SiteOne Landscape Supply Announces First Quarter 2024 Earnings
SiteOne Landscape Supply reported its first quarter 2024 earnings with a 8% increase in net sales to $904.8 million. Gross profit increased by 5% to $301.2 million, although gross margin contracted. The company closed two acquisitions post-quarter and expects commodity price deflation to impact results, with a focus on organic sales growth and EBITDA margin improvement.
Net sales increased by 8% to $904.8 million for the First Quarter 2024 compared to the prior-year period.
Operating cash flow improved by $53.3 million, showcasing financial strength.
Acquisition of Devil Mountain Nursery and active acquisition pipeline signal growth potential.
Adjusted EBITDA decreased by 47% to $21.1 million, with a 250 basis points decline in margin.
Net loss increased to $19.3 million for the First Quarter 2024, compared to $4.5 million in the prior year period.
Gross margin contracted by 100 basis points to 33.3% despite a 5% increase in gross profit.
Insights
SiteOne Landscape Supply's recent earnings report indicates a mixed financial health. An 8% growth in net sales showcases the company's ability to increase revenue, but this is tempered by a modest 1% rise in organic daily sales, which points to less robust underlying growth once acquisition impacts are stripped away. The reported net loss widening, from $4.5 million to $19.3 million year-over-year, suggests that higher revenues are not translating into bottom line profitability, which is critical for investors seeking sustainable performance.
The increase in SG&A expenses as a percentage of net sales is concerning as it indicates rising costs are not being effectively managed or offset by sales. While the company has noted commodity price deflation as a factor, investors should scrutinize future reports for improvements in cost containment. The Adjusted EBITDA margin decline further accentuates the pressure on operational performance. The unchanged net debt to Adjusted EBITDA ratio indicates a stable leverage position, which is a slight positive in the context of the broader report.
The acquisitions of Eggemeyer and Devil Mountain Wholesale Nursery are strategic moves for SiteOne to bolster their market presence. The reported 7% contribution to net sales growth through acquisitions suggests that M&A activity is a key driver of top-line growth. However, investors should be cautious about the impact these acquisitions may have on margins and profitability, as the initial costs and integration expenses can be substantial.
It is also important to acknowledge the company's active acquisition pipeline. If executed properly, these acquisitions can provide a platform for growth and diversification of products and services. Yet, the long-term success of such a strategy will heavily depend on the company's ability to integrate these businesses effectively without compromising operational efficiency or overextending financially.
Despite the concerning financial metrics, SiteOne's leadership appears confident in their ability to navigate market headwinds, including commodity price deflation. The forecast for low single digit Organic Daily Sales growth indicates a belief in strong market demand and the effectiveness of commercial initiatives. While the projected downturn in commodity prices can serve to depress revenues, it is essential for the company to demonstrate its ability to enhance adjusted EBITDA margins to reassure stakeholders.
Investors should watch closely how the company leverages its operational initiatives to manage SG&A expenses, which will be critical for improving margins in the face of anticipated price deflation. Given the unchanged full-year Adjusted EBITDA guidance, the company appears to be maintaining a positive outlook, but as always, it's imperative to monitor future performance against these benchmarks.
First Quarter 2024 Highlights (Compared to First Quarter 2023):
-
Net sales increased
8% to$904.8 million -
Organic Daily Sales increased
1% -
Gross profit increased
5% to$301.2 million 33.3% -
SG&A as a percentage of Net sales increased 140 basis points to
36.2% -
Net loss of
$19.3 million $4.5 million -
Adjusted EBITDA decreased
47% to$21.1 million 2.3% -
Operating cash flow improved by
$53.3 million
Post-Quarter Highlights
-
Closed two acquisitions: Eggemeyer and a
75% interest in Devil Mountain Wholesale Nursey
“During the first quarter of 2024 we experienced continued significant commodity pricing deflation which dampened our near-term results. Against this headwind we were pleased to achieve positive Organic Daily Sales growth, good Net sales growth, and improved operating cash flow for the quarter,” said Doug Black, SiteOne Chairman and CEO. “We were also pleased to add two more companies to our family in April including Devil Mountain Nursery, a terrific new nursery platform for growth in the West. We believe that end-market demand is solid across most of our product lines, and we are confident in our ability to outperform the market and achieve positive volume growth through our commercial and operational initiatives. Our acquisition pipeline remains very active, and we continue to leverage our exceptional teams, market leadership position, and strong balance sheet to further build our company and execute our long-term strategy for performance and growth.”
