Earnings call transcript Q4 2022

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Operator

Greetings and welcome to SiteOne Landscape Supply Fourth Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, John Guthrie, Executive Vice President and Chief Financial Officer. sir. you, Thank

begin. You may

John Guthrie

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

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

during which release useful presentation. we discuss performance. be believe non-GAAP in measures found earnings slide today's and measures, in A can the be evaluating our our in will can call, Additionally, of reconciliation these we

to like I the would Doug to Black. call now over turn

Doug Black

in thank XXXX. on Thank growth in another EBITDA year us top sales in net growth you you, of of record organic morning XXXX John. today. Good and adjusted and double-digit joining the for We achieved daily sales,

last respective All challenges were the product and and labor talented continued our relationships, very teams they tight terrific strong companies year. adapted market high their proud high-performing pleased of continue volume markets. our companies the get to also new have record add to reduced every these and in expand SiteOne I'm and who of product presence We customer during and lines who very to stronger well to a year. XX teams, year inflation,

growth build to our delivering initiatives execution long-term, continue strategy, market leader for in world-class near-term. Through the acquisition and we SiteOne commercial of performance as operational the our while and and a the consistent

XXXX, balance and business, well acquisition strong As face continued navigate exceptional ahead year success. pipeline softer improved markets in and we teams, our robust the have achieve us positioned capabilities well-balanced to sheet,

and with will I start some of through position. strategy provide and balance back then our to and Salmon overview detail you call long-term quarter come today's growth, by from for on an questions. then market I XXXX a liquidity performance and and our outlook walk will brief XXXX. will sheet more in and acquisition address latest our our unique results of Guthrie John Scott taking highlights our year for our will followed strategy, update financial full discuss your fourth before position guidance

more our to As than slide have earnings branches the centers X four and shown on XX grown across presentation, footprint distribution we Canadian US provinces. states XXX and of six

our clear over fragmented of landscaping Accordingly, future of four remains leader we size growth nearest only about share that the are $XX competitor, yet the We industry distribution products estimate our we XX% very significant. wholesale have billion a opportunity times market. the

XX% commercial new of XX% and and construction recreational repair We focused focused balanced and new residential XX% business mix with have upgrade, on a on construction. on maintenance,

distributor the lines product in an we well our only full line as product national wholesale excellent have across As geographically. balance the also market, as

XXXX. providing that avenues both navigate good as markets. portfolio very resiliency coverage our an and business important and our mix, I through US important for to and and balanced we strengthens customers through and product grow Canada, note softer value would and us multiple reinforces in time. across product fill organically to lines broad end geographic this Overall, over be balance mix ways acquisition, strategy more offer our to balanced uncertain while market our create will in suppliers, Our the

Turning to Slide X.

resources in teams all entrepreneurial Our as our to customers talent capabilities that and the deliver superior talented, we largest the suppliers. experienced to and industry consistently to have and scale in our local functional support value strategy leverage company is of our

executing long a come way have world-class in as building development in relatively We SiteOne early are but a strategy, our and true company. our we

product Accordingly, our we stakeholders. adds create terrific complemented build new to initiatives new us which geographic acquisition our remain all capability markets portfolio, to are strategy, focused commercial our highly on and into in by initiatives to for fills our These further operational our talent SiteOne. and moves value

acquisition value growth, growth all through our and for superior expansion. shareholders our Taken margin strategy EBITDA organic together, creates

can If done capabilities this for investing and X, our We've in years organic acquisition technologies margin systems you over and record EBITDA and good foundation and growth and the while growth performance Slide of turn seven track consistent our and create superior with for new teams you to heavily see strong to to our the last suppliers. and expansion. in SiteOne build customers

going investing ability building we still remain to and are our levers three in gain driving and value confident continue and forward. share creation market our of We all

potential that now product remains past our We and robust. XXXX. activity acquisitions development You acquisition leveraged deals note XX since also expanded year completed we've to this team lines will key our pipeline across increase all and

growth. they talent performance and are our All and so company high strengthen excellent performers and new companies ideas of for with these

market Given we and our of come. significant to through many share, the for continue the years modest fragmented industry opportunity growing nature acquisition have to

landscape to continue We're ahead companies industry in filling the we and which shows systematically supplies over the X our filling expect primarily runway long acquisition, do portfolio, decades. that networked aim to the next our in categories. best hardscapes in well the we markets in these have product especially through with in Slide nursery, and

growth discuss growth will approximately a some by net organic We daily inflation growth The XXXX offset and on in XXXX sales growth acquisition. the volume added shown now with highlights X% saw organic by as and and achieved XXXX I XXXX XX% we partially volume growth daily that in sales which XX% driven decline, follows was combined. our sales daily sales of organic sales X. growth performance XX% price net through Slide XX% X% XX%

significant most volume there the adjusted to some we that that Northern the in products as our the customers in our in markets market and meet of Accordingly, maintenance products, we fixed their their we in maintenance experienced in believe believe use upside temporarily is Overall, We budgets. declines XXXX. demand outperformed XXXX.

