Third Quarter 2024 Highlights (Compared to Third Quarter
2023):
- Net sales increased 6% to $1.21 billion
- Organic Daily Sales decreased 1%
- Gross profit increased 6% to $411.0 million; gross margin
improved 10 basis points to 34.0%
- SG&A as a percentage of Net sales increased 170 basis
points to 28.9%
- Net income attributable to SiteOne decreased $12.9 million to
$44.4 million
- Adjusted EBITDA1 decreased 4% to $114.8 million; Adjusted
EBITDA margin was 9.5%
- Cash provided by operating activities increased $27.2 million
to $115.9 million
- Closed one acquisition: Millican Nurseries
- Refinanced and extended the maturity of term loan
SiteOne Landscape Supply, Inc. (the “Company” or “SiteOne”)
(NYSE: SITE) announced earnings for its third quarter ended
September 29, 2024 (“Third Quarter 2024”).
“During the quarter we continued to face market headwinds with
3% price deflation and a softer repair and remodel market. Given
these, we were pleased to achieve 2% Organic Daily Sales volume
growth to partially offset the price decline,” said Doug Black,
SiteOne’s Chairman and CEO. “Overall, our teams are executing our
strategy, outperforming the market with organic sales volume
growth, and pushing forward on our commercial and operational
initiatives to yield organic growth and adjusted EBITDA margin
expansion in 2025 and beyond. With a clear leadership position in
wholesale landscape distribution, strong teams, a robust
acquisition pipeline, and a winning strategy to create value for
our stakeholders, we are confident in our ability to perform and
grow in the years to come.”
Third Quarter 2024 Results
Net sales for the Third Quarter 2024 increased to $1.21 billion,
or 6%, compared to $1.15 billion for the prior-year period. Organic
Daily Sales decreased 1% compared to the prior-year period due to
price deflation for commodity products more than offsetting
positive volume growth. Acquisitions contributed $77.3 million, or
7%, to Net sales growth for the quarter.
Gross profit increased 6% to $411.0 million for the Third
Quarter 2024 compared to $388.1 million for the prior-year period.
Gross margin improved 10 basis points to 34.0% reflecting the
positive impact from acquisitions, partially offset by lower price
realization in the Base Business compared to the prior year
period.
Selling, general and administrative expenses (“SG&A”) for
the Third Quarter 2024 increased to $349.1 million from $311.8
million for the prior-year period. SG&A as a percentage of Net
sales increased 170 basis points to 28.9% primarily due to the
impact of acquisitions. SG&A for the Base Business increased 1%
for the Third Quarter 2024 compared to the prior year period.
Net income attributable to SiteOne for the Third Quarter 2024
was $44.4 million, compared to $57.3 million for the same period in
the prior year reflecting the Organic Daily Sales decline and lower
gross margin in the Base Business.
Adjusted EBITDA1 for the Third Quarter 2024 decreased to $114.8
million, or 4%, compared to $119.8 million for the prior-year
period. Adjusted EBITDA margin contracted 100 basis points to
9.5%.
Operating cash flow for the Third Quarter 2024 increased to
$115.9 million compared to $88.7 million in the prior-year period
primarily reflecting seasonal timing differences in working
capital.
Net debt, calculated as long-term debt (net of issuance costs
and discounts) plus finance leases, net of cash and cash
equivalents on our balance sheet as of September 29, 2024, was
$449.3 million compared to $446.0 million as of October 1, 2023.
Net debt to Adjusted EBITDA for the last twelve months was 1.2
times compared to 1.1 times during the prior year period.
On July 2, 2024, we refinanced our term loan, extending the
maturity by two years to March 2030 and reducing the interest rate
by 25 basis points to Term SOFR plus 175 basis points. The term
loan was also increased by $25.0 million to $392.7 million.
- Adjusted EBITDA includes contribution from non-controlling
interest of $0.8 million for the Third Quarter 2024.
Outlook
“Our maintenance and new construction markets remain resilient,
but we continue to experience soft demand driven primarily by a
weaker repair and remodel end market. In addition, we estimate that
hurricanes Helene and Milton have negatively impacted Net sales by
approximately $15 million ($8 million in the fourth quarter). The
pricing environment continues to be challenging and will have a
negative impact on both our sales growth and gross margin. Against
these headwinds, our teams are executing our commercial and
operational initiatives well, and we expect to continue
outperforming the market with a low single digit Organic Daily
Sales decline for the remainder of the year,” Doug Black continued.
