Greetings! Welcome to the SiteOne Landscape Supply Third Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the call, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. At this time, I would like to hand the call over to John Guthrie, Executive Vice President and Chief Financial Officer. Thank you. You may begin. Thank you, and good morning, everyone. We issued our third quarter 2023 earnings press release this morning and posted a slide presentation to the investor relations portion of our website at investors.siteone.com. I'm joined today by Doug Black, our Chairman and Chief Executive Officer, and Scott Salmon, Executive Vice President, Strategy and Development. Before we begin, I would like to remind everyone that today's press release, slide presentation, and the statements made during the call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. Such risks and uncertainties include the factors set forth in the earnings release and in our filings with the Securities and Exchange Commission. Additionally, during today's call, we will discuss non-GAAP measures, which we believe can be useful in evaluating our performance. A reconciliation of these measures can be found in our earnings release and in the slide presentation. I would now like to turn the call over to Doug Black. Thanks, John. Good morning, and thank you all for joining us today. We were pleased to see end market demand remain resilient in the third quarter, which allowed us to achieve positive sales volume growth. That said, deflation in select commodity products like PVC pipe, grass seed, and fertilizer was stronger than we expected, which had a negative impact on organic daily sales and on both gross margin and adjusted EBITDA margin during the quarter. We expect these negative deflationary effects to continue during the fourth quarter, but moderate in 2024 as commodity prices stabilize. In the current challenging environment, our teams executed well by gaining market share, driving positive organic sales volume growth, and managing through the price deflation. Acquisitions also contributed 6% net sales growth during the quarter. We were very pleased to add six new high-performing companies that represent approximately $230 million in trailing twelve-month sales to SiteOne during the quarter. Through the execution of our commercial and operational initiatives and our acquisition strategy, we continue to build SiteOne as a world-class market leader for the long term, while managing through the near-term market challenges. We remain confident that our well-balanced business, strong balance sheet, exceptional teams, improved capabilities, and robust acquisition pipeline position us well to achieve strong performance and growth over the coming years. I will start today's call with a brief overview of our unique market position and our strategy, followed by some highlights from the quarter. John Guthrie will then walk you through our third quarter financial results in more detail and provide an update on our balance sheet and liquidity position. Scott Salmon will discuss our acquisition strategy, and then I will come back to address our latest outlook before taking your questions. As shown on slide four of the earnings presentation, we have grown our footprint to more than 690 branches and four distribution centers across 45 U.S. states and six Canadian provinces. We are the clear industry leader, over four times the size of our nearest competitor, yet we estimate that we only have about a 16% share of the very fragmented, $25 billion wholesale landscaping products distribution market. Accordingly, our long-term growth opportunity remains significant. We have a balanced mix of business, with 65% focused on maintenance, repair, and upgrade, 21% focused on new residential construction, and 14% on new commercial and recreational construction. As the only national full product line wholesale distributor in the market, we also have an excellent balance across our product lines as well as geographically. Our strategy to fill in our product lines across the U.S. and Canada, both organically and through acquisition, further strengthens this balance over time. Overall, our end market mix, broad product portfolio, and good geographic coverage offer us multiple avenues to grow and create value for our customers and suppliers while providing important resiliency in softer markets. Turning to slide five, our strategy is to leverage the scale, resources, functional talent, and capabilities that we have as the largest company in our industry, all in support of our talented, experienced, and entrepreneurial local teams to consistently deliver superior value to our customers and suppliers. We've come a long way in building SiteOne and executing our strategy, but we have more work to do as we develop into a true world-class company. Accordingly, we remain highly focused on our commercial and operational initiatives that further build our capability to create value for all our stakeholders.... These initiatives are complemented by our acquisition strategy, which fills in our product portfolio, moves us into new geographic markets, and adds terrific new talent to SiteOne. Taken all together, our strategy creates superior value for our shareholders through organic growth, acquisition growth, and EBITDA margin expansion. If you turn to slide six, you can see our strong track record of performance and growth over the last seven years, with consistent organic and acquisition growth and EBITDA margin expansion. We have done this while investing heavily in our teams and in new systems and technologies to build the foundation for SiteOne and to create superior capabilities for our customers and suppliers. We are still building and investing, and we remain confident in our ability to gain market share and continue driving all three of our value creation levers going forward. As previously discussed, 2023 is a reset year for gross margin and adjusted EBITDA margin due to the extraordinary price benefits that we received in 2021 and 2022. We are now experiencing significant commodity price deflation, which causes a temporary negative impact on organic daily sales, gross margin, and adjusted EBITDA margin. We expect this negative impact to subside in 2024, which will provide a tailwind as we look to expand our Adjusted EBITDA margin toward our long-term goal of 13%-15%. We remain confident in our strategy to drive revenue growth while expanding gross margin