a points profit Gross XX margin and to our increased healthy XX% XX.X%. increased gross basis very

was first half of the With extraordinary of high of to the during again able large gain which XXXX, we continued less than XXXX. take second the the inflation once the benefit in were we slightly achieved realization price advantage half

benefit lose operate Gross supplies higher also XXXX. with margin from benefited gross hardscapes percentage. and will in higher this landscape SG&A and We a margin our acquisitions, which

our investment digital and Accordingly, volume, operational points offset sales disciplined side, SG&A our in a contribution On XXX and of elevated fuel acquisitions, and initiatives cost were excellence. SG&A the by marketing, XX.X%. expenses management from continued and net basis operational percent lower as by wage increased

combination in XX.X% declined headwinds. points The solid XX% contribution adjusted XX acquisitions to margin sales XXX good Adjusted achieved XXXX. despite margin the increase a deliver to in us basis from adjusted basis following point allowed our SG&A EBITDA EBITDA organic and of EBITDA growth of

XX% focused our Overall, we improvements adjusted the to since company our remain have and profitability goal meaningfully driving XX%. IPO EBITDA toward on continued the of of expanded margin

XXXX. made terms we our good in of progress In initiatives,

small drive inbound gross label Management improve and grow On freight we our to margin TMS the Transportation System, costs side, customers, private growth or with continue through our initiatives.

gross through Though realization, extraordinary come. of we margin we expect to to reset price these without during improve gross the in to XXXX expect margin years the benefit initiatives

while making growth We have several experience, initiatives our and our in customer our thereby teams aimed increase SG&A efficient more at improving leverage. improving organic

are on side. more serve can especially, hardscape customers We our while helps continue transactions, the functionality branch quicker accurately, our to MobilePro of anywhere from in Enhance our the associates the at branch sites it nursery and more efficient XXXX out company. roll automate and win-win. branch MobilePro to our a and larger across serve and allowing associates customers

outbound XX% to deliveries by DispatchTrack of us on now customer proactively customers our positive. through allows very our status We update going deliveries has our have to DispatchTrack been text. over their feedback customers delivery manage and and

capability SiteOne efficient and achieve to this in XXXX, more have and each to parts new of end all deliveries the expect market. now our utilization make fleet DispatchTrack We of higher leverage by can fully utilizing

our leverage and now sales drive and able intentional CRM, to gains deliver almost the management In we'll relationship and share outside support is XXXX to outside customers inside sales Salesforce value over consistent and better we associates. to new completed serve to large the our help account new system, two-year planning development customer which rollout our to of our customers. and support this XXX XXXX our more sales our associates be market We in conducted more sellers medium XXX designed with and capability

team significantly have becoming use and our efficiently. and run have strengthened more the their in customers they associates the years of and two Sales last digital with business ease landscape During with improved more to we turn functionality we site comfortable contractors as accelerated help the siteone.com. our are progress

We siteone.com gain market-leading share. excited it will customers continue to bring to fully beyond XXXX and are our in to leverage add value to market features and more and to

operational technology-driven with points business and companies in team isolate the initiatives, major pain we our have with and company. each acquired In to our across the newly solutions now develop of addition excellence field full-time also operational implement line working to a and

increase efficiency and our customer excited come. and to our organic Overall, the adjusted EBITDA along are opportunities years to help we associate These sales experience improve to and margin. with experience solutions efficiency our EBITDA our adjusted improved improve in drive growth customer operating our about

their for On provide and excellent high-performing $XXX and in adding the million markets our companies companies us XX-month acquisition to in respective capability sales SiteOne. record while family. XXXX had trailing talent to growth new a with approximately front, we XX adding performance These

strong choice, strong years positioned acquirer Development relationships expect and many team, this in the An the best a exceptional very SiteOne teams we broad well acquisition in an deep and and for companies remain and experienced we grow the to and expanded future. reputation continue to adding year balance remain with sheet of consistently as companies, to XXXX. active through

X. made and Slide shareholders for of customers, communities progress to associates, SiteOne in as suppliers Moving and building that company resilient a great in the We've our for one remains exceptional term. creates XXXX, longer value excellence,

our for strongest of Island the We Grant our of to for Associate Inspire, care our is CARES, times leadership, Assistance ensuring added XXXX, a Group, the included increased the success. associates Pacific of overall diversity most possible Program SiteOne have we A few highlights and which in our take We associates. the team of diverse that Resource need. help their to and drive launching fifth Asian in diversity year, and SiteOne

was look and XXXX through forward we Overall, in continue and organically and confident continuing market of SiteOne a ability strong We and conditions, we chain finally, benefit outperform company of our enhance building pleased supply stakeholders. challenging to our to build market And to efficiency. SiteOne. the our navigate performance our the progress both fleet acquisition. all to our year In are progress for our continue through build summary, in to improve with and remain

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

John Guthrie

Thanks, net is begin a quarter, the reported Slides one of days with we Doug. quarter fourth our day $XXX which XX of We in to some XX, had and fourth highlights than selling I'll in the There were XX% on XXXX. sales the from XX quarter. increase million less fourth in quarter.