First Quarter 2024 Results
Net sales for the First Quarter 2024 increased to
Gross profit increased
Selling, general and administrative expenses (“SG&A”) for the First Quarter 2024 increased to
Net loss for the First Quarter 2024 was
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 March 31, 2024, was
Outlook
“We have seen commodity price deflation continue through April and expect it to persist into the third quarter. For the full year 2024 we expect prices to be down approximately
For Fiscal 2024, we continue to expect our Adjusted EBITDA to be in the range of
Reconciliation for the forward-looking full-year 2024 Adjusted EBITDA outlook is not being provided, as the Company does not currently have sufficient data to accurately estimate the variables and individual adjustments for such reconciliation.
Conference Call Information
SiteOne management will host a conference call today, May 1, 2024, at 8:00 a.m. Eastern Time, to discuss the Company’s financial results. The conference call can be accessed by dialing 844-825-9789 (domestic) or 412-317-5180 (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 live call is 3726760 and for the replay it is 10187673. The replay will be available until 11:59 p.m. (ET) on May 15, 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
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; weather and climate conditions; 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, and geopolitical conflicts such as the ongoing conflict between
Non-GAAP Financial Information
This release includes certain financial information, not prepared in accordance with
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 our 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 does not include pre-acquisition acquired Adjusted EBITDA. Adjusted EBITDA is not a measure of our liquidity or financial performance under
SiteOne Landscape Supply, Inc. |
||||||||
Consolidated Balance Sheets (Unaudited) |
||||||||
(In millions, except share and per share data) |
||||||||
Assets |
|
March 31, 2024 |
|
December 31, 2023 |
||||
Current assets: |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
41.5 |
|
|
$ |
82.5 |
|
Accounts receivable, net of allowance for doubtful accounts of |
|
|
528.5 |
|
|
|
490.6 |
|
Inventory, net |
|
|
933.6 |
|
|
|
771.2 |
|
Income tax receivable |
|
|
2.8 |
|
|
|
— |
|
Prepaid expenses and other current assets |
|
|
73.6 |
|
|
|
61.0 |
|
Total current assets |
|
|
1,580.0 |
|
|
|
1,405.3 |
|
|
|
|
|
|
||||
Property and equipment, net |
|
|
252.1 |
|
|
|
249.4 |
|
Operating lease right-of-use assets, net |
|
|
380.5 |
|
|
|
388.9 |
|
Goodwill |
|
|
485.2 |
|
|
|
485.5 |
|
Intangible assets, net |
|
|
266.9 |
|
|
|
280.8 |
|
Deferred tax assets |
|
|
5.3 |
|
|
|
5.3 |
|
Other assets |
|
|
11.4 |
|
|
|
13.7 |
|
Total assets |
|
$ |
2,981.4 |
|
|
$ |
2,828.9 |