and achieving SG&A leverage to reach our longer-term business performance objectives. We have now completed 90 acquisitions across all key product lines since 2014. We expanded our development team in 2021 and leveraged them to increase acquisition activity in 2022, resulting in a record 16 acquisitions last year and a record $300 million trailing twelve months acquired revenue from the 10 acquisitions we have completed so far this year. Our pipeline of potential deals remains robust, and we expect to continue adding and integrating an increased number of new companies to support our growth. These companies strengthen SiteOne with excellent talent and new ideas for performance and growth. Given the fragmented nature of our industry and our modest market share, we have a significant opportunity to continue growing through acquisition for many years to come. Slide seven shows the long runway that we have ahead in filling in our product portfolio, which we aim to do primarily through acquisition, especially in the nursery, hardscapes, and landscape supplies categories. We are well-networked with the best companies in our industry and expect to continue filling in these markets systematically over the next decade. I will now discuss some of our third quarter performance highlights, as shown on slide eight. We achieved 4% net sales growth, with 6% growth added through acquisition, partially offset by a 2% decline in organic daily sales. As mentioned, we were pleased to achieve 2% sales volume growth during the quarter, but this was more than offset by a 4% price decline, which was slightly more than expected. Commodity price deflation increased sequentially during the quarter, and we believe that we have reached the bottom in September and October. We expect price deflation to begin to moderate as we enter 2024. Organic daily sales were well balanced, with a 2% decline in both agronomic products and landscaping products, despite the deflation being more pronounced in agronomic products. You will recall that agronomic product volume was very weak last year as contractors reduced their application rates in reaction to the steep price increases in fertilizer and grass seed. In the third quarter, we saw just the opposite, with significant deflation in fertilizer and seed mitigated by very strong volume. We were very pleased to see contractors and end users return to more normal levels of application in the maintenance end market. Gross profit was flat during the quarter, while gross margin contracted by 130 basis points to 33.9%. Commodity deflation was stronger than we expected, which negatively impacted gross margin as purchased inventory in PVC pipe, grass seed, and fertilizer were sold at lower prices during the height of the fall season. Our teams have executed very well in this extremely challenging environment by keeping inventory low, reacting with discipline to market prices, and by continuing to drive our gross margin improvement initiatives. We remain very confident that once commodity price deflation runs its course, we can resume our gross margin improvement trend from a solid foundation. SG&A as a percent of net sales increased by 100 basis points year-over-year to 27.2%. Acquisitions had the largest effect on SG&A as a percent of net sales, as the same hardscapes and landscape supplies acquisitions that benefited gross margin slightly also increased our SG&A. SG&A for our base business was 1% lower than prior year for the third quarter, but did not match the 2% decline in organic daily sales. We are highly focused on operating leverage and expect to see benefits from our productivity initiatives as inflation normalizes and as we return to positive organic daily sales growth. Adjusted EBITDA for the quarter declined 12% to approximately $120 million, and adjusted EBITDA margin declined by 180 basis points to 10.5%, with lower gross margin. We expect the year-over-year decrease in adjusted EBITDA margin to moderate further in the fourth quarter, providing a foundation for expansion in 2024. In terms of initiatives, we continue to grow our small customers significantly higher than our average, while also driving growth in our private label brands and improving our inbound freight costs through our transportation management system, all helping us to mitigate the gross margin decline in these challenging times and expand gross margin with normal inflation. Year-to-date, we have increased our Partners Program membership by approximately 70% to 42,000 members. Most of these new members are small to mid-sized customers. We have increased our percentage of bilingual branches from 56% to 59% this year, and are continuing to focus on Hispanic marketing to create awareness among this important customer segment. Lastly, we are making great progress in our sales force productivity as we leverage our CRM and establish more disciplined revenue-generating habits among our over 900 inside and outside sales associates. The continued rollout of Mobile Pro and DispatchTrack allows us to offer better customer service while also increasing the productivity of our branch staff and delivery fleet. Both of these capabilities are now deployed company-wide, and we continue to see usage and benefit increase across the company. We made good progress in growing our digital sales and customer activity on siteone.com this year, which help us increase market share while allowing our associates to focus more on creating value for customers and less on transactional activity. Finally, we are seeing some of the early benefits from our operational excellence teams, who are systematically spreading best practices in each line of business across SiteOne to drive value for our customers, suppliers, and company. Taken all together, we are continuing to improve our capability to drive organic growth, increase gross margin, and achieve operating leverage, even as we fight through the challenges in 2023. On the acquisition front, we've added 10 high-performing companies to our family so far this year, with approximately $300 million in trailing twelve-month sales added to SiteOne. With an experienced team, broad and deep relationships with the best companies, a strong balance sheet, and an exceptional reputation, we remain well positioned to grow consistently through acquisition this year and for many years to come. In summary, we are facing a number of challenges in 2023, including softer markets, commodity product deflation, operating