Greetings, and welcome to the SiteOne Landscape Supply, Inc. Third Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, John Guthrie. You may begin.

Thank you and good morning, everyone. We issued our third quarter 2025 earnings press release this morning and posted a slide presentation to the Investor Relations portion of our website at investors.siteone.com. I am joined today by Doug Black, our Chairman and Chief Executive Officer; Scott Salmon, Executive Vice President, Strategy and Development; and Eric Elema, Vice President, Finance and Corporate Controller. Before we begin, I would like to remind everyone that today's press release, slide presentation and the statements made during this call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. Such risks and uncertainties include the factors set forth in the earnings release and in our filings with the Securities and Exchange Commission. Additionally, during today's call, we will discuss non-GAAP measures, which we believe can be useful in evaluating our performance. A reconciliation of these measures can be found in our earnings release and in the slide presentation. I would now like to turn the call over to Doug Black.

Thanks, John. Good morning, and thank you for joining us today. We were pleased to achieve solid results during the third quarter with 4% net sales growth, including 3% organic daily sales growth and 11% growth in adjusted EBITDA compared to the prior year period, despite the continued softness in our end markets. Our teams are executing our initiatives well, yielding excellent SG&A leverage, good gross margin improvement and meaningful market share gains. We also benefited from a more favorable price/cost environment, yielding a 1% improvement in pricing for the quarter. Finally, we added three excellent companies to SiteOne during the quarter and one more in October, expanding our full product line capability in those local markets. Overall, with strong teams, a winning strategy and excellent execution of our commercial and operational initiatives, we are delivering solid performance and growth in 2025 despite softer end markets. Heading into 2026, we are confident in our ability to drive continued performance and growth in the coming years. I will start today's call with a brief review of our unique market position and our strategy, followed by some highlights from the quarter. John Guthrie will then walk you through our third quarter financial results in more detail and provide an update on our balance sheet and liquidity position. Scott Salmon will discuss our acquisition strategy, and then I will come back to address our latest outlook before taking your question. As shown on Slide 4 of the earnings presentation, we have a strong footprint of more than 680 branches and 4 distribution centers across 45 U.S. states and 6 Canadian provinces. We are the clear industry leader, over 3x the size of our nearest competitor and larger than 2 through 10 combined. Yet we estimate that we only have about an 18% share…

Thanks, Doug. I'll begin on Slide 9 with some highlights from our third quarter results. There were 63 selling days in the third quarter, the same as the prior year period. Organic daily sales increased 3% in the third quarter compared to the prior year period, driven by our sales initiatives and improved pricing. Overall, we saw 2% growth in volume and 1% growth from pricing. Pricing has improved from 3% deflation in Q3 2024 to 1% deflation in Q1 2025 to 1% growth this quarter. Price increases, due in part to tariffs, have now more than offset the price decreases we were experiencing with certain commodity products. We have positive pricing in almost all categories, while commodity products like grass seed and PVC pipe, which were down approximately 13% and 10%, respectively, this quarter, are becoming less of a headwind. Our outlook for price contribution for the fourth quarter is between 1% and 2%. And for the full year, pricing should end up flat to up approximately 1%. Organic daily sales for agronomic products, which include fertilizer, control products, ice melt and equipment, increased 3% for the third quarter due to solid demand in the maintenance end market and market share gains. Organic daily sales for landscaping products, which include irrigation, nursery, hardscapes, outdoor lighting and landscape accessories, increased 3% for the third quarter due to our sales initiatives, improved pricing and more favorable weather. Geographically, seven out of our nine regions achieved positive organic daily sales growth in the third quarter. Consistent with last quarter, we continue to see weaker sales in the Sunbelt states like Texas due to softness in the new residential construction end market. Acquisition sales, which reflects sales attributable to acquisitions completed in 2024 and 2025, contributed approximately $13 million or 1% to net…

Thanks, John. I want to start by thanking you for your leadership and mentorship. You've built a best-in-class finance organization and have set a strong foundation for continued success. I'm honored to step into the CFO role and excited to continue supporting our teams in executing our strategy. From a financial and operational standpoint, nothing is changing. We remain focused on disciplined execution, driving performance and growth and delivering value for our stakeholders. I look forward to working closely with Doug and the leadership team as well as all our associates in the next chapter. I will now turn the call over to Scott for an update on our acquisition strategy.

