SiteOne Landscape Supply Announces Second Quarter 2023 Earnings
- Net sales increased 11% to $1.35 billion
- Organic daily sales grew 4%
- Operating cash flow increased $159.1 million to $253.8 million
- Completed three acquisitions during the quarter
- Successfully increased term loan by $120 million to $372 million
- Gross margin contracted 170 basis points to 36.2%
- Net income decreased 12% to $124.0 million
- Adjusted EBITDA decreased 5% to $211.2 million
Second Quarter 2023 Highlights (Compared to Second Quarter 2022):
-
Net sales increased
11% to$1.35 billion -
Organic Daily Sales increased
4% -
Gross profit increased
6% to ; gross margin contracted 170 basis points to$489.4 million 36.2% -
SG&A as a percentage of Net sales increased 130 basis points to
23.7% -
Net income decreased
12% to$124.0 million -
Adjusted EBITDA decreased
5% to ; Adjusted EBITDA margin was$211.2 million 15.6% -
Operating cash flow increased
to$159.1 million $253.8 million - Closed two acquisitions: Adams Wholesale Supply and Link Outdoor Lighting
Post-Quarter Highlights
- Closed one acquisition: Hickory Hill Farm & Garden
-
Successfully increased term loan by
to$120 million $372 million
“Our second quarter results were in line with our expectations as we delivered solid Organic Daily Sales growth which helped to mitigate the ongoing normalization of gross margin and EBITDA margin,” said Doug Black, SiteOne’s Chairman and CEO. “Our teams have continued to perform well in serving our customers, gaining market share, and successfully managing through the near-term commodity price deflation for select products. End market demand has been resilient which allowed us to achieve positive organic volume growth and strong growth in operating cash flow during the quarter. Finally, we completed two acquisitions during the quarter with one more completed in July. Overall, we are pleased with our first half performance and feel good about our outlook for the remainder of 2023. With strong teams, a robust acquisition pipeline, and a winning strategy to create significant value for our stakeholders, we are confident in our ability to continue delivering exceptional performance and growth in the years to come.”
Second Quarter 2023 Results
Net sales for the Second Quarter 2023 increased to
Gross profit increased
Selling, general and administrative expenses (“SG&A”) for the Second Quarter 2023 increased to
Net income for the Second Quarter 2023 was
Adjusted EBITDA decreased
Operating cash flow increased
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 July 2, 2023, was
Outlook
“We were pleased to generate positive Organic Daily Sales growth in the second quarter with continued resilient end market demand and contributions from our commercial initiatives. We expect pricing to be down versus prior year in the second half due to commodity price deflation which will cause pricing for the full year 2023 to be approximately flat,” Doug Black continued. “Accordingly, we expect Organic Daily Sales growth in the second half to be slightly down with negative pricing offsetting volume. We expect gross margin to be flat and adjusted EBITDA margin to be slightly lower in the second half of 2023 compared to the second half of 2022.”
For Fiscal 2023, we now expect our Adjusted EBITDA to be in the range of
Reconciliation for the forward-looking full-year 2023 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, August 2, 2023, 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 1823770 and the replay is 10180700. The replay will be available until 11:59 p.m. (ET) on August 16, 2023.
