SiteOne Landscape Supply, Inc. (SITE) Earnings

Management highlights

- Market Position & Strategy * Site One is the clear industry leader with 680+ branches, 5 distribution centers across 45 U.S. states and 5 Canadian provinces, approximately 3x the size of the nearest competitor, with an estimated 13% share of the expanded $36 billion fragmented total addressable market (up from the prior $25 billion estimate, including new adjacent categories). * Strategy combines scale of a national organization with entrepreneurial local execution, growing organically and via acquisition to fill product/geographic gaps, with a long-term target of EBITDA margin expansion through 2030. * Since 2014, the company has completed 108 acquisitions adding $2.2 billion in trailing 12-month sales, and management expects to add over $2 billion in acquired revenue over the next 10 years, with a focus on Nursery, Hardscapes, and Landscape Supplies categories. - Q2 2026 Operational & Financial Highlights * Net sales increased 5% year-over-year to $1.53 billion, with 1% organic daily sales growth and 3% growth from acquisitions; overall sales volume declined 2% year-over-year, offset by 3% pricing growth. * Gross profit increased 6% to $565 million, with gross margin improving 50 basis points to 36.9%, driven by better price realization, private brand growth, small customer growth, and effective fuel surcharge management. * SG&A increased 30 basis points as a percentage of net sales to 24.2%, driven by higher fuel costs, healthcare expenses, and inflation; adjusted EBITDA increased 5% to $237.2 million, with adjusted EBITDA margin flat at 15.5% year-over-year. * Net income attributable to Site One increased 8% year-over-year to $139.3 million. * The company returned over $100 million to shareholders via share repurchases in Q2 2026, its largest repurchase quarter since 2022, and maintained a strong balance sheet with net debt to trailing 12-month adjusted EBITDA of 1.3x, within the 1-2x target range. * Commercial initiative progress: Pro-trade private brand products grew 40% year-over-year; digital sales on SiteOne.com increased over 50% year-to-date, with active regular users up ~40%; 70% of branches now have bilingual capability to support the Hispanic customer segment; net delivery expense declined due to improved efficiency and fuel surcharge passing; underperforming focus branch improvement efforts continue, despite short-term headwinds from low demand. * Two acquisitions closed in 2026 YTD adding $110 million in trailing 12-month sales, including Rinders, a Midwest irrigation/agronomics/lighting leader; integration of these deals is on track, and the acquisition pipeline remains robust.

Guidance

- Full-year 2026 organic daily sales growth is expected to be flat to up 1%, with pricing contributing ~3% to net sales growth. - End market expectations: New residential construction (20% of sales) projected to be down high single digits; repair and upgrade (30% of sales) projected to be down mid-single digits; new commercial construction (14% of sales) projected to be flat; maintenance (36% of sales) projected to grow modestly. - Gross margin for 2026 is expected to be higher than 2025, driven by price realization and commercial initiatives, partially offset by higher freight and logistics costs. - SG&A as a percentage of net sales is expected to be approximately flat for the full year, as new cost-cutting actions offset higher fuel costs and general inflation. - Adjusted EBITDA margin is expected to improve year-over-year, with full-year adjusted EBITDA (including the negative impact of the extra 53rd fiscal week in 2026, which reduces EBITDA by $4-5 million) projected to be between $425 million and $455 million, excluding contributions from unannounced acquisitions. - Management maintains the long-term strategy of growing organically, via acquisition, and expanding adjusted EBITDA margin through 2030, with progress expected to accelerate once end markets return to normal growth.

Segment performance

Site One does not break out public separate product segment financial results with absolute revenue or revenue contribution percentages in this call. Management provided organic daily sales performance for two broad product categories: 1) Agronomic products (fertilizer, control products, ice melt, equipment): Organic daily sales increased 5% year-over-year, with 1% volume growth and 4% price growth. 2) Landscaping products (irrigation, nursery, hardscapes, outdoor lighting, accessories): Organic daily sales were flat year-over-year, with flat volume and 3% price growth. By end market segment, the revenue contribution breakdown is: 36% Maintenance, 30% Repair & Upgrade (R&R), 20% New Residential Construction, 14% New Commercial/Recreational Construction.

