Earnings call transcript Q1 2023

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Operator

Greetings and welcome to the SiteOne Landscape Supply Earnings Call. [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. Please go ahead.

John Guthrie

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

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

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

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

Doug Black

volume Good strong morning poor solid delivering year for outcome and demand, market in Against a EBITDA us well and line the quarter. we low top weather and in North West moderating prior the and period, expansion, growth with a along of executed thank the headwinds quarter, this margin today. in you very joining first traditionally gross

lines very presence first relationships teams their also customer and pleased two and high-performing the talented product markets. quarter. expand in are We have during add market our respective and to companies new companies to These SiteOne strong

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

environment exceptional and to balance acquisition As confident current softer our success. navigate us pipeline, achieve position well we capabilities sheet, well-balanced business, we robust markets, improved the teams, that face strong remain continued and

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

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

We are that competitor. distribution the very only we market. leader industry clear estimate nearest fragmented wholesale size we over the landscaping our XX% a share Yet about the billion have products of Xx $XX of

significant. remain growth opportunities Accordingly, our future

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

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

and Canada grow geographic in suppliers U.S. organically over and product strengthens coverage mix, strategy portfolio for balance reinforces Our and while both multiple balanced broad this markets. market good resiliency avenues our the offer create customers product providing Overall, lines through our fill us and in end across our softer to value and to acquisition time. and important

our customers SiteOne our in in support long resources, but strategy and to have a the entrepreneurial of strategy, superior to is talent world-class Slide initiatives we by our and commercial company. in scale, capability complemented company and stakeholders. terrific early development to to in capabilities From are build to our to our initiatives fills are experienced adds functional portfolio, our create we industry, acquisition focused further leverage true geographic to which local X, new new markets us value deliver our that talent for on a and and building These all way value we operational the all highly our talented, teams largest strategy, as relatively in into Accordingly, Turning moves our product as SiteOne. and our remain executing suppliers. consistently our

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

years record to turn acquisition and organic and strong can performance track expansion. the X, last you If growth of our margin growth you EBITDA X see over with and Slide consistent

foundation superior technologies to while We continue Still and and SiteOne and in for going this done and in of create build building and gain market levers customers three in the for to confident driving ability all systems suppliers. investing, our our new we to capabilities value have investing our share forward. heavily and remain our creation teams and

and XXXX. have since lines new XX this excellent high We year, completed growth. across development companies now leveraged key with and our team these robust. remains potential of strengthened acquisitions for so activity pipeline performance We product deals past and to All talent performers ideas are they and expanded company increase acquisition all our our

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

to ahead landscape aim Slide hardscapes which in especially portfolio, that our primarily building long we and acquisition, X in in shows have categories. the do runway nursery through supplies the we product

next best companies in networked filling the We markets the in over these well our are expect industry decade. and continue systematically with to

sales XX% decline the the by sales through XXXX, in grew X. quarter largely highlights net X%. Slide growth growth driven as X% in organic quarter of I our quarter will of of of on quarter some largely was XX% discuss price grew Note performance shown in added XXXX, by X% volume by that and the acquisition sales daily offset first first first first inflation. as sales daily We partially achieved now the organic driven net an

our QX So in terms of is sales, XXXX. comparable for toughest

the more seen markets X% high which only Where daily spring X% and our driven our was increased volume volume declines We low where first inflation, organic X significant that rainfall sales organic sales northern in Florida, in first also our gear Mid-Atlantic decline. the approximately single-digit record daily in was to quarter. daily to later had we most spring decline through experienced by We’ve which growth organic the an kick were X% weeks in pleased came in sales double-digit X%, April. the has favorable XXXX. than price season Southeast, the we April, saw Western and weather the markets during Accordingly, during the year-to-date by offset that the in was growth

Despite by fuel to of with a XX quarter, inflation cost continued benefit as margin the some but loss gross X%, full year. margin moderate in strong to benefit. XX.X%, the higher to a extraordinary was our than basis profit the even we margin first and realization by and which gross and than be perhaps in price and lower through the Gross than very increased the healthy margin our during gross of hardscapes year at offset the for quarter. costs more beginning thought XXXX, to lower The the increased landscape carry price gross the start we XXXX continue expect quarter supplies achieved points of had stronger acquisitions,