cost inflation, and a gross margin reset from the extraordinary price gains in 2021 and 2022. Our teams have done a terrific job of managing through these challenges, and even as we reset financially, we continue to gain momentum in our commercial and operational initiatives and in building the foundation of our company, both organically and through acquisition. We remain confident in our strategy and in our ability to deliver increased value to our customers and suppliers while outperforming the market. Now, John will walk you through the quarter in more detail. John? Thanks, Doug. I'll begin on slide nine with some highlights from our third quarter results. We reported a net sales increase of 4% to $1.15 billion for the quarter. There were 63 selling days in the third quarter, which is the same as the prior year period. Organic daily sales decreased 2% compared to the prior year period, primarily due to lower prices from commodity products, partially offset by volume growth on modest market demand. Price deflation for the quarter was approximately 4%, which was slightly greater than expectations. The price deflation was driven by our commodity products, like PVC pipe, which was down 20% year-over-year, grass seed, which was down 17%, and fertilizer, which was down 16%. We expect price deflation to be a headwind for the remainder of the year and into the beginning of 2024, until we fully lap the price decreases that started in Q4 of last year. Fortunately, we were able to partially offset the price deflation with 2% volume growth for the third quarter. Volume growth was driven by share gains and modest end market demand. While negatively impacting some northern markets, weather did not have a major impact on our overall sales for the quarter. Organic daily sales for agronomic products, which includes fertilizer, control products, ice melt, and equipment, decreased 2% due to lower prices, partially offset by increased volume for those products. Organic daily sales for landscaping products, which includes irrigation, nursery, hardscapes, outdoor lighting, and landscape accessories, also decreased 2% for the third quarter due to slightly lower prices and moderating end market demand. Geographically, five out of our nine regions achieved positive organic daily sales growth, with the greatest growth in southern markets. The Northeast and Midwest markets had the weakest sales performance, as they were impacted by a combination of wet weather and a sales mix more heavily weighted toward fertilizer and grass seed.... Pleased with the performance of our acquisitions in the third quarter. Acquisition sales, which reflect the sales attributable to acquisitions completed in both 2022 and 2023, contributed approximately $65 million or 6% to net sales growth. Scott will provide more details regarding our acquisition strategy later in the call. Gross profit for the third quarter was $388 million, which was largely unchanged compared to the prior year. Gross margin decreased 100 basis points to 33.9%, primarily due to lower prices and the absence of the price realization benefit realized in the prior year, partially offset by the positive impact of acquisitions and lower freight costs. As Doug mentioned, gross margin was weaker than expected, primarily due to commodity product deflation coming in greater and more rapidly than our forecast. Just as we benefited from the rapid rise in market prices relative to our lower inventory costs on the way up, the rapid drop in market prices relative to our higher inventory costs creates a temporary headwind on the way down. We are managing through this headwind, but we expect it to continue for the remainder of the year. Selling, general, and administrative expense, or SG&A, increased 8% to $312 million for the third quarter. SG&A, as a percentage of net sales, increased 100 basis points in the quarter to 27.2%. The increase in both SG&A and SG&A, as a percentage of net sales, is primarily due to the impact of acquisitions. Excluding acquisitions, SG&A for our base business decreased 1% during the quarter, as we have taken steps to align our SG&A spend with our lower sales. For the third quarter, we reported an income tax expense of approximately $18 million, compared to $23 million in the prior year period. The effective tax rate was 23.4% for the third quarter of 2023, compared to 23.8% for the prior year period. The decrease in the effective tax rate was primarily due to an increase in the amount of excess tax benefits from stock-based compensation. We expect the 2023 fiscal year effective tax rate will be between 25%-26%, excluding discrete items such as excess tax benefits. Net income for the third quarter of 2023 decreased to $57 million, compared to $73 million for the same period in the prior year, as our higher net sales were more than offset by our lower gross margin and increased SG&A expense. Our weighted average diluted share count was 45.7 million, compared to 45.8 million for the prior year period. Adjusted EBITDA decreased 12% to approximately $120 million for the third quarter, compared to $136 million for the same period in the prior year. Adjusted EBITDA Margin decreased 180 basis points to 10.5%, reflecting the l ower gross margin. Now I'd like to provide a brief update on our balance sheet and cash flow statement, as shown on slide 10. Net Working Capital at the end of the third quarter was $919 million, compared to $869 million at the end of the prior year period. The increase in Net Working Capital is primarily attributable to an increase in accounts receivable resulting from our sales growth, including acquisitions. Inventory levels were flat with prior year, and inventory turns improved as we continue to make progress on our supply chain initiatives. Operating cash flow decreased approximately $47 million to $89 million for the third quarter of 2023, compared to approximately $136 million for the prior year period. The decrease in operating cash flow primarily reflects timing as we started our seasonal inventory reduction earlier in 2023 compared to 2022. Year to date, operating cash flow increased $77 million to approximately $190 million. The 69% increase reflects our improved management of working capital. We made cash investments of approximately $134 million for the third quarter, compared to approximately $66 million for the same quarter in 2022. The increase reflects our acquisition investments made during the quarter. Scott will provide