Executive Summary / Key Takeaways

• SiteOne Landscape Supply, the industry's largest wholesale distributor, is poised for Adjusted EBITDA margin expansion in 2025, driven by aggressive operational efficiencies and consistent market share gains despite a challenging macroeconomic backdrop.
• The company's robust acquisition strategy, marked by over 100 deals since 2014, continues to broaden its product portfolio and geographic footprint, reinforcing its unique position as the only national full-line distributor.
• Strategic initiatives, including significant SG&A leverage from "focus branches" and the full integration of Pioneer, coupled with rapid digital sales growth (over 130% in 1H 2025) and enhanced delivery efficiency, are key drivers of profitability.
• Despite ongoing commodity price deflation in certain products like PVC pipe and grass seed, SiteOne anticipates overall flat pricing for 2025, with low single-digit organic daily sales growth fueled by strong performance in the resilient maintenance end market.
• SiteOne maintains a strong financial position, with $578 million in available liquidity as of Q2 2025, providing ample flexibility for continued strategic investments and shareholder returns through share repurchases.

The Landscape Leader's Strategic Roots

SiteOne Landscape Supply, Inc. (NYSE:SITE), incorporated in 2013, has rapidly established itself as the largest and sole national full product line wholesale distributor of landscape supplies across the United States and Canada. Operating over 680 branches in 45 U.S. states and six Canadian provinces, SiteOne offers an extensive selection of approximately 170,000 SKUs, ranging from irrigation supplies and hardscapes to nursery goods and agronomic products. This expansive network and comprehensive offering underpin its estimated 18% share of the fragmented $25 billion wholesale landscaping products distribution market, signaling a substantial runway for continued growth.

The company's overarching strategy is to leverage its unparalleled scale, resources, and functional talent to deliver superior value to its professional landscape customers and suppliers. This foundational approach is designed to drive organic growth, fuel acquisition-led expansion, and systematically enhance Adjusted EBITDA margins. SiteOne's business model is well-balanced across end markets, with 65% of sales derived from maintenance, repair, and upgrade activities, 21% from new residential construction, and 14% from new commercial and recreational construction. This diversification provides crucial resilience, particularly in periods of market softness.

The industry currently faces a complex macroeconomic environment, characterized by elevated interest rates, housing affordability challenges, and geopolitical uncertainties, all contributing to weakened consumer sentiment. Despite these headwinds, the long-term outlook for the landscape supply industry remains robust, supported by favorable population trends, sustained housing demand, and a growing interest in outdoor living spaces. SiteOne's strategic response involves a relentless focus on operational excellence and commercial initiatives designed to outperform the market.

Technological Edge and Operational Innovation

SiteOne's competitive differentiation is increasingly rooted in its strategic investments in technology and operational innovation, which enhance its service model and drive efficiency. The company's core technological advantage lies not in product manufacturing, but in its advanced digital platforms and sophisticated operational systems that streamline its distribution and customer engagement.

A prime example is SiteOne's digital transformation, spearheaded by its B2B e-Commerce platform, SiteOne.com, and its mobile application. This initiative provides tangible benefits by increasing customer connectivity and efficiency. Digital sales surged over 130% in the first half of 2025, building on a remarkable 180% growth in 2024. Customers who engage digitally with SiteOne demonstrate significantly faster overall business growth with the company. This digital leadership creates a powerful competitive moat, making it easier for customers to conduct business, fostering stickiness, and ultimately driving market share gains while improving internal productivity.

Complementing its digital efforts are operational efficiency systems like DispatchTrack and its enhanced Customer Relationship Management (CRM) platform. DispatchTrack, a delivery tracking software, is instrumental in improving the efficiency of SiteOne's delivery fleet and associates. In the first half of 2025, the company successfully reduced its net delivery expense by over 40 basis points on delivered sales, which account for approximately one-third of total sales. This ongoing initiative is expected to yield significant progress over the next two to three years, directly contributing to SG&A leverage. The CRM system, meanwhile, is leveraged to boost sales force productivity, enabling outside sales associates to cover approximately 10% more revenue in 2025 without additional headcount. Furthermore, SiteOne is integrating and leveraging Pioneer's specialized bulk material delivery and point-of-sale system functionality across its broader business, demonstrating a commitment to continuous improvement through internal innovation. These technological advancements collectively enhance SiteOne's competitive position by driving cost efficiencies, improving customer service, and enabling consistent market outperformance.