Acquisitions increase our by sales also sales a effect basis quarter basis of same the supplies compared percentage of points the XXXX. increased the of XX.X%, as a on is had hardscapes SG&A. fourth a to year-over-year XXX and that increased as to which SG&A gross increased net our percentage as largest SG&A point Our XX landscape net acquisitions margin

in a West net and in the Additionally, and to these as higher spring several quarter. the were the late factors of continued a and Northern inflation further were deleveraging acquisitions sales. us labor SG&A of also poor volume weather percent Lower where contributing call

that SG&A XX% first lower margin quarter yielded Note EBITDA adjusted declined declined with the first and XXX to for combination adjusted by XXXX our million, Overall, points reflecting and quarter the EBITDA XXXX, the of the sales the first to a EBITDA EBITDA and more EBITDA during of typical volume organic outcome. in from of gross X.X% $XX.X quarter increased elevated was adjusted quarter expectations. Adjusted basis strong first as margin. adjusted in higher line had XX% quarter

enter with of time initiatives, we In terms busiest of as progress we year. our are our pleased the

grow and improve small management expand customers, our margin. gross medium freight transportation private drive us growth through We and costs label continue our our inbound with system, to to all helping

of driving recently organic growth initiatives marketing Partners through are our Salesforce installed XXX stronger sellers. team than and program, sales We inside our drive more our Hispanic productivity leverage our enhanced as from to we and better outside CRM and

makes digital gain to MobilePro productive staff rollout and increasing sales dispatch other to our and Continued ramp track through better siteone.com, activities our productivity share. us which up customers fleet, continue to delivery service offer associates market and customer allows our helps branch of also and of us the and more while customer

of each to are operational excellence our Finally, line company. our for business in systematically across best teams SiteOne drive suppliers spreading and customers, value practices

Taken the improved through to XXXX. we headwinds all perform have our potential significantly capability together, of

of so SiteOne. On the family sales year, acquisition $XX our two adding high-performing far companies XX-month this added to trailing approximately front, we million to

to and with number of pipeline a targets, development XXXX. consistently an year acquisition we this and strong expanded of positioned the and team expect experienced have year sheet remains acquisition come. team, well years Following an for active remain relationships and very in with to exceptional record robust broad and in best another balance a we companies, grow With many our deep engaged reputation, acquisitions XXXX, to our through

and a outperforming navigating initiatives the increased XXXX. while I’m and and market. progress our market are our execute conditions our suppliers summary, remain value pleased to to start our good to off ability with confident in In customers in in challenging we the more deliver

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

John Guthrie

was with X% sales XX some for sales and we the contributed economic days which quarter. growth a quarter, first less first will in increase quarter inflation quarter. net There is volume X $XXX daily of of by begin X% selling on quarter in the sales impacted day organic reported the to XXXX. Organic conditions. first as were Thanks, Slide Doug. We I sales first of weather decreased to the our results. the X million quarter X% than highlights Price had by moderating approximately negatively in daily for

pipe decrease. less comp large the fertilizer year and price As we as seeing like quarter, we products PVC inflation for of increases are cost and the we price discussed last last

in year, expect inflation year. in the half we price the the digits, it of For the continue with low single majority of full realized first the to

in Volume impacted reduced first and as applications fertilizer quarter. declined our and sales down as markets the cold negatively daily sales the and one weather daily northern delayed markets largest unprecedented the the also our were California markets reduced by quarter melt. and and during precipitation especially of California, northern western by for Organic X% Western start for ice snow impacted XX%. rainy ice for landscaping markets limited weather in in demand events U.S. were Organic to late the were negatively spring demand.