additional details on the acquisitions later in the call. Capital expenditures were $8 million for the quarter, compared to $4 million in the prior year period, due to greater investment in branch improvements, including relocations. In July, we borrowed an additional $120 million on our term loan and used the proceeds to reduce borrowings on our ABL facility. As a result, at the end of the quarter, we had liquidity of approximately $588 million, which consisted of approximately $75 million cash on hand and approximately $513 million in available capacity under our ABL facility. Net debt at the end of the quarter was approximately $446 million, compared to approximately $377 million at the end of the third quarter of 2022. The higher net debt reflects our increased acquisition investments. Leverage at the end of the third quarter was 1.1 times our trailing twelve-month Adjusted EBITDA, compared to 0.8 times in the prior year period. As a reminder, our target year-end net debt to Adjusted EBITDA leverage range is 1-2 times. Our priority from a balance sheet and funding perspective is to maintain our financial strength and flexibility so we can execute our growth strategy in all market environments. I will now turn the call over to Scott for an update on our acquisition strategy. ... Thanks, John. As shown on slide 11, we acquired six companies in the third quarter for a combined trailing twelve-month net sales of approximately $230 million, bringing our year-to-date total to 10 companies acquired and approximately $300 million in trailing twelve-month net sales. Since 2014, we have acquired 90 companies with approximately $1.8 billion in trailing twelve-month net sales added to SiteOne. Turning to slides 12 through 17, you will find information on our most recent acquisitions. On July 3, we acquired Hickory Hill Farm and Garden, a single-location wholesale distributor of irrigation, nursery, and landscape supplies. The acquisition of Hickory Hill complements our existing business in the Lake Oconee, Georgia, area, allowing us to provide the full line of landscaping products to landscape professionals in this high-growth local market. On August 11th, we acquired New England Silica, a single-location wholesale distributor of hardscapes. The addition of New England Silica strengthens our leading hardscapes position in Connecticut. On August 25th, we acquired Timothy's Center for Gardening, a single-location distributor of hardscapes, landscape supplies, and nursery products, expanding the products we offer our customers in New Jersey and the Delaware Valley. On August 25th, we also acquired Pioneer Landscape Centers, with 34 bulk landscape supplies distribution sites across Colorado and Arizona. This strategic acquisition establishes SiteOne as the leading bulk landscape supplies distributor in two of the 10 fastest-growing states in the U.S. Also, on August 25th, we acquired Regal Chemical, a wholesale distributor of agronomic products, with one location in the Atlanta market. The addition of Regal significantly expands our portfolio of agronomic products and services across the Southeast. And lastly, on August 28th, we acquired JMJ Organics, with five distribution locations, extending our leading landscape supplies and nursery presence across the greater Houston area. Our acquisitions continue to add terrific talent to SiteOne and move us forward toward our goal of providing a full line of landscape products and services to our customers in all major U.S. and Canadian markets. Summarizing on slide 18, our acquisition strategy continues to create significant value for SiteOne. With a strong balance sheet and a robust pipeline across all lines of business and geographies, we are confident that we will be able to continue adding more outstanding companies to SiteOne over the coming years. I want to thank the entire SiteOne team for their passion and commitment to making SiteOne a great place to work and for welcoming the newly acquired teams when they join the SiteOne family. It's this stronger together culture that continues to attract our industry's best entrepreneurs, and we are genuinely honored when they choose to have their family join ours. I am confident we can continue adding more outstanding new companies through acquisition and drive excellent value for all our stakeholders. I will now turn the call back to Doug. Thanks, Scott. I'll wrap up on slide 19. Our outlook for organic daily sales in the fourth quarter is that it will be similar to the third quarter, with positive sales volume more than offset by commodity price deflation. We expect customer demand to remain resilient, and we expect to continue gaining market share with our strong teams executing our commercial and operational initiatives. In terms of end markets, we expect new residential construction, which comprises 21% of our sales, to continue to be soft for the remainder of the year, with high interest rates constraining home buying. While builders have become more bullish in terms of single-family housing starts, we will not see the benefit of this until 2024. New commercial construction, which represents 14% of our sales, has remained solid, and based on our current customer backlogs, we expect to finish well in this market in 2023. The repair and upgrade market, which represents 29% of our sales, has also remained resilient, and we expect demand to be flat to slightly down during the fourth quarter. Lastly, we expect sales volume in the maintenance category, which represents 36% of our sales, to remain strong as contractors and end users take advantage of lower commodity prices and restore application rates from the depressed levels of last year. With this backdrop, we expect our organic daily sales to be down low single digits in the fourth quarter, driven by price deflation. For the full year 2023, we expect organic daily sales to be approximately flat. As mentioned, we expect Gross Margin and Adjusted EBITDA Margin to be lower in the fourth quarter than the prior year period, although the year-over-year decline will be less than in the third quarter. We also expect the acquisitions completed in the third quarter to have a dilutive effect on Adjusted EBITDA in the fourth quarter, given the seasonality of these companies. With reasonable future demand, we expect to resume expanding Adjusted EBITDA Margin in 2024 and beyond. In terms of acquisitions, as Scott mentioned, we have a strong pipeline of high-quality companies, some of which may join the SiteOne family in the remainder of 2023. Our acquisitions are performing well, and we continue to improve our ability to integrate them into our company. With all these factors in mind, we are lowering the top end of our guidance range and now expect our fiscal 2023 Adjusted EBITDA to be towards the low end of our updated range of $400 million-$410 million. This range does not factor any contribution from unannounced acquisitions.... In closing, I would like to sincerely thank all our SiteOne associates who continue to amaze me with their passion, commitment, teamwork, and selfless service. We have a tremendous team, and it is an honor to be joined with them as we deliver increasing value for all our stakeholders. I would also like to thank our suppliers for supporting us so strongly and our customers for allowing us to be their partner. Operator, please open the line for questions. Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that you please limit yourself to one question and one follow-up question. One moment, please, while we poll for your questions. Our first questions come from the line of David Manthey with Baird. Please proceed with your questions. Thank you. Good morning, guys. First off, John, when you were talking about the segments, you said landscape supplies, ADS, down 2% with slightly lower price and moderating demand, which sounds like sort of an ongoing situation. And, Doug, in your closing remarks, you mentioned that demand remains resilient. I know I'm splitting atoms here, but could you square those thoughts for me, what the message is here as it relates to volume demand in the fourth quarter and beyond? Well, we can say with regards to landscaping products, we were down -2% on organic daily sales growth. That was slightly lower price. Price was about -1 on landscaping products, and we're about -1 on volume for the quarter. Yeah, in terms of the second part of your question, David, we see the fourth quarter being much like the third. We are seeing continued positive volume overall. As we mentioned, you know, agronomic volume was very strong, you know, kind of balancing the very, you know, deep deflation in fertilizer and seed. You know, we're kind of solid in landscaping products, which has less impact from price deflation. But when you put it all together, we expect volume to continue to be positive going through the fourth quarter. And then, you know, we're—it's too early to call 2024, but I'd say overall, you know, we would see it shaping up to be kind of at least a solid start in 2024. You know, we think the markets will, we'll use the word resilient, will continue to be resilient, you know, going forward. Okay. And then, thanks for that. And second, on operating expenses that were very well managed this quarter. I think this is the first quarter in your public history where third quarter SG&A dollars were lower than second quarter SG&A dollars. You mentioned that you've taken steps to accomplish that. Could you give us a little detail on what those steps are, and what that allowed in the context of adding acquisitions and still investing for the future? Right. Well, I think, you know, there's an adjustment, you know, from the, the high growth, you know, during the COVID years and the strong, you know, continued growth in, in 2022, to more modest, you know, growth, you know, in 2023, and obviously, deflation. And so, you know, we've been able to manage our teams. You know, our, our teams are very, you know, flexible and can move fast in, in individual markets. We've had markets that have been weather affected, and so we've, we've pulled in, in the field. And also, we continue to drive our initiatives, which are helping to improve our productivity, you know, from our Salesforce CRM with the Salesforce to Mobile Pro, siteone.com, et cetera, right? And so we're gonna continue to work those hard. And, you know, we're excited about what we're seeing. We were pleased also to be able to achieve that in the third quarter. And I think, you know, we'll look for more of that. And as we enter 2024, you know, I think we've got an opportunity to continue to get more productive as we move forward. And obviously, as part of our long-term EBITDA margin expansion objective, we plan to work both the SG&A leverage side and the gross margin side to achieve that long-term goal. So, a lot of room for improvement over the years to come there. Yeah, it's very clear. Thanks a lot, Doug. Thank you both. Thank you. Thank you. Our next questions come from the line of Ryan Merkel with William Blair. Please proceed with your questions. Hey, good morning. Thanks for taking the questions. I wanted to start off with the deflation. Doug, in your comments, you mentioned that you thought deflation had bottomed in September and October. Just unpack for us why you think that's the case, and then can you confirm that in the fourth quarter, price deflation will be about 4%, same as 3Q? Yeah. So what we saw is, you know, price deflation accelerated as we went through kind of July, August, September. And now in October, we've seen a level similar to September with a slight, you know, the back half of October has shown, you know, a slight improvement over the first half of October. So, you know, we see signs. Prices started dropping last year during the fourth quarter. And so we're starting to lap that. And so we believe that, you know, it stair-stepped down during the third. We believe it'll stair-step back up, yielding about the same amount of or, you know, similar to the third quarter. And then, you know, as we go into 2024, obviously, we'll completely lap those price decreases and things will return to normal. So, John, did you have something to add to that? Yeah, I think 4%-5% is probably a good estimate. For the fourth? For the fourth. Okay, thanks for that. And then, just high level, you know, there's debate about higher interest rates and the impact to your business. Can you just comment on the potential impacts? I'm thinking M&A, and maybe some more, more discretionary purchases. Just where do you think you'd see an impact, you know, over the next 6-12 months? Well, you know, I think the largest impact would be, you know, in new residential. But when we look at new residential, because of the housing shortage, you know, I think you've got people getting used to, you know, interest rates. You have builders that are using incentives and buying down rates. And so at least the