SiteOne Landscape Supply, Inc. (SITE) Earnings Call Transcript & Summary

Good morning. Welcome to the SiteOne Landscape Supply 2026 Investor Day. I'm Travis Jackson, SiteOne's General Counsel and Secretary. Thank you for joining us here in Atlanta and via webcast. We're glad to have you with us today. Before we begin, please note that today's presentation will include forward-looking statements. Please refer to the cautionary statements and risk factors set forth in our Securities and Exchange Commission filings for additional information concerning factors that could cause our actual results to differ materially from the forward-looking statements in today's presentation. Additionally, we'll be discussing non-GAAP measures, which we believe can be useful in evaluating our performance. A reconciliation of these measures can be found in today's presentation slides. For everyone's safety, please take a moment to note the nearest emergency exit. In the unlikely event of an emergency, event staff will provide additional instruction. We ask that you keep aisles clear to ensure an unobstructed exit, if needed. For those online, we will have 2 Q&A sessions during the program. You may submit a question at any time by clicking on the Ask a Question link in the live stream. It is now my pleasure to welcome to the stage SiteOne's Chairman and Chief Executive Officer, Doug Black.

Thanks, Travis, and welcome. It was fun last night, you got to meet the team. And today, you're going to get to hear from our team about SiteOne. And so we're excited to tell you our story where we've been and where we're going over the next 5 to 10 years, okay? So we'll start off. I'll give an overview of the company and our industry. Then we'll have Jerry, Stephanie, Jerry, Shannon and Carl talked about organic growth. How we're going to drive organic growth over the next 5 years, then Stephanie, Shawn and David will talk to you about our EBITDA margin expansion opportunities. We'll stop. We'll take some Q&A and take a break, then we'll come back with Daniel to cover acquisitions and acquisition growth. Joe will cover our culture and our talent. And Eric will come back and do a financial overview for you. We'll wrap up with a Q&A session at the end and then I'll summarize. So we got a full slate, full agenda for you. I've got to break in the middle, and here we go. SiteOne, many of you have seen this chart before. We're the largest and only nationwide wholesale distributor in the landscaping space in the U.S. and Canada. $36 billion is a new number. I'll come back to that. We've spent a lot of time sizing our total addressable market, and we believe that, that is the number. And so when you look at our company, we're 3x larger than #2, larger than 2 through 10 combined. But we only have 13% market share. So this is a very fragmented market still, even though we've been at it for 10 years, and there's plenty of runway going forward for us to grow. And we serve residential and commercial professional landscapers. We have as a full product line. And one of the things that we -- and you can see how we cover the country in terms of our branches and our 5 distribution centers like you saw yesterday. One of the things we like about our business is that we're balanced. We're balanced about across product categories, and we're balanced in end-use segments. And so that balance gives us resiliency as we're going through softer markets like we are going through today. And so we look to maintain that balance as we go forward. We're building a great company here. So we're not just here to make money, which is part of what we're here to do. but we're here to build a great company. And we really -- our vision is to master these 5 objectives a great place to work for our associates. You've made our team, wish you could meet all our associates. We spend a lot of time making sure that this is the best place to work for those associates to come thrive and grow superior quality and value to our customers, right? That's what allows us to grow and be healthy and gain market share. The distributor of choice as a distributor, we've got supplier partners that are important, and it's important that they win as we win. And if we cause them to win as we grow, then they're going to support us even more. And so we know that's an important part of our vision, and we take that seriously. Of course, return to shareholders. We're a public company, and we aim to achieve leading financial performance in terms of performance and growth. And then finally, being a good neighbor in our communities, right? We give back to the less fortunate around us. And this is not really checks to charities. This is our associates being involved in the community to help the less fortunate in ways that they're passionate about, and we support that very strongly. So this is what we're building at SiteOne. And the reason I put this up here, it's not just mom and apple pie. This is what we live because we want to be a company that endures that stands the test of time, that 20 years from now, we're still talking about SiteOne and what we're doing to grow. We break that down to our associates in ways that they can digest and they can act on. So these are our value elements. We call it the SiteOne DNA. And this is our culture, always safe, critically important, taking responsibility for your own safety but also the safety of your teammates, customer obsessed. You'll note, it's not obsessed with serving our customers. It's obsessed with making our customers successful. These are landscapers. And so we can do much more than just provide them products, right? We can help them to win in their business. Team players is a team sport. So selfish [ premidontists ] don't do well at SiteOne. We have team players, professional. We do everything with integrity. We take the harder right bad news travels fast at SiteOne. We're accountable. We have a lot of owners that still work for us. We buy companies, we bring on teams, but accountability is important in terms of our execution and our ability to succeed continuously improving, right? We'll talk to you about new technologies that we're rolling out new strategies. We need our associates to embrace those to drive those. And so that's part of our DNA. That's what we teach them all the way down to the front line. And then talent focus. We're highly focused on bringing on great associates and developing them for the long term. So overall, having fun, serving our customers and winning in the marketplace. And if you go to a SiteOne branch, which I encourage that you do, you'll see this in our associates, and they'll be able to talk to this DNA because it's real, and we drive it all the way down. Joe will talk to that when he goes to the culture page. What's our strategy is to take the best of a large company, but also the best of our local companies and combine the to so that we have -- we can leverage our scale, leverage our technologies and our talent but also be fast and flexible in different markets. These markets are -- it's different in Los Angeles than it is in Boston. And so we need to tailor our strategies to those markets. And of course, we add acquisitions that fill out those local markets, but supported by a strong center. And then we drive execution with our initiatives, category management supply chain, like you saw yesterday, sales force performance, operational excellence, marketing and digital. We've got terrific initiatives across those to drive the pillars of our value creation, which are organic growth, and organic growth kind of always comes first, margin expansion, which we'll talk to you about that and then acquisition growth. And so we've got many ways to grow and add value, and so we look to lever those strongly over time. Our team, it takes a team to execute a strategy. And 95% of a great business is execution. And so you can see our team there on the left, you can see how tenured -- you saw how tenured our team was last night, well, it's even more tenured in the field. And you can see industry experience and years with SiteOne. How many of our leaders out there and sellers and branch managers have been customers themselves. So they know the customer. They were a customer. That's where we -- we don't recruit our customers, but our customers do come to us when they're tired of being landscapers. In the middle, our functional support teams, and we call it field support. We don't use the word corporate at SiteOne. That's our field support teams. You can see we bring associates from all kinds of world-class companies across the globe to provide the functional expertise that it's going to take to win. Again, you can see large and local. The combination is dynamite. And then our leadership team, which you also met last night comes from all types of world-class companies, all here to the landscaping industry, very focused to build a world-class company that can raise this industry up. And you can see our track record, right? We're proud of our track record, 12% compounded growth in sales a 13% compounded growth in EBITDA. But you can also see the ups and downs of the COVID period, right? COVID with the prices going way up, we approached 12% in terms of our EBITDA to sales. And then with the last couple of years of price deflation in soft markets, it's been tough sledding, if you will. But the good news is that we've got a plan to recover those margins, which we started last year, and you can see the progress that we made last year. So if you look at the next 5 years, we're even more excited because we can drive organic growth even is off market. We can drive organic growth, we can drive acquisition growth, but we've got significant margin expansion opportunity over the next 5 years as we recover our EBITDA percentage and drive tremendous value. So if you look at that 13% over the last 10 years of EBITDA growth, Eric will cover in the end, we plan to drive EBITDA growth more in the 17% to 20% range over the next 5 years, aided by that EBITDA margin expansion recovery. So excited about the future. Talk a little bit about SiteOne. How have we built and how are we thinking about building SiteOne. Again, we're building a great company here. carved out of John Deere, so it was John Deere Landscapes. So in the early day in 2014, I came here in 2014. The early period was all about building our -- we didn't have functional teams. We didn't have a supply chain. It was all direct to branch. We didn't have our systems. We didn't have our ERP. We didn't have siteone.com. We had to basically build everything kind of from scratch. We had the branches, we had the associates, but we had to build the systems, et cetera. And then we started our acquisition growth path. We also added hardscapes to the mix. We were already heavy in the other product lines, but hardscapes was kind of a missing element. And in that period, we rebranded to SiteOne and of course, did our IPO in May of 2016, 10 years ago. With that built, we went into the -- we didn't know it, but we're heading into the COVID period. So the next period was continuing to drive growth in hardscapes and nursery. Why hardscapes and nursery? Because that's where we were less penetrated. We are also growing our irrigation and our agronomics and landscape supplies. But the fastest growers, primarily through acquisition were hardscapes and nursery, building our private label brands, which we had LESCO, but we had to build other brands that support LESCO and the other sectors, really driving the digital adoption. So we had the digital product. We improved it during this period but drove adoption fine-tuning our commercial and operational excellence and then navigating the volatility of COVID prices way up prices way down, going through that period. So this is a period of kind of maturing as a company, if you will. We kind of put it together, we built it. It matured. We went through some volatility, some good times, some tough times. The team kind of battle through that. And I think what we have today is a much stronger company that's more mature in our capabilities and our initiatives. So what's the next 5 years look like? We expect to accelerate our share gains. We believe we're taking market share, and we have been over the last 2 years, and we think we'll continue to get better at taking market share smartly as we go forward. steady acquisition growth. So we're going to continue to acquire. There's still plenty of runway on the acquisition front, and we're going to take advantage of that. Our technologies, we're advanced in our technologies, but we're going to continue to build on those. Obviously, I can add to that, and we're looking to continue to drive technology to be the market leader. SG&A leverage. We're confident during that building stage and to the COVID that is up and down. Obviously, we did add SG&A. We're confident we can leverage that SG&A going forward, drive to 13% and finish the project, if you will, of becoming a truly world-class company. And we won't be done at 2030, but at 2030, we'll be I think, a much different company, a much stronger company to head into the future from there. So that's the evolution of our company. That's how we think about it. I'm going to switch to the industry. So let's take a look at the industry. Here's what we think the industry is comprised in terms of end market. And again, this is the industry. It's not SiteOne. So we think it's a strong maintenance component, almost 40%, if you will. Then you have the new construction, which is split between residential and commercial and then repair remodel. Again, a good balanced industry. You can see 60% residential, so it is -- residential is important in the landscape space. but a strong commercial component and then sports feels like golf courses and et cetera, rounded out. And then you can see the product categories, right? Agronomics being the largest working your way down around landscape supplies, hardscapes, and then finishing out with irrigation and lighting, which is the smallest component of the industry. So a pretty nice balance when you think about our industry. Let's talk about the TAM. So we have revised our TAM. We took this opportunity to bring in Kernie to do a deep study of the landscaping space. And some of the numbers change. We talk about agronomics. We have gotten into adjacencies over time, which are important adjacencies. For instance, in agronomics, adjacencies would be pest control or handheld power equipment, et cetera. And so those aided to the increased number there in agronomics. If we look at hardscapes, we've gone into important adjacencies like bulk stone like vertical stone. We carry landscaping stone, but we also carry stone that masons would use for vertical walls or even veneers. And so that drove that total addressable market up. And then landscape supplies. We've gotten into adjacencies like erosion control, synthetic turf. And so when we took a hard look at landscape supplies, that market is bigger today. So when you add it up, we feel like our addressable market is 36% -- or $36 billion. We've got a 13% market share. Again, we're the mega leader, plenty of room to continue to grow in this market. The market trends. Net the market are very positive for us in the landscape space. When you look at the customer trends, we all know about the labor shortage. It's gotten a little better with the softer markets today, but there's really going to always be, I think, a labor shortage in the U.S. for landscaping workers. We make that a yellow error. But even though that might constrain demand to some extent, it also plays in our favor as a wholesale distributor with our customers, having labor being their highest cost and most kind of precious commodity. We can do a lot to serve them and help them be labor efficient, right, to gain market share. And so it actually works in our favor to serve our customers, help them on their biggest problem, which is labor and help them to be more efficient. Hispanic influence is real in the landscaping market. And as we grow our capabilities in our branches, bilingual capabilities, that works in our favor. There is some private equity consolidation of our customers. It's primarily in the commercial maintenance part of the space. So it is a bit limited in that. But again, that's -- you want -- smaller customers are better than larger customers, but we have a national accounts group and kind of hit capabilities that can allow us to serve those private equity-backed companies, we think better than our competition. So it works in our favor. And then steady adoption of technology is younger landscapers get into the business, they're expecting the technology and that works in our favor. If we look at the market, outdoor living is still a strong place for investment, right? People invest in their backyards, right? And they still have the stay-at-home effect. So outdoor living hasn't gone away, and there's demand. And we think there's pent-up demand currently. If things -- some of the market elements get better that there's demand there to go after. Regulation helps us because that spurs remodel and replacement in terms of technology, increasing use of professional landscapes as home incomes grow, folks had to stop doing it themselves and they go to professionals, and that works in our favor. And then the one negative there, as we all know, is single-family affordability and we'll see how that plays out over time, but that's a bit of a headwind. Again, overall, this is a terrific industry to be in that we can take advantage of. Just a little bit deeper here, the growth characteristics the maintenance, which is almost 40% of our -- the market, we expect that to grow steady, 2% to 3% think GDP growth. These are nominal figures, by the way. And that's our agronomic products and our landscape supplies products are tied to that. Now we can grow faster and have grown faster than this and taking market share, but that's going to be steady. New construction, we expect in a normal market, 3% to 5% growth. And again, a couple of percent inflation built into that. And I think we all know the drivers of single-family homes. And then repair and upgrade, right? We believe that repair and upgrade naturally grows a bit faster than new construction, and that's the penetration of the market and outdoor living trend, et cetera. The elements that drive that. When you look at those elements that drive remodel, obviously, today, consumer confidence is weak interest rates are a bit high. Existing home sales are weak. So the components for remodel today are not tremendously strong. But long term, we feel like this is a high growth. And if you look at our 10-year history, our products that are related to remodel would have been growing faster than the other products. So we've looked back at our history, and we feel like going forward, when we say a normal market, these are kind of the growth characteristics of that normal market. One thing to remember is that this is a great industry for wholesale distribution, right? We have thousands of suppliers, most of them much smaller than SiteOne, trying to reach hundreds of thousands of customers. And so the role of the wholesale distributor in this industry is strong, and we expect to be the strongest player taking full advantage of that role, helping our suppliers to reach our customers. And you saw some of that yesterday in the DC, how we do that. So it's a nice market for us to be creating value. And we are the mega leader in the market. And you can see how we line up against our competitors. We're a full-line product provider, which is unique in the space. We expect other competitors to copy that over time. But you can see our competitor set. Most of our competitors, if you go below the first couple are more specialized in either agronomics or irrigation or hardscapes. And so there still is a lot of specialization in the industry that we can acquire and fold into SiteOne. And we feel like we have significant advantages in terms of our scale, our full product line, our culture, our technology, our acquisition capability. I'll come back to those as we go through the talk here. Our customers, right? We spent a lot of time also on our customers. You'll see some new numbers here in terms of the purchases, et cetera. But essentially, this industry is very fragmented. And you can see the small customer that has 1 or 2 associates, 1 to 4 associates typically purchases less than $75,000 a year is 34% of the industry, right? And then medium customers make up kind of the other half or together make up half of the industry. You can see the medium customer has kind of 10 to 20 associates, if you will. You can see their average purchases. Then you get up into large customers. They could have up to 100 associates on their teams right now, they're starting to branch out and go multistate, et cetera. You can see what they comprise in the major customers. We are more weighted toward the major and large customers than we are toward the small customers, and that's an opportunity for SiteOne that we'll talk about. We feel like we can level this up over time and have kind of equal market share across. And we're not going to do that by lowering our share of the large and major. Obviously, we'll still be growing at those categories, but we expect to grow a lot faster, and we are growing a lot faster with the small and medium customers. And so we'll talk to that. But it's a very fragmented space, which again leads itself to wholesale distribution and to SiteOne. So the takeaways of the market analysis are, it's a fragmented space. It's a good space for wholesale distribution. The long-term trends for landscaping are very robust. Our customers scarcity of labor and Hispanic influence are really the biggest components our customers' challenges or trends. And so we take advantage of that, and we are under-penetrated with those small customers. So there's an opportunity. Competition, we resect our competitors. We've got good competitors. They're going to continue to copy SiteOne, but I'd call the competitive environment overall stable. And so we think we have room there to compete and win. For acquisitions, there is competition for acquisitions, but we feel like we're the acquirer of choice in the market, and we'll talk to that. And then technology. We believe we're the technology leader, and we're going to stay a technology leader as we move forward, and you can -- we'll show you what we're working on there. Our strategy, we're a full-line provider to professional landscapers in the U.S. and Canada, right? Very focused. And so while we have a broad product line, we have a very focused customer set, and I think there's power in that focus. We do a bit of light assembly with our GreenTech and irrigation. We do some grinding of mults, so we'll do some light manufacturing here and there, but we don't plan to backward integrate to be a manufacturer, and we don't plan to forward integrate to become a customer. So our strategy is to compete in the middle. I talked a little bit about this, but it's large serving local, right? So the best of functional expertise, the best tools, customer obsessed, working with our local teams that are talented, experienced, passionate, also customer obsessed to achieve consistent execution. There's a lot of teamwork at SiteOne and -- and you'll see that if you go around and visit the branches. Value proposition, full line of products, excellent customer experience. We help you with your business. We help you to grow when you're a customer and then we have a consistent competitive price, and we'll talk to all those. And best acquired companies. So we focus on buying well-run companies that can join our team, bring great talent and can pull us forward. Customer benefits, obviously, are very important. This is what drives organic growth. And so we focus on 3 elements: the full line, a personal connection, no matter how big or small you are. We know you -- we probably know your family. We know what you do for fun, we know what you do for a living, and we serve you well, and we're going to help you grow your business as the third element. And you can see the table stakes in the middle, that's what everybody has. But you can see the differentiators there in terms of personal connection, we have customers first that we train, which is friendly, inquire, respect, solve and thank, so we teach all our associates that platform. We create trusted personal relationships. We'll talk about our CRM where we can keep track of you personally. And then our effective kind of pickup and delivery, so we're very convenient. And then you get into those differentiators in terms of our expertise in SiteOne. universities partners programs, et cetera. Our team will run through all of these. We feel like we've got lots of differentiators that allow us to be different from the competition gaining market share. So just to sum it up, what is the SiteOne advantage, right? First of all, we have scale. We're the largest purchaser of all our product lines in the wholesale space. And so we can leverage that with our partners to get an advantage, right? We have a low-cost supply chain, and you saw evidence of that yesterday. We can drive it even lower and we'll talk to you about how we're going to do that, but we are the low-cost provider and we aim to have low-cost service and delivery right across the network. Customer value. This is important because you can't gain market share if you're not offering value. And so we focus here heavily. Our culture, our line of business expertise, our bilingual capability, or our convenient locations. We have almost 700 locations that we continue to add to our network. The full product line that I talked about to simplify the customers' operations and sourcing technologies that help them run their business and then our partners program to train them, educate them, provide that business assistance. So it's all important in terms of delivering that customer value. Supplier value, we talked about being the distributor of choice. We have a kind of world-class supplier portal. We do forecasting, we do planning with our customers. And so we can lower their cost, we can lower our cost together. We also do joint marketing and demand creation with our suppliers and then our acquisition capability. We've done over 100 acquisitions, we're kind of battle hardened there. We know how to court owners. We know how to bring on companies into the family and to add those synergies when they join us. So that hopefully gives you an overview of SiteOne. And again, you'll hear a deeper explanation of everything I just talked about throughout the morning today. We want to start off with organic growth, and I want to kind of set the context for organic growth, and then I'll hand it over to Jerry to get into details. But let's look at the history of SiteOne, our organic growth history and it really comes in 2 segments, if you will, 2015 to 2019 were kind of the normal years, if you will, right? This is pre-COVID. We feel like this was normal landscaping growth, and we do not -- we don't feel like we were gaining share during this period. You can see we're growing at 4% or 5%. We think the market was growing at 4%, 5%, stable market inflation. You can see a couple of percent throughout. So this is where we think the landscape market is in the kind of a normal period, right? And then we have the last years, which have been anything but normal. We had the big COVID run-ups in terms of price. You can see the volume and price going through the roof there. You can see the correction in 2022, which was masked by kind of 18% price increases. And then you've seen in the post period, right, where we think over the last 2 years, '24 and '25, the market has been down. We've been able to grind out 2% volume growth in '24, 1% volume growth last year in a down market. And obviously, price went negative 3% in '24 and was flat last year is going to be more normalized this year, right? So this has been a period of deflation, soft markets and tough times kind of hone your skills and it's been a period where we've really honed our skills in terms of organic growth, market share and quite frankly, managing price and margin, et cetera. So it sets us up we believe, for success going forward, and we certainly feel like we're a stronger company today having gone through these kind of tough periods. Obviously, 2026 is also turning out to be a tougher year. So we're not out of the woods yet, but our ability to grow in a tough period and to expand our margins, which we did last year gives us a lot of confidence in the future. And so with that, I'll hand it over to Jerry and we'll dig into organic growth.