Fortunately, Western customer we in the have base diverse our markets Northern geographically growth and was by sales growth and solid in partially negative markets. offset southern a

in we conditions As of the up in have Doug North. the pick seen in drier West April the and mentioned, with sales spring start

products, Organic landscape includes economic products, accessories, the sales daily sales due as strong reduced from for growth X% for for grew melt X% southern to conditions. moderating products. hardscapes, includes which price melt to in conditions and landscaping which decreased ice agronomic weather fertilizer, economic lighting resulting and outdoor more moderating unfavorable slow nursery, the spring, quarter reduced of equipment sales control start quarter Organic sales than irrigation, offset volume the inflation first daily markets and and products, for the and ice the

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

of the the gross as was XXX acquisitions increased profit first and like in benefit XX.X% higher XXXX. margin year from costs gross the realization first contributions absence and margins the many X% we realized $XXX in for from The gross basis bulk Gross benefit quarter large to supplies. freight the higher price $XXX points mulch this for as compared period. XX with of of offset basis acquisitions to million lower acquisitions prior products margin recent points to Gross million our quarter landscape increased over margin quarter, specialized

However, carry to also products more costs. handling due SG&A increased these transportation and

down not was in a business base our for the benefit margin gross expected, quarter as As large realization quarter realized last first of year this together. price was

acquisitions, increase in of million Selling, general expenses or for impact our quarter. in quarter. and over a XX% cost in the first reflects increased operating of to increased net a low half SG&A percentage in of investment increased net Acquisitions The accounted seasonally the XXX the quarter as basis first this expense the the SG&A growth. slow primarily increase to increase XX.X%. reflects and SG&A support inflation as combined of quarter. administrative with sales sales in The investments SG&A $XXX the SG&A for incremental sales SG&A to points in percentage

tax and For first excess of in $X.X a benefits an year period. of quarter quarter compared $X.X compared tax expense for to income income stock-based in benefit a was The million for period. to million XXXX $X.X effective prior in year the for $X to first to quarter, XX.X% to million reported change decrease in year tax we million tax tax compensation. period. of income benefits before the the amount the tax for the were XXXX first XX.X% due of the compared Excess net rate prior from of The effective the net before taxes, prior of primarily decrease the taxes a was recognized loss rate

the net effective the will benefits. were million as tax for sales between net items loss rate first XX%, year compared We higher million prior recorded be a of as tax expense. increase XX% the margin excluding net XXXX fiscal offset in period XXXX income excess expect $X.X discrete the We gross SG&A quarter by and of and of for such $XX.X to year

Adjusted $XX.X EBITDA million decrease $XX X.X%. any decreased to for this average EPS Adjusted for the the as inclusion would to XX% calculation year. negatively prior margin year diluted net quarter $XX.X million to diluted was impact million count weighted securities by loss the EBITDA the in compared prior in The to million share first basis the per period. the period compared used XXX decreased share. same quarter to shares of Our to the for common $XX.X points dilutive

for in same decrease approximately The XXXX the reflects in decline a Now update first in the in and $XX increase period. working cash same million was quarter made investments end and to to shown capital. investment small Net the approximately capital the was statement increased net $XX a million months of approximately first build working compared of million quarter to primarily provide We I’d the on X $XXX compared flow like the seasonal Cash first capital of acquisitions approximately million is spring for to quarter $XXX year of $XXX seasonal investment increase as a sheet million used in attributable XX. acquisition prior XXXX. balance period. quarter for compared prior the of our on to of working year brief XXXX. the at The first the Slide in The the to season, decline inventory million in $XXX net and new income in cash selling at our the inflation. primarily in operations higher cash compared due of in to in preparation our impact used period operations to end the

Net quarter X.Xx end debt approximately Leverage increased increased reflects million end investment million end the EBITDA was leverage capital. at the our first the quarter approximately working the quarter acquisitions year. $XXX the compared at compared to last in $XXX to to The borrowings of adjusted primarily of at increased higher XX-month our trailing fund XXXX. of the X.Xx first to and of

of on X under the in we million approximately our $XXX ABL quarter, of leverage available a cash net adjusted $XX approximately and of end to million year-end which approximately range reminder, our EBITDA At $XXX liquidity hand consisted had available to Xx. of capacity million, facility. As is target debt the

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

Scott Salmon

Thanks, John.

with acquired we sales acquired As the net of companies we $XX a shown in trailing XXXX, million. Slide XX first XX, combined net have XX-month added quarter SiteOne. Since companies on billion trailing two to sales XX-month in $X.X approximately approximately with