builders seem to be bullish that, you know, single-family new residential will be up next year, and so, you know, we're optimistic about that. In the remodel market, you know, certainly it affects things, but we're not seeing, you know, a big negative effect so far in that remodel market. It's been very resilient. We think it'll continue to be. There's still strong forces in remodel, you know, work from home and, you know, outdoor living, that are underlying, you know, the remodel market. You know, forecasts from HIRI are that, you know, there'll be growth in remodel next year, so, you know, we see that being fairly resilient. In commercial, you know, there was theories that it would start to affect the commercial market. We'll have to see. Commercial has remained strong. You know, we watched the ABI index. Obviously, that went below 50, so we're watching that closely. And then, the maintenance market, we don't really think there's any effect there. So, you know, we'll have to see. But we believe that our markets, when we take them all together, especially with the maintenance market, are, you know, solid, let's say, give us a good foundation for growth. Okay, thank you. Thank you. Thank you. Our next question comes from the line of Steve Volkmann with Jefferies. Please proceed with your questions. Hi, good morning, guys. Thank you. I guess my question is around share gains. Doug, I think you mentioned that in your prepared remarks. How much do you think the sort of underlying end markets grew, and sort of relative to you guys, to sort of address that share gain question? Well, we would say that the end markets, you know, we would guess that they were, you know, slightly down, you know, flat to slightly down when you take it all together. And, you know, our volumes were positive. So, you know, you can do the math there. You know, it's hard to put specifically calculate share gain, but we're, you know, in touch with all of our suppliers. We have a good sense of what's going on in the different markets. You know, we get to see a few, you know, horizons, performance, et cetera. And we feel pretty confident that we're, you know, gaining share, and it's consistent across product lines. So we're gonna continue to drive that going forward. Okay. And I think you said you are adding new customers, right? In the sort of small and medium-sized category. We are. We're growing faster in that category than we are with our larger customers, and that's, you know, an intentional effort that we've got with our Hispanic marketing, with our teams. We've created inside sales that are specifically, you know, calling on small customers. So we've got a lot of exciting initiatives going on there, and we're seeing the results of that. So that helps us, you know, both from a sales growth standpoint, but also from a gross margin standpoint. Great. And then just finally, on SG&A, do you think you'll get back to SG&A leverage next year, given sort of the investments that you've been making? I think it's really too early to give a guidance with regards to that. You know, how are the acquisitions gonna filter in? But, you know, we're certainly working towards that. Okay. Yeah, just in the long-term context, certainly that would be the case. We would expect to get SG&A leverage over the next two to three years. Understood. Thank you. I'll pass it on. Thank you. Our next question has come from the line of Damian Karas with UBS. Please proceed with your questions. Hey, good morning, everyone. Morning. Thanks for the details around price in the third quarter and the cadence that you're expecting from here. Could you just maybe help us wrap our heads around what gross margins could look like in 2024, based on your price expectations? Yeah. I think, again, it's a little too early to be calling 2024. You know, we'll do that after we finish the fourth quarter. But, you know, we are experiencing... You know, the reset aside- we're experiencing an additional headwind with the, the price deflation. We expect that, as we mentioned, to subside in, in 2024 and provide a bit of a tailwind, for 2024, which is, which is terrific. And then with acquisitions and our, you know, our initiatives around gross margin, you know, we certainly would expect, you know, improvement next year. But, you know, putting a number around that or quantifying that would be a little bit too early to, to do that. Understood. What are you expecting for cash flow and what that looks like in the fourth quarter? I mean, if you look at the first three quarters, you're up pretty considerably this year. So are there any headwinds lining up for the fourth quarter we should be aware of? No, we would expect this would be at a normal fourth quarter. What you saw this quarter is we probably pulled some of the. It's really a timing issue. We had such a strong Q2. I think we realized kind of the we started the inventory pull-down. So the difference between Q3 and Q this year over last year is primarily what was recognized in Q2 so far this year. So on a year-to-date basis, we're well up, and our inventory position is very similar to last year at this point, and so we would expect kind of normal seasonality for cash flow in the fourth quarter. Got it. Thanks very much. I'll pass it along. Thank you. Our next questions come from the line of Mike Dahl with RBC Capital Markets. Please proceed with your questions. Morning. Thanks for taking my questions. Just to follow up, I know you don't want to get into the 2024 details, but maybe asked a different way on the margin side. Can you quantify more specifically in your three Q and four Q gross margins, how much of a headwind is the price deflation component? I would say, you know, it's, there's a lot of things going on that going into, into gross margin, from that standpoint. With regards to Q3, if you kind of said, you're probably talking, you know, 50 basis, 50-70 basis points, kinda, number out there, and that would be kind of comparable to kind of what we would normally expect. So, you know, that's kind of where I would say kind of where we're at in Q3. And that would be kind of, that's kind of, if you will. You know, we talked about a lot over what's gone over the last couple of years, it's, and as many of you have asked questions about, kind of the price realization benefit. So that was, in effect, what we're seeing here is that was a, that was a benefit. We talked about it with many of you how that was kind of a one-time gain. Now