|
|
|
|
|
|
||||
Liabilities and Stockholders' Equity |
|
|
|
|
||||
Current liabilities: |
|
|
|
|
||||
Accounts payable |
|
$ |
390.9 |
|
|
$ |
270.8 |
|
Current portion of finance leases |
|
|
23.7 |
|
|
|
21.8 |
|
Current portion of operating leases |
|
|
83.4 |
|
|
|
83.6 |
|
Accrued compensation |
|
|
52.5 |
|
|
|
74.2 |
|
Long-term debt, current portion |
|
|
5.3 |
|
|
|
5.3 |
|
Income tax payable |
|
|
— |
|
|
|
8.0 |
|
Accrued liabilities |
|
|
114.2 |
|
|
|
114.6 |
|
Total current liabilities |
|
|
670.0 |
|
|
|
578.3 |
|
|
|
|
|
|
||||
Other long-term liabilities |
|
|
10.3 |
|
|
|
11.5 |
|
Finance leases, less current portion |
|
|
77.8 |
|
|
|
69.8 |
|
Operating leases, less current portion |
|
|
304.7 |
|
|
|
313.3 |
|
Deferred tax liabilities |
|
|
2.1 |
|
|
|
2.3 |
|
Long-term debt, less current portion |
|
|
442.7 |
|
|
|
367.6 |
|
Total liabilities |
|
|
1,507.6 |
|
|
|
1,342.8 |
|
|
|
|
|
|
||||
Commitments and contingencies |
|
|
|
|
||||
|
|
|
|
|
||||
Stockholders' equity: |
|
|
|
|
||||
Common stock, par value |
|
|
0.5 |
|
|
|
0.5 |
|
Additional paid-in capital |
|
|
610.7 |
|
|
|
601.8 |
|
Retained earnings |
|
|
897.0 |
|
|
|
916.3 |
|
Accumulated other comprehensive income |
|
|
2.3 |
|
|
|
4.2 |
|
Treasury stock, at cost, 322,021 and 322,021 shares at March 31, 2024 and December 31, 2023, respectively |
|
|
(36.7 |
) |
|
|
(36.7 |
) |
Total stockholders' equity |
|
|
1,473.8 |
|
|
|
1,486.1 |
|
Total liabilities and stockholders' equity |
|
$ |
2,981.4 |
|
|
$ |
2,828.9 |
|
SiteOne Landscape Supply, Inc. |
||||||||
Consolidated Statements of Operations (Unaudited) |
||||||||
(In millions, except share and per share data) |
||||||||
|
|
Three Months Ended |
||||||
|
|
March 31, 2024 |
|
April 2, 2023 |
||||
Net sales |
|
$ |
904.8 |
|
|
$ |
837.4 |
|
Cost of goods sold |
|
|
603.6 |
|
|
|
550.3 |
|
Gross profit |
|
|
301.2 |
|
|
|
287.1 |
|
|
|
|
|
|
||||
Selling, general and administrative expenses |
|
|
327.7 |
|
|
|
291.4 |
|
Other income |
|
|
4.2 |
|
|
|
4.0 |
|
Operating loss |
|
|
(22.3 |
) |
|
|
(0.3 |
) |
|
|
|
|
|
||||
Interest and other non-operating expenses, net |
|
|
6.7 |
|
|
|
6.9 |
|
Loss before taxes |
|
|
(29.0 |
) |
|
|
(7.2 |
) |
Income tax benefit |
|
|
(9.7 |
) |
|
|
(2.7 |
) |
Net loss |
|
$ |
(19.3 |
) |
|
$ |
(4.5 |
) |
|
|
|
|
|
||||
Net loss per common share: |
|
|
|
|
||||
Basic |
|
$ |
(0.43 |
) |
|
$ |
(0.10 |
) |
Diluted |
|
$ |
(0.43 |
) |
|
$ |
(0.10 |
) |
Weighted average number of common shares outstanding: |
|
|
|
|
||||
Basic |
|
|
45,263,984 |
|
|
|
45,045,851 |
|
Diluted |
|
|
45,263,984 |
|
|
|
45,045,851 |
|
SiteOne Landscape Supply, Inc. |
||||||||
Consolidated Statements of Cash Flows |
||||||||
(In millions) |
||||||||
|
|
Three Months Ended |
||||||
|
|
March 31, 2024 |
|
April 2, 2023 |
||||
Cash Flows from Operating Activities: |
|