“We are managing our SG&A tightly and making the necessary
changes to optimize our cost structure for the long run. As a part
of these efforts, we plan to consolidate or close 16 branches in
the fourth quarter, resulting in an expected one-time charge to
adjusted EBITDA of approximately $5 million.”
Taken all together, for Fiscal 2024, we now expect our Adjusted
EBITDA to be in the range of $370 million to $380 million, which
includes the $5 million one-time charge. Our guidance does not
include any contributions from unannounced acquisitions.
Conference Call Information
SiteOne management will host a conference call today, October
30, 2024, at 8:00 a.m. Eastern Time, to discuss the Company’s
financial results. The conference call can also be accessed by
dialing 877-704-4453 (domestic) or 201-389-0920 (international), or
by clicking on this link for instant telephone access to the call.
A telephonic replay will be available approximately two hours after
the call by dialing 844-512-2921, or for international callers,
412-317-6671. The passcode for the replay it is 13749081 The replay
will be available until 11:59 p.m. (ET) on November 13, 2024.
Interested investors and other parties can listen to a webcast
of the live conference call by logging onto the Investor Relations
section of the Company's website at http://investors.siteone.com.
The online replay will be available for 30 days on the same website
immediately following the call. A slide presentation highlighting
the Company’s results and key performance indicators will also be
available on the Investor Relations section of the Company’s
website.
To learn more about SiteOne, please visit the company's website
at http://investors.siteone.com.
About SiteOne Landscape Supply, Inc.
SiteOne Landscape Supply, Inc. (NYSE: SITE), is the largest and
only national full product line wholesale distributor of landscape
supplies in the United States and has a growing presence in Canada.
Its customers are primarily residential and commercial landscape
professionals who specialize in the design, installation and
maintenance of lawns, gardens, golf courses and other outdoor
spaces.
Forward-Looking Statements
This release contains “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements may include, but are not limited to,
statements relating to our 2024 Adjusted EBITDA outlook and our
share repurchase program. Some of the forward-looking statements
can be identified by the use of terms such as “may,” “intend,”
“might,” “will,” “should,” “could,” “would,” “expect,” “believe,”
“estimate,” “anticipate,” “predict,” “project,” “potential,” or the
negative of these terms, and similar expressions. You should be
aware that these forward-looking statements are subject to risks
and uncertainties that are beyond our control. Further, any
forward-looking statement speaks only as of the date on which it is
made, and we undertake no obligation to update any forward-looking
statement to reflect events or circumstances after the date on
which it is made or to reflect the occurrence of anticipated or
unanticipated events or circumstances. New factors emerge from time
to time that may cause our business not to develop as we expect,
and it is not possible for us to predict all of them. Factors that
may cause actual results to differ materially from those expressed
or implied by the forward-looking statements include, but are not
limited to, the following: cyclicality in residential and
commercial construction markets; general business, financial
market, and economic conditions; seasonality of our business and
its impact on demand for our products; severe weather and climate
conditions, such as Hurricanes Helene and Milton; prices for the
products we purchase may fluctuate; market variables, including
inflation and elevated interest rates for prolonged periods;
increases in operating costs; public perceptions that our products
and services are not environmentally friendly or that our practices
are not sustainable; climate, environmental, health and safety laws
and regulations; hazardous materials and related materials; laws
and government regulations applicable to our business that could
negatively impact demand for our products; competitive industry
pressures, including competition for our talent base; supply chain
disruptions, product or labor shortages, and the loss of key
suppliers; inventory management risks; ability to implement our
business strategies and achieve our growth objectives; acquisition
and integration risks, including increased competition for
acquisitions; risks associated with our large labor force and our
customers’ labor force and labor market disruptions; retention of
key personnel; construction defect and product liability claims;
impairment of goodwill; adverse credit and financial markets events
and conditions; inefficient or ineffective allocation of capital;
credit sale risks; performance of individual branches;
cybersecurity incidents involving our systems or third-party
systems; failure or malfunctions in our information technology
systems; security of personal information about our customers;
intellectual property and other proprietary rights; unanticipated
changes in our tax provisions; threats from terrorism, violence,
uncertain political conditions (including as a result of the
upcoming 2024 elections), and geopolitical conflicts such as the
ongoing conflict between Russia and Ukraine, the conflict in the
Gaza Strip, and general unrest in the Middle East; risks related to
our current indebtedness and our ability to obtain financing in the
future; financial institution disruptions; risks related to our
common stock; and other risks, as described in Item 1A, “Risk
Factors”, and elsewhere in our Annual Report on Form 10-K for the
fiscal year ended December 31, 2023, as may be updated by
subsequent filings under the Securities Exchange Act of 1934, as
amended, including Forms 10-Q and 8-K.