that prices are going in the opposite direction, what you're seeing is a little bit of a one-time kind of a negative headwind, if you will, as a result of that. And you know, the 50-70 basis points is kind of what we would kind of estimate as kind of the potential headwind where we're at right now, relative to kind of what I would call a more normal market. Okay. Yeah, that makes sense. Understood that there's a lot of moving pieces there, so appreciate trying to split that out. And then relatedly, you know, when we think about the deflation that you've seen, let's assume that the stabilization holds. I get that, you know, just given the comps, it seems clear that your pricing headwinds would subside when you get to the second half of next year. The first half, you're still comping positive price from 2023, and in particular, in 1Q. So do you think we'll still start off the year with these kind of mid-single digit price headwinds? Yeah, again, I know you don't want to give- It's- full guidance. I think it's, I think it's too early to say how it flows through on the Gross Margin line. I think it is fair to say, on the revenue side, it'll still be a headwind, from that standpoint, in the first half. And so we'll have to see. On the flip side is, you know, California, which makes up a lot of Q1 sales, got killed this year in Q1. So that'll be a positive, and we'll get in more into that as we go. But you know, just realistically, until we lap these price increases that a lot of them came in, you know, in the first half, and we'll be a little bit of a headwind. Some of that will be offset. We do expect, you know, some of the other products, we'll see price increases at the beginning of the year. So that dynamic that we saw this year will play out a little bit into next year also. Yeah, the other factor is, you know, it's stairstep down, October, November, December, we expect to kind of stairstep up. So, you know, as we go into the first quarter, you know, it would be. We would expect it to be less than, say, the third or fourth in terms of that deflation. Then, you know, you have the other prices that will start kicking in in the second quarter. So yeah, we're gonna it will be a headwind, but likely, John, not as steep as the headwind in the last half, you know, the last two quarter, the third and fourth quarter of this year. Okay. Okay, great. Thanks, thanks, John. ...Thank you. Our next questions come from the line of Keith Hughes with Truist Securities. Please proceed with your questions. Thank you. Could you give us some sort of a feel on the magnitude of the price declines of the three products that are causing the deflation we talked about so much in this call? Well, we talked about with regards to the numbers, we talked about 20% year-over-year in Q4. You know, pipe was down 20% year-over-year. And fertilizer and grass seed were down in the teens, I think 17 and 15. I don't have that number in front of me, but, you know, they're in those. Those are the type of the size that we're talking about. Okay. And the descent really began, what? Late summer, or is that timing about right? The decrease with pipe began in Q4 of last year. I would say most of the agronomic ones came in in the first half of this year. And really what stood out is grass seed was really a Q3 item. It's a... Seed season is really starts in Q3 as we like to think about it. But and those numbers that what I mentioned on the call were 17 and 16-17% for seed, 16% for fertilizer down. Okay. Thank you very much. Thank you. Our next questions come from the line of Joe Ahlersmeyer with Deutsche Bank. Please proceed with your questions. Hey, good morning, everybody. Thanks for the questions. Morning. In your end market discussion, you talked about new commercial remaining solid, finishing well, this year. Just curious if you feel like maybe this end market is the one where there's the most, most volume risk into next year. I know you are later in the construction cycle there, but just anything you're hearing, either on the bidding side or, or just hearing generally on new commercial construction would be helpful. Yeah. So, you know, we don't... You know, our bidding has been, you know, pretty good this year, as well as, you know, obviously, customer, we look at customer backlogs and the work they have in front of them. But we do lag the market, right? You know, if you look at the ABI Index, you know, that went below 50, so we'll have to see if that stays below 50. So it's really hard to tell at this point. I mean, we wouldn't be able to call next year. I think because we lag, we think the first half of next year is likely to be pretty solid in commercial. Hard to tell about the second half unless we see, you know, kind of more trends develop over the next two or three months. You know, we don't have any better information probably than you have on that, because we lag the you know the commercial starts, if you will. Right. No, that's, that's helpful, about the front half. The other question I had, also sort of related to the front half or the front half of the front half, is how did the weather impact your last first quarter? Just so we make sure we understand the lapping dynamics around, the colder Northeast, first quarter of this year and the rain in California, just to make sure we've got it in our models correctly. It had a pretty big number. If you look at the, especially in California, I think California was down almost 20% in the first quarter. I mean, we put a daily organic of -2%, roughly in the first quarter. But that was, I think, on 6% price increases, so we were down, like, -8% on volume in Q1. And now kind of volumes have kind of leveled out. So I don't want to get too optimistic there, but... Specifically address everything with regards to the weather, but it was certainly the primary of things this year was the primary driver of Q1. Yeah, you got to be careful 'cause weather can. Bad weather can really. So, but certainly, last first quarter was not favorable in terms of weather. Right. And just to follow up maybe on that, was there also, because that's the daily sales number, was there a margin impact from product mix or anything around the Northeast, just to be aware? No. I mean, I would say I wouldn't call that out as a driver of what's going on with the business overall. Okay, understood. Thanks a lot. Thank you. Our next questions come from the line of Andrew Carter with Stifel. Please proceed with your