Thanks, Doug, and good morning. I'm excited to -- well, I'm Jerry Justice, I'm the Division President of the East, first of all. I'm excited to dig in and introduce you to some of our customer types. I'll spend a little bit of time about and introduce you to who they are, what some of their critical needs are. And I'll go into a little bit of detail about the investments that we make to deliver superior quality service and value too. I'll start with the small customer. And many of these, as you saw in the other slides are Spanish speaking. Many of these customers, they don't have turf degrees. Many don't have business degrees. And you can think of these as many of them just ended up in this business. And we're glad that they did, but we have to meet them where they are. Many of these small customers are the job site format. They're also the accountant. They're also the sales department, to collect this department. They're the sales department, they do everything, right? And so, we have to have the knowledge, the technical expertise to solve their problems. We have to be close to them. We have to have convenient locations. They have to be on the job. We need to keep them on the job. So when they come in our stores, we have to have the technical expertise. We have to be able to solve their problems. We have to have the inventory in stock. We have to immediately push it over the counter or load it in the back of the truck and send them back to the job sites where they can make money. Some of the same, I would say, services we provide to the small customers are also important to the medium-sized customers. But this is where it gets a little bit complex, right? This is where they go from one crew to multiple crews. This is where, instead of us just training them. Now we need to help train their crews. And so similar services that we provide, but this is when they would get a dedicated sales associate. And this dedicated sales associate would spend time getting to know them to make sure that they understand all the things that SiteOne can do to help their business and to help them grow. This could be examples, for instance, like delivery. This medium customer is someone that is trying to stretch resources. And so they may have on heavy-duty trailer, and they need to get a piece of equipment from point A to point B, but they also need to get 4 pellets of Flagstone to a job site. So our seller can say, "Hey, we got you covered." We have delivery. You make sure that your Bobcat gets from point A to point B, we'll make sure your Flagstone gets where it needs to go. This is also a customer, again, stretching the resources where credit becomes important. They may need $30,000 for the site and they don't have $30,000. And they know they won't be paid for 45 days. It's okay. We have credit solutions, we can get taken care of. It's also worth mentioning for both of these customers are the ones most likely to be at their dining room table at 9:00 on a Sunday, trying to schedule the crew. We're trying to figure out what they're going to do on Tuesday and realizing that they need 100 feet of 2-inch pipe, and they don't have it. And trying to make the schedule work wondering where they're going to get it. Well, with siteone.com and our digital solutions, they can quickly log on and see, okay, SiteOne has it and a matter of fact, I'll go ahead and secure that material right now and make sure let them know them coming by on Tuesday I wanted to pick it up. Moving over to large customers, and this is certainly where it gets complicated. This is when multiple lines of business, multiple crews, and they also have shifted over to probably offering and bidding on commercial projects. And so we still have the same services of training, but now we have to keep their teams up to speed on all the lines of business. We have to train multiple people with the commercial projects, there's a lot of bidding. Once they get the commercial work, they have to go back and make sure that the job costing that they did was accurate to tweak it for the next time that they're going to bid. So similar situations. But obviously, we have a dedicated sales associate, but this is also where these larger customers they're to the point where they have office. They've office staff. They have a laydown yard for equipment in trucks. They have a warehouse, maybe mechanic space. And so now as where we can approach them with consignment solutions. And I'll get into that in a later slide in more detail. But project services, which I'll touch on another slide is another service that we provide that helps our commercial contractors to bid as many projects. It helps them find projects to bid, and it also helps them keep track of of their expenses as the projects are over, so that they can tweak for future use. The main customer investment for me to describe a major customer is it's multiple large customers. in multiple cities across multiple states that are owned by the same people. They have the same leadership team, right? So they're complex, but then there's another element of complexity across geographies the same way that we are. And for this customer, many of the same dilutions that we provide, but this is when we probably have our national accounts team. that's plugged in with their home office and is helping to coordinate the efforts of sales across our sales team in the different states. And it's worth pointing out that both of these customers, the large customer and the major customer billable hours is very important to these customers. Making the very most of wage is very important for these customers. This is when no doubt pennies adds up to hundreds of thousands of dollars in efficiencies. So these customers are rifle focused on efficiencies for sure. Now I'll change this over to an evolution. So customers evolve through this, right? They start out small, they grow, they transform. And I'll walk you through how that looks and how SiteOne helps them, but how it also benefits SiteOne in the process to be there and be their partner through this process. So let's say you have a maintenance customer, and I'll give what happens with many maintenance customers across our branches today. Pre-emergent season starts, it's early spring. And every day that makes customer drives into our branch and they pick up 10 bags of pre-emergent fertilizer. They're in the truck, they drive out to the job site, supply that product next day, back in again. Well fast forward, customer growth and now that 2 -- 10 bags I need every day turns into 2 pellets. And so that changes. Logistics changes and now they have multiple crews, but we can help them. This is a point where we can -- we can provide seller support. We have professional agronomic sellers that can help them with their offerings, make sure that they're using the right products and they're being as efficient as they can. This is also where we could introduce other ways of replenishment or other ways of fulfilling those orders. For instance, if that 2 pellets a day over 11 days is 22 pellets. We could offer them a solution. 22 pellets is a truckload. If you have a shop, you have some storage capabilities, we can kind of order directly from the manufacturer straight to your shop. And that's at a lower cost. An example like this, it could be $3,000 in savings and material to get that directly through the shop. Now if that product is in your shop, there's also efficiencies. And again, this is when the customer starts to pay attention to those efficiencies. There's efficiencies. If you can store it there, your crew comes in, in the morning, they put the 10 bags in the truck and they leave, bypasses the supply house and saves the fuel, the truck and they can get more done, efficiencies, et cetera. And by the way, if you can't, and many can't take full truckload quantities into their shop, if they can take less than truckload quantities, our agronomic sales center comes into play. We can deliver 6 pellets, 11 pellets, 5 pellets, whether you're going to need that week. We can bring it to your shop, stack it up, you can -- they can put TARPs over it outside if they need to try to store this stuff. But then, let's say, it's not $3,000 in savings, but it could be $1,500. It's still saving money from going directly into store and buy it every time. But they still get the efficiencies, which is probably the biggest dollar amount is their crews coming to the shop and not having to stop by a supplier. And so picking up those efficiencies. And by the way, when -- when we help this customer do this, they take market share. And when they take market share, we naturally take market share. As they grow, we grow. And we also build an incredible amount of loyalty through this process of helping them do this. And by the way, it's worth mentioning that the agronomic sales center, this is a proven model. This is a double-digit EBITDA margin model. So we win either way. We're happy to grow with them. We're happy to take market share. By the way, as that capacity shifts to this also high profitable model, it frees up capacity and our branches to get more new customers and new small customers in the door and create and continue to graduate through the process. Flip it over to an installation customer. Similar let's start with one line of business. They install irrigation, maybe they've add side. They want to grow. We want them grow for the same reasons. We can introduce them to one of our full concept branches in that full concept branch, we have sales reps for nursery. We have sales reps for hardscapes. We have inventory for those products. We have knowledge, know-how, training. We can get them started on any line of business that they choose to grow in. And the same goes, as they take market share, we take market share, both of these are profitable models. Here's a way of sort of showing you the different types of branches that we have. and how they work together to as individual branch teams to form a high-performing market team or an MSA team. And if you'll note, 9 standard locations, and the standard location for us, it's irrigation, agronomics, lighting and landscape supplies. The full concept, which is all the products that we have available plus nursery, and then we have 2 stone centers in this market, which is your hardscapes materials and bulk products. And then on agronomic sales center, like from the last slide. And this is an actual market. This is a real market. These are real stats. It's worth noting 36% delivered sales. It's also interesting to see that where the mix of agronomic business is, mix of large customers and a mix of smaller customers. Almost half the revenue is going through one location and the rest is split amongst the others in the small locations. It's also worth noting that we're covering all of the market. We're covering all of the customer types. And with the setup like this, we're also covering all the overhead. This is a very profitable business. I promised I'd hit on these value-added services again. And so project services going back. This is something for commercial contractors, larger customers. This is not only a website, but it's also a team of associates. We provide quick and accurate takeoffs from material takeoffs and material list from plants, landscape plans to provide prices for our customers. So we can turn irrigation estimates for them. We can turn designs for them, but it's a way to keep them bidding projects, give them accurate numbers so that they can go out and bid with confidence. Also in this service, there's open bids, for contractors. So if they're on our project services, there's open bids, they can go and we share bids with them to bid and grow. And the Project Services team is also -- it's a team of folks. We have a system of -- we keep track of all the bids. We keep track of all the jobs. We keep track of who's bidding those. We keep track of who's winning those bids. It's a lot of intelligence that we have that we bring together and allows us to do a couple of things. It allows us to chase projects, not just chase customers, right? We're chasing projects. Who was awarded. Keep going until we make sure that we put our presentation in front of them and our numbers. That also gives us the opportunity to bundle projects. We can sell all these products. We can discount certain things and move things round in our favor to try to win more of these projects. Training, we literally do thousands of trainings every year. I mean from SiteOne universities with hundreds or maybe 1,000 associates customers showing up to continuing education units that they require for their certifications or the licenses. One-on-one trainings, we'll take customers how to do things in the field on their job sites. And of course, we have plenty of how to videos on siteone.com. Consignment, I touched on as well for the larger customers. And if you're not familiar with this is, if they have a warehouse and they have a building in -- if they have a room in there or a cage in there that's lockable, then we can put our inventory in their warehouse. And we stock our inventory. They use it. So again, back to the same principle of the material is in the story. The material is in here. And so you don't have to go to our branch. It's there. And by the way, it keeps them out of our branches, but also keeps them out of our competitors' branches to. And then they can replenish that with their cell phone. They can go through car or getting ahead later, they can replenish that with their cell phone. So big way to help those, again, driving efficiencies. And then lastly, Business Solutions, this is just other things that our customers have to spend money on that it's not materials. So it's you just think cell phone plans, fuel, website, design, et cetera. And we just connect them with a trusted partner. That way, it's easy for them. They know it's a trusted partner, and they oftentimes get discounts that's more than they could go out and negotiate on their own. High level of how we cover sales and marketing from these customer types. I touched on national accounts earlier. The other major large customers, we really have 3 primary commission sales roles that cover these key account managers and account executives, those are focused on high share of wallet customers because already buy it from us. And then we have business development managers that go after the low share of wallet customers, right? So the customers that are large, they just don't buy from us as large, yes. They don't spend large money with us yet. And the key here is really putting the right talent and the opportunity leverage in the line of SiteOne. And with the smaller customers, that's where marketing kicks in, connects with those customers, drives them into the branches, helps create loyalty programs that gives our customers a reason to turn right into a site on versus turn left, if all things were equal, I know what make them choose us. And then also Shannon and the marketing team help us with intentional touches, right? So from an inside sales team, but also the branch teams to make sure that we have a system, a systematic process of touching our small, medium customers and new customers when they come back and win back customers that have lapsed. Shifting over to -- in a little more detail, I guess, into this coverage strategy with the major media customers is really we want to do 2 things. Of course, drive growth but also reduce the cost, reduce the cost of our sales. And so it's really a two-pronged approach. And so drive productivity primarily with our key account managers and our account executives and then to drive growth with BDMs. And so a few of the key productivity drivers with the key account managers and AEs as to continue to get more efficient and become more efficient as our sales support reps. As they become more efficient, it frees up time for our key account managers and our commission sellers to go spend more time in front of their customers face-to-face. Repeatable proven sales processes, right, follow repeatable, proven sales process drives productivity. And then lastly, industry-leading technology solutions, Sales force, AI tools to again drive growth and then together all of these working in concert to increase the book size that our sales have continued to improve the retention of those customers. and, of course, drive growth. And on the BDM front, our business development manager front, we do believe that these productivity drivers will trend -- well, they'll transfer over to our business development managers as well to get efficiencies. And we also plan to increase the number of mediums that we have in the marketplace over the next 3, 4, 5 years, and of course, to drive share gain. In terms of technology, Carl will spend more time on siteone.com. It's a key differentiator for us. I'm sure the people in this room know what sales force is and how that can help us, obviously, be more efficient, make sure we're contacting our customers and an incredible reporting that we have that connects to our point-of-sale service that we can really, really get some good reporting, put it in front of them that allows them to go and sit down with customers and have real meaningful conversations about how we can drive efficiencies in their business. And then lastly, AI. We're highly focused on how AI can drive productivity, initial focus areas here is meeting recording capabilities. And you can imagine how that could not only help you keep notes but also follow-up tasks, next steps, sales coaching. And then further, as we reach critical mass with something like that, the market insights that we could gain from what's going on in the new construction and what's going on in a different market. So exciting stuff there. And then winning with the large and major, and so this is where everybody competes. This is where the competitors are coming and so a little more into this strategy a few different elements of it. And from a sales side to continue to get efficiencies in the sales team to have some of the lower skilled duties be done by siteone.com or our sales support team to keep the sellers focused on higher skilled duties. So we're seeing continue to penetrate and get growth in private brands. and local sourcing to drive down cost of goods. On the replenishment side, you've seen some of these fewer touches, fewer touches, more from direct ship, fewer touches. And really these -- and say that these customers should be using these branches for convenience. Our standard branches around should be for convenience us. And then the execution is really our sales teams being well connected with the leadership teams of these large customers. Meeting coming together on a regular basis and talking about how we can work together to drive cost out of our businesses and win together. And the punchline here really is the lower SG&A in terms of our cost to serve and then lower our cost of goods to provide the absolute best price, and I'd say cost to purchase materials for our customers. Okay. And I will turn over -- turn it over to Shannon to walk through our strategy with small customers.