compared days in XX% selling year, $X fiscal had XXX fiscal sales selling to full to days XXXX. increased net the billion. For XXXX, in XXX year year We

increased fiscal the XXX quarter suppliers, days, quarter. full more our day selling year. one in XXXX, in one in but for increases Organic volume price first Organic X%, the again the full we will by less fourth partially higher cost the primarily will both day growth and attributable inflation, by softening In fourth conditions. by have and for quarter lower driven sales offset economic daily was resulting year, XX% from product and quarter we sales to have the and daily prices year from the

for price saw XX% XX% levels XXXX. full see price daily PVC the year, inflation sales approximately inflation we growth pipe fertilizer. quarter, and lines products but across like moderate, product Price to price this contributed year. from the increases commodity to all comp for and as inflation We in the We're organic higher starting

XX%, quarter the December second the was just first under which Price under XX% month is since of XXXX. inflation for

to XXXX, who in like catch-up price far from price their costs, for as many as PVC increases are suppliers rising pipe. still we decreases trying So own seeing well are commodity its products with

will the X% the Currently, we outlook single-digit the year. Volume expected year. are for the fourth for provide discuss full of of our of for inflation quarter Doug X% in for the that projecting XXXX declined XXXX, and detail, XXXX. more low first we price with half majority when

conditions following from we As rates, shutdown. levels, in the seen peak the interest higher moderate decrease the COVID response economic have volume to we experienced

for In as reduced have prices budgets. maintenance grass constrained seed, products addition, higher like and with demand our deal fertilizer customers

While of important place. we we their is living spaces people see to it in did trend volume note, in outdoor and the remains remain XXXX decline XXXX, growth above the more in secular levels investing that

and equipment, daily Organic includes landscaping for products, which includes year. for control and X% fourth increased also was outdoor and full year. quarter solid, sales X% hardscapes X% for the the for which Organic lighting growth for fertilizer, the increasing sales accessories, nursery, daily products, products, agronomic XX% irrigation, full the melt quarter for and ice landscape

primary the rising the negative was lines products, the as prices agronomic products. most impact all to costs. almost inflation higher as with lower compared product was for growth pronounced when quarter of impact result, both The in volume on landscaping year, volume the and growth of and growth driver experienced of Price a

in Belt smaller of Organic have not for growth, Sun Sun markets. markets. Sun to Geographically, the the fourth to quarter, from approximately in Belt XX% only percentage stronger for markets compared mix. stronger their Belt in grew see sales X% construction seasonal a markets agronomics new we product continue approximately more but also Northern benefited growth daily

details to reflect in year sales net year. We XXXX acquisitions both sales X% in acquisitions approximately strategy $XX growth were fiscal XXXX, to our full X% which for and the sales, and regarding with million contributed later completed our Acquisition the or attributable performance million or to quarter, more the pleased acquisition of in for call. the growth XXXX. will sales $XXX the net provide Scott

for for toXX.X%. margin the Gross XXXX, gross X% the absence basis our XXX of to benefit the by was impacted million the $XXX quarter decreased in we gross realized price fourth large profit quarter to the and margin increased of the quarter, Similar XXXX. of fourth points quarter third realization fourth

full XX.X%. and margin to new ahead year, as the inventory we the XXXX, cost expect margin XX% for increases. gross from by the chain XX gross For points more of will a increased the realization the outlook, and basis the improvement year gross half supplier increase margin than XXXX. Doug benefit acquisitions, increased The in gross buys in are profit initiatives initiatives, reflects supplier of of to loss of supply programs offset strategic we in contribution saw first discuss price margin reset our gross benefit, in the including

as in and the percentage basis XX.X%. to or increased reflects the quarter. supporting increase $XXX sales the benefit net to inflation points for general investment corresponding to fourth expense expense, net increased of XXX quarter accounted of sales of SG&A, seasonality. almost for XXX incurred increased a million administrative points higher The expenses without the SG&A basis Selling, and SG&A from in sales a SG&A XX% percentage Acquisitions acquisitions growth. as as difference, primarily the due in the cost our acquisitions, impact operating we of

For XX% a the points increased year, and XX.X%. SG&A billion, full $X.X of net to XXX percent SG&A as basis increased to sales

all year, cost During increased. on general experienced operations branch fuel, the for inflation wages, travel SG&A we as the and of of the impact

due In cost but to structure. addition, gross our impacted margin, acquisitions their have also positively operating impacted negatively our SG&A higher

of quarter, in year $X.X million an tax million For period. compared tax the income prior to we an income expense the fourth recorded benefit $X.X of

year, period. to income prior expense the million compared tax was For full $XX.X the year million, $XX.X in

the primarily in tax year, compared the for amount effective stock-based XXXX fiscal benefits effective from year. tax in excess XX% fiscal decrease to was for increase a the 'XX rate tax was to The due XX.X% rate Our of compensation. the

$XX.X of fiscal XXXX for XXXX million year. compared Excess $XX.X for tax recognized to million year, the benefits the were fiscal as

of million XX%, be million compared tax net SG&A. XX% as year higher loss excluding of We for expect quarter between a We gross rate to net will tax prior fiscal net attributable and recorded our loss lower for the was XXXX, year and period. items, income such fourth the $XX.X discrete effective The to benefits. the of XXXX $X.X margin excess

the income income year to $XXX.X X% million compared or net fiscal growth for and Net attributable increase was for year increased to the million for fiscal the sales margin. XXXX. $XXX.X in XXXX gross improved to The year our

prior Our is Adjusted year decreased which weighted XXXX the to the period with prior average the was in number. million count the the quarter, $XX.X year, diluted XX.X fiscal same million EBITDA million XX% by for fourth to year. compared $XX.X for for share consistent