Strategic Evolution and Financial Performance

SiteOne's history since its 2013 incorporation is defined by a disciplined and aggressive acquisition strategy. This approach culminated in its 100th acquisition in March 2025, having added over $2 billion in acquired revenue since 2014. Recent notable additions include Grove Nursery and Nashville Nursery in July 2025, Green Trade of Georgia and Pacific Nurseries (via the Devil Mountain joint venture) in Q1 2025, and Custom Stone and OakStreet Wholesale Nursery in Q4 2024. These acquisitions are crucial for filling product line gaps, expanding geographic reach, and integrating new talent.

The company faced significant headwinds in 2023 and 2024, including broad commodity price deflation (notably in PVC pipe and grass seed), and a softer repair and upgrade market. The acquisition of Pioneer, a large turnaround opportunity, also initially diluted Adjusted EBITDA margins. In response, SiteOne implemented robust cost control measures and operational enhancements. This included streamlining its base business and aggressively managing "focus branches"—underperforming locations with Adjusted EBITDA margins below 6%. These efforts led to a more than 200 basis point improvement in the Adjusted EBITDA margin of these focus branches in the first half of 2025. Additionally, SiteOne consolidated or closed 22 locations in 2024 to optimize its branch network and reduce costs, with Pioneer now fully integrated and restructured to realize SG&A reductions.

SiteOne's second quarter 2025 financial results underscore its operational resilience. Net sales grew 3% to $1,461.6 million, with acquisitions contributing $40.9 million. Organic Daily Sales remained flat, as solid growth in the maintenance end market offset softer demand in new residential construction and repair and upgrade. Agronomic products, benefiting from strong demand in maintenance, saw organic daily sales increase 7%, while landscaping products decreased 1% due to softer construction markets and unfavorable weather. Gross profit increased 4% to $531.4 million, with gross margin expanding 30 basis points to 36.4%, driven by improved price realization, strategic initiatives, and contributions from higher-margin acquisitions. Selling, General, and Administrative (SG&A) expenses as a percentage of net sales decreased 40 basis points to 23.9%, reflecting strong efficiency gains. Consequently, Adjusted EBITDA increased 8% to $226.7 million, with the Adjusted EBITDA margin improving 60 basis points to 15.5%. Net income attributable to SiteOne rose 7% to $129.0 million.

For the six months ended June 29, 2025, net sales reached $2,401.0 million, up 4%, with organic daily sales flat. Gross profit increased 4% to $841.2 million, though gross margin remained flat at 35.0%. Net cash provided by operating activities for the six-month period was $7.1 million, a decrease from $48.1 million in the prior year, primarily due to a higher seasonal investment in inventory in anticipation of tariffs. Net cash used in investing activities decreased to $37.9 million from $119.8 million, reflecting lower acquisition investments compared to the previous year. SiteOne's liquidity remains strong, with $578 million in available liquidity as of Q2 2025, comprising $79 million in cash and $499 million in available ABL facility capacity. Net debt stood at $532 million, resulting in a conservative 1.3x leverage ratio against trailing twelve-month Adjusted EBITDA, well within its target range of 1x to 2x. The company also actively returned capital to shareholders, repurchasing 494,609 shares for $54.3 million in Q2 2025, its largest repurchase quarter since the program's inception in October 2022, with $254.3 million remaining under authorization.

Competitive Positioning and Market Dynamics

SiteOne's competitive standing is formidable. It is more than three times the size of its nearest competitor and larger than the next nine combined, a testament to its scale and strategic execution. This market leadership provides significant advantages, including superior purchasing power, a robust distribution network, and the ability to invest in differentiating technologies and services.