Thanks, Eric, and thank you, John, for your leadership and contributions to SiteOne. It's been a pleasure working alongside you. I'll now provide an update on our acquisition strategy. As shown on Slide 11, we acquired three companies in the third quarter and one more post quarter, bringing the total to six acquisitions year-to-date with a combined trailing 12-month net sales of approximately $40 million. Since 2014, we have acquired 104 companies with approximately $2 billion in trailing 12-month net sales added to SiteOne. Turning to Slides 12 through 15, you will find information on our most recent acquisitions. On July 24, we acquired Grove Nursery, a single location wholesale distributor of nursery products in Northwest Minneapolis, Minnesota. The addition of Grove Nursery now enables us to provide a full range of products to our customers in the Twin Cities. Also on July 24, we acquired Nashville Nursery, a single location wholesale nursery in Northwest Nashville, Tennessee. Joining forces with Nashville Nursery further strengthens our position as the leading wholesale distributor of nursery products in the Central Tennessee. On September 19, we acquired Autumn Ridge Stone, a single location hardscapes distributor in Holland, Michigan, expanding the range of products we provide to our customers in Western Michigan. And lastly, on October 1, we acquired Red's Home & Garden, a single location hardscape and nursery distributor in Wilkesboro, North Carolina. The addition of Red's allows us to better service our many customers in Western Carolina. Summarizing on Slide 16, our acquisition strategy continues to provide a significant growth opportunity for SiteOne by adding excellent talent and moving us forward toward our goal of providing a full line of landscape products and services to our customers in all major U.S. and Canadian markets. As we've noted throughout the year, acquired revenue is expected to be lower in 2025, reflecting a more modest contribution from recent acquisitions. We have a large pipeline of potential acquisitions, and we are actively building relationships with many other companies. We have significant runway to grow and create value through our acquisitions in the years to come. As always, I want to thank the entire SiteOne team for their passion and commitment to making SiteOne a great place to work and for welcoming the newly acquired teams when they joined the SiteOne family. I will now turn the call back to Doug.

Thanks, Scott. Before we wrap up, I'd like to take a moment to thank John for his outstanding leadership and many contributions to SiteOne over the years. John has been a terrific partner and trusted colleague from the day I joined the company back in 2014. Over the years, he's been instrumental in building our strong company, executing our strategy and achieving excellent performance and growth. We wish him all the best in his well-earned retirement. I'd like to also congratulate Eric Elema on his appointment as CFO. Eric is a proven leader with deep knowledge of our business, and I look forward to working with him in his new role as we continue to execute our strategy and drive long-term value. Now turning to our current outlook for the rest of the year on Slide 17. With continued market uncertainty, elevated interest rates and weak consumer confidence, we believe that the softness in new residential construction and repair and upgrade demand will continue, more than offsetting growth in maintenance demand. With the benefit of positive price growth and our commercial initiatives driving market share gains, we expect to achieve positive organic daily sales growth during the remainder of the year. In terms of our individual end markets, we have seen a decline in new residential demand this year, especially in the high-growth markets across the Sunbelt. Accordingly, we expect the demand for landscaping products for new residential construction, which comprised 21% of our sales to be down during the remainder of 2025. Continued elevated interest rates, housing affordability challenges and lower consumer confidence are constraining demand, and we expect this end market to remain weak until some of these factors improve. The new commercial construction end market, which represents 14% of our sales, has remained resilient in 2025 so…

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

First question, a simple one, just on the charge that you mentioned. Why are you not excluding that from adjusted EBITDA guidance? It seems like a nonrecurring item, just optically wondering why that's not being factored out.

We've always had relatively strict guidelines with regards to our adjusted EBITDA, and this is consistent with them. All of our adjustments primarily reflect acquisitions and the adjustments within the first year. So that's been our policy. We provide the information, so you and the investors can make those adjustments themselves.

Yes. I appreciate it. That's great. And then the next line of questioning on pricing. If you could talk to us about the price you realized in agronomics versus landscape products. And then thinking about the fourth quarter and seasonality, the mix of the business, for example, grass seed, obviously lower in the fourth quarter than the third. How should we think about price realization as it relates to mix as we go into the season, the off-season? And then any thoughts about 2026 as that's going to evolve?

Sure. Price for the quarter, landscape products was up 1% and agronomic products was flat. I mean, it was actually down slightly, but round it -- we would round it flat. Going into the fourth quarter, grass seed, which is the largest component, still with negative price will be a smaller component of the business. And so we expect price in the fourth quarter to be between 1% and 2%. And then going into next year as kind of the deflationary items continue to diminish, we would think it would be kind of more of a normal pricing year with -- historically, we're around 2%. 1% to 3% would probably be a good range right now. But I think we would probably say we're at the midpoint of that range would be our outlook today.

Perfect. John, congrats, all the best. Thank you. And Eric, we look forward to working with you.

Thank you.