J&J Turning Rhode acquisition Massachusetts five Cod On hardscape with you hardscapes focused Cape XX, our we acquisitions. landscape will the Island supplies regional our to Materials acquired on March information locations to on recent XX, complements This Slides and and prior of leader, acquisition Southeastern and find XX Stone. most another bulk providing markets.

full bulk major we in four U.S. toward Landscape of of On providing contractors products a us our supply and providing acquired terrific services and landscape March and and XX, Triangle SiteOne Canadian locations market. landscape move with our markets. to These hardscapes all landscape Supplies forward to acquisitions goal customers the Raleigh-Durham add line to in talent

create our of significant a pipeline sheet acquisition With continues XX, across for strong a strategy robust Slide value business balance lines to geographies. and on all Summarizing SiteOne. and

able passion that making SiteOne year. many to to SiteOne I and team We the great family. to confident acquired for be work to value outstanding thank XXXX, a as the joined confident all and want terrific of through companies outstanding will entire SiteOne acquisition to keep stakeholders. adding the are we ability I SiteOne during to add in newly when the more place their am commitment they for move teams more our companies for through our creating we welcoming

call to the will now I Doug. turn back

Doug Black

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

remains it as call earnings was February. last the for same largely during our in outlook Our XXXX

to prices yielding in As moderate. John with And the the seen mentioned, for continue we single-digit inflation have year. that half, we second to low continue inflation expect flat full

XX% our being we which share, sales, driven that backlogs residential digits by grow by mid-single continue construction In total, end gain a to resilient with our new modest offset continue any more year. believe commercial to is negative market the and our and have down inflation would daily expect in new seen Good upgrade flat XXXX construction to XX% volume. our we markets, we offset the in to on flat-to-modest effects we markets. slightly which of organic we prior commercial maintenance, growth be versus decline represents and banking by expect recent of sales not end bidding, price with repair yet comprises sales could of terms decline this crisis. healthy Note in That the to construction ability market, and expect to reduced In sales. industry

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

Additionally, expect business sales a modestly. to base as with our flat SG&A increase declining percentage to of for we sales,

We also gross to normalize as net expect providing to XXXX, in benefit further over margin the increased a as expect sales. foundation adjusted margin acquisitions the EBITDA percent margin for and of longer SG&A gross of term. but sales, increased Decrease we a net SG&A in percent improvement

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

maintaining and be continue Accordingly, our XXXX to not these well, fiscal in the company. year any to performing improve the in adjusted unannounced $XXX year. anticipate With to factors our to range does to to acquisitions million. and factor EBITDA from are and $XXX we expect all mind, Our performance integrate our This during growth are full contribution we our we guidance them our acquisitions. range million of acquisitions into strongly ability contribute

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

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

the please questions. for line Operator, open

Operator

our Baird. comes Instructions] Manthey with [Operator first David you. question Thank And from

David Manthey

Yes. you. Thank

clarifying First off, a question.

But they just down you average X% said that think the year-to-date in April, clear to I were X%. said first be I quarter. were want that. You through on plus daily then that sales

Doug Black

Yes, that’s correct.

David Manthey

Okay.

inclement question sales an just and are quarter I the that mean that those be sales And leads missed. higher And are sometimes here so pushed you sales February, delayed, of times, April simply geographies volumes I the to right. leads to than weather sign. Could then but that’s nature still guess the weather-affected January, other completely first would the that March, these to sales? And characterize encouraging

Doug Black

Yes.

in and correct into the kind first quarter second the you’re quarter end So first the split, the and rolls of starts of at spring second.

sales more later you often for mostly into kind spring would instance, or first our And than the that and into is get where So the can we came in of markets, less that weather in northern more characterize XXXX. second. dynamic

we we and don’t seeing It’s the might of fertilizer One we’ve as come anything. largely up applications area wet. very kind company not the made think whole, That’s as up. we that robust And We’re we missed as where market. in been the sales all-weather California a West. get mentioned, And a make it is done. an

several rainfall, but think And we of just has play the But and the of that it’s so things, for year. sales scheme won’t in make been we there probably record is all weather around, months moved go. of to this really all still