Non-GAAP Financial Information
This release includes certain financial information, not
prepared in accordance with U.S. GAAP. Because not all companies
calculate non-GAAP financial information identically (or at all),
the presentations herein may not be comparable to other similarly
titled measures used by other companies. Further, these measures
should not be considered substitutes for the information contained
in the historical financial information of the Company prepared in
accordance with U.S. GAAP that is set forth herein.
We present Adjusted EBITDA in order to evaluate the operating
performance and efficiency of our business. Adjusted EBITDA
represents EBITDA as further adjusted for items permitted under the
covenants of our credit facilities. EBITDA represents Net income
(loss) plus the sum of income tax (benefit) expense, interest
expense, net of interest income, and depreciation and amortization.
Adjusted EBITDA represents EBITDA as further adjusted for
stock-based compensation expense, (gain) loss on sale of assets and
termination of finance leases not in the ordinary course of
business, financing fees, as well as other fees and expenses
related to acquisitions, and other non-recurring (income) loss.
Adjusted EBITDA includes Adjusted EBITDA attributable to
non-controlling interest. Adjusted EBITDA does not include
pre-acquisition acquired Adjusted EBITDA. Adjusted EBITDA is not a
measure of our liquidity or financial performance under U.S. GAAP
and should not be considered as an alternative to Net income,
operating income or any other performance measures derived in
accordance with U.S. GAAP, or as an alternative to cash flow from
operating activities as a measure of our liquidity. The use of
Adjusted EBITDA instead of Net income has limitations as an
analytical tool. Because not all companies use identical
calculations, our presentation of Adjusted EBITDA may not be
comparable to other similarly titled measures of other companies,
limiting its usefulness as a comparative measure. Net debt is
defined as long-term debt (net of issuance costs and discounts)
plus finance leases, net of cash and cash-equivalents on our
balance sheet. Leverage Ratio is defined as Net debt to trailing
twelve months Adjusted EBITDA. Free Cash Flow is defined as Cash
Flow from Operating Activities, less capital expenditures. Base
Business is defined as SiteOne operations excluding acquired
branches that have not been under our ownership for at least four
full fiscal quarters at the start of the fiscal year. We define
Organic Daily Sales as Organic Sales divided by the number of
Selling Days in the relevant reporting period. We define Organic
Sales as Net sales, including Net sales from newly-opened
greenfield branches, but excluding Net sales from acquired branches
until they have been under our ownership for at least four full
fiscal quarters at the start of the fiscal year. Selling Days are
the number of business days, excluding Saturdays, Sundays, and
holidays, that SiteOne branches are open during the relevant
reporting period.
SiteOne Landscape Supply, Inc.
Consolidated Balance Sheets (Unaudited) (In millions,
except share and per share data)
Assets
September 29, 2024
December 31, 2023
Current assets:
Cash and cash equivalents
$
85.5
$
82.5
Accounts receivable, net of allowance for
doubtful accounts of $25.8 and $27.3, respectively
574.9
490.6
Inventory, net
884.9
771.2
Income tax receivable
4.0
—
Prepaid expenses and other current
assets
91.4
61.0
Total current assets
1,640.7
1,405.3
Property and equipment, net
288.4
249.4
Operating lease right-of-use assets,
net
419.9
388.9
Goodwill
509.9
485.5
Intangible assets, net
268.3
280.8
Deferred tax assets
7.2
5.3
Other assets
11.8
13.7
Total assets
$
3,146.2
$
2,828.9
Liabilities, Redeemable Non-controlling
Interest, and Stockholders' Equity
Current liabilities:
Accounts payable
$
327.8
$
270.8
Current portion of finance leases
28.1
21.8
Current portion of operating leases
86.1
83.6
Accrued compensation
67.5
74.2
Long-term debt, current portion
4.7
5.3
Income tax payable
—
8.0
Accrued liabilities
134.8
114.6
Total current liabilities
649.0
578.3
Other long-term liabilities
10.5
11.5
Finance leases, less current portion
96.1
69.8
Operating leases, less current portion
342.2
313.3
Deferred tax liabilities
—
2.3
Long-term debt, less current portion
405.9
367.6
Total liabilities
1,503.7
1,342.8
Commitments and contingencies
Redeemable non-controlling interest
19.2
—
Stockholders' equity:
Common stock, par value $0.01;
1,000,000,000 shares authorized; 45,583,961 and 45,404,091 shares
issued, and 45,118,918 and 45,082,070 shares outstanding at
September 29, 2024 and December 31, 2023, respectively
0.5
0.5
Additional paid-in capital
620.9
601.8
Retained earnings
1,061.6
916.3
Accumulated other comprehensive income
(loss)
(1.4
)
4.2
Treasury stock, at cost, 465,043 and
322,021 shares at September 29, 2024 and December 31, 2023,
respectively
(58.3
)
(36.7
)
Total stockholders' equity
1,623.3
1,486.1
Total liabilities, redeemable
non-controlling interest, and stockholders' equity
$
3,146.2
$
2,828.9
SiteOne Landscape Supply, Inc.