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. 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 2023 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 economic and financial conditions, including a prolonged economic recession; 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 rising interest rates; increases in operating costs; public health emergencies such as the COVID-19 pandemic; public perceptions that our products and services are not environmentally friendly or that our practices are not sustainable; 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; 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; 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 |
|
July 2, 2023 |
|
January 1, 2023 |
||||
Current assets: |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
69.6 |
|
|
$ |
29.1 |
|
Accounts receivable, net of allowance for doubtful accounts of |
|
|
569.6 |
|
|
|
455.5 |
|
Inventory, net |
|
|
865.4 |
|
|
|
767.7 |
|
Income tax receivable |
|
|
— |
|
|
|
10.9 |
|
Prepaid expenses and other current assets |
|
|
81.4 |
|
|
|
56.1 |
|
Total current assets |
|
|
1,586.0 |
|
|
|
1,319.3 |
|
|
|
|
|
|
||||
Property and equipment, net |
|
|
201.8 |
|
|
|
188.8 |
|
Operating lease right-of-use assets, net |
|
|
364.0 |
|
|
|
321.6 |
|
Goodwill |
|
|
433.9 |
|
|
|
411.9 |
|
Intangible assets, net |
|
|
274.2 |
|
|
|
276.0 |
|
Deferred tax assets |
|
|
3.8 |
|
|
|
3.7 |
|
Other assets |
|
|
8.8 |
|
|
|
12.6 |
|
Total assets |
|
$ |
2,872.5 |
|
|
$ |
2,533.9 |
|
|
|
|
|
|
||||
Liabilities and Stockholders' Equity |
|
|
|
|
||||
Current liabilities: |
|
|
|
|
||||
Accounts payable |
|
$ |
382.3 |
|
|
$ |
279.7 |
|
Current portion of finance leases |
|
|
18.4 |
|
|
|
14.8 |
|
Current portion of operating leases |
|
|
73.4 |
|
|
|
70.1 |
|
Accrued compensation |
|
|
57.9 |
|
|
|
81.2 |
|
Long-term debt, current portion |
|
|
4.1 |
|
|
|
4.0 |
|
Income tax payable |
|
|
24.8 |
|
|
|
— |
|
Accrued liabilities |
|
|
122.0 |
|
|
|
110.0 |
|
Total current liabilities |
|
|
682.9 |
|
|
|
559.8 |
|
|
|
|
|
|
||||
Other long-term liabilities |
|
|
14.8 |
|
|
|
12.8 |
|
Finance leases, less current portion |
|
|
56.1 |
|
|
|
43.9 |
|
Operating leases, less current portion |
|
|
299.7 |
|
|
|
260.1 |
|
Deferred tax liabilities |
|
|
7.6 |
|
|
|
7.8 |
|
Long-term debt, less current portion |
|
|
376.4 |
|
|
|
346.6 |
|
Total liabilities |
|
|
1,437.5 |
|
|
|
1,231.0 |
|
|
|
|
|
|
||||
Commitments and contingencies |
|
|
|
|
||||
|
|
|
|
|
||||
Stockholders' equity: |
|
|
|
|
||||
Common stock, par value |
|
|
0.5 |
|
|
|
0.5 |
|
Additional paid-in capital |
|
|
589.3 |
|
|
|
577.1 |
|
Retained earnings |
|
|
862.4 |
|
|
|
742.9 |
|
Accumulated other comprehensive income |
|
|
8.1 |
|
|
|
7.7 |
|
Treasury stock, at cost, 232,021 and 232,021 shares at July 2, 2023 and January 1, 2023, respectively |
|
|
(25.3 |
) |
|
|
(25.3 |
) |
Total stockholders' equity |
|
|
1,435.0 |
|
|
|
1,302.9 |
|
Total liabilities and stockholders' equity |
|
$ |
2,872.5 |
|
|
$ |
2,533.9 |
|
SiteOne Landscape Supply, Inc. Consolidated Statements of Operations (Unaudited) (In millions, except share and per share data) |
||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
July 2, 2023 |
|
July 3, 2022 |
|
July 2, 2023 |
|
July 3, 2022 |
||||
Net sales |
|
$ |
1,353.7 |
|
$ |
1,216.6 |
|
$ |
2,191.1 |
|
$ |
2,021.9 |
Cost of goods sold |
