Financial Data and Key Metrics Changes - The company achieved 4% net sales growth in Q3 2025, with 3% organic daily sales growth and 11% growth in adjusted EBITDA compared to the prior year [5][14]. - Adjusted EBITDA for the quarter increased 11% to $127.5 million, with an adjusted EBITDA margin improvement of 60 basis points to 10.1% [16][28]. - Net income attributable to the company increased 33% to $59 million due to net sales growth, improved gross margin, and SG&A leverage [27]. Business Line Data and Key Metrics Changes - Organic sales volume grew 2% during Q3, with maintenance-related demand remaining steady and achieving 3% organic daily sales growth in agronomic products [14][25]. - Landscaping products also saw a 3% increase in organic daily sales due to sales initiatives and improved pricing [25]. - Acquisition sales contributed approximately $13 million or 1% to net sales growth [26]. Market Data and Key Metrics Changes - The company estimates it holds about an 18% share of the $25 billion wholesale landscape products distribution market, indicating significant long-term growth opportunities [8]. - Seven out of nine regions achieved positive organic daily sales growth in Q3, although sales in Sun Belt states like Texas were weaker due to softness in new residential construction [25][41]. Company Strategy and Development Direction - The company aims to leverage its scale and resources to deliver superior value to customers and suppliers while focusing on organic growth and acquisitions [9][10]. - The acquisition strategy is expected to continue filling in product lines and expanding geographic reach, with six acquisitions completed in 2025 so far [22][38]. - The company plans to consolidate or close 15 to 20 branches to optimize its footprint and cost structure [45]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in driving continued performance and growth despite softer end markets heading into 2026 [6][41]. - The outlook for the fourth quarter includes expectations for low single-digit organic daily sales growth, driven by commercial initiatives and modest price inflation [44][45]. - Management noted that the repair and upgrade market has begun to stabilize, which is a positive sign for future growth [60][44]. Other Important Information - The company has a strong balance sheet with available liquidity of approximately $685 million [30]. - The effective tax rate for Q3 was 20.4%, down from 26.2% in the prior year, primarily due to increased excess tax benefits from stock-based compensation [27]. - The company has repurchased approximately 656,000 shares for a total of approximately $78 million year to date, reflecting a commitment to disciplined capital allocation [28]. Q&A Session Summary Question: Why is the charge not excluded from adjusted EBITDA guidance? - The company maintains strict guidelines for adjusted EBITDA, which primarily reflect acquisitions and adjustments within the first year [50]. Question: What is the pricing outlook for agronomic versus landscape products? - Pricing for landscape products was up 1%, while agronomic products were flat. The expectation for Q4 pricing is between 1% and 2% [51][53]. Question: Are you seeing positive organic sales growth in October? - Yes, positive organic sales growth is being observed in October, although the fourth quarter is a tougher comp due to weather impacts [59]. Question: How is the competitive landscape changing? - The company has not seen unusual changes in competitor behavior, although competition naturally increases in softer markets [68]. Question: Will branch closures affect the ability to serve a recovering market? - The company believes it can fully serve a stronger market with its current network and has the capacity to add associates as needed [73]. Question: What is the outlook for SG&A improvements? - The company expects to continue achieving SG&A leverage improvements through the rest of the year [93]. Question: How does the company view the M&A landscape moving forward? - The company anticipates a higher acquisition activity in 2026 compared to 2025, focusing on well-run companies rather than turnaround opportunities [86][88].

Financial Data and Key Metrics Changes - Organic sales decreased by 0.9%, with positive pricing of 1% offset by a volume decline of 1.9% [4][10] - Adjusted EBITDA for the quarter was $171 million, up 3% year-on-year, with an EBITDA margin of 19.1%, an increase of 110 basis points year-on-year [4][12] - Adjusted gross profit margin was 32.3%, up 190 basis points versus last year [10] - Adjusted earnings per share (EPS) was $1.26, reflecting a 12% increase compared to the third quarter of 2024 [12] - Net debt to adjusted EBITDA decreased from 3.4 times to 3.3 times [12] Business Line Data and Key Metrics Changes - HHC (Health and Hygiene) organic revenue decreased by 3.1%, with EBITDA up 2% year-on-year and EBITDA margin at 16.9% [5][6] - Engineering Adhesives (EA) organic revenue increased by 2.2%, with EBITDA up 14% and EBITDA margin expanded to 23.3% [6][7] - Building Adhesive Solutions (BAS) organic sales decreased by 1%, with EBITDA increasing by 3% to $41 million and EBITDA margin at 17.7% [7][8] Market Data and Key Metrics Changes - Americas organic revenue was up 1% year-on-year, driven by EA's high single-digit increase [8] - EIMEA (Europe, India, Middle East, and Africa) organic revenue declined by 2% year-on-year [8] - Asia-Pacific organic revenue decreased by 4% year-on-year, primarily due to significant volume decline in solar [8] Company Strategy and Development Direction - The company is focused on enhancing its portfolio, driving efficiencies, and repositioning for growth and margin expansion [3][4] - The strategy includes proactive measures in pricing and raw material management, as well as cost controls [15][16] - The company aims to achieve a greater than 20% EBITDA margin target in the