Compared to direct competitors like Pool Corporation (POOL), Scotts Miracle-Gro Company (SMG), Central Garden & Pet Company (CENTA), and Tractor Supply Company (TSCO), SiteOne distinguishes itself through its comprehensive, full-line wholesale distribution model tailored for landscape professionals. While POOL excels in specialized recreational outdoor products and SMG in branded consumer lawn care, SiteOne's strength lies in its integrated consultative services, extensive branch network, and broad product range, which are critical for complex commercial projects. SiteOne's gross profit margin of 35.85% (TTM) and EBITDA margin of 5.91% (TTM) demonstrate solid profitability, though some rivals like POOL (30% gross margin, 12% operating margin in 2024) or TSCO (36% gross margin, 10% operating margin in 2024) exhibit different margin profiles reflecting their distinct business models and customer bases. SiteOne's focus on operational leverage is key to closing any margin gaps with more specialized or retail-focused competitors.

SiteOne's technological investments, particularly in digital platforms and delivery optimization, further enhance its competitive moat. These tools improve customer efficiency and stickiness, driving market share gains that smaller or less technologically advanced competitors may struggle to replicate. The company's disciplined approach to acquisitions, coupled with its reputation as a preferred partner for integrating new businesses, reinforces its long-term growth trajectory in a highly fragmented industry.

Outlook and Strategic Imperatives

SiteOne's management projects a full-year 2025 Adjusted EBITDA in the range of $400 million to $430 million, excluding contributions from unannounced acquisitions. This guidance reflects a strategic confidence in the company's internal initiatives to drive performance, even as the broader end markets are expected to be "slightly down" year-over-year in the second half of 2025.

The pricing environment is anticipated to normalize, transitioning from a negative 1% in Q1 2025 to flat in Q2, and then to a positive 1% to 2% in Q4 2025, resulting in overall flat pricing for the full year. This shift is driven by a moderation in commodity price deflation (e.g., grass seed expected to be down 10-20% in 2H 2025) and the pass-through of mid-to-high single-digit price increases from suppliers, partly due to tariffs.

From an end-market perspective, new residential construction is expected to be down in 2H 2025, particularly in previously strong Sun Belt markets, due to persistent affordability and interest rate challenges. The repair and upgrade market is also projected to remain soft. Conversely, the maintenance end market is expected to continue its steady growth, and new commercial construction is anticipated to remain flat. Despite these mixed market signals, SiteOne expects sales volume to be slightly positive in the second half of 2025, leading to low single-digit organic daily sales growth for the remainder of the year, a direct result of its commercial initiatives.

Gross margin for 2025 is expected to be similar to 2024, with initiatives, improved price realization, and acquisition contributions offsetting higher freight costs. The primary driver of profitability improvement will be SG&A leverage, stemming from the strong cost control actions taken in 2024, including the optimization of "focus branches" and the full integration of Pioneer. Management anticipates "solid Adjusted EBITDA margin expansion" for the full year 2025 and believes it is positioned to continue expanding margins for the next five to seven years, targeting the 13-15% range.

Conclusion

SiteOne Landscape Supply stands as a compelling investment proposition, demonstrating remarkable resilience and strategic foresight in a dynamic market. Its core investment thesis is rooted in its unparalleled market leadership, a robust acquisition engine that consistently expands its footprint and capabilities, and a relentless pursuit of operational excellence driven by technological innovation. Despite facing macroeconomic headwinds and commodity price deflation in recent periods, SiteOne has effectively leveraged its scale and strategic initiatives to drive market share gains and enhance profitability.

The company's commitment to digital transformation and operational efficiencies, evidenced by significant growth in online sales and reductions in delivery costs, provides a durable competitive advantage. Coupled with the successful integration of key acquisitions like Pioneer and the systematic improvement of underperforming branches, SiteOne is well-positioned for sustained Adjusted EBITDA margin expansion. While market uncertainties persist, SiteOne's balanced end-market exposure, strong liquidity, and clear strategic roadmap underscore its capacity to outperform and deliver long-term value to shareholders, solidifying its position as the undisputed leader in the landscape supply industry.