Julian Nirmal

Julian Nirmal asked for an outlook on input inflation for the remainder of the year, specifically concerning commodities. He also sought details on the expected cadence of the 15-20 branch closures planned for 2026 and their anticipated contribution to margins throughout the year.

Answer

EVP, CFO, and Assistant Secretary John Guthrie stated that the inflation outlook for the rest of the year was embedded in the company's guidance, noting no major swings in fertilizers or similar products. Chairman and CEO Doug Black explained that the focus branches, representing about 20% of revenue, had already seen over 200 basis points of adjusted EBITDA margin improvement this year, and this trend was expected to continue into next year, with the new closures supporting these improvements even in a soft market.

Julian Nirmal inquired about the outlook for input inflation in commodities for the remainder of the year and the expected cadence and margin contribution from the planned 15-20 branch closures in 2026.

Answer

Doug Black, Chairman and CEO, stated that the inflation outlook is already embedded in their guidance, with no major swings expected in products like fertilizers. Regarding branch closures, Mr. Black explained that focus branches, representing 20% of revenue, have already seen over 200 basis points of adjusted EBITDA margin improvement this year, a trend expected to continue into next year, with new closures supporting these improvements independent of market conditions.