|
|
864.3 |
|
|
755.5 |
|
|
1,414.6 |
|
|
1,291.6 |
Gross profit |
|
|
489.4 |
|
|
461.1 |
|
|
776.5 |
|
|
730.3 |
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative expenses |
|
|
320.6 |
|
|
272.7 |
|
|
612.0 |
|
|
503.2 |
Other income |
|
|
2.5 |
|
|
1.7 |
|
|
6.5 |
|
|
4.2 |
Operating income |
|
|
171.3 |
|
|
190.1 |
|
|
171.0 |
|
|
231.3 |
|
|
|
|
|
|
|
|
|
||||
Interest and other non-operating expenses, net |
|
|
7.3 |
|
|
4.6 |
|
|
14.2 |
|
|
8.9 |
Income before taxes |
|
|
164.0 |
|
|
185.5 |
|
|
156.8 |
|
|
222.4 |
Income tax expense |
|
|
40.0 |
|
|
44.8 |
|
|
37.3 |
|
|
49.4 |
Net income |
|
$ |
124.0 |
|
$ |
140.7 |
|
$ |
119.5 |
|
$ |
173.0 |
|
|
|
|
|
|
|
|
|
||||
Net income per common share: |
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
2.75 |
|
$ |
3.12 |
|
$ |
2.65 |
|
$ |
3.85 |
Diluted |
|
$ |
2.71 |
|
$ |
3.07 |
|
$ |
2.62 |
|
$ |
3.78 |
Weighted average number of common shares outstanding: |
|
|
|
|
|
|
|
|
||||
Basic |
|
|
45,093,712 |
|
|
45,034,633 |
|
|
45,069,781 |
|
|
44,985,199 |
Diluted |
|
|
45,682,976 |
|
|
45,779,173 |
|
|
45,661,533 |
|
|
45,814,054 |
SiteOne Landscape Supply, Inc. Consolidated Statements of Cash Flows (Unaudited) (In millions) |
||||||||
|
|
Six Months Ended |
||||||
|
|
July 2, 2023 |
|
July 3, 2022 |
||||
Cash Flows from Operating Activities: |
|
|
|
|
||||
Net income |
|
$ |
119.5 |
|
|
$ |
173.0 |
|
Adjustments to reconcile Net income to net cash provided by (used in) operating activities: |
|
|
|
|
||||
Amortization of finance lease right-of-use assets and depreciation |
|
|
31.0 |
|
|
|
21.1 |
|
Stock-based compensation |
|
|
15.7 |
|
|
|
9.5 |
|
Amortization of software and intangible assets |
|
|
30.8 |
|
|
|
23.7 |
|
Amortization of debt related costs |
|
|
0.5 |
|
|
|
0.6 |
|
Gain on sale of equipment |
|
|
(0.2 |
) |
|
|
(0.3 |
) |
Other |
|
|
(2.5 |
) |
|
|
0.6 |
|
Changes in operating assets and liabilities, net of the effects of acquisitions: |
|
|
|
|
||||
Receivables |
|
|
(111.2 |
) |
|
|
(122.5 |
) |
Inventory |
|
|
(84.8 |
) |
|
|
(215.2 |
) |
Income tax receivable |
|
|
10.9 |
|
|
|
3.3 |
|
Prepaid expenses and other assets |
|
|
(16.7 |
) |
|
|
(9.1 |
) |
Accounts payable |
|
|
98.5 |
|
|
|
80.8 |
|
Income tax payable |
|
|
24.8 |
|
|
|
34.6 |
|
Accrued expenses and other liabilities |
|
|
(15.1 |
) |
|
|
(23.7 |
) |
Net Cash Provided By (Used In) Operating Activities |
|
$ |
101.2 |
|
|
$ |
(23.6 |
) |
|
|
|
|
|
||||
Cash Flows from Investing Activities: |
|
|
|
|
||||
Purchases of property and equipment |
|
|
(16.3 |
) |
|
|
(16.6 |
) |
Purchases of intangible assets |
|
|
(1.1 |
) |
|
|
(7.2 |
) |
Acquisitions, net of cash acquired |
|
|
(58.6 |
) |
|
|
(122.0 |
) |
Proceeds from the sale of property and equipment |
|
|
1.1 |
|
|
|
1.1 |
|
Net Cash Used In Investing Activities |
|
$ |
(74.9 |
) |
|
$ |
(144.7 |
) |
|
|
|
|
|
||||
Cash Flows from Financing Activities: |
|
|
|
|
||||
Equity proceeds from common stock |
|
|
2.1 |
|
|
|
2.3 |
|
Repurchases of common stock |
|
|
(0.6 |
) |
|
|
— |
|
Repayments under term loan |
|
|
(1.3 |
) |
|
|
(1.3 |
) |
Borrowings on asset-based credit facility |
|
|
302.8 |
|
|
|
319.8 |
|
Repayments on asset-based credit facility |
|
|
(271.5 |
) |
|
|
(133.8 |
) |
Payments on finance lease obligations |
|
|
(8.3 |
) |
|
|
(5.8 |
) |
Payments of acquisition related contingent obligations |
|
|
(2.7 |
) |
|