Consolidated Statements of Operations (Unaudited) (In
millions, except share and per share data)
Three Months Ended
Nine Months Ended
September 29, 2024
October 1, 2023
September 29, 2024
October 1, 2023
Net sales
$
1,208.8
$
1,145.1
$
3,527.5
$
3,336.2
Cost of goods sold
797.8
757.0
2,305.0
2,171.6
Gross profit
411.0
388.1
1,222.5
1,164.6
Selling, general and administrative
expenses
349.1
311.8
1,020.6
923.8
Other income
8.0
4.9
15.3
11.4
Operating income
69.9
81.2
217.2
252.2
Interest and other non-operating expenses,
net
9.5
6.4
25.2
20.6
Income before taxes
60.4
74.8
192.0
231.6
Income tax expense
15.8
17.5
46.1
54.8
Net income
44.6
57.3
145.9
176.8
Less: Net income attributable to
non-controlling interest
0.2
—
0.6
—
Net income attributable to
SiteOne
$
44.4
$
57.3
$
145.3
$
176.8
Net income per common share:
Basic
$
0.98
$
1.27
$
3.21
$
3.92
Diluted
$
0.97
$
1.25
$
3.18
$
3.87
Weighted average number of common
shares outstanding:
Basic
45,229,528
45,149,650
45,253,447
45,096,404
Diluted
45,572,078
45,747,398
45,647,670
45,690,285
SiteOne Landscape Supply, Inc.
Consolidated Statements of Cash Flows (Unaudited) (In
millions)
Nine Months Ended
September 29, 2024
October 1, 2023
Cash Flows from Operating Activities:
Net income
$
145.9
$
176.8
Adjustments to reconcile Net income to net
cash provided by operating activities:
Amortization of finance lease right-of-use
assets and depreciation
55.3
46.1
Stock-based compensation
19.5
20.7
Amortization of software and intangible
assets
48.1
47.0
Amortization of debt related costs
1.0
0.9
Loss on extinguishment of debt
1.8
—
Gain on sale of equipment
(1.0
)
(0.4
)
Other
(5.8
)
(3.8
)
Changes in operating assets and
liabilities, net of the effects of acquisitions:
Receivables
(72.4
)
(68.8
)
Inventory
(44.2
)
(45.4
)
Income tax receivable
(4.0
)
7.2
Prepaid expenses and other assets
(28.1
)
(37.2
)
Accounts payable
47.2
55.2
Income tax payable
(8.0
)
—
Accrued expenses and other liabilities
8.7
(8.4
)
Net Cash Provided By Operating
Activities
$
164.0
$
189.9
Cash Flows from Investing Activities:
Purchases of property and equipment
(31.0
)
(24.1
)
Purchases of intangible assets
(3.4
)
(5.3
)
Acquisitions, net of cash acquired
(110.4
)
(181.7
)
Proceeds from the sale of property and
equipment
4.5
1.9
Net Cash Used In Investing
Activities
$
(140.3
)
$
(209.2
)
Cash Flows from Financing Activities:
Equity proceeds from common stock
5.1
3.0
Repurchases of common shares
(21.6
)
(0.6
)
Borrowings under term loan
220.1
120.0
Repayments under term loan
(197.0
)
(2.2
)
Borrowings on asset-based credit
facilities
360.9
434.3
Repayments on asset-based credit
facilities
(354.9
)
(461.8
)
Payments of debt issuance costs
(2.2
)
(1.8
)
Payments on finance lease obligations
(19.4
)
(13.2
)
Payments of acquisition related contingent
obligations
(4.7
)
(5.6
)
Other financing activities
(6.8
)
(7.0
)
Net Cash (Used In) Provided By
Financing Activities
$
(20.5
)
$
65.1
Effect of exchange rate on cash
(0.2
)
—
Net change in cash
3.0
45.8
Cash and cash equivalents:
Beginning
82.5
29.1
Ending
$
85.5
$
74.9
Supplemental Disclosures of Cash Flow
Information:
Cash paid during the year for interest
$
23.0
$
19.8
Cash paid during the year for income
taxes
$
56.3
$
46.0
SiteOne Landscape Supply, Inc.