|
|
|
||||
Net loss |
|
$ |
(19.3 |
) |
|
$ |
(4.5 |
) |
Adjustments to reconcile Net loss to net cash used in operating activities: |
|
|
|
|
||||
Amortization of finance lease right-of-use assets and depreciation |
|
|
16.9 |
|
|
|
15.5 |
|
Stock-based compensation |
|
|
10.5 |
|
|
|
8.6 |
|
Amortization of software and intangible assets |
|
|
16.0 |
|
|
|
15.3 |
|
Amortization of debt related costs |
|
|
0.3 |
|
|
|
0.3 |
|
Gain on sale of equipment |
|
|
(1.0 |
) |
|
|
(0.4 |
) |
Other |
|
|
(1.5 |
) |
|
|
(3.2 |
) |
Changes in operating assets and liabilities, net of the effects of acquisitions: |
|
|
|
|
||||
Receivables |
|
|
(38.1 |
) |
|
|
(39.3 |
) |
Inventory |
|
|
(160.9 |
) |
|
|
(168.2 |
) |
Income tax receivable |
|
|
(2.8 |
) |
|
|
(3.1 |
) |
Prepaid expenses and other assets |
|
|
(8.9 |
) |
|
|
(14.8 |
) |
Accounts payable |
|
|
121.0 |
|
|
|
81.8 |
|
Income tax payable |
|
|
(8.0 |
) |
|
|
— |
|
Accrued expenses and other liabilities |
|
|
(23.5 |
) |
|
|
(40.6 |
) |
Net Cash Used In Operating Activities |
|
$ |
(99.3 |
) |
|
$ |
(152.6 |
) |
|
|
|
|
|
||||
Cash Flows from Investing Activities: |
|
|
|
|
||||
Purchases of property and equipment |
|
|
(8.9 |
) |
|
|
(7.1 |
) |
Acquisitions, net of cash acquired |
|
|
— |
|
|
|
(33.2 |
) |
Proceeds from the sale of property and equipment |
|
|
1.6 |
|
|
|
0.7 |
|
Net Cash Used In Investing Activities |
|
$ |
(7.3 |
) |
|
$ |
(39.6 |
) |
|
|
|
|
|
||||
Cash Flows from Financing Activities: |
|
|
|
|
||||
Equity proceeds from common stock |
|
|
2.6 |
|
|
|
1.1 |
|
Repurchases of common stock |
|
|
— |
|
|
|
(0.6 |
) |
Repayments under term loan |
|
|
(1.0 |
) |
|
|
(0.6 |
) |
Borrowings on asset-based credit facility |
|
|
158.2 |
|
|
|
298.3 |
|
Repayments on asset-based credit facility |
|
|
(82.1 |
) |
|
|
(85.3 |
) |
Payments on finance lease obligations |
|
|
(5.8 |
) |
|
|
(3.9 |
) |
Payments of acquisition related contingent obligations |
|
|
(1.8 |
) |
|
|
(1.6 |
) |
Other financing activities |
|
|
(4.4 |
) |
|
|
(4.0 |
) |
Net Cash Provided By Financing Activities |
|
$ |
65.7 |
|
|
$ |
203.4 |
|
|
|
|
|
|
||||
Effect of exchange rate on cash |
|
|
(0.1 |
) |
|
|
— |
|
Net change in cash |
|
|
(41.0 |
) |
|
|
11.2 |
|
Cash and cash equivalents: |
|
|
|
|
||||
Beginning |
|
|
82.5 |
|
|
|
29.1 |
|
Ending |
|
$ |
41.5 |
|
|
$ |
40.3 |
|
|
|
|
|
|
||||
Supplemental Disclosures of Cash Flow Information: |
|
|
|
|
||||
Cash paid during the year for interest |
|
$ |
6.0 |
|
|
$ |
6.0 |
|
Cash paid during the year for income taxes |
|
$ |
1.1 |
|
|
$ |
1.2 |
|
SiteOne Landscape Supply, Inc. |
|||||||||||||||||||||||||||||||
Adjusted EBITDA to Net Income (Loss) Reconciliation (Unaudited) |
|||||||||||||||||||||||||||||||
(In millions) |
|||||||||||||||||||||||||||||||
The following table presents a reconciliation of Adjusted EBITDA to Net income (loss): |