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

My congrats to John and Eric as well. I wanted to start off on the fourth quarter, the outlook for low single-digit organic. Are you seeing this in October, is the first part of the question. And then the second part is you mentioned repair and upgrade stabilizing a bit. I'm wondering if you could provide a little more color there because that's a bigger ticket item usually, and I'm just surprised that you'd be seeing the stabilization now.

Yes. So the comment on the growth first. We are seeing positive organic sales growth in October. Keep in mind that the fourth quarter is a tougher comp. Last year, we had 4% volume growth in the fourth quarter, which was quite strong. And the fourth quarter is highly impacted by weather. So -- but we are seeing that positive growth so far in October. In terms of the repair and upgrade market and talking with our customers and monitoring our product lines that are tied to that like hardscapes, lighting, we've seen that kind of stabilize. The performance there has been stronger. I think our customers, clearly, remodel is down this year, but I think it seems to have settled. We hope it's a bottom, if you will. Don't know that for sure. But certainly, the numbers there and discussions with customers, they don't have long backlogs, but they seem to be settled into a rhythm of work. So more to come later, but the numbers that we see and the conversations that we're having, we would -- we're more optimistic now than we would have been 3 months ago.

Okay. That's good to hear. And then on fourth quarter, on in-line sales with the Street, the EBITDA is coming in a few million dollars below, and that's if I back out the branch closures. So how should we think about gross margin and SG&A in 4Q? Just trying to square why EBITDA is a little below. And I realize fourth quarter with the weather can be, right, it's a small quarter. So I appreciate being conservative.

Yes. I think in the fourth quarter, our guidance does not quite have as strong an outperformance year-over-year on gross margin as we achieved in Q3. We still expect to achieve good SG&A leverage, and that to be the primary driver of performance is what's built into our guide.

Our next question comes from the line of Damian Karas with UBS.

Yes. I was going to say that, obviously, the market environment for housing and homeowner spend isn't great right now. I'm just curious if you've been seeing any change in competitor behavior just given some of the demand softness out there.

We operate in competitive markets, and I wouldn't say we're seeing anything unusual. Obviously, when things are softer, people -- things naturally get more competitive. Those are typically around the larger customers and around the commercial side of the business. But -- and so we've seen that, but we've been seeing that for the last couple of years. So nothing more than usual. And we have strong teams and with our initiatives and capabilities like siteone.com and our delivery capabilities and the way we're private label and going after small customers, we're able to combat that competitive activity and still, we believe, gain market share.

That makes sense. And then I wanted to kind of throw a little bit of a hypothetical your way, thinking about some of the additional store closures and footprint optimization that you're doing. If you were to see a comeback in housing and the demand environment sooner rather than later, would you still be in a position to fully serve the market? I recognize that's not an expected turn of events at the current moment, but just any thoughts on how you might need to respond to such a scenario?

Right. That's actually a great question. Yes, we would be able to fully serve, let's say, a strong market with our current network. We have ample capacity. And of course, as things ramp up, we can add associates at the front line and our branches, et cetera. We have our DCs, and we have the capability to feed the system, if you will. And so the network optimization that we're doing with the store closures wouldn't prevent us from servicing a stronger market. We don't expect that to be the case. If it was, it would be a pleasant surprise. But we would be more than capable of serving that. And obviously, that would accelerate our SG&A leverage and our EBITDA expansion that we're planning for next year, but we're planning within a soft market.

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

This is Julian Nirmal on for Keith Hughes. I think you talked a little bit about how inflation is going to look like for the rest of the year. Any outlook on what input inflation look like in commodities?

I mean, I think that's carried through in our guide for inflation for the year. We're not seeing fertilizers and stuff like that. We're not seeing necessarily kind of major swings. So all that really is embedded in the guide that we've given.

And then going back to the focus initiatives, I know you talked about you want to close 15 to 20 branches in '26. Do you have any idea of what the cadence of that would look like and kind of how that would contribute to margins going through the year?

Well, if you take our focus branches in total, which represents about 20% of our revenue, as we mentioned, the EBITDA margin -- adjusted EBITDA margin for those sets of branches are up 200 -- over 200 basis points this year. And we would expect to continue that improvement trend. They're not up to the average, and there's a ways to go before they get up to the average. And so we would expect that improvement trend to continue into next year. And the new sets of closures and consolidations are really just part of making sure that we can make those improvements next year without a lot of help from the market, if you will.

Our next question comes from the line of Andrew Carter with Stifel.

Question I have is around the margin targets you've said before. I know you've put out there a double-digit near-term kind of margin. If we're in a soft volume environment for '26 and '27, do you have the internal levers to get there, whether it be focused branches, whatever, independent of volume meaningfully accelerating?