Thank you, Jerry. All right. For those of you maybe I didn't get a chance to meet last night. My name is Shannon Versaggi, and I lead the category, marketing, digital and pricing teams. So as Jerry mentioned, marketing plays a really important role in winning that small customer. Our strategy is to develop programs that engage the small customer across multiple channels, everything from our partners program to product marketing campaigns all the way through merchandising events. Our job is to create programs that support that small customer and create loyalty. So I'm going to walk you through a few of our key focus areas. We'll start with the partners program. Partners program is our loyalty program, and it's been around for a while, but it was a need of a refresh when we relaunched it back in 2023. We were able to lower the threshold of points needed to unlock benefits for our customers, which was a really big win for small customers. We also introduced points promotions. We can now do 2x the points on a specific purchase or 3x a points on a certain purchase. We work with our suppliers to fund those promotions or we can prioritize our own private brands. But of course, the partners program is not just a points program. As Jerry mentioned earlier, we offer business solutions. These are high-value discounts on programs submarketing or website design, project management, communication tools and even products that our customers use all the time like fuel or phone services. The success this program, you can see through the numbers, up to 82,000 members that make up about 70% of our sales and over half of these customers at this point are small customers. So on to our customer life cycle strategies. This is really about one-to-one outreach executed by a team of account representatives. The goal here is to reach out to our customers, make them feel valued, make them feel visible. And we do this really across a couple of different priorities. One is new customers. So our account representatives reach out to our new customers to introduce them to all the services that SiteOne provides. Many times, we signed them up for a digital account. Many times, we signed them up for the partners program. And our small customers, in particular, feel valued and recognized when we take the time to reach out and welcome them specifically to SiteOne. Another focus is contacting customers we see starting to decline. These customers, it's very easy to reach out and often we can resolve an issue quite quickly and reengage them. These customers it's amazing, sometimes all it takes is a phone call and they get back involved. We also are able to -- through just a few questions really be able to figure out what the size of these customers are. So when we do come across the larger customers, we hand them off to our sales teams for that white glove service. Product marketing. I always call this the bread and butter of marketing. This is that traditional marketing that you guys are used to, right, driving traffic and sales into our branches and online. We work with our media agencies to target small customers and deliver creative that is relevant and on brand. Our goal is to deliver the right message to the right customer at the right time. We've gotten pretty good at this over the last few years, so much so that we have a significant return on ad spend. And we don't believe we're anywhere near a point of diminishing return. Moving over to private brands, very much related to product marketing. A lot of our product marketing campaign support our private brands. I'll talk more about private brands in a few minutes, but marketing is here to support the growth expansion, launch and overall growth of these particular brands. Every year, we do a brand equity study where we focus on looking at unaided awareness and how that's growing year-over-year. You can see looking at the numbers that we continue to improve that unaided awareness across all of our private brands. Winning the Hispanic customer. As Doug mentioned, this is a growing force, and we'll continue to be that within our industry. These customers represent small customers, but also could be a little bit larger beyond having bilingual associates in our branches, which we do find to be probably the largest factor in servicing that customer well. And by the way, we are currently at 70% of our branches have a bilingual associate. We also thought it made a lot of sense to align our brand with a passion point for this particular segment, soccer. So earlier this year, we launched a partnership with United Soccer League, which is the largest and fastest-growing nonprofessional and professional soccer organization in the country. This partnership includes bilingual brand building, both in games and in broadcast. It includes hospitality opportunities for our customers. And we are a preferred supplier for these stadiums all across the country. Beyond that, we are still making sure all of our campaigns are bilingual. Our merchandising is bilingual, and we've been running awareness campaigns with this customer audience for the last few years. As you can see, our unaided awareness with the Hispanic landscaping contractor has grown year-over-year. And at this point, we have the highest unaided awareness across all of our competitors. Merchandising. We used to joke and many of you may understand this, that if you've only been to one SiteOne branch, you've only been into one SiteOne branch. But over the last few years, as we focused on bringing our brand to life consistently across our branches, that joke doesn't quite work so well. We are right now upgrading and merchandising about 75 branches a year. That includes improved way-finding signage, impulse fixtures, in caps and overall displays that make our branches far more shoppable, especially for that small customer. Our end caps and our signage helps to educate them, and I'm always amazed at watching impulse fixture work. I can't count the times I've been in a branch, and I've seen a customer pick up something off of an impulse fixture as you walk towards the counter. That would have been an item that maybe they got into the job site without, they hadn't seen it on the impulse fixture. And did I mention these are higher-margin items, so really a big win for both us and the customer. training and industry events. So we -- this is an area I think we can really stand out. For example, our SiteOne universities, Jerry mentioned these earlier, are world class. We offer training to thousands of contractors every year. partner closely with our suppliers to offer product training and also the continuing education units that are so critical to their state licensing. National local industry events. We go to all of our line of business trade shows and see thousands of customers at these events. Beyond that, we offer customer trips that drive incremental loyalty and sales. We've had customers that have gone on these same loyalty trips for years and consider them the best in the industry. We've got customers that refuse to miss any of those events on a regular basis. All right. So to sum up the overall customer growth strategies, we really build strategies that focus on winning customers with targeted strategies that fit that business with where they are. large customers get that white glove service with a dedicated seller who ensures their pricing is right, but they're driving efficiency in their business. For smaller customers, marketing provides support in our branches provide the world-class service. We offer bilingual capabilities and programs to help these customers grow and make them happy and like they are being successful. We believe these focused strategies will allow us to grow 200 to 300 basis points in market share annually. So now I'm going to shift focus a little bit and start talking about our line of business and product strategies, starting with the irrigation business. So this business includes valves and fittings, sprinklers, pipe, controllers and wire. There are really 3 major suppliers that supply our core products in this area, and there's our Hunter, Rain Bird and Toro, and they make up about 40% to 45% of the business. The balance of the business for categories like wire and pipe as examples, those are much more smaller regional suppliers. One of the areas we focus on here -- the first I must say is a high barrier to entry in this industry. It requires significant inventory levels and a breadth of product assortment. So where we focus really to begin with, is we look for areas of opportunity to target legacy system upgrades and ensure we have the program to support those replacement opportunities. As an example, we do a controller trade-in program every year. This is where our customers can bring in their customers' old controllers we recycle them, and we give our customers a discount on a newer controller that they can take back to their customer with the latest innovation. That's just one example of where we can add and build incremental demand for our product lines. Smart water efficient system upgrades are important and are specifically important in certain states and in growing importance everywhere. This is really about educating our customers on the latest regulations through training and communication and ensuring we have those products that meet those new regulations. Technical support is important for large complex commercial jobs that GreenTech organization helps us deliver. And as Jerry mentioned, we can support those larger commercial projects with our value-added services like project services. Jerry mentioned this earlier, but this is where we can deliver takeoffs and provide visibility to open bids for our customers. And finally, this is a really important business online. We have been developing our overall online capabilities for this space. And at this point, irrigation is our largest online business. We'll continue to focus here, and there's really an opportunity to go after that smaller customer, which we'll be doing later this year. The agronomics business. This is really about fertilizer, pesticide, seed, equipment, ice melt and pest control. We work with our top suppliers. You guys have probably heard Syngenta in view BASF Nufarm to make sure we have most relevant high-performing products. We've got some competitors are vertically integrated in this space to sell direct and out of large hubs that probably makes up about 10% of the industry. Overall, this industry has seen steady demand, but we've been able to actually grow above the market over the last couple of years. So we want to keep focusing here on things like LESCO our private brand. You've heard us mention this several times, this is really all about driving innovation. We will continue to invest in research and development to ensure LESCO has the newest and latest products. We'll also be focused on leveraging our size to lower cost and deliver more efficiency in our local market assortments. Ongoing line reviews and clear sort by market help take cost out of programs and deliver the exact products our customers need in those markets. We also, as Doug mentioned, recognized adjacencies in this category, specifically around equipment and pest control. We've been selling some equipment for years. You all have probably seen the iconic green LESCO spreader on the back of contractors trucks. We've since expanded into larger pieces of equipment and equipment like handheld power equipment that our customers use every day. In addition, we saw quite a bit of crossover between our turf care customers in pest control. So we've introduced pest control assortments into our branches to help supply those customers. I'd like to, at this point, I'll move to the next slide, just talk a little bit more about these agronomic sales centers. So Jerry mentioned these, and I want to go into a little bit more detail. when our maintenance customer grows, it requires a little bit of a different approach to win their business. So we are moving to ensure we have the capability to support this customer as well. The goal here really is to lower the cost to serve, ensure we have significant room for significant levels of inventory and make sure we have dedicated sellers with that line of business expertise. Currently, we have 13 of these locations with a high return on sales, and we're targeting over 40 of these by the year 2030. This initiative allows us to better serve that large customer has become a foundation to our agronomic strategy going forward. The hardscapes business. So this business includes products like manufactured hardscapes products, I think, concrete pavers or wall block natural stone bolt products such as decorative aggregates or construction aggregates. There are a few MHP manufacturers that we partner with, BillGuard, Keystone, Techbook. These suppliers will go after large commercial projects and sometimes can go direct. Natural stone on the other hand, opt most incomes from small regional quarries. There are a few national distributors in the space that we compete with. But beyond this view, it really is more regional in terms of competition. So we're focused on simplifying our offering with in-stock programs that are based in trends and colors. We can also improve the profitability by removing and only having a few suppliers per market. We also are consciously optimizing our product mix, really encouraging more of our customers to buy natural stone and our private brand sources, which are more profitable. We also sell a whole system, right? The whole goal is to sell the system when selling the hardset project. Hardscape projects often come with accessories like adhesives, polymeric sands, stealers and cleaners, which are very high-margin items. And we're encouraging our teams to sell the whole project. Rarely, would you have a hardscapes project that didn't include lighting, maybe some drainage or mulch which, again, can help sell the profitability of the project. Sometimes selling the entire project helps our new acquisitions as well. As an example, when we acquire a stone center, we can very quickly add additional lines of business like lighting to help them improve their profitability and drive growth quickly as well. Landscape Supplies, this is a category that includes everything from erosion control, what things we call consumables, so think bag mulch, drainage, edging synthetic turf, which is growing very quickly in our long-handled tools. This is a really big line of business for our private brand PRO-TRADE. Both synthetic tariff and longwall handle tools are great examples of where we use that PRO-TRADE brand. In other cases, we have some big supplier partners like take drainage as an example, where we partner with ADS and NDS on opportunities around marketing merchandising and promotions. Drainage is another great example of where we can work with our suppliers to create that incremental demand by educating consumers on the benefits of adding digital to any project. As I mentioned earlier, erosion control will be selling through our economic sales centers and then merchandising strategies are really important for these categories. Many of these particular products help complete the project. So they have been integrated throughout our merchandising strategies and our branches. And finally, this is another channel or another product line where the online channel is incredibly important. So we are always building out capabilities to better support and target that small customer online. Nursery. Well, this is pretty much what you can imagine, right? This is trees, shrubs, colored and accidents. What makes this line of business a little bit different than our suppliers. Our suppliers are growers, which are small regional nurseries. And one of the most important things that they need to understand is what we need grown, right? This is a little bit different in that you can't just ramp up manufacturing of plants. Many of these plants take years to grow, some up to 7 years to get to sellable size. And so one of the most important strategies we have here is really around long-range planning. We partner with our best suppliers are our best growers to build out that long-range plan, and we can take costs out of our program. So you'll hear a little bit more about from Shawn, and we become a preferred distributor for that particular grower. We're also focused on our private brand in this space. You're going to hear more about portfolio in a minute, but this is all about delivering unique genetics and premium sizes. And finally, we have an opportunity here to grow our direct business. This requires combining basically orders from a number of different growers and that's a level of coordination that our competitors can't do quite as easily. We also have the opportunity to take freight costs out of these particular sales due to the fact that we can combine our direct orders with an order from our location, getting to full truckloads. In the end, we never have to touch this product when it's a direct sale, which makes it a very profitable channel for us. Last but not least is our lighting line of business. So this is pretty much what you expect lighting fixtures, wire, lamps, transformers and holiday lighting, which is a very quickly growing aspect of this line of business. There's a very low barrier entry in lighting. And so we see a lot of online pure players compete in this space. While increasingly competitive, we have an opportunity to differentiate with our 2-brand strategy. We've leaned into Hunter FX as one of our brands, which is a very well-known, well-respected brands and then our private brand, PRO-TRADE. The other thing that we're starting to focus on here is holiday lighting with our acquisition, most recently of Renders, which already had some success in this space, we plan to invest more here going forward. As I mentioned, we think Lighting goes along with a lot of other projects. So we partner closely with hardscapes to make sure those projects are sold together. And as I mentioned a minute ago, this is a very hot category online. So we're using our online channels to ensure we have a great shopping experience for that small customer. Okay. So I've talked through all of our lines of business, I want to take just a minute and talk through our private brands. These are a huge priority for us. And you can see the top 2 LESCO and GreenTech, they're fairly well established. They've been around for a little while. LESCO was a part of an acquisition years ago. It was established in 1962 and is one of the most recognizable brands in all of turf care. GreenTech was established over 50 years ago, in the spec product used in water management systems for large commercials or institutional projects. GreenTech drives high margin and provides a key technology for our customers. Now the next 3 brands, PRO-TRADE sole system portfolio are much newer and are growing at a very rapid pace. So PRO-TRADE, we launched that back in 2017 and is a very flexible category. We're able to use it across a lot of categories. So it's very much a fighting brand for us. And this fighting brand is quickly approaching $200 million in sales. Solstice is our Natural Stone brand. We acquired Solstce Stone a few years ago and have since expanded to 7 unique natural stone collections. This simplifies selling for our associates, expands into new customer segments and drives margin growth. And then finally, portfolio, portfolio the creative is my favorite. And this is a brand we launched back in 2021 is really, as I mentioned before, about unique genetics and premium sizes. Creating this has helped us to have those long-range production planning opportunities with our growers. I'm going again [indiscernible] that margin growth. So private brands overall are both a winning strategy for our customer as well as us. As you can see here, we've been growing penetration of our overall SiteOne sales, 14%, 15%, and we're aiming for 16% going forward. So it is a highly profitable space for us. These products are only at SiteOne, high quality, very well sourced. So therefore, high margin and definitely going to be a big win for us. As we continue to grow that penetration year-over-year, we expect this to deliver 20 basis points of gross margin expansion as we move forward. So thank you very much for your time. I appreciate your interest in SiteOne. And with that, I'm going to bring Carl up to talk through digital strategies.