Adjusted EBITDA to Net Income Reconciliation (Unaudited)
(In millions)
The following table presents a reconciliation of Adjusted EBITDA
to Net income (loss):
2024
2023
2022
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Reported Net income (loss)
$
44.6
$
120.6
$
(19.3
)
$
(3.4
)
$
57.3
$
124.0
$
(4.5
)
$
(0.9
)
Income tax expense (benefit)
15.8
40.0
(9.7
)
(5.0
)
17.5
40.0
(2.7
)
(4.6
)
Interest expense, net
9.5
9.0
6.7
6.5
6.4
7.3
6.9
5.5
Depreciation and amortization
35.9
34.6
32.9
34.6
31.3
31.0
30.8
31.6
EBITDA
105.8
204.2
10.6
32.7
112.5
202.3
30.5
31.6
Stock-based compensation(a)
5.2
3.8
10.5
5.0
5.0
7.1
8.6
4.3
(Gain) loss on sale of assets(b)
0.3
(0.3
)
(1.0
)
(0.1
)
(0.2
)
0.2
(0.4
)
0.2
Financing fees(c)
0.5
—
—
—
0.4
0.1
—
—
Acquisitions and other adjustments(d)
3.0
2.8
1.0
2.3
2.1
1.5
1.1
2.8
Adjusted EBITDA(e)
$
114.8
$
210.5
$
21.1
$
39.9
$
119.8
$
211.2
$
39.8
$
38.9
____________________________________
(a) Represents stock-based compensation expense recorded during
the period.
(b) Represents any gain or loss associated with the sale of
assets and termination of finance leases not in the ordinary course
of business.
(c) Represents fees associated with our debt refinancing and
debt amendments.
(d) Represents professional fees, performance bonuses, and
retention and severance payments related to historical
acquisitions, as well as the cost of inventory that was stepped up
to fair value during the second quarter of 2024 related to the
purchase accounting of Devil Mountain. We cannot predict the timing
or amount of any such fees or payments. These amounts are recorded
in Cost of goods sold and Selling, general and administrative
expenses in the Consolidated Statements of Operations.
(e) Adjusted EBITDA excludes any earnings or loss of
acquisitions prior to their respective acquisition dates for all
periods presented. Adjusted EBITDA includes Adjusted EBITDA
attributable to non-controlling interest of $0.8 million and $0.9
million for the third and second quarter of 2024, respectively.
SiteOne Landscape Supply, Inc.
Organic Daily Sales to Net Sales Reconciliation (Unaudited)
(In millions, except Selling Days)
The following table presents a reconciliation of Organic Daily
Sales to Net sales:
2024
2023
Qtr 3
Qtr 2
Qtr 1
Qtr 3
Qtr 2
Qtr 1
Reported Net sales
$
1,208.8
$
1,413.9
$
904.8
$
1,145.1
$
1,353.7
$
837.4
Organic Sales(a)
1,089.6
1,291.5
840.7
1,103.2
1,334.5
835.8
Acquisition contribution(b)
119.2
122.4
64.1
41.9
19.2
1.6
Selling Days
63
64
64
63
64
64
Organic Daily Sales
$
17.3
$
20.2
$
13.1
$
17.5
$
20.9
$
13.1
_____________________________________
(a) Organic sales equal Net sales less Net sales from branches
acquired in 2024 and 2023.
(b) Represents Net sales from acquired branches that have not
been under our ownership for at least four full fiscal quarters at
the start of the 2024 Fiscal Year. Includes Net sales from branches
acquired in 2024 and 2023.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241030514195/en/
Investor Relations: SiteOne Landscape Supply, Inc.
Investor Relations 470-270-7011 investors@siteone.com
SiteOne Landscape Supply (NYSE:SITE)
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SiteOne Landscape Supply (NYSE:SITE)
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