David Manthey

XX% helpful. the Okay. year, to said then And second, of Thank you. on February in gross XX.X%. guidance That’s you margin this back

you’re Now than previously higher saying thought.

guidance, you’re EBITDA guess assumes that you about of operating Could naturally not higher talk changing that to sources the expenses? your Given upside SG&A. I

John Guthrie

Yes. a That’s roll-in one mix that issue SG&A in With have SG&A. acquisitions higher general, kind our kind is think SG&A. of what we’ve I of of that’s the regards SG&A these just and seen driving to

increase if hiring because is done that also, year-over-year, really sales, look spring but we’re the comp especially accentuated percentage also you in was is in the value, obviously, the XXXX. – at of in most of of think QX as a of the I seeing kind sales last low

with sales. at markets. and also the given uncertainty across we much general, the marketplace. certain the goes that down. would hiring we’re in doing not We’ve I any then the in taken address as And some also, say, in We’ve the start actions all already taken we’re So year-over-year, comping board challenges hiring to having of difference even

sales it So in certainly, we’re we areas growth by April that where pleased the can I’m closely. monitoring actions, seeing with take

David Manthey

thanks Okay, much. very

Doug Black

you. Thank

Operator

Merkel Ryan with William comes from Blair. question next Our

Ryan Merkel

then gross on margin. me, Hey, on guys. and one from sales questions one Two

growth contractors, telling on sales, well and what guidance backlog was? contractors, organic there what you just for maybe sales. pretty of things to Because And April bit tell can upside us terms resi curious, when it you a in feels me to are first is bookings? I’m the you then talk to and So are of like tracking they

Doug Black

Yes.

April, high kind single in April. of sales in in we’re of digits terms So in

So we’re pleased with that.

of they terms still more like that more resilient seem are is have little the again, probably thought to have ago. how be little could But been we a than we say we’re market I builders, And builders, – we’re confidence was from bit down. out. would In than, going it And X seen the say But agree than would would down. it the the we to they be still have them or we we be they months would again, net-net, months seems still would market it calling X more be. ago. calling see that that builders, plays confident to there But to heard a X market to X a will

Ryan Merkel

last budget sort And you inflation seen to part bit. normalize? think relates as the you year, I of said of maintenance for resi? that business sort was the Have a of it impacting

John Guthrie

that really seen wouldn’t yet. I say we’ve

obviously, regards in to be We here major a that watching closely, it in one are down, weather kind recovery been our agronomic seen, or role going of weather to growth monitoring in but April, year-over-year, that’s up seeing, obviously, a areas have of we’re QX with The but sales, – and the paid right now. we April.

Ryan Merkel

Got it.

gross then margins, what freight will supply Okay. could you freight the for relative do ago? And fuel? thought chain lower up months Is you helping end to upside? unpack how much you think then just you year the helping that’s it normalizing, X Is costs? on so And that

John Guthrie

combination general, in a it’s So of both.

it I is is basis QX, that from managing about think we positive perspective. talk standpoint better inbound it primarily when approximately QX results. was this, that in point XX our Year-to-date, year-over-year our freight freight pickup a we’re from in

but will expect that the a had into existing that that the kind We full going be for optimistic being without of positive. would of freight year. numbers, built We’re our some into year we

has since the guidance. we market think original I gave gotten better even

Ryan Merkel

Got it. Helpful. Thank you.

Operator

next with question Barclays. Matthew comes Bouley from Our

Matthew Bouley

taking guys. morning, Thanks good for Hey, question. the

Just on to again, the I I gross point. want guess clarify margin,

margin you to basis the curious little had bit, you acquired think that that acquisitions something million XXX like $XX given of could you I unpack think sales? that points million the gross if in just I’m said contributed $XX seems to just full quarter. big I like out broadly, a where of for step you more be just and can settle gross a us update Thank kind those. it would So you to margin to margin on applied of expect you. if kind year? just And back the

John Guthrie

Yes.