All right. Thank you, Shannon. Good morning, everyone, and thanks for joining us today. My name is Carl Sukenik, and I lead digital and analytics at SiteOne. So as you've heard, digital is a key lever for how we will drive organic growth. And we've had tremendous success over the last several years, driving digital. But one thing that has remained consistent over that time and will continue to remain consistent is our vision for digital to deliver a seamless customer experience that's consistent across channels, dependable, fast and tailored to the customer. We save customers time and money through making their interactions with SiteOne more convenient, and we enhance the interactions between our associates and our customers, and we leverage our existing assets and lower transactional cost to serve. And so as we continue to build best-in-class digital experiences, we differentiate SiteOne from our competition and continue to position ourselves as a preferred distributor in the industry. So to bring some of these experiences as benefits to life, I'd like to highlight 3 customer examples of customers who have derived significant value from digital and have had success adopting. So the first example is an irrigation installer who is actually a long-time customer of SiteOne. This customer maintains a stock of product at their site that their crews pull from every day to go to jobs and so knowing this, we work with a customer introduced them to our stockroom solution on siteone.com and got them set up and reconfigured their stock room with scannable bin labels for all the areas where they maintain stock. So now, as Jerry referenced earlier, as this customer goes through and they need to replenish their stock room, they simply scan with the mobile app, build a basket, adjust quantities and check out in a matter of minutes. And so since implementing this, we've seen the overall sales with SiteOne increased by 38%. And I'd also add that this is a service that is available for customer self-service on the website and we see many use it in that capacity, whether it's a set up their stock rooms or their trucks for replenishment or to simply create order books that they keep in their shop for easy reorder. Second example is a pest management customer. And this was a new customer to SiteOne. And in this case, the seller knew that this customer's primary supplier did not have the same digital capabilities of SiteOne. And so we introduced this customer to the list functionality. And this customer was able to build curated list of product that were customized to what they wanted to purchase most frequently. And now this customer's employees purchased from these lists very quickly in Easlane, we've seen share of wallet with this customer increase. to the point where we are now this customer's preferred supplier and about 95% of their sales to SiteOne are now flowing through digital and this list mechanism. The third example is a maintenance design customer who also does a significant snow removal business in the winter months. This customer works across a number of different job sites with different product needs, working all hours of the night. And that's a lot to keep track of, especially when you're in season. We introduced this customer to the mobile app. And now they place orders on the go using the app. They keep track of their delivers. They keep track of their orders. And we've seen sales with this customer increase 30% in total year-over-year because of this convenience that we're offering. And so as you can see, there are kind of 3 examples of customers that are getting significant value, and we're seeing share shift as a result. So looking at a quick snapshot of our digital business. So we're most heavily concentrated in our irrigation and maintenance categories. and our digital sales over-indexed with major and larger customers, primarily due to their overall size and the relative sophistication of their processes. We have 67,000 customers who are using digital in some capacity. Now this would be either purchasing or in a non-transactional capacity such as checking product information, checking local branch inventory, checking their personalized pricing or simply paying their bill online. We have 49,000 customers who are purchasing on siteone.com and 10,000 of those are regular purchasers, meaning that they have truly integrated siteone.com in digital kind of into their business processes. And so you can kind of see the continuum here of how we think about advancing our customers from acquiring self-service accounts transitioning them into purchasing accounts and then developing that regularity and really integrating SiteOne digital into their business processes. So this is an important page and one I'd like to take a minute on. So just to orient you to the chart here. So the green bars is digital sales for SiteOne. And you can see that digital sales have grown from $20 million in 2022 to $420 million in the recent year 2025. The gray bar is total sales impacted by digital. And so essentially, what this is, is among the customers who purchased on digital, what were their total sales with SiteOne. So in 2025, we had $420 million in digital sales. But in total, those customers comprise $1.5 billion in total sales to SiteOne. And this is an important distinction because we see in the data that when customers purchase on digital, they grow at a higher rate in terms of their total overall sales with SiteOne than customers who don't. And so this growth differential is kind of one of the key drivers of organic growth and value back to SiteOne as a whole that we're creating through these digital platforms and getting more customers onboarded to these tools. And so we've seen tremendous growth here over the last several years, and that's been due to a variety of investments, a few to highlight. We've advanced our category experiences significantly in those times. We've added additional product information, imagery, taxonomies to make categories like nursery and hardscapes more shoppable online. We've increased the personalization on the site. So this year, we implemented a new search platform, which takes into account both past search history to drive better relevancy, not just among our accounts, but also the users within the accounts. So we're getting our customers to the product they're looking for more quickly. We also have advanced our list product, right, which is a personalization tool for customers to be able to create curated assortment. So if you're a pest management, you can create a list that's specific to best management or to hardscapes orchard irrigation, whatever your interest area is. And so kind of that degree of customization delivers a lot of value and increases efficiency for those customers. And then digital quote is a tool that we rolled out a couple of years ago. And this allows customers to more easily process kind of complex multiline item orders through our digital platforms. So previously, they would call a seller or send them a list of -- and so there's a lot of back and forth. But with digital quotes, they can go online, request the quote gets price, they make edits and then ultimately approve that quote through online, and then that gets processed into an order. So it saves our customers and our associates' time and reduces friction in that process and captures a lot of the larger transactions through digital. And so a variety of benefits when we kind of scale the impact to SiteOne overall. So like I mentioned, we see accelerated organic growth from that growth differential and impacting more of SiteOne's overall sales. we can achieve labor savings by increasing the efficiency of those customer and associate interactions. When we flow more orders through SiteOne digital, we have greater pricing control. And so it allows us to reduce some unnecessary discounts along the way and so that can have a gross margin benefit. And then as we think about pursuing more direct fulfillment from DC initiatives in our sales through siteone.com, that reduces our handling and transportation costs and can lower overall cost of capital. So a lot of benefits in total to SiteOne kind of driving digital and digital adoption with our customers. So while forecasting to exceed $600 million in 2026 is great. We think that that's really just the beginning, and we still have a lot of runway ahead of us. So we think about the opportunities here in 3 pillars. So the first is to continue to advance the functionality of the platform. And a couple of areas to highlight there has to do with larger transactions and quotes and complex orders. So Jerry mentioned Project Services a great tool for our customers doing commercial projects. We're bringing that project services experience now into siteone.com. And so now that's going to be connected to digital quote. So as customers submit and get takeoffs back on those projects, they can flow that directly into siteone.com and process that order online. So again, kind of creating a more seamless and connected experience across all those different services that we offer. Second, we're going to pursue more customer-specific use cases, right? So we've talked about leveling up small customers, but also growing larger customers. And so we have strategies here designed to target those different segments through digital. So first, we're doing more integrations with our larger customer systems, so integrating with their ERP system or their business management software that they run, right? So this is -- the opportunity here is to get closer to how they do business and how they currently operate and get siteone.com integrated into that. And then also, we'll be building select business management features for our smaller customers who may not require a full suite and a full software package, but there are certain point solutions that are going to be useful to them. As Jerry talked about, we want to be a trusted partner to our customers and this is a way to do it, right, gives them additional features and functionality that helps them run their business better. And then stock room and replenishment, right? We talked about this, but when we can get SiteOne digital integrated into their stock room and their replenishment behaviors, that is a huge share of wallet growth back to SiteOne. So we're going to continue to pursue advancement there. And then third pillar, looking at broader assortment opportunities in faster fulfillment. We can offer a broader assortment through DC direct and also vendor direct opportunities and then more same day and next day delivery use cases for our customers that require that speed. And so as you can see, we're really excited about the progress we've made with digital but also what the opportunity is ahead of us here, not just to grow digital sales but also to grow the impact that digital can have on SiteOne overall and the impact that could have on organic sales growth. So with that, thank you. I would like to turn it over to Stephanie to discuss EBITDA margin expansion.

Thanks, Carl. For those I haven't yet met, I'm Stephanie Hertzog, there goes my water. I'm the Division President for the West. I joined SiteOne 3 years ago. I get to talk to you all today about EBITDA margin expansion, which based on my conversations at dinner last night, I think many of you are interested in. I will kick us off talking about our focused branches and pricing specifically. And then Shawn Delfausse will cover supply chain procurement and delivery, and then David Bannister will close out this topic, talking about AI and automation. So with that, I will jump right into focus branches. So this chart shows you the percentage of our revenue that is coming from branches that are high performing on the left side of the -- of the chart and greater than 15% return on sales and from branches that are underperforming on the right-hand side of the chart that are at less than 6% return on sales. So like with 680 branches and continuing to be acquisitive, we are likely to always have some underperforming branches. But the opportunity here is for that to look more like a normalized distribution as opposed to what you see today. I joined SiteOne after the COVID heyday. It sounds like it was a fun time. And look, financially, it was a strong time for the business, but I will tell you from an operational standpoint, that excess of demand and pricing hit some of the gaps that we had in our operations. And so back then, you could be underperforming from a service standpoint at your branch and still deliver financial performance that is much harder to do today in today's environment. So we have put a bright white light on those branches that are in the less than 6% bucket. And as we've been reviewing those, what we have found is there is -- we believe there's extensive opportunity for EBITDA margin expansion, and we think it's in our control today to do that even if we have a delayed market recovery. So we've developed a playbook that systematically is intended to move those branches from the right graph, part of the graph and over towards the left. We made substantial progress on our focused branches last year, and we expect to do that again this year. So I'll tell you a little bit about the playbook. We execute this framework at the branch level to assess the branch. Every focused branch has given a sponsor to help work through the framework. And then we develop a performance improvement plan for each branch. So there are 4 pillars, team, financial, customers and operations. So let's start with team. You have to have the right leaders, a complementary set of skills amongst your leaders clear roles and responsibilities and strong collaboration between sales and operations. You can usually tell when you walk into a focus branch. It's not clean entity. We're not calling out customers by name. There's not this sense of comradery amongst the associates at the branch. I cannot emphasize enough the importance of having the right leadership at the branch. Because you can have a great plan across these other pillars of the framework. But if you don't have the right leaders there day-to-day, making those things happen, it's really hard to turn a focus branch around. Financials. So again, benefit of 680 branches as we can benchmark any branch against a performing one a bit similar. And so we take that entire P&L. We start at the top. We start with revenue. Do they have enough revenue? Do they have the right mix of customers. We can go to gross margin. If the gross margin is low, do they have the right assortment, do they have the right mix are they pricing the products correctly. If the pricing looks okay, are we buying it correctly. And then we can look at -- because 1/3 of our product is delivered, we take a close look at the delivery P&L. How many trucks do we have? Are we pricing deliveries appropriately. And then, of course, SG&A just efficiency at the branch and at the area level. So we can work through those financials and come out with a strong plan for each branch. On the customer side, we have gotten much -- we've sharpened how we're engaging customers and how we're measuring performance at the branch. So early last year, we launched our sales and service metrics. These are a handful of metrics that we think are the most important ones to our customers. They are as simple as what percentage of the time do we answer the phone when someone calls the branch to what percentage of the time do we deliver within the window, we have promised the customer? Is the branch doing cycle counts so that their inventory is accurate at the branch and on siteone.com. And so we are measuring those on a regular basis. They are front and center. And I will tell you if you're a focused branch after you've got the team right, this is the very second thing you need to work on because if you're not providing good service at your branch, it's really hard to pull the other levers like increasing pricing or increasing volumes or selling new lines of business, you've really got to have your service tightened up first. Customer first execution. You heard Doug mention this. So friendly, inquire, respect, solve, think. This is the training that we give all of our associates. So we've had sales and service academies the last couple of years, where we have trained on those sales and service metrics, customer first, as well as a host of other training that we're giving our branch associates and sellers. Management routines. We have taken our best branch managers, sellers area business managers, area sales managers, and we've said, how do you do your job, what are your routines, what are the metrics that you measure and then have trained the rest of our associates that are in those positions on what best-in-class looks like. And then, of course, we measure customer profitability at these branches. And then the last pillar on operations. Look, during the COVID days, we couldn't keep our brands staffed. We were constantly hiring. You couldn't have enough people. Today, we have to be much more discrete about how many people we have in the branch, what volumes are they running? So we've developed labor productivity and staffing models to help our branch managers figure out what the optimal staffing is for that branch. Again, delivery and operational efficiency. So we now have geo tabs in all of our trucks, we can tell which trucks are underutilized, and we can either exit those from the system or move them to a branch that's growing that needs -- has a greater need. And then the last one around branch consolidations. Most of our branch consolidations have come out of our focused branch efforts because we look at each branch and we say how much revenue they're doing, how much is their rent, what other branches are nearby? And could we be more efficient by combining this branch with another one? So look, I think these efforts are still gaining in momentum. We've built a lot of the core tools, the reporting for driving a sustained improvement, and we're also using these tools now to make sure that we don't have branches falling backwards. So coming off of a healthy place onto our focused branch list. I give you a couple of examples where this has worked. So this branch is a branch in the Southeast. We acquired it in 2021. It's an irrigation branch. In this case, we decided the branch manager was the right person, but he needed to be trained up in the SiteOne way. So we spent some time training him. We exited some low-margin accounts. But then to balance out that drop in revenue from those accounts, we expanded into some other lines of business. So you can see that the revenue there grew by about $1 million. We also were able to take advantage of the SiteOne buying power. So you see the gross margin improved a lot through the lines of business expansion and the SiteOne buying power that we brought in. And then we looked at rightsizing the staffing. And so we were able to actually keep SG&A flat at this branch and handle the additional volume. So therefore, the bottom line went from 3.7% to 15.8% in 2 years. And this is another example of a nursery and stone center in the Midwest. So in this case, we changed the branch manager, got a new branch manager in '23, who upgraded his team and the talent there. He expanded the product offerings to include some higher-margin products like bulk and natural stone. We've dialed in the product assortment, so we could buy better and so you can see the top line there increased by about $2 million, our gross margin by about 340 basis points. And in this case, we weren't able to keep SG&A flat, but we were able to get some SG&A leverage. We adopted MobilePro, reinvested in some equipment that got us some increased labor productivity. And so net-net, this branch went from 4% to 10% in 2 years, and we think there's more opportunity for it to grow. So look, we have a well-tuned review system that allows us to look at these focused branches. That said, we're making some improvements to proactively address some of the more common struggles that we're seeing across the network of branches. So the first one, they are gold standard locations. Often, we have right branch manager on the right team, but if they haven't seen excellence, it's hard to deliver it. They just don't know what it looks like. And so we've developed these gold standard branches in each line of business where our teams can go and these branches are delivering high financial performance and world-class service. So they can go and see what that looks like and then bring that back to their branch. Regional operations excellence and LOB team. So we are organizing our subject matter experts by area of expertise and share, so that they can share and implement best practices across our regions. Now it's important to note, these are not as, they are people we had in the organization today. We're just reorganizing them so that, a, they're more consistent in what they're delivering; and b, they're more targeted where we need the help the most. And then on leveraging data and technology. So look, we have a lot of data. So we are continuing the journey to get that data in a format that's easily accessible and very actionable for our leaders. So they can clearly see where they have gaps and go work on that. And we're also still on our journey on technology adoption. So look, we've adopted tools like SiteOne.com, salesforce.com, MobilePro, our delivery systems. But getting consistent, excellent execution is still something that we're striving to achieve. So look, while the turnout examples that we showed you demonstrate what's possible, these things will help make that repeatable and scalable over time. Am I on right? There we go. So SiteOne pricing. I'm going to switch gears a little bit and talk about pricing as a strategic advantage. We have a very clear pricing strategy combined with an excellent team that we believe is giving us a competitive advantage. So on the strategy, it is not to be the lowest price all the time. It is to deliver the right price for the right customer on that project. So sometimes you have a customer who's being sole-sourced for a high-end residential job, their customer is less price sensitive, they can pass through a higher margin. Then you have another customer who might be doing a government bid job, 3 bids in a buy the lowest price is going to win, our pencil needs to be very sharp for that customer. So we want to be in tune with the customer situation and price accordingly. And we are really about optimizing margin dollar growth. And that's how our sellers are incented in our branches as opposed to just top line growth. We have, again, a lot of data and very good data, and it's been cleaned up now. So very clear SKUs. So we are able to see what are those known value items. What are those items that customers are buying repeatedly that have, frankly, very transparent pricing across the market? Let's -- we want to be very competitive on those products. And then as we create the basket of what we're selling to the customer, we have opportunities to input higher-margin products into that basket. Our field still has a lot of autonomy in regards to pricing. So while we have a lot of data and a strong central team and broad benchmarks, we believe our field is the most in tuned with our specific customers and their market. And so they get suggestions, but at the end of the day, they control the pricing. Now having said that, we also give them data so that they can see where they may be having margin leakage. So for example, you have a customer service rep at a counter who's doing a lot of overrides, maybe that's unnecessary, customer-specific pricing. We get a list of, "Hey, these look like maybe they're a little lower than they need to be." But we also get the, hey, these look like they might be a little on the high side. And if that customer went out and got a competitive bid, you might be challenged. So we take all that data into account in the field and adjust pricing. And then that strategy is great, but without the team we have in place, it wouldn't be possible. We have this great centralized team who is very integrated with our field in our category leaders and our suppliers that are making this happen. So net-net, that enables us to grow gross margin and grow market share. Now one of the things I've really appreciated about this team over the last few years is we've been in a very volatile costing environment. So obviously, a lot of inflation during COVID, deflation over the last few years. tariffs and most recently, fuel surcharges. And so this team has been able to act very quickly as those changes come through, adjusting them in the system, communicating with the field, helping communicate to customers. So we really appreciate the support that we have from that pricing team. And David is going to talk to you more about AI, but I wanted to mention it here because we think AI is going to be a really powerful tool to help both our pricing team and our field teams that are working on pricing. So look, as strong as that team is and as well in tune as our people in the field are, we do tens of millions of transactions a year. So they can't possibly look at each and every transaction. But we think AI agents can. And so their ability to look at each and every job and understand that specific competitive situation each line item and where we price it, we think that there's going to be a lot of opportunity when you do that at every branch for every job, for every customer to have some substantial impact. Data queries. So we get -- again, a lot of data, a lot of questions out of the field. When you go ask those questions, somebody is good at, they may or may not have the ability to look through the data, so they got to go to a central place, that takes a couple of days. And so having this at our fingertips where we all have our own analyst and can get the answers to those questions quickly. So for example, where are we over using customer credits and being able to get that response in real time, we think that's going to add some value to our field teams as well. And then just AI optimization. So again, we have different customers, different lists of materials, different competitive pressures. Historically, our negotiation guidance has been generally broad benchmarks in our local seller knowledge. So being able to be more in tune with , for example, that product looks like we need to be -- the win rates aren't as high. Maybe we need to get more aggressive on the pricing or this other product we may be leaving some money on the table. Product recommendations, one of the main ways that we can get cost down is by substituting in our private label products and so identifying those opportunities, not just on the big jobs where we know we've got to sharpen our pencil. But on every job that comes through can give us opportunity to raise margins. So a lot of opportunities that AI is going to arm our teams with as we get that in place. So with that, I will turn it over to Shawn to cover our next topic.