For XX% for to Adjusted million basis $XXX.X the EBITDA full year. XXXX XXXX year. compared XX.X% $XXX.X to fiscal points for million XX fiscal EBITDA the decreased increased year, the adjusted to margin

brief working to a is working receivables, update Now sales XXXX year end end acquisitions fiscal in new capital supply and and to cash to cost strong an on increase inflation, resulting $XXX year. statement chain disruptions. the levels $XXX sheet The of capital on and attributable to our provide flow stocking in I'd Slide million, fiscal to inventory increase million our the the mitigate our like balance of Net net shown compared as was XXXX resulting increase higher from growth primarily decision at from at the XX.

excess While to to flow higher uncertainty down quarter come product chain million efforts. compared from compared reduction $XX inventory fourth significant Cash to would our the million the year. the approximately Cash to inventory from driven improvement approximately attributable $XXX million improvement flow our flow primarily levels was making $XXX supply in from remained are we reducing The to year we increased prior operations profitability. like the and period. approximately cash our The than decreases, primarily for branches. increased year, inventory times in increased in as operations million $XXX lead prior progress approximately by in full was

million investments $XXX fiscal quarter, activity $XXX $XX share In greater for fourth cash $XX the million in capital to fiscal XXXX fiscal reflects authorization shareholders for year the October, Board year to for of for XXXX, $XXX the compared fiscal during year acquisition investments $XX XXXX repurchase made approved million The of million We our fourth million in to and quarter repurchase same quarter compared our activity. returned a in compared increase cash year we XXXX. to and through million XXXX.

the compared our end at the the at $XXX EBITDA, the leverage year. The approximately of end Net acquisition year. XXXX approximately was investment. end primarily XXXX fiscal increased debt compared X.Xx for to of Leverage reflects the year million X.Xx increased for prior $XXX months at borrowings to adjusted trailing XX million, of higher to the fiscal

of While range fiscal to compared XXXX debt of had to approximately year $XXX $XX hand million we approximately $XXX year, and which facility. liquidity in available under XXXX, we below the increased million, still available our leverage net of million adjusted our in on ABL our leverage of fiscal of end approximately the At Xx. capacity to EBITDA Xx cash year targeted consisted are

Slide highlight XX, allocation. we capital On to approach balanced our

our with to to Our invest business the execution of in regards our is acquisition goal primary including allocation strategy. capital

our we did the maintaining provides share to demonstrated these our objectives a extent the sheet shareholders also we are return have ratio. last us To quarter. by repurchase capital excess the mechanism authorization committed after target to achieving capital leverage conservative like We as balance to

market priority from growth to and or without and strength sacrificing long-term sheet financial balance maintain a capital is flexibility allocation our opportunity. Our perspective

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

Scott Salmon

John. Thanks,

of we XX net XX-month bringing we with sales companies acquired billion million. Slide fourth XXXX sales $X.X to trailing with SiteOne. XX quarter a trailing XXXX, have $XXX on to acquired the our approximately total approximately shown Since companies net combined three As XX, added and in for XX-month

range Block provide information a establishes expands to recent Turning of acquired in October of XX, and Stone, distributor the products Wisconsin. the to a landscape customers. Slides on will Madison wholesale hardscapes XX, market acquisitions. XX most acquisition & Madison position through This find and you leading in our Madison we On we hardscapes services our

XX, located of market. acquired a across hardscapes Telluride presence the Arizona. we Natural Phoenix, Telluride December distributor wholesale our On Phoenix Stone, hardscapes in extends leading

locations XXst, and expand we Whittlesey Texas on supplies Supplies, December offer and to distributor seven the we platform hardscapes with Landscape our and Whittlesey acquired market. of establishes Also landscape services customers. serving Central the hardscapes supplies Texas products serve wholesale a Austin, a and landscape

our teaming with the By offer we high-performing expand companies, products, these markets. we and our services on up three strategy customers continue all to across deliver value overall to

Summarizing we geographies of significant on strategy for SiteOne across balance create to add acquisition sheet companies that value we business robust continues more SiteOne outstanding lines be our pipeline a confident able with strong XX, and are and slide to in XXXX. all a to many will

customers and as professional us that deliver and agility to them are and improve continue owners so for company. leadership in the powerful help excited and and innovators bring flexibility as are personal SiteOne a their fresh their great force These choose many ideas value resources We thrive teams and within to home and entrepreneurial a honored we and pursue their to leaders family support SiteOne they our both continue with that to passions. strong businesses across They we positions suppliers. and the

great to the we commitment win and work thank newly to I SiteOne to for Ultimately, making SiteOne want passion stronger and all a entire for welcoming together. the their team place new they acquisitions through to the outstanding I acquired companies am creating adding XXXX, family. our teams keep terrific joined stakeholders. all value ability more our SiteOne when in for in confident

turn to the Doug. call back now will I

Doug Black

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

we look moderating into inflation ahead we XXXX, increases continue from to the as years. lap expect last we steep the two As

most inflation single-digit of low the during of occurring year, the with For half the full year. first this we expect