Risks & headwinds

- Ongoing macroeconomic headwinds including energy volatility from Middle East tensions, high interest rates, weak consumer confidence, and broad inflation are negatively impacting demand across key end markets, particularly new residential construction and repair and upgrade. - Commodity price volatility (especially for fertilizer and fuel) creates uncertainty for pricing, margins, and customer demand, as fixed customer budgets lead to short-term volume cuts when prices rise sharply. - Higher than expected healthcare cost inflation and fuel cost inflation pressured SG&A margins in Q2, and could continue to pressure results for the remainder of the year if costs remain elevated. - Soft end market demand could lead to increased competitive pressure from independent and regional competitors. - Greenfield expansion and branch optimization efforts carry execution risk if demand does not rebound as expected. - The 53rd fiscal week in 2026 creates an expected $4-5 million headwind to full-year adjusted EBITDA, as the extra week falls in the slow, traditionally loss-making December sales period.

Analyst Q&A

• Q: Ryan Merkle (William Blair) asked about the magnitude of new residential weakness in Sunbelt markets, the breadth of repair and upgrade (R&R) decline across categories and geographies, and Q3 volume and pricing outlooks. /

  A: New residential completions are down high single digits nationally, with worse weakness in Sunbelt markets (California, Arizona, Texas) and stronger performance in the Midwest. R&R decline is broad-based across the U.S., with hardscapes and lighting as key weak categories, driven by macro uncertainty and energy volatility; long-term fundamentals remain strong, and R&R could snap back faster than new residential once conditions stabilize. The full-year guidance of flat to up 1% organic sales assumes ~2% volume decline, with the company offsetting market weakness via market share gains. Full-year 3% pricing reflects offsetting factors: falling fertilizer prices from double-digit Q2 increases and lapping 2025 tariff price increases balance potential PVC and finished goods price increases, leaving pricing anchored at 3% for the full year.

• Q: David Manshew (Baird) asked how fuel impacts freight-in and freight-out costs, how much of freight-out costs are recouped via surcharges, and how freight-in costs are recaptured in the back half of 2026. /

  A: Fuel surcharges implemented at the end of Q1 have kept the net impact of higher freight-out fuel costs neutral, though the increase adds 15 basis points to SG&A as a percentage of sales, offset by a corresponding benefit to gross margin. Freight-in costs from distribution centers to branches are recorded in cost of goods sold, and these higher costs are passed through to customers via regular pricing adjustments, with only a small dilutive impact to results. Supply chain management actions further mitigate inbound fuel cost pressures.

• Q: Charles Perron (Goldman Sachs) asked about the company's additional SG&A actions for weaker volumes and the biggest commercial penetration opportunities in the back half of 2026. /

  A: The company is taking targeted actions to adjust labor and other costs lower in response to weaker volumes, with the goal of achieving flat full-year SG&A as a percentage of net sales after a Q2 increase. No actions are planned that would sacrifice long-term growth. Digital engagement via SiteOne.com remains the biggest growth opportunity, with digitally engaged customers delivering stronger sales growth and margin expansion. Sales force productivity and delivery efficiency initiatives are also on track, and all initiatives are continuing full speed to help the company outperform weak end markets, with acceleration expected once markets normalize.

• Q: Andrew Carter (CFO) asked if SG&A reductions are hurting market performance, what customer retention has been for closed consolidated branches, and whether cost cuts will reverse when markets rebound. /

  A: SG&A actions focus on productivity improvement, not arbitrary cuts, and do not harm growth or market performance. Retention for consolidated closed branches is tracking above the 80% sales retention target, exceeding management's original expectations. Focus branch improvement efforts combine sales growth and cost reduction, not just cutting. Because cost cuts are strategic and productivity-focused, the company will retain the benefits when markets rebound, delivering incremental margin leverage on future sales growth rather than reversing cost savings.

• Q: Jeff Stevenson (Loop Capital) asked if competition has meaningfully changed amid softer residential demand and what is driving near-term maintenance demand pressure. /

  A: The market is more competitive as expected in a soft demand environment, but there have been no abnormal changes to the competitive landscape, and management is confident in the company's ability to compete through the cycle. Near-term maintenance demand pressure is driven by double-digit fertilizer price increases in Q2: maintenance customers operate on fixed annual budgets, so they temporarily reduce volume to offset higher prices. This is a short-term phenomenon; as fertilizer prices have declined, demand could rebound as a tailwind in Q3, since customers need to maintain landscaping and turf long-term.