SiteOne Landscape Supply Inc.: Takeaways from the Road

Research evidence excerpt

SiteOne Landscape Supply Inc.: Takeaways from the Road

f market growth would be

ultimately required to support more significant SG&A leverage and fully achieve the LT targets.

In addition, we think that historically cases of dilutive M&A may have slowed the path to margin

expansion, though we think management may be less likely to acquire lower-margin targets in

the future. Still, we have always thought it difficult to combine the key theme of M&A with an

expectation of stronger margin expansion, and we’ll look for more detail at the Investor Day.

Potential Inflation Upside: With 1Q results, SITE increased its guidance for inflation in 2026 to

+2-3% from +1-3%, with some investors potentially disappointed by the relatively mild increase

in guidance. We had suspected more inflation was on the horizon and the company would not

be likely to guide to that until the price was in the market. Today, with continued inflation in

PVC (and price increase announcements from manufacturers in PVC pipe) as well as urea

(fertilizer input), we think it likely that SITE should see incremental inflation with potential to

exceed guidance, should these recent input cost increases stick in product prices. However, we

do note that elasticity bears watching, given PVC pipe is more tied to softer residential markets,

while historically fertilizer has been known to see demand elasticity when prices rise.

End Markets Slower YTD: Coming into this year, SITE initially guided to flat end markets, with

an expectation of less pressure in new residential (but still decline) and flatter R&R activity. As

we moved into April earnings, SITE marked that down, with R&R now guided to decline LSD%

and new residential now seen to be down HSD% or even LDD%. Positively, we get the