All right. Thanks, Stephanie, and good morning, everybody. I know I've had a chance to meet most of you, but for those that I haven't, my name is Shawn Delfausse, and I have responsibility over our supply chain, operational excellence and IT functions. Yesterday, with many of you, we had the opportunity to deep dive into our distribution operations. This morning, we're going to give you a broader perspective on the opportunities we have across the supply chain. When we talk about our supply chain, we think about it in key -- 3 key pillars: efficient inventory management optimizing transportation. We talk about transportation, that's both inbound movements to our branches, NRDCs and then customer delivery and then low-cost distribution models. Over the last 10 years, we spent a lot of time building core capabilities, specifically implementing the systems and technologies that we needed, building out the team as well as upgrading the talent across supply chain and then just implementing core capabilities and functionality needed to support the growth aspirations at SiteOne. So made a lot of progress, delivered a lot of value, but we think there is still significant value we can deliver going forward in supporting our branches, adding value to our customers and driving profitability. And that's what we walk through in the next few slides. So let's start with inventory management. So I'm going to hit a little bit on our turns goals over the next 5 years, and then I'll hit on a topic that came up in Shannon's conversation around sourcing opportunities to expand margin. When it comes to inventory turns, you can see how we compare against a peer group about middle of the pack. As we look forward and as we have additional sales growth, as we normalize our distribution center rollout and then also we've launched a lot of new programs, especially import private brand programs. And as those mature, -- and then finally, with no major macroeconomic, global supply chain disruptions, which is a big assumption given the last 5 to 6 years, we think there's an opportunity to achieve 4.0 turns by 2030 with a longer-term goal of 4.5-plus turns down the road. A couple of key things I want to hit on that will help contribute towards that. I talked about new programs, especially private brand import. When we launch these new programs, we purposely focus on the customer experience. We want to be deep in our inventories, right, to have the product in stock to drive sales and be successful. As those mature, we will dial in our replenishment on our inventory, and we believe we'll be able to drive more productivity. The second part of this is our assortment. So we are in the process of defining our assortment for every branch, every item in that branch across all of our product lines. We're about 60% of the way through with a goal of getting to 100%. And there's kind of 2 parts to this in terms of how it supports our efforts. One is it clearly signals to our customers the items that we intend to be deep in stock. That, in turn, allows them to go to their customers and bid confidently known, we'll have the products that they need for the job. The second part of it is, obviously, as we dial in that assortment, we'll get more efficient turns on those items as well as start working our way out of some of those other ancillary items that we may have stocked previously helping to drive the turns improvement. Improving turns to 4.0 by 2030 will give us improved working capital and operating cash flow of about $100 million. So let's turn to the sourcing opportunities. So Shannon hit on this a little bit, and I want to provide a little more color. So we're at different stages of maturity when it comes to our sourcing. We talked a little about it yesterday with some of the efforts we've made in our irrigation, agronomics, some of our landscape and lighting businesses. We're a little more mature on the sourcing side, being able to deliver that at best possible cost. We still have some room for opportunity. But on the nursery and hardscape lines of business, we still have some more room to grow there. So I'm going to hit on a couple of key themes there. We've already talked about assortment. So we're using data to dial in our assortment on those product lines. As we do that, that allows us to drive both SKU and supplier consolidation. So when we go to negotiate, we can get best possible terms and cost. And I want to elaborate a little more on the final bullet point around planning. And I think nurseries are a great example for that. So if you think about our nursery growers, right, they are planting materials, and then it is years, right, later that they are selling that material. There's naturally risk, timing risk involved with that. They price that risk into their product. As we invest in forecasting capabilities that we now have today to do 1, 2-plus years forecasting, we can partner with them more closely. We know our core items. We need to be in stock, and we can better partner with them on making commitments. They're allowed that derisks their side of the equation, and they can pass better pricing on to SiteOne. At the end of the day, we believe this will drive meaningful margin expansion through 2030. Eric will outline this in a little more detail later in the presentation. So we dove into this quite a bit yesterday, but let me summarize on the distribution and transportation logistics side, we're focused in terms of driving leverage. We've developed a meaningful distribution center footprint that has capacity. And we're able to flow more programs, additional suppliers through that platform, and that will drive leverage across our business. Number two, even without driving additional product flow through our distribution sites, we have opportunities to optimize, right? One is on the labor side as we implement engineered labor standards put in LMS, we'll be driving efficiency across every process inside the 4 walls of our building. Additionally, on the storage side of things, we're optimizing our storage capabilities, how can store more products, low more product through the current footprint that we have across the network. And then finally, on the transportation side, both inbound and outbound out from the distribution center, how can we do things like improving our backhauls on the inbound side, cooling less than truckload shipments to have more efficient shipments coming into our distribution centers and then the outbound side is driving more cube and utilization there. We've hit on this. Carl hit on this a little bit. The third item is enabling drop-ship capabilities out of our distribution centers. really don't do much drop ship today, and there's an opportunity to hit a unique need in our end segments to better service customers that require fast, efficient partial shipping. And we're piloting that and we'll be paying that over the next few months out of our distribution centers. And then finally, when we think about transportation, not just in our DCs, but our entire network, think about all inbound movements to a branch to a distribution center, transfers amongst our branches, pretty much everything except the outbound custom delivery side of the business. We want to own more of that freight. We actively manage about 55% of that freight today. Our goal is to get to 75%. That does a couple of things for us. It allows us to drive more freight through our transportation management system. When we do that, we have better visibility to that product. We can plan better as an organization. We've got better visibility to carrier performance coming better carrier selections down the road. This really allows a more frictionless process when it comes to invoice and payment for our carriers, which simplifies our back-end operations as well as our carriers. And finally, it just allows us to put more volume through our competitive bid process so we can ensure we always have the best balance of cost and service in the market. So let's now talk about customer delivery. As Stephanie mentioned, over 1/3 of our sales are delivered to our end customer. So we will be best-in-class from a service standpoint and highly efficient in how we do this. If you go back to 2016, we were largely put this on the market. It was a manual process. Our customer experience was inconsistent as best as relating and give our local teams a playbook to go execute deliveries consistently. We also really didn't give them the data they need to make informed decisions, especially when it came to procurement of fleet vehicles. So fast forward to today, and our focus has really started around the customer experience. So we built a defined process and how we were going to execute our customer deliveries around the best-in-class system and roll that out company-wide. As part of that, we enabled functionality to provide alerts, updates, proof of delivery, all of the things that we've come to expect in our daily eyes when it comes to deliveries. As a result of that, we've achieved a delivery Net Promoter Score of 91% plus each of the last 2 years. On top of that, we added a centralized fleet and delivery team. Stephanie talked about data. We've organized our data, and we're now giving better information than ever to our local teams so they can make better decisions about their business, procurement decisions to help optimize their business. So we've done quite a lot. But I'm probably much more excited about where we're going because we have a significant opportunity to drive additional profitability and improved service within our delivery space. So there's kind of 3 key themes that I'm going to hit on. The first of which, if you think about how we do delivery today, it still is primarily optimized at a branch level or across a few branches, really not optimizing across entire MSA. You saw Jerry put up a slide about a large MSA that we have and how they operate together. And that's probably one of the best examples. We want to enable that in every single market. So we're using our technology, using the experts within that market to create a truly optimized delivery operation, drive utilization of our fleet vehicles, our drivers. The second part of this is making sure that we are enabling capabilities to hit the end customer segments with the best delivery mechanism. So we talked about our branch delivery. We've hit on the agronomic sales center concept that is going to enable better, more efficient deliveries of large orders to our customers in the agronomic space. drop-ship capabilities out of the DCs will allow us to be more effective in our parcel direct link capabilities, e-commerce, certain e-commerce type orders. And then Jerry also talked about direct from supplier. That today, we leverage that, but it is -- got some friction in the process we intend to improve that process so we can drive even more, especially in the nursery space. So across those 3, when you add them all together, there's a significant opportunity for us to go after to reduce overall net delivery expense, while also improving the customer experience, and we'll outline that opportunity again a little more later as Eric gives the financial update. So what does that do to our overall network. So this is kind of -- when you think about fulfillment from SiteOne, this is how we look today. The backbone is our branches, 90% of what we fulfill is fulfilled delivery or walking traffic to our branches. We do some direct ship from supplier and then we have some agronomic sales center presence that does good bulk delivery in that space. As we enable these capabilities, this will shift and shift for the better as we're able to more effectively service different end segments. So we believe drop-ship capabilities are will allow us to hit a different segment and grow fulfillment to about 5%. Agronomic sales centers as we roll those out to more markets, could be in the neighborhood of 15%. These are all illustrated -- for illustrative purposes. Branches will continue to be the backbone of how we fulfill and service our customers. And then as we create a more frictionless direct from supplier process, especially on the nurse business, that will grow as well. The important note on this is this is not just shifting fulfillment across buckets. This is actually allowing us to more effectively target different segments and serve them better to grow overall market share. So at the end of the day, what we're left with is a dynamic highly cost-effective, high service level fulfillment network that allows us to go gain market share. So in summarizing, these are most of the initiatives that we've hit on today. In the middle of the slide, you see we provide a maturity assessment. Do you give you an idea of kind of where we think we are in terms of optimizing each of these capabilities. In some cases, we're farther along, and we're really in the optimization. Some we're still building and realizing. We highlight on the right side the boxes where we think are the most opportunity to drive profitability and value for SiteOne. So a common theme that you're hearing today, right, we're really excited about what we've done and proud, but we really have our eye set on going forward and how we continue to support our branches, drive value for our customers. continue to be the distributor of choice for our suppliers and add shareholder value. So with that, I'm going to turn it over to David Bannister, our CIO. Thank you.

Good morning David Bannister, Chief Information Officer here at SiteOne. I joined SiteOne just under 10 years ago. When I got to say, we've been busy. We've gotten a lot done in the last 10 years, namely selecting and implementing our core technology platforms that run our business. As Doug said, there wasn't much to start with back in 2014, I didn't have an ERP, so we implemented that in Microsoft Dynamics. We also implemented our inventory demand planning system in Blue Yonder, implemented a transportation management system, our customer delivery platform, Salesforce as our CRM in 2021. And most recently, we implemented Manhattan's warehouse management system, in support of our fifth distribution center we opened in Wisconsin at the end of last year. We've also put great effort into stabilizing and securing our critical systems to minimize technology disruptions to the field. And importantly, we've consolidated and centralized our data and built a rich suite of reports and real-time dashboards to help our leaders make timely and accurate business decisions. But we're not done yet. As Shawn mentioned, we're kind of shifting from build to optimize. It's a similar story in IT. We're going to continue to enhance our point of sale in MobilePro to better serve our customers. getting them out of the branches quickly and back on the job site to install our products. Shawn also mentioned unlocking supply chain efficiencies. Obviously, technology is going to play a major role in that through deeper integrations of our supply chain systems. And we're going to continue to leverage our data through advanced analytics to identify upsell and cross-sell opportunities and surface those through Salesforce to activate our sellers. Finally, we're going to continue to develop and execute on our AI strategy. So on AI, obviously, there's a lot of potential that we see for AI across all the SiteOne , which we categorize in these 3 major areas. First of all, being improving our customer experience; the second being increasing associate productivity and the third being in back office automation. It's a wide scope. There's a lot we can go after, and it's really not hard to spend money on AI right now. But the core of our AI strategy is to take a more targeted cost-effective approach by focusing on a small number of high confidence priorities at a time, making sure that we properly execute and realize value before moving on to the next. So we've identified these 4 initial priorities that are currently in various stages of execution. Jerry talked about adding AI for sales enablement through providing a meeting assistant, which will help transcribe and summarize customer meetings, add those notes into sales force, extract action items help with automating follow-ups. The goal here is to reduce administrative overhead, allowing sellers to spend more time with customers and increase the size of their books. Jerry also mentioned Project Services. Again, this is value-add service for material takeoffs helps our customers win more jobs. And when they win, we win, they buy more product from us. Doing a material takeoff is currently a very manual effort. With AI, we'll be able to significantly lower the cost of performing a material takeoff while also reducing turnaround time, which will allow us to offer that service to more customers. Stephanie talked about AI within pricing optimization. Again, here, it's in quickly detecting margin leakage and correcting it. There will also be including pricing guidance, resulting in more competitive bids and therefore, a higher win rate. And finally, in the next section, Joe is going to talk about our robust associate training curriculum. We're going to augment that with an AI-enabled role-play agent, which will allow associates to put their training into practice by simulated face-to-face interactions. This tool provides real-time feedback and coaching. So think about a seller using this to practice a sales pitch or preparing to handle a difficult price objection -- price objection conversation. So in summary, we feel good about our systems. We've got great foundational data, and we're excited and ready for AI. I'll now hand it back over to Doug for Q&A.

Thanks, David. All right. So we're going to have presenters come up. And we're going to take the next kind of 15, 20 minutes. We'll take a break right after this. So if you're looking for a break, it's coming. And just take any questions you have at this point. I would preface this by -- Eric is going to quantify these initiatives and lay out a walk for you. So you're eager to see that. You'll get to see that at the end of the presentation to see how this all kind of fits together and contributes to our path forward. But at this time, just dig in any questions that you have of of anything that you've heard this morning.

This is Charles Perron from Goldman Sachs. First, I guess my question is for Jerry. Despite several unique initiatives that you guys have put in place in the last few years, I think you noted that the share that you have with large customers remain sub-20%. What are some of the key factors that have limited your ability to capture share with those larger customers? And where do you think it can go over time?

I don't know that limiting our ability with the larger customer. I mean, we've continued to grow share with them. I mean there's a focus on small and medium, but I don't know that there's factors and maybe there's other comment on that on struggling to grow with.

Yes. I think that's just where we are. I mean, it's a very fragmented market, 13% overall. We obviously have a higher share with those major customers. We feel like we're winning there. But that is a more competitive -- I mean, there's a lot of other competitors aimed at those customers. And so we think our share gain there will be more in the 100 basis points a year as Shannon outlined better than the market. It's a small customer, small medium customers, we're thinking 400 to 500 game with those. So -- but there's nothing limited in us there. In fact, we have strength -- the strength of SiteOne has traditionally been with those large customers.

Dave Manthey with Baird. So I'm thinking about also the large customers, one of the key risk factors that investors are concerned about right now is the private equity money that's coming in and rolling up some of these customer groups, TruGreen and Senski and LawnPro, et cetera. I think, Doug, you said earlier that, that would be a lower gross margin and that makes some sense. But I'm wondering somewhat of what Jerry was talking about with some of these more efficient ways of dealing with larger customers, meaning consignment, digital, some of these other things. Is it possible that SiteOne given your breadth and your capability that you can target that group even though you expect to grow faster in the smaller segment, but that group, in particular, and it won't necessarily mean degradation in margin. It might mean maybe corporate average based on some of those factors that you can bring to bear?

Yes, absolutely. I mean, Jerry talked to some of those tactics, the agronomics centers, shipping direct from our manufacturers driving out the cost of sales through siteone.com and our CRM. That is our strategy. As you know with those logged and Jerry mentioned it, and Jerry, you might want to talk to how this happens. When you're bidding on commercial work, you're also leveraging your suppliers for specific jobs for specific customers, right? So it's not -- you're not just using the standard cost you negotiated at the beginning of the year. So all of those tactics will allow us to continue to gain share with those large customers without lowering our gross margin, right? We're essentially getting to a lower cost point.

Yes. And I think, Doug, on your slide, it had a neutral sort of -- and I think we're very optimistic about what we can do. I think there are a lot of things we're working on that could really, really give us an advantage.

Yes. I would add to that. I think usually, there's some short-term pain in the beginning. They acquire somebody. We've had a nice high margin with them. Now they want the cheaper pricing, and it takes a little time to get those efficiencies the system. But long term, we should be better positioned to service those customers than anyone else. And the data that we can provide them across their network of customers, we should be able to use...

Yes, they start to look more like us.

Keith Hughes from Truist, one question for Stephanie. You had the slide with the branch margin breakout. You still got a large number of branches with low single-digit margins. Now I know there's probably some geographies where branches probably can never be at the top, just given the reality of that geography. Is there -- when you look at the branch network, is there a minimum margin number they have to hit where you just have to make a do you even want to be in that market anymore?

I think Jerry can talk me off on this. I would say it's not really market specific. I mean I don't think we have any geographies that are just generally underperforming. So they -- every line of business and every geography has branches that perform. So we should be able to get them all -- maybe not to the 15% or the hot far end, but we should be able to get them out of that focus area. I mean sometimes the branch is just so small that it doesn't really make sense, is that's where you see some of the branch consolidation. But aside from that, I don't know any geographies that are just...

Not geography. It could be the customer mix in a branch they have attracted a certain customer mix or they've gone after a certain mix and it's not balanced.

But you're the to get the margin done?

Right. Absolutely.

And I would reinforce that. I've been in some industries where some geographies because of the structure of the -- this would be more manufacturing structure of that market just are unfavorable. We really don't see that in wholesale distribution in landscaping across the country. I mean you can find your way to profitability and really even the -- in fact, some of the tougher markets in terms of if you look at pricing competition, we have more of our profitable businesses. And so it's -- we're capable to making very good returns in really all markets. you shouldn't say all, but virtually all markets.

Collin Verron, Deutsche Bank. I just wanted to touch on the sales center strategy. Can you just delve into that a little bit more how do you plan to increase that 5% of revenues to 15%? And how much of this is shifting sales from the branches to really be in a market share opportunity? And then maybe just touch on the current sales center footprint? And how much you need to build that out?

Yes. I think it's -- we started the sales center strategy when we bought Green Resource in North Carolina. And they had 5 locations. They were a large agronomic player. And what we found with resources that we were able to grow our small business out of our branches, and Jerry can probably talk to specifics of this, at the same time, they were growing with a large customer. And so we started to replicate that across the country. Those branches do -- will get fed with some of that large business that we're serving out of our smaller branches, right? So right now, we're kind of serving those customers. It's not as cost effective. And so we're not as profitable. So there'll be some cannibalization of that, but the net growth is pretty powerful as we add new growth to the agronomic service center, but also when you pull that large business out of a small branch, it allows them the freedom to fill that up with small customers, small midsize customers, which is the way they should grow in and the way we do it in North Carolina. So we think what we get is our cost to serve goes down steadily as we're putting in these branches. And again these are leased branches, et cetera. So there's not a large capital expenditure with these branches. But we're growing on both sides of the equation. We're growing with a larger customer because we're more competitive, we're more focused. And we're going with a smaller customer as our branches get the freedom to do that. Jerry, do you...

Yes. And I would add there's also margin expansion opportunity here because we believe there's margin expansion opportunity because we have customers that -- we're selling to some of these larger customers through these smaller locations. And we're selling it at -- in some of these cases, margins that we would like to be able to push them through more of a sales center. So we have markets where we're taking care of that. And as we stand those up, those revenues and those services will flow through the sales centers, freeing up, like I said, capacity for the branches to bring on more small customers. and those margins better fit through those sales centers versus the standard branch today.

Andrew Carter, Stifel. So I want to go back to the question on consolidation of your customers. I mean do you see that the industry could become significantly consolidated? Do you see the larger guys as they get scale massively outperform. And I guess I'd go a different way with that. Do you see any risk that as some of these commercial guys get larger, they can just go direct to supplier and kind of put in some of these capabilities themselves? Therefore, kind of commercial becomes melting iceberg for some parts of the business?