of think too an of adjusted issue. for like what for an regards to low for the acquisitions, say, seeing EBITDA But kind some much I products, product basis, in So we’re relatively not certain issue on acquisitions, mix of with instance, and would it’s existence margins bring these really a higher gross mulch cost. SG&A. and higher

which XX% be year, a actually, we XX% margin for regards XX.X%, full to probably is of the With XX% here. the seeing cost SG&A, previously is we’re product and high, we’re would to probably is full transportation Thinking talked handling the to very So about better but high. what year driving number. now relatively

top a pointed previously As our out, our margin, guidance really changed. EBITDA hasn’t

there that. higher slightly be SG&A coming So along may some with

Matthew Bouley

it. Got

point, on so SG&A SG&A. towards margin that Thank you’re from away to it the you following gross for guess then XX sounds And points I and basis of shifting like so kind Okay. that. side,

something SG&A the was on million up in like $XX I basis, quarter. dollar a think

decelerate million as spending SG&A or So, presumably we doing quarter the – acquisitions more you we run a how $XX we that of year. kind right on of to said Thank half of should increase? as through what kind you. the little more that. You SG&A think were the decelerate run than color meaningfully? How that Is about spend kind dollar of on are you are to that rate, expecting per

John Guthrie

Yes.

$XX the full considered, all So, million have as comp that future go did of expect to it. obviously with be contribute we this predicated similar that down quarter. acquisitions the this. we we QX, to And to QX and quarter-by-quarter basis. but would the a always QX relatively on are us is year the to not the higher of for forecasting will and increase things QX, with we been all as some and from last start that on a SG&A But acquisitions regards this flat flat always XX% we probably historical regards the than that of after – would potentially year, Sequentially, QX would number, was relatively historically –

Doug Black

when we talking are XXXX, right. through are that completed And about we in about acquisitions talking and John, acquisitions, XXXX were

John Guthrie

Right.

that whole brings You there, the company. into the get higher SG&A set which

Matthew Bouley

Alright. John. Thanks Dough. Thanks

Operator

our [Operator Mike with And from question Instructions] RBC Dahl Markets. comes first Capital

Unidentified Analyst

actually Thanks our taking Chris on is Mike. This questions. Hi. for for calling

Just basis quarter? how moving a for PVC thinking the of side, fertilizer of through you that lower much a to year? this the about evolving was guys and magnitude pricing are And of over headwind rest pricing year-over-year headwind on how you the the

John Guthrie

are on contributed a there basis, headwind low-single – was still, rest both say, year-over-year there to Well, items be down it year. greater. There negative on percentage I basis, March will of year-over-year the they in those QX a mid the would were still a still year-over-year an of – digits I is mean for a is and contribution. is

because but that from it sequentially, year standpoint, So, if throughout would rose last be greater you prices look than I the year. that think

on But year-over-year QX, this were basis, mid-single a in digits low negative down. far growth. so they year, to So,

Unidentified Analyst

was contribution kind And just April, of in back Thanks way sales the how the just of of of And to number much how a to that. non-weather on of just digit was about projects that, full is sales still daily versus in versus to of impacted? weather volume much use XX% to organic lastly going April’s And price for just is that high-single growth then of the it. digit think contribution sales? kind Got volume? there year good a high-single delayed terms comments

Doug Black

about is is, There question, I the first think been digit that into quarter. high-single the April growth. catch-up on Well, built Yes. some the from think to way it first has

index to with probably the growth. on. that’s is And there X% at a if on negative number So, volume some you year-to-date, inflation better that net look balanced

to would the so is more two. a be of nature, to which number get April by less inflation, that And X%, the combination volume

John Guthrie

was what the And question? second

Doug Black

question? second was the What

Unidentified Analyst

Yes.

Just year Is is of number contribution full it’s affected of still in around use, to – that or monthly the think you XX%. past, of kind good all? April at to a kind sales that kind I said has

John Guthrie

Yes. I XX%. probably it’s to XX% would say

Unidentified Analyst

all Appreciate color. it. the Got

Operator

our And comes from Hughes next question Truist Securities. with Keith

Keith Hughes

Thank you.

talked lot this SG&A have we call. So, in a about

a percentage look sales I let it under kind your what me am SG&A And of like think way, year? direct sales, statements, end some by to trying you just of as of the will of do guidance, ask this hard the the

John Guthrie

could clarify think – do how, that? will like we look like What you SG&A look

Keith Hughes

sales, we do roughly a percentage given, of range you have As are in what think guidance looking the at? you

John Guthrie

not are going of de-lever. out it SG&A as think I will we Well, a we percentage to specifically forecast mean sales.