Yes. Of course, the short answer is, yes, we have a lot of self-help capacity with our focused branches, with the productivity with our sales force, with the delivery productivity that we've mentioned. And then on the gross margin side with our private label growth, which we're driving quite successfully with small customer growth, et cetera. And so given that, we do need a base if there was a big falloff next year or whatever, obviously, that would interrupt that. But as long as we have a solid market, a stable market, call it, soft, stable, then we have the opportunity to continue to expand our adjusted EBITDA. Obviously, the stronger the market, the quicker we can make gains. But we do have the capacity to continue the gains that we're seeing this year on into the next year, next couple of years in a continued soft market conditions.

Second question on the M&A landscape. You said that this is going to be a softer year, which you've done six to date. Do you see that meaningfully picking up in '26 given your pipeline? Are you going to be more focused going forward on the smaller guys? And I know you've said Pioneer was kind of uncharacteristic. Would you be willing to do something like that again given kind of the challenges ahead? I'll stop there.

Yes. So we are having a lighter year revenue-wise this year with acquisitions. But if you look at the course of acquisitions, the size moves around. Every once in a while, we'll do a larger one like a Pioneer or a Devil Mountain and then you have the midsized acquisitions and then you have more small ones, right? And so we -- sellers sell when they're ready to sell, not when we're ready to buy. And so we're out there talking to all the companies that we would like to join. And any 1 year, you could have it be up, you could have it be down, et cetera. Given how it's falling this year, we would expect next year to be higher than this year just because of the law of averages. If you look at the 10-year period, $2 billion, that's a pretty good gauge of where we'll be going forward. In terms of would we do a Pioneer, I'll call it a fixer-upper. We don't look to do those. And I wouldn't know of anything in our pipeline, Scott, you can correct me that we have any more Pioneer. We had tracked Pioneer for a long time, so we kind of knew it was coming. But we much prefer to buy well-run companies. And I believe our target set going forward would be -- I mean, would be all well-run companies. Scott, could you confirm that?

Yes. To the extent we can know the performance of the companies, I would agree. We're not searching or tracking a larger turnaround or anything like that.

Our next question comes from the line of Matthew Bouley with Barclays.

You have Elizabeth Langan on for Matt today. I just wanted to start off asking on SG&A. Obviously, you've made some improvement into this quarter. I was wondering if you could dig into that a little bit and maybe speak on how you're tracking with your SG&A initiatives, and if you expect a similar magnitude of improvement through the end of this year and into 2026?

We expect -- we're still tracking. We would expect to continue the trend we've seen for the rest of the year. So obviously, we're -- in Q4, we are taking the charge, but we had a similar magnitude charge last year. So we would expect to continue to achieve the SG&A leverage in Q4. It's our plan to be without -- we're not giving guidance today on SG&A, but -- for '26. But certainly, that's -- SG&A leverage is foundational to what we're doing going forward.

Okay. And then I had another question on the commercial end markets. Could you speak to what you're seeing in those end markets? And then also if you're seeing any regions that are having relatively lighter or more outsized demand on the bidding side?

In terms of commercial, we're seeing that continue to be stable. It has been all year. We look at -- we have a project services group that puts together takeoffs for customers for commercial work. And so they're looking at all the commercial jobs coming down the pipeline. Their activity in terms of bidding is slightly up. And so that -- we take that as a positive. When we talk to our customers, the backlogs are less than they would have been a year ago, but they're seeing continued work coming down the pipe. So we would -- it's been stable. We think it will continue to be stable, flattish. And no, we don't see any outsized growth in any particular regions. It just seems to be kind of flat, stable going forward.

Our next question comes from the line of Mike Dahl with RBC Capital Markets.

This is Chris on for Mike. Just shifting back over to pricing and your initial expectation of a more normal plus 2 price environment. I was hoping you maybe give some initial kind of puts and takes in terms of the drivers there, based on what you're seeing in commodity pricing, how you expect commodity pricing to play out relative to noncommodity? And should we think about -- given the easy first half comp, should we think about kind of trending towards the higher end of that 1% to 3% range and then settling out to something more normal, just the evolution of that based on where you see things today?

I think it will accelerate as we go just primarily because the grass seed probably won't -- that will be an overhang in the first half on the commodity side. The rest of the products are in pretty good shape from a commodity standpoint. Most of the PVC pipe prices decreases were, frankly, in 2024. And so that's been relatively stable in 2025. So -- and then we'll have -- really the uncertainty is we'll have to see what the price increases are coming from our suppliers in the first quarter of next year. Right now, kind of we're hearing low single-digit type numbers coming from those suppliers, but that's a little bit uncertain at this point, and we'll get greater visibility of that over the next 3 months.

