SiteOne Landscape ((SITE)) has held its Q1 earnings call. Read on for the main highlights of the call.
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SiteOne Landscape’s recent earnings call for the first quarter of 2025 revealed a generally positive sentiment, highlighting a strong start to the year with notable sales growth and a successful acquisition strategy. However, the company also faced challenges, such as flat organic sales volume, a decline in gross margin, and an increased net loss. The outlook for acquisitions remains uncertain due to macroeconomic factors.
Solid Start to 2025
SiteOne Landscape reported a 4% net sales growth and a 6% increase in adjusted EBITDA in the first quarter of 2025. This achievement came despite challenging weather conditions and a late spring season, showcasing the company’s resilience and effective management strategies.
Successful Acquisition Strategy
In early 2025, SiteOne added two companies to its portfolio, marking over 100 acquisitions since 2014. This strategy has strengthened its product offerings and expanded its team, contributing positively to the company’s overall growth.
Digital Sales Growth
The company experienced a remarkable 140% growth in digital sales in Q1 2025, building on a 180% increase in 2024. This surge was driven by the growing adoption of the siteone.com platform, reflecting a successful digital transformation.
Improved SG&A Leverage
SiteOne managed to decrease SG&A expenses for its base business by 3% in the first quarter of 2025. This improvement resulted from effective cost control measures implemented in 2024, enhancing operational efficiency.
Positive Sales Momentum
Despite a slow start, volume growth turned positive in March and continued into April. The company expects low-single-digit organic daily sales growth throughout 2025, indicating a recovery in sales momentum.
Flat Organic Sales Volume
Organic daily sales saw a 1% decrease in Q1 2025, with flat organic sales volume attributed to adverse weather and a softer repair and remodel market. These factors posed challenges to organic growth.
Gross Margin Decline
SiteOne’s gross margin declined by 30 basis points in the first quarter of 2025. This was primarily due to lower price realization and increased freight costs, impacting profitability.
Net Loss Increase
The company reported a net loss of $27.3 million in Q1 2025, up from $19.3 million in the same period the previous year. This increase highlights the financial pressures faced amid challenging market conditions.
Commodity Price Deflation
SiteOne experienced continued price deflation in commodity products, such as a 21% decrease in PVC pipe prices and a 10% drop in grass seed prices in Q1 2025. This deflation affected the company’s pricing strategy.
Uncertain M&A Outlook
The outlook for mergers and acquisitions in 2025 appears uncertain, with expectations of lower acquired revenue due to macroeconomic uncertainties. This could impact SiteOne’s growth strategy in the near term.
Forward-Looking Guidance
Looking ahead, SiteOne Landscape anticipates low-single-digit organic daily sales growth and a full-year adjusted EBITDA ranging from $400 million to $430 million, excluding potential future acquisitions. Despite a 1% price deflation, the company expects modest price inflation driven by supplier price increases due to tariffs. Gross margins are projected to remain steady, with improvements in SG&A leverage.
In conclusion, SiteOne Landscape’s earnings call reflected a mix of optimism and caution. While the company demonstrated strong sales growth and effective acquisition strategies, challenges such as flat organic sales and increased net loss remain. The forward-looking guidance suggests cautious optimism, with expectations for modest growth and steady margins.