EBITDA So, Yes. than guidance. be would previously. higher number into that it from will back I of our kind

Keith Hughes

Okay.

about market in fertilizer. terms more the have question thinking do previous suppliers me lot What’s already of switch What that? have a deflation than over coming from are we on we you seen? Let hearing

John Guthrie

a that at seen if they be have prices obviously, are you lot significantly. additional. are now, right we material deflation. raw will of I look thinking down the But people Well, know don’t there

they think at levels. I pre-COVID are even

from fertilizer So, down standpoint. come prices there that the have a lot

and we it’s of that’s obviously, are they kind highly where carry kind of we now, where see, feel if commodity we have kind of as at will think would them forward. to volatile. a I But

Keith Hughes

you. Thank Okay.

Operator

from Our Stevenson Jeff comes next question Markets. Loop Capital with

Jeff Stevenson

taking today. questions Hi. Thanks for my

can what hearing the back year? half the you of from So, and through professional have demand at a R&R talk about about been customers environment the bidding high residential you expectations level,

Doug Black

– that is are well repair the market commercial remodel busy. the we up customers are as our We mentioned holding and So, maintenance markets. our – and

the their And half customers which of they they would so optimistic the couple would up say, coming I jobs in and are had pike. – second are loaded down of have what’s last say already saw years. had would seeing normalized. the customers I backlogs, about are But And in I what have today cautiously net-net, the bidding during our the backlogs second they we don’t that They cautiously COVID in busy. terms are are extraordinary about half. would optimistic They say

net prior of We our year has that do been for bids. couple a We the and have services space, put group that bids project this commercial bidding year, a positive versus together in up customers percent.

us of get another you read jobs that the So, more into you – kind as as good and the kind remodel go. It’s gives market commercial repair The market. is backlog-driven. of not

But get the in half into is about good visibility in we of that to market. feel how second year harder the terms commercial, developing. some pretty it’s So,

Jeff Stevenson

you helpful. That’s contribution active. similar a M&A Great. past expecting this still Are growth as And year? Okay. inorganic the pipeline sounds then

Scott Salmon

at acquired. we this say pipeline to $XX it’s we predict and and But trailing sitting as million I pipeline. obviously, This XX impossible three very year, good or acquisitions And are time, strong $XX million. months better. had this year, Well, year, is two year, exactly. at that we were would at in our Last a last

of strong I confidence SiteOne. feel that we can’t to precisely a a it overall level predict we amount So, good can though. contribute for

Jeff Stevenson

Thank Great. you.

Operator

And question Ahlersmeyer our next with Deutsche from Joe Bank. comes

Joe Ahlersmeyer

my Good morning. Thanks for taking Yes. questions.

John Guthrie

morning. Good

Joe Ahlersmeyer

So, my acquisitions, have last mix question if it we I on I a bit. your most know assumed the the am would gross talked the quarter correctly, But is about first from benefit mix some expectations probably margin. year-over-year. of it of already about thinking have

also like by off. quarter, And freight happened the to so in seems you And offset probably were expecting the it inventory the benefit. roll that profits

are XQ remainder expectation. be through to it year should you sort steady of So, we to We not going in probably think to of really is get margins? tick move see to down from XQ a just the to and the full that as XQ to XQ, sequential year right

John Guthrie

know the don’t if exactly I case. that’s

have from are have that the roll We profits off inventory we in going also of QX – to a standpoint.