Yes. We take the consolidation in context. I mean there has been consolidation going on in the landscape industry for 5 to 7 years. But there is a high influx of small customers always feeding this history, right? So the industry fundamentally, the fragmentation of it is moving very slowly, let's put it that way. The PE active involvement tends to be very focused on commercial maintenance. Now those are the TruGreens and the big residential players that are already a big size, et cetera. But the commercial maintenance space, as they roll that up, we still have to service those customers. I mean those customers operate the same way that they've always operated. It's a very structured. They have 2-year contracts. It's a very kind of steady demand. And so with our national accounts team, we can marry up with them, get them very competitive prices. A lot of that would come out of these agronomic sales centers for the maintenance side of that business. So we don't feel like there is a large risk of them going direct. It would be very difficult for them to do that with their business system. And we line up -- we compete in agronomics with manufacturers that are integrated. I think you mentioned that, Shannon. So we kind of already compete with manufacturers, but we have manufacturing partners that are just as strong as they are, and they're just flowing through us. And with our size, with those partners, we're buying the bags that the product goes in. We're getting involved with buying the area that they use we have setups where we can replicate that kind of manufacture direct, right? So no, I think we're very strong, capable of competing in that space as these roll-ups happen. And with our national accounts group, we're highly coordinated. It really gives us an advantage over our local distributor competitors when you service a Bright View or a yellow stone or some of these big folks that expect consistency. And we can offer that.

And I'd add that the private equity roll, I mean, their biggest cost for those commercial maintenance providers is labor. And so that seems to be where the PE firms are really spending their time with these companies is how do you optimize the labor on each job not so much. So it's anything we can help them because we can deliver the product to the site or to their shops as opposed to their guys having to come through our branches. And so those are the opportunities to work together on the labor front more so than on the cost of the products.

Lynn, Ryan, over...

Ryan Merkel, William Blair. My first question, Doug, you mentioned accelerating share gains. Are you delivering 2 to 3 points of share gain when you look at '25 and '26. And what are the 1 or 2 initiatives you're most excited about? And then the second question was on digital. It looks like it's really accelerated. If you look at like the last 2 years, maybe 50% growth this year. So what's sort of unlocking that growth? And then what kind of growth should we expect going forward for digital?

Yes, a lot of questions there. We believe we were taking share, right? I mean when you look at '24, '25 and what we're doing today, I'm excited about all of those initiatives we talked about. Digital, obviously, is high up on the ability to gain market share. But -- so with sales force, so is our small customer efforts, et cetera. So some of our product strategies. So we focus on a lot of ways to gain share. And keep in mind, we're gaining share in those adjacencies like synthetic turf and erosion control where we're just a minor player with lots of ways. So we believe in multiple strategies to gain market share, and we think it's consistently paying off because they've matured. And you can see the digital curve. Digital should continue to grow, right? We believe that it's not unreasonable to expect kind of 30%, 30%, 40% digital down the road, and that would be online sales. When you look at Watsco or some of the more advanced Ferguson some of our peers and other industries are certainly there, and we plan to get there in terms of landscaping. So yes, we're excited about that, and we think we're going to just continue to gain strength. You can see as digital ramps up, it's just -- our customers become stickier and helps us.

And we have some areas today that already have 30% going to digital.

We do, yes. And so yes, -- we've got multiple ways to get there. Some of those will work better than others invariably. So the key to life is plan B, right? So we want to have plan A, B, C and D to gain market share.

Jeff Stevenson from Loop Capital. I just wanted to follow up on digital with a question for Carl. Just on the slide regarding digital sales growth and total sales impact. I wondered if you could dive more into how your digital strategy has helped increase your share of wallet with large customers who are early adopters and the long-term opportunities to drive share gains with smaller customers as well.

Yes, definitely. That growth differential that we see is something that we're very proud of and a key reason why we invest and continue to invest in digital. I think with large customers, there have been a couple of key features that we've launched, things that allow them to access digital for larger projects like digital quote. That's been helpful to them. And then also some of the direct integrations that I talked about, particularly with business management software that they operate. And so again, just getting closer to their business operations has been helpful in driving adoption with them. With smaller customers, I think it starts with just the blocking and the tackling on the site every day, right? So quality product information, accurate pricing, accurate inventory and just continuing to build that credibility and then also building that credibility with our feeler branch is our sellers so that they can [indiscernible] back to the small customers day in and day out in the branches. It's a little bit more challenging to downward small customers just because there are so many of them, and they're disparate, but I think we're doing a good job of building that credibility and kind of leveraging our field to carry that message forward.

This is Matt Johnson from UBS. I guess if we could talk about the focus branches. It seems like this is something that's gone on for maybe 1 or 2 years at this point. And it seems I think on the slide, maybe 1/4 of your branches are still below 6% EBITDA margins. And you guys have pointed to some pretty concrete early wins, I think, and it could be things as simple as just realigning priorities at the branch level. But I guess on a go-forward basis, I would imagine a lot of those, I guess, easy conversations have already been had, so I guess how do you think about just the improvement of those remaining branches moving forward? And kind of what the trajectory of that could look like moving forward?

Yes. I think overall -- I'll take it and then you can jump in here. It's going to be a multiyear effort, right? I mean we made -- we really started this in -- aggressively in '24 once we kind of saw the results coming out of COVID, last year, we made good progress. But we're expecting 2 or 3 years of just steady improvement with those focused branches move us more towards that normal distribution curve. And so we'll make progress this year, and that's going to help us. This is part of the walk in our return on sales going up as a focus brand should be a consistent contributor to that over the next 2 to 3 years, including this year.

I would just add. It tends to be a multiyear effort. So for example, last year, we made great progress. A bunch of those branches are still in that lower column there. So we've got to make that same amount of progress again this year and maybe even one more year before they really graduate and get off of that bar and other bar. So it tends to take some time to move those efforts. Some things are quick and easy, right? You got to cut -- you've got too many people at the branch cut one, okay, fine. But when you're talking about growing changing your customer makeup, adding additional lines of business, adding additional products, those things just tend to take a little bit longer.

Yes. They sometimes they're more simple to businesses, sometimes it can flip really quickly, and sometimes it takes more time.

Matt Bouley, Barclays. Very similar line of questioning. I think you're basically starting to answer it there around the focus branches. My question was going to be around by definition, there's always going to be a lowest quartile, I guess, as we have this distribution. But what's the difference between the lower-performing branches where it seems like you've got a pretty good line of sight in the lower-performing branches where you just know it's going to be a lot harder. It's kind of what is that difference? And within that, is kind of the fragmentation of the market also part of it? And so just simply consolidating that market may also be what it ultimately takes for the more challenging branches?

I'll take the first step. Again, it tends not to be a market issue. It starts with the team issue. So obviously, you have to replace the leader. You're into a year there because you got to get the new leader on board, new leaders got to come on board, catch the falling knife, turn it around, rebuild the team, move it forward, right? So when it comes to team changes, especially leader changes, it's going to take longer than others. If you have one, which is the example you showed with the acquisition, you have the leader. It's the training initiatives those go faster, much faster, right? So the team is an element that creates some slowness and some stickiness, right? And by the way, you can replace a leader with a leader that your batting average isn't going to be [ 1,000 ], right? So you can also have double replacements, which take on more. The second is product mix and customer mix, those are going to take longer. If you're a mix, if you're too indexed toward large customers, you don't have enough small, you're going to have to get marketing involved. That's going to take some time. The ones that are just have too much in stack, the SG&A cuts can come pretty easily, right? So that would be the factors, I mean, Jerry and Stephanie, you can add to that. But those tend to be the factors that cause you to take a couple of years to turn a branch instead of just kind of quickly. Also the size of the branch. A larger branch, that's a focused branch is going to take you longer to change than a small standard branch. Just by the complexity of the product mix. If you get a full line branch that's underperforming, you've got to make changes in nursery hardscapes, irrigation, that's a harder lift than just a standard branches do an irrigation agronomics and you can change a couple of things and get it right. So does that make sense? So -- and look, these branches are across product groups or across geographies. If they're all in place, whatever it might be even a little easier. But we just -- we have a lot of work to do. And as we described it, we went through the COVID, they everything looked great. They came out of that, they weren't. We don't how to fix them and we're focused on and we're confident we can get there. I think we've used our time. I know we've earned a break here. If you take a break, we'll start again at 10:30. We've got about 12 minutes to get ready to get a drink. [Break]

Awesome. Good morning, everyone. Look, we really appreciate this group taking the time to come and learn more about SiteOne. I had the opportunity to meet with most of you last night. But for those I didn't have the opportunity to meet, my name is Daniel Laughlin. I recently rejoined the company at the first of the year after having been part of the inaugural strategy and development team formed in 2013. I'm thrilled to be back leading the team and excited to walk you through the future of acquisitions and greenfields at SiteOne. Before we talk about the future, I think it's important to understand the past. Since spinning out of [ John Deere ] in 2013, we've completed 108 acquisitions totaling roughly $2.1 billion in annualized sales. Our average acquisition operates at roughly $20 million in annualized sales. And historically, you can see we've had a relatively normal distribution across smaller to larger deals. You can see five of our largest transactions account for close to 30% of the $2.1 billion in annual sales. I'm also happy to say we started the next 10-year stretch off nicely with a large deal in Q1 with [ Reinders ], which has been mentioned previously today, and we'll touch on a bit later. There continue to be several large acquisition opportunities in the market. However, we're really excited about what we refer to as the mid-majors, which are those deals between $10 million and $75 million in annual sales. So we're super proud to have established ourselves as the acquirer of choice in the landscape supply industry over the past 12 years. There's a number of key elements why we believe we're the acquirer of choice. I won't walk you through all these in detail, but I would like to briefly touch on some of them. For starters, we provide owners the autonomy to run their business within the context of the broader SiteOne strategy. We're solely focused on the landscaping industry. This is very attractive to our owners who've been doing that their whole careers. We're a very financially strong organization with a great reputation and a long list of references from former owners, many who continue to work with the SiteOne team. Trust and integrity are huge parts of our acquisition process. We really pride ourselves on that. We do what we say we'll do, and we're incredibly transparent throughout the deal process. As many of you know, the landscaping industry is a tight knit community. We hear the positive feedback often from owners who've had friends or family or competitors partner with us. When we talk about our integration approach, we're super careful and intentional in the changes that we make. We like to take the time to learn businesses as we look to increase sales and profitability over time. Flexible deal structure is something we pride ourselves on as well. We typically try to find win-win situations for owners, and we've been very experienced in providing these flexible deal structures over time. A quick highlight, approximately 85% of our deals have been sourced outside of the competitive process. This is really a tribute to our stellar reputation and the relationships we've developed with owners over the years. So who do we target for acquisitions? It's really pretty easy. We look for strong owners with strong teams. We want to partner with market leaders. These are the companies that are highly regarded in their line of business by our shared customers. We focus on high-performing companies with accretive financial performance and the ability and desire to grow. And we also target businesses that fill in gaps in our market coverage and enhance our position and share of wallet with our customers. So part of being great at acquisitions, obviously, is being able to realize synergies post close. As we talked about a little bit today already, the past several years have been a little choppy for our industry, but I'd like to walk you through how we have historically captured synergies and higher levels of return on invested capital from our more tenured acquisitions in a more normalized environment. If you look at the left side of the chart, you'll see our more tenured acquisitions from 2014 to 2019. This group of acquisitions included 45 companies, which represent about $1.2 billion of the $2.1 billion in acquired revenue. And as you can see, it has a healthy mix across all lines of business. Our average -- excuse me, our average beginning after-tax ROIC for these deals was approximately 11%, and we've been able to increase that to 16% through 2025. The main drivers of this improvement include three primary levers: expanded sales growth through cross-selling and line of business expansion, gross margin enhancement through purchasing synergies and product mix and then SG&A leverage through the consolidation of people, processes and branches. So now talking a little bit about the future. We remain excited about our M&A opportunities, and the next two slides really outline the continued meaningful white space in which we can grow. With all the growth we've had over the last decade, it's really hard to believe we still only offer all our product lines in 30% of our top markets. There are over 100 -- I'm sorry, there are 100 markets where we lack scale in nursery, hardscapes or both. And there's an additional 35 top markets where we have little to no presence. Viewing this through a slightly different lens, the map provides a nice visual outlining the MSAs where we don't have our full suite of products. As you can see in the map, the West Coast and Pacific Northwest remain a significant opportunity in nursery, which we're excited to grow through our [ Devil Mountain ] business, a large California acquisition we purchased in 2024. Additionally, finding a large agronomic business on the West Coast is a huge opportunity for us, along with the multiple opportunities in top markets that you can see throughout the map to fill line of business gaps in both hardscapes and nurseries. Lastly, we continue to have opportunities to buy best-in-class irrigation and agronomic distributors like [ Reinders ], which we spoke about a couple of times today already. [ Reinders ] is a fifth generation $100 million business that we closed in the first quarter. This acquisition highlights our ability to further strengthen our position in markets where we are already the market leader. So another growth lever for us that we're really excited to discuss today is enhancing our greenfield strategy. Historically, our greenfield programs have been driven by our local teams and supported at the company level, averaging around three to four greenfields per year. Moving forward, we'll be much more intentional and anticipate doubling this effort by greenfielding five to 10 branches annually, primarily focused on our agronomic sales centers and standard branches. Greenfields historically have and will continue to deliver above-average return on sales and return on invested capital because of the relatively inexpensive nature to greenfield branch. Equally as exciting is that these efforts typically allow us to enhance our sales and service metrics and reduce our cost to serve because new locations can lower the burden for neighboring branches and allow us to serve our customers more efficiently. To be clear, M&A will continue to be our preferred entry point into the markets. However, we're really excited to accelerate our new complementary greenfield programs to allow us to gain market share faster where we do not have attractive entry point through M&A in the short term. So after 12 years of acquiring top landscape distribution companies, I'm very excited to say the industry remains highly fragmented. We continue to focus on high-performing companies. And if you look at the right side of this chart, you can see we've honed in on and have active relationships with 260 targets, which we believe are the best of the best in the industry. All these companies may not look to sell over the next decade, but many will. And when they do, we're confident we'll have the opportunity to bring them into the SiteOne family. As we previously discussed, these deals that fall between $10 million and $75 million in annual revenue represent not quite 40% of the estimated annual revenue where we have active relationships and it represents a huge opportunity for us moving forward. It's also important to note as well that we know we will continue to discover more best-in-class distributors in that $10 million and below revenue range as we continue to collaborate with our teams across the country and develop new relationships with owners. We have an incredible team of leaders that nurture and develop these relationships daily. So we're super confident in our ability to deliver acquired -- I'm sorry, all this gives us confidence in our ability to acquire $200 million to $300 million each year of annualized sales on average over the next decade. So as you can see, we remain extremely excited about our acquisition and complementary greenfield strategy. As I wrap up, I think it's important to summarize a few things. One, we're the market leader with a strong reputation as the acquirer of choice in our industry. With only 13% market share, acquisitions continue to play a significant role in our growth story. We have deep experience in successfully integrating and capturing synergies with an acquired companies all across all lines of business. We'll greenfield actively to complement our acquisition strategy, which will continue to enhance our ROIC. And we expect to add in excess of $2 billion in acquired sales over the next decade, similar to the previous decade. So I'd like to thank this group again for coming out today. And at this time, I'll pass it over to Joe Ketter, our Executive Vice President of Human Resources, to talk about culture and talent.