long term [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed caution due to a globally subdued economic backdrop, expecting volume growth to remain elusive [3][4] - The manufacturing sector is weak, with customer demand appearing uneven and less predictable [9] - The company anticipates a slow growth environment with ongoing economic volatility and high interest rates [9] Other Important Information - The company updated its financial guidance for fiscal 2025, expecting net revenue to be down 2 to 3% year-on-year and organic revenue to be flat to up 1% [13][14] - Full-year adjusted diluted EPS is expected to be in the range of $4.10 to $4.25, equating to year-on-year growth of 7% to 11% [14] Q&A Session Summary Question: Could you provide some more detail behind the reduction in cash flow guidance? - The reduction is primarily due to increased working capital, specifically higher inventory levels in preparation for footprint consolidation actions [19][20] Question: What helped EA volumes and margins in the quarter? - EA experienced a return to double-digit organic growth in electronics and positive mid-single-digit growth in the U.S. due to strong execution and new customer wins [24][25] Question: How would you explain the HHC decline in volumes versus EA? - HHC volumes declined due to consumer demand reflecting a weakening global economy, while EA outperformed the market through share gains and unique solutions [30][31] Question: What is the outlook for solar in fiscal year 2026? - The company will continue to face headwinds in revenue from the solar segment but expects to improve EBITDA margins by exiting lower-margin product lines [34] Question: How is the pricing environment expected to trend in the fourth quarter? - The pricing environment remains supportive, with many companies in the sector raising prices due to inflation and tariffs [60]

Financial Data and Key Metrics Changes - The company achieved 3% net sales growth and 8% growth in adjusted EBITDA for Q2 2025, despite broader economic uncertainty [5][12] - Adjusted EBITDA for the quarter increased to $226.7 million, with an adjusted EBITDA margin improvement of 60 basis points to 15.5% [16][30] - Gross profit increased by 4% to approximately $531 million, with gross margin improving by 30 basis points to 36.4% [15][27] Business Line Data and Key Metrics Changes - Organic daily sales were flat, with maintenance-related demand remaining steady, while new residential construction and repair markets were down [12][23] - Agronomic products saw a 7% increase in organic daily sales, while landscaping products decreased by 1% [14][25] - Acquisitions contributed approximately $41 million or 3% to net sales growth [27] Market Data and Key Metrics Changes - The new residential construction market, which represents 21% of sales, is expected to decline due to elevated interest rates and low consumer confidence [40][41] - The repair and upgrade market, accounting for 30% of sales, is also anticipated to remain soft [41] - The maintenance end market, representing 35% of sales, is expected to continue growing steadily [41] Company Strategy and Development Direction - The company aims to leverage its scale and resources to drive market share gains and improve operational efficiency [8][9] - The acquisition strategy is focused on filling product lines and expanding geographic reach, with a robust pipeline of potential deals [11][12] - The company is positioned to drive adjusted EBITDA margin improvement in 2025 and beyond through operational initiatives and acquisitions [11][43] Management's Comments on Operating Environment and Future Outlook - Management expects the end market demand for landscaping products to be slightly down year-over-year in 2025, but anticipates pricing improvements [39][41] - The company is optimistic about achieving low single-digit organic daily sales growth for the remainder of the year, supported by commercial initiatives [41][42] - Management highlighted the importance of maintaining financial strength and flexibility to execute growth strategies in various market conditions [34] Other Important Information - The company completed its 100th acquisition in March 2025, adding over $2 billion in acquired revenue since 2014 [11][35] - The effective tax rate for Q2 2025 was 25.4%, up from 24.9% in the prior year, primarily due to a decrease in excess tax benefits from stock-based compensation [29] Q&A Session Summary Question: Update on Pioneer integration and SG&A leverage - Pioneer is fully integrated, and the company is seeing synergies and SG&A reductions from this integration [45][46] Question: Share repurchase authorization and future plans - Approximately $250 million remains in available capacity under the existing share repurchase authorization, and the company may continue aggressive repurchases if acquisition opportunities are limited [50] Question: Outlook for adjusted EBITDA and risks - The company feels confident about being solidly within the adjusted EBITDA guidance range, with the primary risk being market demand deterioration [55][56] Question: Market share gains and commercial initiatives - The company is gaining market share through digital initiatives, improved sales force productivity, and competitive private label offerings [66][68] Question: Impact of labor scarcity on customers - Customers have managed to find labor despite challenges, and labor scarcity is not seen as a significant limiter on market demand [70][71] Question: Focus branch initiative and future improvements - The focus branch initiative is expected to continue improving, with a reasonable assumption of ongoing growth in performance [76] Question: Acquisition dynamics and market conditions - The current environment has led to fewer larger deals, but the company maintains a strong pipeline and expects to continue adding companies of various sizes [78][80]