In construction, to prices as of our to consumers home high decline compared expect to approximately XXXX, markets, XX% we sales, new end mortgage residential terms adjust comprises and XX% of rates. which

healthy our backlogs the the this could slightly and market in recreational sales. we prior grow new which represents With commercial We stable versus year. bidding, XX% expect more of environment and believe a good construction,

we sales, repair be major in has market, construction again remodel major and support is XX% though home both the expect our turnover which be the that Note lower new a relatively home low downturn, headwind. be to of comprises and than high repair and that and to be expected durable XXXX. Major in flat. case a more repair unemployment values, remodel, and Typically proven remodel to could

Finally, typically the much maintenance end of past customers translating Maintenance sales, in market, dollar expect our and continue inflation has XX% from which been has we steady that to steady comprises remained demand downturns. our volume. with reasonable lower in into XXXX

our down In to we sales flat market inflation to price industry with by expect to mid-single-digits sales decline we share being in with expect total, our reduced volumes. modest and to XXXX organic be offset ability gain would daily

We we substantial the inventory saw and gross XXXX. to that ahead this of without benefit rapid strategic inflation expect margin normalize in year XXXX from purchases our

adjusted in over with normalize Additionally, also expect sales, improvement margin flat of longer expect providing to EBITDA Accordingly, SG&A, further to modestly. we we foundation to increase a XXXX, the percentage declining for sales, as a term.

In terms as Scott more these in SiteOne forward strong companies mentioned, high-quality of look to adding of and XXXX. of family we a to have the pipeline acquisitions,

during Our into them, our to ability our improve we acquisitions expect to strongly to acquisitions and contribute well. continue we Accordingly, growth our the year. to performing performance integrate And company. are

does range we mind, in factors in not from million acquisitions. range factor these all adjusted our fiscal any XXXX contribution to the million. EBITDA unannounced anticipate This be of to With $XXX $XXX

continue amaze like closing, selfless all me with who associates their teamwork to and In passion, to our thank, SiteOne service. sincerely would commitment, I

them, strongly our for stakeholders. tremendous for We supporting true customers deliver have allowing partner. also a to to as And their us value joined with like be thank I our is would a we team. suppliers all honor increasing so our be us it and to for

for open please line the Operator, questions.

Operator

Thank you.

We question Please will question. Baird. Our session. from David a with first with now proceed Manthey is be question-and-answer your conducting Instructions] [Operator

David Manthey

Yeah. everyone. Thank Good you. morning

Doug as guidance about being just XX%. looks you percentage guess, I back a here maybe higher, what we can looks of a SG&A, margin First like about we which EBITDA said, that when question, And into XX.X%. you're gross talking estimated sales impute can your the like slightly then, about

like that's the First I'd in just ballpark. of see all, if to

just that the of is at percent. talk gross moving just are you then, that confidence you plan parts And the from level? at in keeping SG&A your both SG&A implies that couple about a year-to-year? that on And interval up range? around sort it then, And how margin level, What could

Doug Black

Yeah.

the that's ballpark. So

margin estimate market. gross to there between our the just with ballpark. be XX% to going team And your confidence and fall so to the SG&A side, able we're then we're expect that somewhere We in XX.X%, outperform is the to going -- into year we're on going

We've got a et lot the momentum we're closely. of very sales monitor But going experience terrific with our cetera. with customer our force market and to

we April, what As March and spring to comes would in we know expect see.

support field at is And very we're have if field fast and the situation is the flexible. we find SiteOne decentralized, of center right? We ourselves in a our tougher one of and benefits very the

the do pullback market. And very that to quickly And can we seeing. that in can demand each they they're

we those very can fast. the those two teams stay markets if If strong in weak, markets So that are country have are pull parts offense. of we'll on

So of And we're us in SG&A, so that's we because know XXXX. a that we management don't in important the how deleverage manage a for get tougher environment. very SG&A, the we'll will significant of be amount

David Manthey

expected quick us full current have And by Yeah, your sense. contribution what's quarters then, acquisitions one, with four for the the from tell makes been company John, could convention? you XXXX just that a

John Guthrie

into the numbers XXXX the from $XX are businesses year. acquisitions carrying XXXX or this XXXX actual to regards presentation I million -- I in sales acquisition. the the would for over point those Well, with believe the we to of revenue

in million recognize revenues they about year $XXX roughly So and are I those ballpark acquisitions. about this mean in from $XX just we math million run rate

David Manthey

it. Got

Okay. Thanks much. very

Operator

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

Ryan Merkel

sales the I I XXXX. little you just for know just down taking how organic morning. a below quarterly comp, gross XQ to And kind I give that want about don't bit think then and Good a margin think help wanted gross in. comes is question. sales about about margins. to think way Is a where was quarter seasonally to really typically little of first think about in hoping Thanks right but low Hi. single-digits? Should for to I it's the ask it? big guidance, we given

John Guthrie

a have strong with February standpoint. quarter of of, be I off so strong started some We quarter January a have very did did and volume think that's parts. -- the we facing year year highlight very some first will -- I'll first that from moving kind -- the I last of fair. strong mean from last perspective. We just a Especially,

into this that we will day standpoint. Going first quarter selling less one have quarter, from

inflation On was lower the the the they gross standpoint. price And are first positive that the strongest in in this probably in our quarters from in are quarter remaining margins year that quarter of than from perspective. general first side

Ryan Merkel

Got it.