Good morning. First, I realize I'm the last thing standing between you and Eric's financial overview. So I'm going to try to keep this tight and as efficient as possible. So bear with me. Again, my name is Joe Ketter for those of you I've not met, I have the pleasure of leading our HR and safety teams here at SiteOne. And I'm excited to have a few minutes this morning to talk about something that we view as a unique and critical driver of our SiteOne performance, and that's our culture and talent. In a business like ours, the success depends on local execution and strong customer relationships, our people and the culture that they operate in are not just part of our story. They are a key competitive advantage. At SiteOne, we are building what we believe is a true great place to work. But that's not just an engagement story. We view it as a key strategic operating advantage. It all starts with safety. Safety is deeply embedded and personal at SiteOne. It reinforces both our care for our associates and our operational discipline. As Doug mentioned earlier, we have a strong values-based team-oriented culture that really sets the tone for how we operate -- it defines how we operate and drives consistency across our business. He also highlighted our unique blend of talent, which includes strong industry talent in the field and strong functional expertise supporting local execution. This combination allows us to scale effectively while we stay close to the needs of our customers. We are utilizing industry-leading strategies to attract, develop and retain the high-performing talent necessary to execute our strategies. The result is we've become a true employer of choice in our industry, which strengthens our ability to hire and retain the high-performing talent to win and drive our continued growth. As I mentioned, safety is critical at SiteOne, and it's a great example of how our culture can drive positive outcomes. As you can see, we do outperform the broader wholesale trade benchmarks when it comes to key safety metrics like recordable and lost time incident rates. But more important than those rates is how we go about doing it. It all begins with leadership commitment. As you've noticed, probably yesterday and this morning, every SiteOne meeting starts off with safety. Each of our communications that go to all associates addresses safety first and initially. Calls are conducted each time we have a lost time accident. Those calls include senior executives like myself, Doug, our presidents, along with local leaders and members of our safety team. And those calls are focused on figuring out what happened, identifying root causes, brainstorming solutions and making sure that we implement the action plans to avoid those incidents in the future. Safety is also integrated into our operations. Branch managers receive daily safety topics that they address each morning in their daily huddles. And there's aligned accountability at every level with coordinated goals and defined safety activities that are included in our incentive plans at all levels of the organization. And finally, we ensure strong local engagement with safety champions for each of our branches. Safety isn't just really about compliance and avoiding incidents at SiteOne. It's about creating a culture of caring that ensures that every one of our associates return home safely to their families every night. As we continue to grow, building a sustainable talent pipeline is obviously important. To do this, we attract talent through our strong employer brand and our unique and clear value proposition. We hire talent by utilizing our specialized SiteOne recruiters and our efficient tech-enabled hiring processes. Over nearly 1/4 of our annual hires now come through associate referrals, and we are outperforming all industry benchmarks in terms of recruiting performance. We've added bilingual capabilities and customer-facing roles at over 70% of our branches, and we continue to reduce our overall cost per hire. We retain this talent by consistently investing in their ongoing development and by providing a large variety of career growth opportunities. Over 700 annual promotions demonstrates the strength of our talent pipeline. So while labor availability can be challenging in our industry, we believe that our strong employer brand, our recruiting capabilities and our culture have allowed us to build the necessary talent pipelines to fuel our ongoing growth. We view talent development as a driver of performance, and it all starts with a structured performance management process that ensures that individual goals are clear and aligned with the goals of the organization. Rewards are then based on actual performance against those goals. So as a result, they're tied directly to our business outcomes. Career ambitions and development plans are reviewed and discussed annually through our talent and succession and performance review processes. We invest heavily in leadership development through vehicles such as our Leadership Academy, where over 360 of our top leaders have spent 3 days with Doug, myself and our leader of learning and development, learning how to build and lead a high-performing team. An additional 700 branch managers have attended 2.5 days of Branch Manager Academy, where they learned specifically how to build and lead high-performing branch teams. And finally, we're conducting lead training for all of our leaders, which focuses on how to listen, how to demonstrate empathy, advocate for and truly develop your associates. We are also building skills and capabilities through customer-focused programs such as customers first, which you've heard referred to a few times today for all of our associates and sales and service training, where we have spent time developing our area leaders, our sellers and our branch managers on how to deliver an exceptional customer experience and drive sales performance at their locations. And finally, role-based development tied directly to our key product categories. These commitments reinforce our culture while improving both our customer experience and our associates' performance. At the field level, we've built robust certification programs that are designed to upskill our associates in each of our key product categories. Over 5,300 certifications have now taken place across seven key product categories. The training is delivered by dedicated experienced product category experts and includes a blended approach of on-demand instructor-led and hands-on training. These certifications also come with pay increases for our associates that tie directly to their skill development and the added value that they're going to bring our customers. These programs create deeper expertise in our branches, improve our customer experience and help us retain our high-performing specialized talent. Our approach to retention is very focused and intentional, and it all begins with ensuring that we hire for our culture fit, utilizing interview guides that are based largely on our DNA. And then we focus on thoughtful, thorough, leader-led onboarding programs that utilize our role-specific onboarding guidelines. Those two items alone have led to our 30-day retention rates now being over 95%. Providing a safe and supportive environment is also critical, where all new associates feel valued, respected and feel like they can be their best and perform at their highest levels. And then finally, we offer real development opportunities and clear career paths for advancement. We pair this with our pay-for-performance model, which ties to our financial performance, safety activities, customer and sales performance and your personal strategic goals. These incentives are aligned from the frontline associates all the way through our senior leaders. So we hire for culture, invest in growth and reward on performance. And the result is stronger engagement, lower turnover, more consistent alignment, which leads to improved execution and performance across our business and our high performers are then recognized and meaningfully rewarded. When you look at our engagement outcomes, you can see that this model is working. Based on our latest engagement survey, which was conducted this past fall, 81% of our associates participated in that engagement survey. Our administrator, [ Willis Towers Watson ], stresses we should be incredibly proud of that response rate given the decentralized nature of our business. 95% of those respondents recommend SiteOne as a safe place to work. 94% told us they feel they're treated with respect, 87% believe strongly in the goals of SiteOne. 83% recommend SiteOne as a great place to work. And finally, 86% are considered engaged in their work. [ Willis Towers Watson ] defines world-class as scoring in the top 15th percentile. Not noted on the slide, but we are also encouraged by the engagement scores of our acquired businesses. While the results vary by company, the overall engagement score for our acquired businesses remains above 80%. These engagement scores are important leading indicators of retention, productivity, quality of execution and most importantly, growth. SiteOne culture and talent are not separate from the business. We view them as too central of how we operate. You might even say we refer to them as our special sauce. They enable consistent local execution, strong customer service, performance against our objectives and most importantly, scalable long-term growth. And we believe that gives us a clear lasting competitive advantage as we continue to grow. Thank you for your time, and I will now turn it over to Eric Elema, who will be providing a financial update.

All right. Good morning, everyone. Finally, the numbers, right? I've met most of you, and I'm assuming I met a lot of people that are live streaming today. But those of you who have not, I am SiteOne's CFO. I've been the CFO since the start of the year. A lot of you dealt with [ John Guthrie ] through the years, and he was a great mentor and it's an excellent opportunity to be up here today. So I'm going to take you through the financial performance and outlook that aligns to the strategy you've heard today. My objective over the next several slides is to show you the track record we've built, the levers we have to drive our margins and returns higher and the framework that gets us to our 2030 targets. Before I get into the details, here are the key messages I want to convey. Since IPO, we've delivered double-digit sales and EBITDA compounded average growth. This demonstrates our consistency through multiple market cycles. Our addressable market has expanded, as Doug covered earlier today. And our share is still relatively small, setting us up for significant growth, both organically and through M&A. We see a clear path to improve EBITDA margin and our return on invested capital. We will not only benefit from the recovery in price, and we've seen that captured today and where we've been recently, but also through our self-help actions and accretive acquisitions going forward. We also are committed to a disciplined capital allocation strategy. A stronger market will only accelerate everything we're doing on the self-help front. Our M&A strategy is long tested and proven. And our integration playbook has gained maturity, and we're able to integrate companies faster and better, and particularly companies of scale that we've acquired through the years. So this overview frames where we were in 2019 before the pandemic, last year's results and our 2030 targets. We believe we have the path to become a 6% to 8% organic grower by 2030 with the benefit of share gain. Net sales have essentially doubled from $2.4 billion in 2019 to $4.7 billion last year, and we're targeting $7 billion to $8 billion by 2030. This assumes a contribution of over $1 billion to sales from new acquisitions at the midpoint of this range, which is consistent with our track record. Gross margin has expanded 200 basis points since 2019 with an achievable target from our perspective of 36% to 37% from our commercial initiatives. EBITDA has grown from roughly $200 million to over $400 million, and we're targeting a range of $900 million to just over $1 billion at our 13% EBITDA margin target. That represents a compounded average growth rate from 2025 to 2030 of 17% to 20%. Looking back, you can see our strong track record of growth represented by this chart. Net sales have compounded at 12% since IPO with more than $3 billion of sales growth over that period. On the organic side, we've averaged 6% organic daily sales growth. M&A has added roughly $1.9 billion to net sales growth over this time period. The important takeaway here is that our growth algorithm is balanced and consistent through organic and M&A execution. We also believe through the actions we've described earlier today, we are better set up to continue to outperform the market going forward. EBITDA has grown on average stronger than sales, including the end market pullback the last few years with 13% compounded average growth -- a 13% compounded average growth rate and roughly $280 million of adjusted EBITDA growth since IPO. EBITDA margin climbed to nearly 12% in 2021 with the benefit of strong demand and the pricing environment and then declined as the market softened and price deflation occurred. Gross margin expanded 350 basis points over the period with about 130 basis points related to product mix from acquisitions. Accounting for this product mix impact, SG&A deleveraged approximately 150 basis points, driven primarily by post-pandemic price deflation as well as focused branches, negative end market demand and the growth investments we chose to make as we built the foundation for a larger company and rapid growth. Despite the weak end market environment, we are set up to achieve SG&A leverage. going forward, like we did last year as a result of our commercial and operational initiatives. As markets gradually improve, SG&A leverage progress will only accelerate. Our unique market position and strategy provide us the confidence to grow the business from $4.7 billion last year to the target of $7 billion to $8 billion by 2030, with an underlying compounded average growth rate of 8% to 11%. The components break down into four main drivers. Market volume is expected to grow 1 to 2 points on average over the 5-year period, which is at or below the growth we experienced during the time frames that Doug covered earlier today. Our assumption is the market is going to be down this year. Unfortunately, it looks a lot like last year. But we're expecting gradual improvement next year. And then as we progress forward from 2028 and onward, we see the potential for market growth slowly returning towards our experience -- our historical experience and getting into positive contribution from the market. Our above -- I'm sorry, pricing. Pricing is expected to contribute roughly 2%, which is right on the average where we consistently experienced from 2015 to 2020. It was like clockwork, 1% to 3% right down the middle. And this year, while there has been some pricing increases that may push us a little to the higher end of that, we're finally in a year where we're not dealing with deflation, flat pricing or something out of our historical norm. Our above market or market share gain growth is expected to achieve 2 to 3 points on average, a rate where we have demonstrated the last couple of years. We believe the market was down at least a couple of points last year, and we delivered 1% volume growth. And M&A growth, as Daniel walked you through, is expected to contribute 3 to 4 points on average, which is lower than our historical performance but at a similar contribution on a dollar basis. We see the opportunity, if you look back over the last 10 years of acquired annual sales, looking forward the next 10 years, a similar dollar amount. These components are achievable from our perspective and where we've demonstrated before in our history. And now we have a couple of years of share gain momentum that we expect to continue. And now to the important topic of margin expansion. We believe we are well positioned to increase EBITDA margin from around 9% today to 13% by 2030. The expansion opportunity breaks down into two themes: the self-help initiatives, which we believe are not dependent on the macroeconomic conditions, where we have momentum and account for the majority of the expansion to the target, and also the improvement in the end market environment. First, self-help. Private label expansion is expected to contribute 80 to 120 basis points, continuing our recent experience of nearly 20 basis points of contribution annually, as [ Shannon ] covered earlier. This includes an assumption of private brand growth increasing roughly 100 basis points per year of total company sales. Delivery optimization is expected to add 40 to 80 basis points over the time period or roughly 10 basis points a year annually. Our delivery improvement initiative is a multiyear program that represents a significant opportunity to align the cost of our fleet and delivery personnel with the associated delivered revenue. We are driving cost-out actions and making delivery more efficient and optimized. And also included in this delivery margin improvement is the standardization of pricing for the delivery service as well as ensuring all deliveries are consistently but, particularly for the heavier products like hardscapes, landscape supplies and nursery products. Procurement efficiencies and small customer growth are opportunities that we expect each to drive margin improvement in the 20 to 40 basis points range. [ Shannon ] covered our strategies to leverage our purchasing scale in hardscapes and nursery. And Shannon took you through the significant opportunity to grow with small customers. We believe both of these strategies will be key contributors to gross margin expansion. You also heard from Stephanie regarding our Focus branch program and the opportunity that remains to improve our underperforming branches. The program has gained maturity and is being executed systematically to improve margins. In 2025, we improved the collective margin of these branches significantly. We believe there are multiple years of self-help improvement opportunities related to drive down the percentage of underperforming branches of our total footprint. Focus branch optimization is going to be a meaningful contributor to margin expansion in the near term and over the 5-year period. Completing the incremental margin improvement story is return to market growth. With a low single-digit market growth assumption contributing to a mid-single-digit trending towards a high single-digit organic growth rate, we believe we can more effectively leverage the business and accelerate SG&A leverage. This also includes an assumption of improving focus branch sales performance as a result of better end market demand. In summary, we believe we can return to double-digit EBITDA under a flat market scenario, reaching approximately 11% to 12% by 2030 and achieve the 13% target with the benefit of historically more typical end market demand returning in 2028 and continuing forward. The bulk of the margin expansion opportunity from our perspective is under our control. We also have pricing initiatives that [ Stephanie ] covered that we expect to benefit margin expansion and are not quantified in this bridge to 13%. Moving on to return on invested capital. The chart on the left provides our performance history back to 2019. We benefited first from the significant increase in demand and then the rapid rise in prices during the pandemic time frame. Return on invested capital then declined below the 2019 level. The chart on the right highlights the significant impact that price deflation had going from 3% positive price contribution in 2019 to deflation of 3% in 2024. This translated to over 2 points of the decline in return on invested capital as a result of the negative impact on sales and margins. In addition, we acquired Pioneer in 2023 as well as some other -- excuse me, made some other acquisitions in 2022 during a period of higher earnings that subsequently underperformed in response to the market pullback. The combined impact of Pioneer in these 2022 acquisitions lowered return on invested capital by nearly 2 points. In 2025, with prices improving from negative 3% to flat, and the turnaround progress we made with Pioneer in these 2022 acquisitions. We increased return on capital by approximately 60 basis points. In addition, a number of our self-help initiatives beyond these acquisition turnaround provided a net benefit of approximately 40 basis points to return on invested capital. From our perspective, this highlights the opportunity to improve return on invested capital in the near term through self-help and the recovery of pricing without the benefit of market growth. Looking forward, as EBITDA margin expands from 9% towards 13%, we expect return on invested capital to increase accordingly. We believe a reasonable target is to exceed 16%, and that would be at a level of margin expansion without the benefit of a positive market. As highlighted earlier, we are focused on growing organically and completing accretive acquisitions. We also increased the level of share repurchases last year and expect to continue our balanced capital deployment approach. Our disciplined capital allocation strategy, which I'll cover in a few slides, will help us accelerate the improvement and get back to the return on invested capital levels we have already achieved in the past. At a 13% EBITDA margin, we believe return on invested capital will reach 20%. The strength of our balance sheet and the capital structure provides us the flexibility to drive our growth strategy. We have consistently maintained our leverage in a targeted range of 1 to 2x. We had available liquidity of roughly $500 million at the end of the first quarter. We recently extended the maturity of the [ ABL ] revolver to 2031, and the maturity date of the term loan isn't until 2030. We've also returned capital to shareholders, repurchasing $98 million of shares in 2025 and another $20 million in the first quarter. We had $194 million remaining under the repurchase authorization at the end of the first quarter, and we'll continue to be opportunistic with respect to buying back shares at this time. Our credit ratings also reflect the financial strength of the business. We have a consistent track record of generating free cash flow. Since 2019, free cash flow has grown on a compounded average of approximately 14%, which is above the EBITDA growth for the same period. We have been converting net income to free cash flow well above 100% the last few years and achieved this result most years dating back to 2019. Our capital-light working capital-efficient business model enables us to turn earnings growth reliably into cash. And the consistent cash generation allows us the flexibility to execute our capital allocation priorities and maintain a strong balance sheet. Turning to capital allocation. We've deployed capital of approximately $1.4 billion since 2019, and our priorities are clear. Acquisitions have been the largest investment at approximately 71% and our highest return growth lever. Capital expenditures were 16%, funding organic growth, new locations and technology investments and share repurchases were approximately 13%, returning capital opportunistically while managing leverage. Also note, we didn't commence our share repurchase program until late 2022. Over the past 3 years, share repurchases were approximately 24% of the capital allocation. Looking forward, we expect this framework to continue over the near term with CapEx running roughly 1% to 1.4% of sales, strategic acquisition investments estimated to be in a range of $150 million to $250 million to acquire $200 million to $300 million on average of annualized net sales and share repurchases of approximately $100 million to $200 million while staying within our 1 to 2x leverage target. We will continue to be disciplined, focused on growth, a strong balance sheet and returning capital opportunistically. Wrapping up with the financial outlook for 2030. As I noted earlier, we are targeting $7 billion to $8 billion by 2030 of annual sales, an 8% to 11% compounded average growth rate from 2025. EBITDA is estimated to be in a range of $900 million to a little over $1 billion by 2030. The base business is expected to contribute 14% to 15% and M&A adding 3% to 5% of compounded average growth to get to a 17% to 20% compounded average growth rate over the period. Cumulative free cash flow is expected to be approximately $2.1 billion to $2.3 billion over the 5-year period and return on invested capital is expected to exceed 16%. The other assumptions are conservative and relatively consistent with our history with working capital of 16% to 18% of sales and effective tax rate of approximately 25%, which excludes any benefits from stock-based comp activity. In closing, most of the improvement in EBITDA margin and return on invested capital is within our control. We are built to achieve these targets. I'll now turn the presentation back to Doug for closing comments.

Great. So there you go. Site One, you've been able to meet our team. You've heard from our team. You've heard a bit about our history and about our industry, where we're positioned and the opportunities that we have going forward. And so we're excited. And these aren't just Doug Black's goals or Eric Elema's goals, et cetera. You can see these goals run deep into SiteOne in order to drive ourselves forward, build a great company and perform for all of our stakeholders from our associates to our customers, to our suppliers, shareholders and communities. So just to sum it up, the landscaping industry is a great industry for wholesale distribution. It lends itself to wholesale distribution, and we're glad we've got an attractive industry to operate in. We're the clear market leader, and we have advantages over our competition that we intend to leverage going forward to grow and perform. We've got well-developed organic growth strategies, and we wouldn't have been able to say that 4 or 5 years ago. And they've been kind of battle-tested and we can leverage those to outperform the market, which we have over the last couple of years going forward. Significant margin opportunity to expand our margins. And you can see that a lot of this is self-help, right? If we get that market that comes back, then you'll see us perform up toward that 13%. But without the market, we can certainly move forward and post strong numbers, which will enhance our growth going forward. We have market-leading technologies, and we aim to continue to build and advance those technologies going forward as we leverage AI and our other systems. We've got a well-established growth engine with acquisitions. We feel that will be steady, that $200 million to $300 million adding to the company going forward to enhance our growth. And then finally, and most importantly, you've got a strong management team. And that's what makes the difference, right, a committed team that's focused on building a great company to ensure that the ups and downs that we navigate to deliver value going forward. So at this point, we'll bring the last set of presenters up, and we'd love to take any questions that you have on what we've presented here today.

So a couple of questions. Number one, on FY '26. I heard during the presentation, you did say volumes down like last year, similar what you said, pricing at the high end. So number one, are you kind of reiterating there? And then I guess you were kind of pointing to kind of a soft market continuing through '27, what you're building the plan around. Is that right? And therefore, to get there, it's a very, very meaningful step up, maybe a catch-up in '28 through '30?