So, as QX that will we be – talked somewhat that about. be have of will headwind a a in

addition, talk margin. to gross our were In about we

continue would and We – on largest company component of that seeing But freight to that of consolidated QX. Price the bit inventory a side, than basis bit also will, I as also not I of cost in obviously realization total business of the little the QX, the may benefit higher. go be. base of better, margins That off QX, kind we roll the back little get say, you of continue in outperformance the little in last we year. was that the into realization of in this business. the price we some of – profits, drove think acquisitions expectations overcome that I quarter that general, our of positive are outperformance base higher played benefit think saw on a some some was a may came the QX. where did that will over in see kind price obviously enough into it because as to we a thought season, gross to negative going if to

but So, more that a kind will not be into of headwind, falling expectations.

position about we think be I could year-over-year second challenging a in a on previously. as have general, say, a in QX the and us very better still year, quarter So, a the half I margin. will be for would basis gross of talked we

Joe Ahlersmeyer

give detail. for sales first you to question, if go Okay. organic for imagine My the April maybe back weather we to the contextualize Great. I to commentary, extrapolate, necessarily didn’t but additional Thanks impact. just so much us that quarter second

better that way dollar the about the second or your range sort of to get expectations as so sales? roughly of kind full to of your Is year there think is XX% the for quarter in of So, XQ? being

Doug Black

Yes.

the the and first year, a $XX fourth. piece, it’s , kind of or quarters at $XX and second in are $XX, I and the $XX – typically and roughly as then you the third first – think get

John Guthrie

Right, roughly.

Doug Black

plus minus. or Right,

Joe Ahlersmeyer

Okay. Thanks a lot guys.

Operator

Volkmann question Jefferies. comes Our next from with Stephen

Stephen Volkmann

seasonal bit me little a just comment year, Can you bit. John, this on build think I that morning guys. Good surprised bit little Hi. inventory a more? you mentioned more little a

John Guthrie

Yes.

we we price bring – in went inventory that inventory. Obviously, bit year, a So, up. more to did little contributing into more this is

price. it’s in. flow the other sales think brought due the thinking X% from that’s increase it base business primarily North thing there, that in and in our from perspective. I Those I probably other perspective, a the playing am of of to this or we is into year-over-year that were from delayed then obviously, cash – X% And thing

and time, second weather be optimize of think capital. slightly of will, with year is have I be an But kind those load in goal get you also the branches half to over delayed. is think sales us, is than our spring and resulted to opportunity of plan for the better there But stocked as if in that our year, general, and turns original our our of – store those I allows – to were the game opportunity product. we to the was So, fully kind customers, want our because higher into a and this full our to our and the inventory of our we there it we improve course working the is think

Stephen Volkmann

in hoping I your Doug, and remarks I could some imagine issues. could some are some issues. any of your you that. was around And credit seeing mentioned comments have type really customers And then issues because Great. little some maybe possibly you with might targets secondarily, that credit pull for Thank contractor prepared bit that then, not some availability in a you M&A potentially on of imagine environment? could your this I can I have of that

both you? of maybe topics, for those So, wonder if are I those any concern

Doug Black

into customers to-date. We got seem coming haven’t roll-in But far, run that of that, work, least in. backlogs at they Obviously, and second effects continuing etcetera. to be the commercial are in delayed really projects be and our so do and half, to could have

that we companies and performers. are of acquisitions, high strong target terms In court

not have because out issues. that are The they performers end in so on the they target the list issues aren’t And weaker are ones companies probably our the there with that up market.

has mentioned, flow so deal been we well. steady as And the seen as consistent. And haven’t and Scott that

us, we having credit. rates to seen We haven’t any any and fall haven’t with or interest rush off higher seen do to

Stephen Volkmann

it. Thanks. Appreciate Super. pass on. will it I

Operator

We are session. closing our question-and-answer

Black would I back over floor like Doug to ahead. comments. Now, closing for the turn Please to go

Doug Black

I call. to the day. partner have thank well. job supporting great earnings a another forward to us our they Well, us like SiteOne our in again look do, our associates again their very and and would to joining today. you appreciate suppliers and interest quarterly for for our for next Okay. much us We so nice to in you to special terrific speaking for customers you thanks allowing Thank give be that your

Operator

conference call. today’s concludes This

this day. disconnect your your have lines great at You time. for Thank and may a participation you

SiteOne Landscape Supply (SITE) 3 May 232023 Q1 Earnings call transcript