|
(8.9 |
) |
Other financing activities |
|
|
(6.5 |
) |
|
|
(7.4 |
) |
Net Cash Provided By Financing Activities |
|
$ |
14.0 |
|
|
$ |
164.9 |
|
|
|
|
|
|
||||
Effect of exchange rate on cash |
|
|
0.2 |
|
|
|
(0.2 |
) |
Net change in cash |
|
|
40.5 |
|
|
|
(3.6 |
) |
|
|
|
|
|
||||
Cash and cash equivalents: |
|
|
|
|
||||
Beginning |
|
|
29.1 |
|
|
|
53.7 |
|
Ending |
|
$ |
69.6 |
|
|
$ |
50.1 |
|
|
|
|
|
|
||||
Supplemental Disclosures of Cash Flow Information: |
|
|
|
|
||||
Cash paid during the year for interest |
|
$ |
13.9 |
|
|
$ |
6.8 |
|
Cash paid during the year for income taxes |
|
$ |
2.2 |
|
|
$ |
13.7 |
|
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: |
|||||||||||||||||||||||||||||
|
2023 |
|
2022 |
|
2021 |
||||||||||||||||||||||||
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
||||||||||||||
Reported Net income (loss) |
$ |
124.0 |
|
$ |
(4.5 |
) |
|
$ |
(0.9 |
) |
|
$ |
73.3 |
|
|
$ |
140.7 |
|
|
$ |
32.3 |
|
|
$ |
27.5 |
|
$ |
80.0 |
|
Income tax (benefit) expense |
|
40.0 |
|
|
(2.7 |
) |
|
|
(4.6 |
) |
|
|
22.9 |
|
|
|
44.8 |
|
|
|
4.6 |
|
|
|
2.7 |
|
|
19.1 |
|
Interest expense, net |
|
7.3 |
|
|
6.9 |
|
|
|
5.5 |
|
|
|
5.6 |
|
|
|
4.6 |
|
|
|
4.3 |
|
|
|
5.1 |
|
|
4.3 |
|
Depreciation and amortization |
|
31.0 |
|
|
30.8 |
|
|
|
31.6 |
|
|
|
27.4 |
|
|
|
23.1 |
|
|
|
21.7 |
|
|
|
22.3 |
|
|
21.0 |
|
EBITDA |
|
202.3 |
|
|
30.5 |
|
|
|
31.6 |
|
|
|
129.2 |
|
|
|
213.2 |
|
|
|
62.9 |
|
|
|
57.6 |
|
|
124.4 |
|
Stock-based compensation(a) |
|
7.1 |
|
|
8.6 |
|
|
|
4.3 |
|
|
|
4.5 |
|
|
|
5.8 |
|
|
|
3.7 |
|
|
|
3.1 |
|
|
3.5 |
|
(Gain) loss on sale of assets(b) |
|
0.2 |
|
|
(0.4 |
) |
|
|
0.2 |
|
|
|
(0.7 |
) |
|
|
(0.2 |
) |
|
|
(0.1 |
) |
|
|
0.2 |
|
|
(0.2 |
) |
Financing fees(c) |
|
0.1 |
|
|
— |
|
|
|
— |
|
|
|
0.1 |
|
|
|
0.2 |
|
|
|
— |
|
|
|
— |
|
|
— |
|
Acquisitions and other adjustments(d) |
|
1.5 |
|
|
1.1 |
|
|
|
2.8 |
|
|
|
2.5 |
|
|
|
3.0 |
|
|
|
1.3 |
|
|
|
0.9 |
|
|
0.5 |
|
Adjusted EBITDA(e) |
$ |
211.2 |
|
$ |
39.8 |
|
|
$ |
38.9 |
|
|
$ |
135.6 |
|
|
$ |
222.0 |
|
|
$ |
67.8 |
|
|
$ |
61.8 |
|
$ |
128.2 |
|
_____________________________________
(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. |
|
(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 (Unaudited) (In millions, except Selling Days) |
|||||||||||
The following table presents a reconciliation of Organic Daily Sales to Net sales: |
|||||||||||
|
2023 |
|
2022 |
||||||||
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 2 |
|
Qtr 1 |
||||
Reported Net sales |
$ |
1,353.7 |
|
$ |
837.4 |
|
$ |
1,216.6 |
|
$ |
805.3 |
Organic Sales(a) |
|
1,252.4 |
|
|
777.6 |
|
|
1,201.4 |
|
|
802.0 |
Acquisition contribution(b) |
|
101.3 |
|
|
59.8 |
|
|
15.2 |
|
|
3.3 |
Selling Days |
|
64 |
|
|
64 |
|
|
64 |
|
|
65 |
Organic Daily Sales |
$ |
19.6 |
|
$ |
12.2 |
|
$ |
18.8 |
|
$ |
12.3 |
_____________________________________
(a) | Organic Sales equal Net sales less Net sales from branches acquired in 2023 and 2022. |
|
(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 2023 Fiscal Year. Includes Net sales from branches acquired in 2023 and 2022. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230802756693/en/
Investor Relations Contact:
SiteOne Landscape Supply, Inc.
Investor Relations
470-270-7011
investors@siteone.com
Source: SiteOne Landscape Supply, Inc.
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