strongly. some you a in back labor the while pause of we will. of the And had you a months probably say little And we've there's paused the XXXX which areas bit we so -- halted We there come

So I'd the is down the there's logical we for we're think home trying a the view a homeownership through we our attitude prepared in there's XXXX, first vaccine, how that residential an probably but there'll that next toward, is because real And that that and been most would at for think would is manifest pandemic. of of terms that, homeownership. figure sustain swing going market. year trend year shut And of capacity want back the in next say the that, itself, in full once attitude at to to be but out importance half, toward of least would be everybody overhang trend hey, to it's to not a just servicing

going XXXX. think is be residential we strong So to in

Operator

[Operator question Markets. the Instructions] Ryan Frank with of RBC comes line next Your from Capital

Ryan Frank

But organic below or slightly last quarter, So did XH. have significantly expecting kind I of guys you sales just line half you in that be been better obviously, -- quarter. this than to X

to just differences what trying something So there. stronger else? there Or main I were new out figure res? was it was Was just the

John Guthrie

especially call. and sales we this and I much homeowner had what we anticipated probably think saw remodel than strong, but demand in was coming stronger and quarter the expected. the than quarter repair were repair out in on at remodel, marketplace, out, were greater a just second the -- the we was We

Ryan Frank

pick now, you guys I to maybe, just Got larger worked the the lower that we attractive? it. being next kind acquisitions had one Xx, And But with of the with appreciate are see is leverage pace offering. year? below then should any you Or that materially there next up your are

Doug Black

size it our exited I've very since line pause It's balanced and been pipeline. good we here. feeling has of think business been I about as our across

maintaining and is pause we building I at word were actually. So our wrong hard improving processes. the sourcing, improving work relationships probably mean and our just

a the position exit better think, in from able I when So to much economy improved, a pipeline. we were

in to arise. motivator that does but a offering, of we're equity of any that positioned deal, take advantage terms In wasn't terms particular certainly for well anything us large our of

Ryan Frank

just quickly, And on that. Okay. a follow-up

kind X is likely X to the of forward opposed range Xx Xx? going to as of to range new So the kind

John Guthrie

Yes.

where You will to our downturn, should obviously, on strategy, is, hold what be down in markets that that's And put going and market in we're necessarily not continue if up be that allows some execute acquisition strategy, and in that, down our doing have markets to really consider operate. both -- us perspective, to which, really even that and is strategy to the we're to from time is there opportunistic there especially markets future. to a that

Doug Black

to the X to was And the because X that going to to times, decision in good then risky we but ranges just do out that. that the acquisitions -- strategic that to miss we above would get migrate downturn. we And -- up just there's our we X. continue in be don't ratio don't on wouldn't specific, up expect could so to so would anticipate expect And in a operate to out lower recessionary to be we in to to range, to in we the on continue it them. want a they're and want X because made, available, miss So acquisitions Ryan, and we period,

are now to quite navigate available. do where we're a if so And we downturn to and they continue to and come when through be comfortable able deals

Ryan Frank

the Got makes that quarter. sense. Yes, it. all for me. in Congrats That's

Doug Black

Sure. Ryan. Thanks,

Operator

to Ladies remarks. turn have would session, end the back call question-and-answer gentlemen, the and we and closing like I Black reached Doug the of Mr. for to

Doug Black

results terrific all associates, company, and year-end you Well, like and interest and our all to great our be go thank We us into of a and those our to today. our your by look SiteOne, to out go impacted much thank all us prayers for And XXXX. sharing of as we we once Thank with thoughts our appreciate to for suppliers customers you in COVID-XX. much. I'd helping you joining Okay. very very again forward

Operator

today's concludes This conference.

Thank this for You lines may at your participation. your disconnect you time.

SiteOne Landscape Supply (SITE) 28 Oct 202020 Q3 Earnings call transcript