I What assumed during might is and of that Okay. of That's part boost was 'XX? little flattish in that worried part a are a the kind big to business on then upgrade in helpful. normalize. you And and from this the a little XXXX. be hearing that saw business I surprised was repair of contractors pandemic the

Doug Black

have work to contractors gone they backlogs of there really have work. amount telling don't the where too our have they much long of We're time a of see from year. lead And half can do so contractors, remodel doesn't of us that to it's traditionally. amount Repair where a tremendous and good first a still they they the work reasonable through Right. hearing had most just our are to

so we'll half. during when did COVID years the we they see the but get into Now second --

second remain half. the market hold things they're optimistic good would And that first But saying for up we in that are somewhat half. the would then

of repair side by labor professional and the constrained all remodel remember through highly COVID. you was If

saw big side. so you as we that on run-up the see didn't And -- retail the

And so if pull -- we was you have there less less forward will.

So what see for our we're clear less year. how we'll first they the see a hearing second see is develops. amount half the for the from good of --the but contractors is half visibility of that We'll work

Ryan Merkel

sense. on. Makes Thanks. it Pass

Doug Black

you. Thank

Operator

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

Mike Dahl

Hi. so questions my Thanks the for taking and far. color

down res market commercial the just XX, talk end asked Just you R&R. a new commentary. on When stable some follow-up of the Ryan about about

appreciate end clarify those But kind all-in Just are assumptions I differences us help understand assumptions? inflation. there's all-in Can gave by market? low of of the are kind or are if volume you in you price assumptions to single-digit volume numbers. that those any And those

Doug Black

all we markets mean, those kind think them about really When think we as it's Yes. of about hard to volume. in. dissect I

would when that of kind be So making an those we're comments all-in.

John Guthrie

similar think I -- across like volume. don't trend to price I Yes. it's by that end But going by expect don't the is would think would be vary think significantly driven I would we -- market. that be obviously resi not primarily there's

talking we're volume all while in driving what's in So differences, the those yes. specifically is numbers really

Mike Dahl

Yes.

on we price, it's a in see terms price you Okay. you first on the And environment a the that net January? second actually you about headwind on you just helpful in get envisioning low when XXXX, commentary. half, the about trajectory Do color half. all go or at with comment year? the flatter Could And That in then through then as sense. talk makes the are majority price just of the anticipate price, December single into you you as digits

John Guthrie

a flatter envisioning price throughout the We're year. number on

So, in relatively in now. flat price the we're assumptions right really, is built going some into relatively tail our off I there's -- mean, going kind what QX. see is price increases of to the our of And --

mentioned, there's some came actually As down. I commodities

down. of a throughout a going But coming offset we year So are those last runoff, prices the increases the year. right throughout that will commodities then now, by price that price kind the in the happened and year have of larger lot be -- carry would of the

Doug Black

the third, the the through to to inflation correct quarter John, the And consider it's fourth in – steady to the flat fourth quarters. me a first it's second, and in pretty decline, wrong, those pretty steady decline I'm a if but

Mike Dahl

Got it.

lot. Thanks John. Okay. a Thanks,

Operator

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

Matthew Bouley

helpful questions. the morning. to SG&A in an response. good color taking I Hi, It more you was question Thanks gave wanted there earlier time. for the back go one to

investments Just are to you the sort in thinking XXXX. obviously, the modest you've of deleveraging of been specifics making, guys about and around sort growth some guiding of labor the

guide pretty the on of SG&A for pick you. if side, does curious, details because the there component like kind apart of important year. EBITDA can to your Just it seem achieving the you Thank some there

John Guthrie

investments lot and trying those broadly, of we year, of Well, a great harvest Yes. do went one year, into guess is we're we this year things made I of last just the kind this to investments.

So challenges said it's results still having investments, everybody marketplace, we isn't that, wage more inflation want do last in now away -- of that we we from those to we going made with year, like made -- face else and right kind drive the investments the regard of

people standpoint. And to that pay so, our we're from going

And costs throughout year. with regards those the it so we'll managing be to

new investments demand. dynamic more very moderating it's throughout year, be of less a mentioned, and last Doug investment this as would the year year's I locally. As then go to can we and say, probably But harvest SG&A done

Doug Black

of sales all our And the potential the we in to CRM the John our MobilePro, on and better productivity done siteone.com when have associates et our force, work on think harvesting, that associates, talks put all DispatchTrack, those we've about branch cetera. we sales drive