|||||||||||||||||||||||||||||||
|
2024 |
|
2023 |
|
2022 |
||||||||||||||||||||||||||
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|
Qtr 2 |
||||||||||||||||
Reported Net income (loss) |
$ |
(19.3 |
) |
|
$ |
(3.4 |
) |
|
$ |
57.3 |
|
|
$ |
124.0 |
|
$ |
(4.5 |
) |
|
$ |
(0.9 |
) |
|
$ |
73.3 |
|
|
$ |
140.7 |
|
|
Income tax expense (benefit) |
|
(9.7 |
) |
|
|
(5.0 |
) |
|
|
17.5 |
|
|
|
40.0 |
|
|
(2.7 |
) |
|
|
(4.6 |
) |
|
|
22.9 |
|
|
|
44.8 |
|
|
Interest expense, net |
|
6.7 |
|
|
|
6.5 |
|
|
|
6.4 |
|
|
|
7.3 |
|
|
6.9 |
|
|
|
5.5 |
|
|
|
5.6 |
|
|
|
4.6 |
|
|
Depreciation and amortization |
|
32.9 |
|
|
|
34.6 |
|
|
|
31.3 |
|
|
|
31.0 |
|
|
30.8 |
|
|
|
31.6 |
|
|
|
27.4 |
|
|
|
23.1 |
|
|
EBITDA |
|
10.6 |
|
|
|
32.7 |
|
|
|
112.5 |
|
|
|
202.3 |
|
|
30.5 |
|
|
|
31.6 |
|
|
|
129.2 |
|
|
|
213.2 |
|
|
Stock-based compensation(a) |
|
10.5 |
|
|
|
5.0 |
|
|
|
5.0 |
|
|
|
7.1 |
|
|
8.6 |
|
|
|
4.3 |
|
|
|
4.5 |
|
|
|
5.8 |
|
|
(Gain) loss on sale of assets(b) |
|
(1.0 |
) |
|
|
(0.1 |
) |
|
|
(0.2 |
) |
|
|
0.2 |
|
|
(0.4 |
) |
|
|
0.2 |
|
|
|
(0.7 |
) |
|
|
(0.2 |
) |
|
Financing fees(c) |
|
— |
|
|
|
— |
|
|
|
0.4 |
|
|
|
0.1 |
|
|
— |
|
|
|
— |
|
|
|
0.1 |
|
|
|
0.2 |
|
|
Acquisitions and other adjustments(d) |
|
1.0 |
|
|
|
2.3 |
|
|
|
2.1 |
|
|
|
1.5 |
|
|
1.1 |
|
|
|
2.8 |
|
|
|
2.5 |
|
|
|
3.0 |
|
|
Adjusted EBITDA(e) |
$ |
21.1 |
|
|
$ |
39.9 |
|
|
$ |
119.8 |
|
|
$ |
211.2 |
|
$ |
39.8 |
|
|
$ |
38.9 |
|
|
$ |
135.6 |
|
|
$ |
222.0 |
|
|
| _______________________________ | ||
(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, retention and severance payments, and performance bonuses related to historical acquisitions. Although we have incurred professional fees, retention and severance payments, and performance bonuses related to acquisitions in several historical periods and expect to incur such fees and payments for any future acquisitions, we cannot predict the timing or amount of any such fees or payments. These amounts are recorded in 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. |
|
SiteOne Landscape Supply, Inc. |
||||||
Organic Daily Sales to Net Sales Reconciliation |
||||||
(In millions, except Selling Days; unaudited) |
||||||
The following table presents a reconciliation of Organic Daily Sales to Net sales: |
||||||
2024 |
|
2023 |
||||
|
Qtr 1 |
|
Qtr 1 |
|||
Reported Net sales |
$ |
904.8 |
|
$ |
837.4 |
|
Organic Sales(a) |
|
840.7 |
|
|
835.8 |
|
Acquisition contribution(b) |
|
64.1 |
|
|
1.6 |
|
Selling Days |
|
64 |
|
|
64 |
|
Organic Daily Sales |
$ |
13.1 |
|
$ |
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/20240501125731/en/
Investor Relations:
SiteOne Landscape Supply, Inc.
Investor Relations
470-270-7011
investors@siteone.com
Source: SiteOne Landscape Supply, Inc.
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