questions. Hey, thanks. Just some kind of questions on the commodities. Just to make sure, you do price to gross margin rate. How often do you reprice at the branches to adjust for commodities? And for the commodity categories, like 20%, how long are your inventory positions exactly? Therefore, how much of a mismatch could it be? Thanks. It can be a while. I think there's a couple of things that you need to consider. One is, you know, it's not just the commodities have to flow all the way through. So, you know, you have a commodity price, it's got to go to a supplier. The supplier is going to make inventory over a month, and then we buy it, carry. You know, we do, you know, 3-4 turns of inventory a year. So that would be the way it would flow through that. And just as an example, even this year, we saw some of, like, the PVC pipe prices start coming down this year. But if you actually just were to look at the cost of PVC resin, if you will, I think the lead time on that was quite a bit earlier, and was actually those decreases were occurring last year. So commodities are general indicators. There is lags in between there. Thanks. Also, and then I guess, just to get to the structural gross margin, I know that last quarter, it was 35.1. You felt that that was kind of normalized for pricing benefits. This quarter, you added $230 million subsequent to the quarter of annual M&A. Is that a higher margin kind of? So what's, I guess, I'm getting at, is what is kind of the structural gross margin for this business, all things considered, all prices are matching one another, et cetera, that we should be thinking about going forward? Thanks. We've said, kind of, this is a base year for a Gross Margin, so, you know, if you went back to the beginning of the year, our guidance was, like, 34.5%. Things went pretty strongly in the first half of the year, so we kind of started going back up to the high end of that range. We're probably gonna be more at the low end of the range as we reset this year. Yeah, the range being 34.5-35. So- Okay. Got it. Just last question, you said -1 SG&A, kind of, core SG&A, how much of that was kind of driven by freight? Most of our freight is in cost of goods sold. Okay. So it's primarily there. We do have some freight costs for the kind of last mile for our own trucks, but that's not really what's driving the primary. The primary thing, as Doug alluded to, on the actions we've taken, is really on staffing to more match and our labor costs to more match on the sales volume. Thanks. I'll pass it on. Thank you. Our next question has come from the line of Matthew Bouley with Barclays. Please proceed with your questions. Hey, good morning. Thanks for taking the questions. Just back on the comment around, you know, driving higher margins in 2024. You know, if you do still have some deflation flowing into the first half of 2024, you know, and maybe given some of those comments you made earlier, Doug, on the end markets next year, I mean, the question is: You know, would you need higher volumes in 2024 in order to grow margins in 2024? Or maybe said another way, you know, what would happen to margins if volumes are, you know, say, flatter in 2024? Thank you. Yeah, I think in terms of gross margin, it wouldn't have a significant impact. You know, obviously, on SG&A leverage is where you get, you know, from an EBITDA margin standpoint, you know, positive volume is better than flat. And so we're focused on both. But in terms of gross margin, like I said, with the deflation kind of abating in the first half, you know, I'd say a slightly lower level than we've seen in the second half of this year, should get a bit of a tailwind there. And then our margin improvement initiatives, we should see some benefit from. So... And those aren't highly, obviously, there's extremes, but those wouldn't be impacted significantly between, you know, a couple of percent volume. Got it. Okay, that's helpful there, Doug. Thank you for that. And then secondly, just on the repair and upgrade end market, I'm curious, you know, how do you think about, you know, the leverage of your business to existing home turnover, which, you know, clearly, the move in interest rates seems like there's having a bit more of an outsized impact to that part of the housing market. How do you guys think about your exposure there and what that could mean to repair and upgrade? Thank you. Yeah. Well, I'll start with the long-term trend is there. Outdoor living, people are, you know, invest in their backyards, they enjoy their outdoor living spaces, and, you know, as more people are working from home, that's driving growth there. So that's a solid trend. It's interesting that housing turnover had normally been a driver of remodel. You know, a new person moves in, they wanna redo the backyard or... And that would be business for us. You've got a lot of people that are sitting on low interest rates that aren't selling their homes, so, you know, home turnover is lower. However, now you got the opposite effect that, you know, since I'm gonna stay here, I'm gonna do the project that I was putting off because I was gonna move. It's interesting how those two—I'm not sure if they completely balance, but there certainly puts and takes there. Overall, we think the remodel market's gonna be solid. Long term, the remodel market is gonna be a strong growth driver for us, you know, going forward. Yep. Nope, that's fair. Thank you for that. And just quickly on the SG&A, was there anything in that Q3 number in terms of, you know, incentive comp relative to Q2, any kind of true-ups of accruals? Any kind of little details in there that sort of helped the SG&A number? Thank you. I'll say incentive comp is certainly less this year and will be, you know, you know, our commissions are based on sales growth, so they're gonna be less this year, year-over-year, than they were last year. All right. Thanks, John. Thanks, Doug. Good luck, guys. Thank you. Thank you. We have reached the end of our question and answer session. I would now like to turn the floor back over to Doug Black for any closing comments. Okay. Thank you all for joining us today. We certainly appreciate your interest in SiteOne and look forward to speaking to you again after the fourth quarter. Would like to take one more opportunity to thank our terrific associates for all they do to help build SiteOne, our suppliers, and our customers. Have a great day. Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.