And so on, is what those that's year important. going improvements very getting productivity is we're this that because extremely be to we're really -- focused the that's

a just John said. more on that's color little what of top So,

Matthew Bouley

figure to be or are there ramping around a year? able those quantification any type this that were of you. Got disclose, may down that And dollar you sort investments of

Doug Black

mid-single general down, productivity take And wage to to down Not sales With guidance math beyond that's slightly inflation, with modest there. the flat can deleveraging, digits. have some or the that some do the you going flat we'll improvement. to

productivity much savings investment get amount terms those the for more that investments. XXXX. What's harvest of Our that important is the benefit dollar quite is we not in and frankly, of, material

Matthew Bouley

Got you.

business, the just side, And the was you. very in is on color one certainly back the around gave Thank color commodity also the you But then helpful pricing second any that on side, Thank guide? like low you're fertilizer and what within inflation around you. what's inputs seeing your single-digit PVC of and that, price the and commodity the specifically of assumed things sort Okay. prior just question. piece

John Guthrie

commodity But different. decreases obviously, into to price express basket the decreases commodities I to peaks, mean, an negative PVC think like buy the already everyone I of saw for because component of we've difficult on products. instance, different, I Those updated going we fourth is got where then the specifically number, on say. And and is quarter. going -- but XX% fertilizers already small a a haven't it's on negative should we we the relatively that seen PVC are a but -- from have there pipe, we've seen into large pipe. it was spring, -- XX% I each similarly, growth

So...

Matthew Bouley

Thanks, it. Got All right. guys. Good Doug. John. Thanks, luck

John Guthrie

you. Thank

Operator

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

Keith Hughes

we on price is share the this where I'm of allocation sure Question there's activity? program. where you. repurchase longer-term longer continue opportunistic acquisition an stock is going is a at this addition going given But going point. this capital repurchase sure to the of to Thank and aspect change the in term. share to part are I'm be be to you're

John Guthrie

capital we it, our allocation we long-term about as a waterfall. It's describe as process. think Yes. It's a quarter-by-quarter process not

in acquisitions there. Our and number grow priority is invest business one to the and invest

if as choppy, sheet, we we in to our very to that that to to deploy a back So expect if way find we we'll very deploy share do maintain balance much some capital that, happy way. repurchases And and as it our excess acquisitions have one. and we that capital, our be would that we But shareholders. to are of is can return of use so we number conservative all

of a So, we've the forward. that standpoint. maybe year, fact just give pipeline thing only year acquisitions very that kind of got of about a the from beginning are full that that. optimistic new here I to the and some guess clarify reality other We're starting is going we We're

obligated of investing each we'll and So we But right as purchasing this purchase our it right primarily at mind, that year, opportunities. we investing and out focused go frame throughout our don't the at shares, -- feel to we're kind of year, evaluate go because on capital, it moment. from looking

Keith Hughes

Okay.

is the as do acquisitions repurchase? a to debt 'XX on given you as to Given least would have my capital allocation even the of the utilizing a your there the down with of acquisitions question, more capital both debt though 'XX, seems spend -- 'XX, it the the coming ratio the to both. -- range, the well to as -- debt midpoint I leverage question just in amount guess is, building of plan get share in year is particularly in that through in

Doug Black

see a we repurchases. going this workout, as that a to little the second can toward on We half certainty mentioned, how how the -- certainly, going be pull. that we and there's we are things do more are John year share to and get lever can as And things mid would of

that for could is One come even the are we million a the we're mind, things were we deals be that in it's We to out sale. don't a large are that range to cycle, typically cycle a do even flexibility $XXX million but deals, don't particular or down larger of we in any down the million, few into there pike. do in And strategic companies might potentially. a $XXX want there the want longer $XXX heading keep though, pause Whether know.

point, sure waters into leverage going don't a So, the we tougher to able those wouldn't we to especially we get that deals want to be do make such that strategically. a

So the that's we below at that prudent part little sheet from of the with our it's -- maybe we a where But and is our be point. one at two feel range a to target of uncertainty evaluating a still strength should this balance this We it's ahead, to thought target. process good think standpoint. point, in be the

Keith Hughes

Thank Okay. you.

Operator

with your UBS. Damian with from Our next is proceed Please question. question Karas

Damian Karas

Hi, good morning everyone.

John Guthrie

morning, Good Damian.

Damian Karas

your about you ask the flow cash to year. free expectations for wanted I

are else this made everybody year thinking lighter there. free bit cash on little this I the a Could you're think about reducing out flow? flow cash excess about on conversion, sense a how you think making you us maybe like just But progress you comment, inventory. free year give I

John Guthrie

of result -- of -- to year. this our a we'll still think think make We levels. think is objective income a issues. year we good net -- -- with year. -- think the We not bit free as very will of quarter this year the our can we into hopeful having We this first had going flow. chain kind we were on We we're to a achieve kind this that on We supply progress every hole inventory cash of year, hit as quite pleased

year turns there's We're after earn efforts very as we team's I pleased this the in cash think to half the first still hole of the we quarter. free flow positive second post growth large after opportunity the on said by the still And flow uncertain, next continue as to improve to year of year, an goal. down would on our come which times improve at or supply lead less put kind us free further to that above average cash get even next opportunity chains