Yes. In terms of guidance, we'd rather wait until the end of July to comment specifically about Q2. But just suffice it to say that we're still very confident in our annual guidance for the year, which has EBITDA margin built into that. And in terms of the second question.

Yes, it's about if '27.

Yes. What we -- as Eric mentioned, we believe the market will be down this year. We've incorporated, I think, modest improvement, I think flat market in '27. And then we think it returns to a more normal market in '28 and forward. We don't have a better crystal ball than any view, right? And we don't tend to make long-term forecast, but that's just the assumption that we've got built into 2027. We'll see how this year develops and we'll have a much better view of '27 when we get to that place. But that's what we've kind of got built into our outlook. So we don't know if that's conservative or aggressive, but it certainly -- we think it's our best view at this point.

Dave Manthey at Baird again. I think last night, Doug, you said we should bring our tough questions. So, when we look at the forecast and we think about what that implies for contribution margins, I'm calculating, if my math is correct, something in the high teens all in, including acquisitions. Ex acquisitions, it would probably push that number into the 20s, north of 20% contribution margin, which is much higher than we've seen recently. And you've outlined a number of factors that, as you said, seem to be well within your control. But I think the hard question here would be, if you looked at the range of opportunities the company has over this next 4- or 5-year period, what are the items that you would say you feel the least confident about? You said most of conservative. just look at it. Is it pricing? Is it your ability to execute some of these initiatives? Which would you say are the ones you're a little bit less confident about?

That's a good question, less confident. We're confident in the things that we can control. We see the opportunity and the largest ones kind of working from the bottom of that bridge that I had a confident in private brand. We've got momentum there. confident that Focus branches contributed last year. It will get tougher, I guess, over time to contribute at the rate they have, but there's an excellent opportunity to drive that. Small customer growth, we're seeing the traction in that. And I guess the component that we can't control is where the market goes. And that could, I guess, stunt the progress to some extent. But on a flat market, we're going to get positive organic growth. If the market was to go down further, stay negative or there was some sort of recession or pullback further in the housing market, I guess that would be somewhere that would take us off that long-term trajectory.

Yes, I'd say that our confidence indexes on the range we provided there for each of those initiatives, right? And then so we feel like all those initiatives are going to pay off, but they could all pay off at the low end, which puts us at the end of the 12 period at kind of 11%, let's say, range. But yes, I mean, we're pretty confident. I think the biggest swing factor is the market, right? Does the market get worse? Do we have a prolonged recession? We're not really in a recession. Do we go into a recession? I mean those were the things that we can't control and that would be the biggest, I think, risk factors for this plan is the market.

Yes. And I'd add, like we went into this year with some confidence in February and rates were moving in the right direction, and we thought we would have a flat market and things change quickly. So now it's 2 years of pretty good. I don't know if I want to call it surprises, but 2 years of shocks between liberation Bay and Middle East conflict and what's next.

Could you remind us on the focus branches, the improvement you expect to see in profitability because of that? Is it similar to what you've seen in the first round of improvement? Is it different? And does it get -- does the degree of difficulty increase? I'm trying to just gauge the confidence in that number given that you've already sort of been through this one time. Does it get harder as you move forward? Or are you just equally as confident you can improve?

Yes. I think that each of these focused branches have plans to improve the margin. They're all unacceptably low. And it may seem like it's lower-hanging fruit to take a branch that 0 to 1% return on sales to 3%, 4%, get a couple of hundred basis points and if that's the average. But I don't think there's anything more challenging from taking a 0% to 2% return branch from a 3% to 5% branch and improve it. All of them are below 6% and the goal is to get off. And the plan is when they set the plan annually is to improve them off the list and then it doesn't stop there. So you can get to 7%, that's great, but that's below the company average. And we want everyone to be performing at or above the company average.

Yes. I'd say it's a lot tougher to move focus branches in a down market than it is in an attractive market, right? So I think if there's risk, there's timing risk there, right? If markets get weaker or they continue to be weak, if '27 is down again, I think it will be tough, tougher to move those branches. If the market comes -- if market is flat in '27 versus down this year, it gets easier. If the market is up in '28, it gets easier, right? So I think with focus branch, the primary risk would be, does it take us longer. I think over the 5-year period, I don't think there's a lot of risk, right? But in '26 and '27, I think there's some risk depending on market weakness. that could delay the timing of kind of focused branch recovery. Does that make sense?

Ryan Merkel of Blair. How do we think about the cadence of the margin improvement? And if the market is flat in '27, can you still do 100 basis points of expansion?

Yes. I think that's more challenging. You can see last year, we had a negative market and we expanded 50 basis points. That would be more of a run rate with a negative market, no market help. The 100 is when we start to get into positive market volume growth.

I figured. I just thought I checked.

Yes. So in down fat market, you think 30 to 50 basis points in an up market, market comes back, that's where you get the 100 basis points movement.

And then, Eric, one of the slides, you had incremental branch EBITDA at 14% to 15% that's a little lower than I would have expected. Talk about some of the assumptions there. Why isn't it higher like 20% is typically what we see at the other distributors?

Yes. other than just a bit of conservatism built in at a higher rate would have implied a CAGR that's over 20% growth to the lofty target. So I would say that the expectation would be higher, but at a higher rate than we're up over 20% and a higher than 13% return on sales.

Yes. We believe without gross margin improvement, without any kind of special initiatives, the growth in these types of distribution businesses, the drop-down is around 15% or so to the bottom line. The reason it's more toward a 20% is because we've got these other initiatives that is kind of juicing those drop-downs.

Keith Hughes from Truist. In that margin waterfall, private label is kind of on par with organic growth and the focus branch improvement. Under your plan, 100 basis points a year, you'd be in about 20% on this. Does that require you to launch private label in more categories? Or maybe said another way, which categories are going to take ahead? I didn't feel like it's going to be LESCO's going to have to be something else...

Right. It's really around the 3 that are growing the fastest, right? So we expect LESCO to outperform the market, but be more of a kind of pedestrian grower contributing. We expect Greentech to be the same way. But ProTrade is the biggest grower. We are going to continue to move into new categories. We've just recently moved into erosion control and synthetic turf with ProTrade. So those are big runners for us that can kind of take us for a couple of years. But yes, it does assume that we go into more categories with our ProTrade brand. And then Solstice and portfolio are expected kind of to grow rapidly as well from a smaller base. So it's those 3 brands that we expect to drive that growth. And those are the brands that have the most margin differential in terms of added to the company. And the other thing about ProTrade, it is our fighting brand, right? So it's actually high margin, but it's very competitive price, right? So that's allowing us to take market share and contributing to our gross margin walk.

One follow-up on that, your private label, how much higher gross margin do you get than most of your competitors?

We don't like to quote specifics, but if you do the -- you can figure that out if you do the -- take the 20 basis points and do some backwards.

Is it -- let me ask it this way. Is it through whether it's ProTrade or LESCO. Is the improvement over the competitor, is it similar? Or are there certain ones that are just dramatically higher?

The ProTrade, Solstice and portfolio would be significantly higher...

Higher margins.

Maybe a question for you, Daniel. Talking about the M&A strategy, you talked about a focus on the major as one to target along with the smaller ones. But you also have on the chart that's like some larger companies that are out there. Would you guys consider expanding into acquiring some of these larger companies above the $75 million, I think, revenue target that you highlighted more aggressively over time? And what leverage would you be willing to go if, let's say, a larger portion were to come through?

I'll save the latter part for Eric and Doug. Absolutely, we go after some of the larger companies that they come available. We try to have relationships with all those companies. To the extent they do come available, we'll be a player in those deals for sure.

Yes. I mean the one thing about acquisitions, sellers sell when they're ready to sell, not when we're ready to buy, right? And if you try to speed that cycle up, then you're overpaying, right? And so we believe in a disciplined long-term approach, especially with those larger companies, right? And we know who they are. We court them. [ Reinders ] is a good example of that, where we had a relationship with [ Craig Reinders ]. We thought over some period of time, they would decide to sell the business. They decided to sell the business. They called us. We had kind of a limited auction. We went in there that we were the most attractive home. And now we have [ Reinders ]. So we already have one of our large ones. Remember, there was 5 in the last 10 years. So we're off to a good start for the next 10 years. But yes, there's attractive opportunities in that large space, but we'll work with them. And when they're ready to sell, we'll be ready buyers. We expect to get most of it in the mid-majors as we have in the past. And again, we're courting them and as they come ready. And then there's a long tail of small that -- some of those we don't even know yet and that we'll be able to mine that as we go forward.

Got it. And for the leverage part, is this something you'd be willing to go above 2x for, let's say, a longer period of time just to be able to realize those synergies on those acquisitions?

I didn't understand.

Sorry, the 2x leverage, 1 to 2x range like if a bigger deal were to come through.

I'd say for now, that could be something we'd evaluate if the opportunity arose, we make that thoughtfully. But I would say our standing guidance is we plan to stay within the 1 to 2x.

Yes. And we think with our cash flow, we're a self-funded engine when it comes to acquisitions. Obviously, we have cash left over that we're using to purchase shares. We keep a very strong balance sheet just for that reason, right? We could have a year where we have -- and look, I'm not forecasting this, but we could have a year where 2 or 3 of the big ones come due. Well, we want to be able to do those deals. I mean we will do those deals, right? But we craft our balance sheet so that we can do those deals and still keep our leverage. As you saw the other -- the competitors there, this is an industry that doesn't have huge fish to purchase, right? They're mostly very adjustable size to go after.

Matt Bouley, Barclays. Thanks again for all the great detail today. I wanted to ask a question on the return on invested capital outlook. So greater than 16% and the potential path to 20%. It seems like the EBITDA margin, of course, is doing a lot of the heavy lifting there. My question is more around the denominator and kind of how do you grow that numerator more than the denominator here while you're doing all these acquisitions. Maybe the way the answer to the question would be kind of talk about sort of what led to the increase in invested capital over the prior years and how you're kind of thinking differently about the future on limiting that increase in invested capital to sort of allow the returns to kind of get you to those targets?

Yes. Like you said, the margin is doing a lot at a much higher margin. And you can see at nearly 12% where we were. I recognize the denominator is growing. We are buying back shares. It's not something we were doing before then. It just started late 2022. So at the height of that chart that I had up, you can see we weren't buying back shares there. And also stress the accretive acquisition investment aspect of our strategic investment. So that's going to benefit the return on that denominator more than it has, especially recently.

Plus you've got the self-help aspect of that, right, where you're kind of turning around our focused branches, et cetera, which tend to be pretty high return parts of that.

And we'll be more opportunistic from a buyback front, in the current environment.

[ Jim Sheehan ] from State of Georgia. When you think about your acquisitions over the last 4 or 5 years, which deal would you say was most disappointing for you? And what would you say lessons you learned from that, that you're applying to the pipeline going forward?

Right. Great question. Some of the deal -- as Eric mentioned, well, first of all, let's talk about Pioneer. We bought Pioneer. We knew Pioneer was a turnaround situation. It had 30 locations in Colorado and Arizona, fast-growing markets. and we went for that deal. It's as -- this is why we don't do turnarounds for a Living. Pioneer is -- it's long term, got great characteristics, and we're fixing the business and we're improving the business rapidly. But it's taken a lot of work. And the lesson learned is, going forward, stick with our core strategy, which is buying well-run companies that pull you forward. That being said, Pioneer has given us a great strategic position in those markets. So we're glad we did it. It's been a lot of work. We're on our way on that. The -- we did some deals in 2022 peak market, we paid lower multiples, but the lower multiple didn't take in account the fall from that peak market to today, right? And so we're fixing those. Those are part of our focused branch efforts. And so it reminds us that you got to watch -- when you're doing acquisitions, you got to watch market cycles, right? And low multiples don't necessarily take care of market risk at a peak of a market, right? So I think that's the lesson learned there. By and large, these are all deals that fit in our network, and they were high performers, they'll be high performers again. Some of those were done during the worst possible time, and they weren't integrated. And it reminds us how powerful our pricing team is. When costs move, our pricing team is right on top of that. And with these acquisitions, they don't have pricing teams, right? And so if you buy them in a volatile period, they won't have the ability in. COVID was a 100-year flood and some of these even great entrepreneurs that had strong businesses couldn't handle the ups and downs of COVID, right? And so we kind of saw that. But yes, those would be the lessons learned. The good thing is all things are fixable, and we can drive those forward. They're part of the reason that we're going to expand our margins going forward and the return on invested capital comes back.

I wanted to go back to digital again, which is one of the initiatives I'm probably more excited about. The potential is massive. I saw in the slides that it said you could offer more products. So I'm curious what those products are and like how big that could be? And then you mentioned same-day or next-day delivery. Are you doing that today? And is that coming from the branches? Or are you doing that from the DCs?

Yes. I think in terms of products, Carl, you might want to -- why don't you cover the products, and I'll cover the same day next day.

Yes. I think regarding the product, there are adjacencies, I guess, in our business that we could add on. I don't know that we've gotten into specifics as to what those are, but they're certainly adjacent things that our customers consume along the way. So those would be things that we wouldn't carry in the branch. We carry them in the DC and could ship direct from there. And then same day next day.

Yes. That's something that we're planning to do. Obviously, customers can pick up at the branch same day, next day. But that's -- we're talking about a more traditional online to very small customers where we can offer that primarily out of the DC would be the strategy there. And we're standing that up with our break pack area. and we're looking to kind of pilot that and grow that over the next several years. So that's work in progress.

Andrew Carlson, Ohler Capital. In your long-term guide, do margins for your peers or competitors stay where they are today? Or do they get more or less competitive over time? And how does that impact your ability to get to 13%?

We don't know what our margin. There's not a lot of competitors that we have the financials for unless we acquire them. But I don't think our strategies impact the competitors' margins. We're obviously, we're gaining market share in certain spots, right, which could impact bottom lines of some competitors. But our strategies aren't putting any competitors out of business. And we have good competitors that are -- will copy us, right, to kind of improve their bottom line. So I don't think our strategies will have a significant impact on our competitors other than they'll be growing their sales a little less, and we'll be growing our sales a little more. But we're not putting people out of business at the share gains that we're talking 2% to 3% points of market share is very manageable, especially if the market is growing.

Including adjacencies.

Think about that we have 13% market share, right? So we're growing 2% or 3%, but we're growing it on a 13% base, right? If you take the rest, the 87%, that's growing. There's plenty of growth there for our competitors. So we feel like we can execute our strategies still have good competition that are competing hard as well and doing well. Some of our competitors will do well just like we will. It's a very, very fragmented market with thousands of distributors, right? So that's the beauty of it. There's lots of small competitors.

We have some online questions. I think just to build on that market share, you guys laid out 2% to 3%. How does that compare to some of your larger competitors and their comments that they're also taking share? And how are you advantaged against some of your larger competitors?

Yes. Like I mentioned, we compete hard against the larger competitors. Most of the competition there is in for that large, the customer, the commercial business, et cetera. I'm sure some of our competitors are gaining market share. Again, it's a highly fragmented market, and there's lots of competitors. So there's room for more than just one consolidator in this industry, right? We're a consolidator. There are other consolidators in the market. There's plenty of room for competition for a strong #2 or #3, #4, et cetera, right? And there's some good companies in those sets. And they're using strategies similar to us, not only to compete against us, but to compete against our other smaller competitors. So we feel good. We've been competing against the competitors that are in our competitor set for that whole 10-year history. I think we know them pretty well. They know us pretty well. We feel confident in our ability to gain share.

And then just one more from online. If you think about kind of siteone.com, what categories or lines of business are driving that growth? And how do you think about kind of your technology capabilities as a competitive advantage versus other competitors?

I got Yes, the growth today is, as Carl outlined in the chart, irrigation and agronomics kind of led the growth. But partially, that was because of our data and our ability to service the nursery, the hardscapes, the harder to serve product lines. Now that we have our data in place, I think you'll see those product lines catch up to irrigation and agronomics. So -- and I mean, Carl, you might add to that. I mean we're seeing that today as nursery and hardscapes are growing rapidly. And over time, we think all those products lend themselves to digital. And so there's no reason why they won't ramp up. Customer size, the larger customers were the faster movers than the smaller customers. But as our product gets better, it will attract customers of all sizes.

Yes. No, that's exactly right. We've invested a lot in our product data, specifically in nursery and hardscapes. Kind of unique categories requires different taxonomies to get to the product that you're looking for. And then that combined with our quotes feature where we have customers who are purchasing kind of large jobs across more lines of business kind of in one transaction, that lends itself also to building a complete basket across more of those lines of business. So yes, what Doug said is that nursery and hardscapes are playing catch up at this point and growing on a percent basis at a faster rate.

Great. Any other questions?

I think there's more in the back of the room. Andrew, you got one...

I want to come back to the waterfall on Slide 108. The self-help on the left, is it completely independent of the end market side? And I think at what level on the end market side or organic growth, would you start to face sales deleverage, i.e., your margin would be stuck in the mud despite what you're doing internally?

Yes. I think the way we laid it out was this doesn't include any market growth, but it doesn't assume that the market goes down further. It includes our assumptions around this year and then maybe a more flat market next year. If there was a further decline in the market, that could have a negative impact on what we define as self-help contribution.

Yes. We obviously -- if we went into a full-blown recession, obviously, that would impact negatively margins, right? So not expecting that, but our assumptions are down market in '26, flattish, '27, '28, some recovery. Things get worse, obviously, we're pushing against those assumptions. Okay. Well, great. Well, thank you for your attention, your time. We've enjoyed hosting you here at SiteOne. We feel good about our story. We look forward to keeping in touch as we move forward. And I hope everybody here has a safe trip home. Thank you very much.