Got it. Appreciate that. And just drilling in deeper into the SG&A outlook, I realize you guys aren't providing guidance, but just trying to get a better sense of magnitude of potential leverage next year given actions to date. Should we think about taking volume out of the equation and just the pricing expectation and the actions you're doing around branch closures that we could see kind of a similar magnitude of SG&A leverage as we've seen in the last couple of quarters looking to next year?

We're really in our planning process right now. That's our goal is to achieve it next year. I think it's a little premature to give too much guidance in Q4 since we're really having those discussions right now.

Our next question comes from the line of Charles Perron-Piché with Goldman Sachs. Charles Perron-Piché: First, congrats on retirement to John and Eric, congrats on the new role. Maybe I could start with capital allocation. Maybe for John or Eric, if anything you have to add. Your leverage is now at the low end of the 1 to 2x range as of September. It's good to see that you guys were active on share repurchases in October. Against that, I guess, should the M&A market remains softer for longer, would you consider a higher focus on shareholder return going forward?

Yes, I think that's fair. Our guidance is to invest in the business first with acquisitions. Obviously, we will have some acquisitions in the fourth quarter. But in so much as we are at the bottom of our leverage range and that certainly lends itself to doing increased share repurchases. Charles Perron-Piché: Okay. And then second, just following up on pricing. I think in your prepared remarks, you talked about the benefits of commercial initiatives on pricing this quarter. Can you expand on that notion? And if you expect to see further mix benefits to results going forward on top of like-for-like pricing?

The benefit of commercial is really not -- I think that's two separate things. We benefited from stronger pricing. And then also, we also benefit from our commercial initiatives with regards to gross margin. So we're also -- some of the outperformance in what we've seen with regards to gross margin has been as a result of our private label and small customer initiatives. they're both contributing to our overall performance in addition to the price benefit. So those were the two drivers that we talked about that kind of helped us from a gross margin perspective this quarter.

Our next question comes from the line of Jeffrey Stevenson with Loop Capital Markets.

John, congrats on your retirement. So slight successful internal initiatives continue to drive 2% to 3% above-market growth and offset choppy end market demand this year. I just wondered how sustainable is the growth you're seeing in areas such as private label and small customers over the coming years? And do you expect share gains to continue to track above pre-pandemic levels?

Yes. We've got quite a bit of runway with those two in particular. We're still significantly lower market share with the smaller customers than we are with our larger customers. And so we've got quite a bit of catch-up there that will take the next probably 3 to 5 years. And so that's a long-term play in terms of private label, same thing. We're at about 15% private label. We'd like to be 25%, 30% long term. And so we're continuing to drive initiatives. We mentioned the growth in the quarter. We intend -- we're already teeing up our forecast for next year, but we intend to keep pace and keep that percentage of our total sales growing as we move forward. And then the other initiatives is just our customer excellence initiatives, the work with our sales force and our CRM. We're -- we aim to be an above-market grower for many years to come. And so we are looking to keep pace, including adding adjacent product lines like pest control and erosion control and there's high growth in synthetic turf. So plenty of opportunities to outperform the market, not just this year, but in many years to come.

Got it. And then pricing came in better than expected in the third quarter versus kind of original flattish expectation. And I wondered what the primary variance with your results compared with prior expectations? Was it tariff-related price increases, grass seed declines maybe not as severe as expected? Any more color there would be helpful.

I think we went into the quarter thinking probably that it was going to be a more competitive pricing than -- especially with grass seed and some of the other products relative to what it actually was from that standpoint. So it held up just a little bit better from that perspective. And so that was -- it was a pleasant surprise from that perspective, but that was the primary driver.

And we are talking small -- we thought it would be flat and it was up 1%.

Yes. It should be relative. We didn't really put in a lot of price increases. It's more of the bids and quotes where things ended up. And it was -- we're probably within rounding, but it was slightly stronger than we thought.

This now concludes our question-and-answer session. I would now like to turn the floor back over to management for closing comments.

Okay. Well, thank you, everyone, for joining us today. We very much appreciate your interest in SiteOne, and we look forward to speaking to you again at the end of next quarter. A big thank you to our amazing associates for the great job that they do for us, also to our customers for allowing us to be their partner and our suppliers for supporting us. And then a final thank you to John, who's been such a terrific partner for these years. And congratulations to Eric. We're excited about our future, and we look forward to talking to you at the beginning of next year. Thank you.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.