SITE Q1 Earnings Call: Organic Sales Decline Offset by Acquisitions, Tariff Uncertainty Remains

Agriculture products company SiteOne Landscape Supply (NYSE: SITE) reported Q1 CY2025 results topping the market’s revenue expectations, with sales up 3.8% year on year to $939.4 million. Its non-GAAP loss of $0.33 per share was 23.9% above analysts’ consensus estimates.

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StockStory’s Take

SiteOne’s first quarter results were shaped by modest organic sales declines, offset by contributions from recent acquisitions and improved operational efficiencies. Management pointed to weather-related disruptions and continued price deflation in key categories like PVC pipe and grass seed as primary headwinds. CEO Doug Black highlighted the company’s efforts to drive growth through both commercial initiatives and acquisition strategy, noting, “We believe that we are outperforming the market consistently through our commercial initiatives, and our end markets, though softer, have remained resilient.”

Looking ahead, SiteOne’s guidance reflects a cautious outlook due to ongoing macroeconomic uncertainty, particularly around tariffs and consumer confidence. The company expects pricing to shift from a headwind to a slight tailwind as supplier cost increases take effect, with volume growth anticipated to be positive for the remainder of the year. CFO John Guthrie emphasized the increased uncertainty, stating, “Given the changing nature of tariffs, there is greater uncertainty than normal in our outlook.”

Key Insights from Management’s Remarks

SiteOne’s leadership attributed the quarter’s financial performance to a mix of external pressures and strategic actions, while emphasizing ongoing initiatives to improve profitability and market share.

• Acquisition-Driven Growth: Recent acquisitions in nursery and hardscape businesses contributed to net sales growth, particularly compensating for softer organic volumes and helping expand SiteOne’s presence in key regional markets.
• Operational Efficiency Initiatives: SiteOne’s cost control measures, including branch consolidation and focused improvement in underperforming locations, led to lower base business SG&A (selling, general, and administrative expenses) and improved leverage despite overall higher expenses from acquired businesses.
• Digital and CRM Expansion: Significant investment in digital tools, such as siteone.com and DispatchTrack, boosted digital sales by 140% and improved delivery efficiency. Management noted these tools help capture market share and enhance productivity among sales associates.
• Product Line Strategy: The company is systematically increasing its share with small customers and promoting proprietary brands like Pro-Trade and Solstice Stone, which grew 30%, as part of its gross margin improvement initiatives.
• Tariff and Price Pass-Through: Management expects recently announced supplier price increases, due to tariffs on imported goods, to become a slight pricing tailwind in 2025. SiteOne is working to pass these costs through to customers, especially in product categories like irrigation and lighting.

Drivers of Future Performance

Management’s outlook for the remainder of the year centers on navigating uncertain macroeconomic conditions, executing cost initiatives, and leveraging both organic and inorganic growth strategies.

• Tariff-Driven Pricing Dynamics: Management expects price increases from suppliers, attributed to tariffs, to provide a modest offset to previous price deflation. The company is monitoring the ability to pass these increases to customers without impacting demand.
• SG&A Leverage and Cost Actions: Ongoing efforts to improve sales force productivity, branch efficiency, and delivery management are expected to support operating margin improvement even if end-market demand remains flat or softens.
• Acquisition Pipeline and Market Fragmentation: While the company anticipates a lighter year for new acquisitions due to macro uncertainty, the fragmented nature of the landscaping supply industry leaves substantial long-term runway for inorganic growth.

Top Analyst Questions

• David Manthey (Baird): Asked about the progress of DispatchTrack and focused branch initiatives; management noted measurable SG&A savings and ongoing branch-level improvements, particularly at the Pioneer acquisition.
• Ryan Merkel (William Blair): Sought clarity on organic sales growth expectations for Q2 and the impact of tariff-driven price increases; management projected low-single-digit growth and described pricing as likely flat to slightly positive.
• Damian Karas (UBS): Questioned gross margin outlook amid stabilizing commodity prices and rising freight costs; management expects gross margin to remain steady, with most improvement coming from SG&A leverage.
• Charles Perron-Pich (Goldman Sachs): Inquired about inventory management strategies given inflation and macro uncertainty; SiteOne is selectively building inventory in tariff-affected categories while maintaining flexibility for future acquisitions and capital allocation.
• Collin Verron (Deutsche Bank): Focused on the sustainability of cost actions and SG&A benefits if end-market softness persists; management affirmed most improvements are embedded in guidance and can adjust labor costs as needed.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will monitor (1) SiteOne’s ability to pass through tariff-related supplier price increases without dampening demand, (2) progress in driving SG&A leverage and operational efficiencies from digital initiatives and focused branch improvements, and (3) the pace and quality of acquisitions against a backdrop of industry fragmentation and macro uncertainty. Trends in residential and commercial construction markets, as well as consumer confidence, will remain important factors to watch.

SiteOne currently trades at a forward P/E ratio of 32×. Is the company at an inflection point that warrants a buy or sell? Find out in our free research report.

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