Damian Karas

you And it. been on front. busy have all deal Got very the execution

market factors conditions anything is higher or Just curious timing? random drive or related have it volume deals site-specific more if helped of to just that

sale of up And approaching turn valuations related kind kind are these suggests part from even second a of has though of that times, on to our one cost kind to public half down. turn of equity of gone X.X them deals, sales, X.X maybe math turn maybe now --

of deals kind of doing getting guys you've the deal seen actually or anything related mix you space to are more if like the just or So that? competitive curious that's if

Scott Salmon

Yes. I'll one hit second the first.

earnings. not or I at -- the at valuing a We're off misleading think look that of that's look we it. probably would way way to

the that really sales drives And you're talking we're that partnering profitability of that multiple so the about. businesses with,

a we at the way not look it's So that typically would valuation.

much So in I or of increased too anything that wouldn't into that. terms competition read like

deals are our quite of acquisition playbook. And white honestly, their that the saying we've more out quite not often that still running exclusively there lot, been sourced. than space. folks And certainly pretty it's a of majority think I are consistent been But are lot there's there steady. in other

very about feel continuing good we So that.

our close contacts field our through then And stay a We it's M&A, and of effort part. on think strong very the our terms years team. in over I M&A consistent just

when flow consistently their business, entrepreneurs that family we're deal are choice. we their believe first transition the So these ready to

we very deal XXXX. be obviously continued choppy XXXX. just but we And very momentum. so flow a more continued there can into good It's It expect feel to be in going about

certainly for the softer specific don't likely side. into know market push more people people factor if the few there's could to that potential sell is any I a dramatically, pushing a market although on they upward during a ready end to were the sell they window. which a in little if short window, were short had they them may If XXXX that anyway, -- that push of

Damian Karas

Best lot of Thanks Makes luck. guys. of a sense. Great.

Doug Black

you. Thank

Operator

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

Andrew Carter

potential year out can approach deteriorate as guess lean Hey, things wrinkle? to say potentially M&A knowing on take higher that the now, you're and EBITDA going there with "No of benefited end the knowing earnings, multiple, sales how I in much your at it. with you're looking and they how step of Can margin, thanks. tail at certainty their want out do Kind we look just of you through sales? we're you thinking Just any if that this on go Good targets M&A on a built understand there terms go last to the you I'll the cycle, terms you you go at is there's want to I Or question, just probably if that?" like not take that possibility one. their we're in buying on morning. pay of way start further, heavily." a "Hey back certainty to Certainly, a different and numbers

Scott Salmon

Yeah. in at We're step not all. looking any fashion to back

earnings. we just businesses. sustained how with process we often value the looking disciplined the at at of And we're we continue have think -- look our I to

over for look last has investors, whether or full it's businesses several just due we're a We look are years. some are been companies the at don't there to months. certainly, inflation various or And bump those. in we XX that a we the the last And COVID long-term going cycle. So Because to consider factors. perform we looking -- at best

so that them. or the acquisitions too don't think I slightly not up -- being we get do try say impact dramatically or by slightly last will swayed But ability So to our months down. XX to that appetite for

Doug Black

where we you're in share earn year going disagree bet a is to lot risk quite that kind then of and do the just on And be for we and The that uncertain. reason be We earn that owners. reasonable to with the those are do the one we we outs, benefit thinks it's out going it's think owner and just bit things talking place together of a or we where future to weaker. very stronger about do other thing three we do a a the the can

pay of way to earnings the are owners reasonable most And that that fair so another quite And that future manage do happy but uncertainty able to together. prices. and are prices that's we

Andrew Carter

I'll guys. it Thanks Thanks. pass on.

Doug Black

Thank you.

Operator

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

Jeffrey Stevenson

taking questions. Thanks my Hi. for

different First, assumptions the XXXX I give and was any low your on wondering of fiscal your guidance? high-end if at more could you color

John Guthrie

the managing play there's mean this great be certainly, how that a will great drive standpoint. of mean, uncertainty actually I are to And out. things here going and these uncertainty not kind I I SG&A next dynamic linked to. from sales that's don't what is going sales to But And is all year we're think it's a slowdown together. where is

Doug Black

of of can XXX the major guidance and the outcome. end driver you the the take bottom that's in our sales So XXX end to top

Jeffrey Stevenson

Got it.

for about XXXX. specifically be opportunity how improvement in versus on could year? some Okay, moderating, that more this no And side with I just DIY prices And DIY thinking helps. ask then wanted there you're professional the to

Doug Black

business is part a of DIY or Yeah. very X% so. small our

towards so professional would don't not whatever business. our meaningful oriented a on So have we -- impact DIY -- side happens we really in the we're very

Jeffrey Stevenson

Thank Okay. you.

Operator

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

Doug Black

be we today. I'd Thank in to for so appreciate with look us our like our suppliers again build very as everyone to also very joining the you partner much great job for our forward our customers associates first to We after SiteOne allowing quarter. interest Well their amazing thank doing speaking us you and you such for strongly and and we us thank Okay. a supporting company. for your much.

Operator

today's concludes teleconference. This

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

SiteOne Landscape Supply (SITE) 15 Feb 232022 Q4 Earnings call transcript