SiteOne Landscape Supply Announces Third Quarter 2021 Earnings
SiteOne Landscape Supply reported a robust performance for Q3 2021, with net sales up 25% to $936.4 million. Organic Daily Sales grew by 15%, driven by strong demand for landscaping products. Gross profit surged 36% to $340.5 million, while net income rose 66% to $80.0 million. Adjusted EBITDA also saw significant growth, increasing 46% to $128.2 million. The company remains optimistic, projecting 2021 Adjusted EBITDA between $380 million to $400 million, reflecting a promising outlook amid ongoing market trends.
- Net sales increased 25% to $936.4 million.
- Organic Daily Sales rose by 15%.
- Gross profit increased 36% to $340.5 million.
- Net income surged 66% to $80.0 million.
- Adjusted EBITDA climbed 46% to $128.2 million.
- Adjusted EBITDA guidance raised to $380-$400 million for 2021.
- SG&A as a percentage of net sales increased by 70 basis points to 25.1%.
Third Quarter 2021 Highlights (Compared to Third Quarter 2020):
-
Net sales increased
25% to$936.4 million -
Organic Daily Sales increased by
15% -
Gross profit increased
36% to$340.5 million 36.4% -
SG&A as a percentage of Net sales increased by 70 basis points to
25.1% -
Net income increased
66% to$80.0 million -
Adjusted EBITDA increased
46% to$128.2 million -
Adjusted EBITDA margin increased 200 basis points to
13.7% - Completed the acquisition of Green Brothers Earth Works
Post-Quarter Highlights
- Issued 2021 Environmental, Social, and Governance (ESG) Report with enhanced disclosures and climate considerations
-
Established fourth major distribution center in
Dallas, Texas
“Our excellent momentum in 2021 continued in the third quarter as our outstanding field and functional teams worked together to overcome select product shortages, trucking challenges and rapidly rising product costs in order to take advantage of the solid demand for landscaping products and services. With strong contributions from our acquisitions, we delivered another quarter of excellent organic and inorganic Net sales growth, EBITDA margin improvement and EBITDA growth,” said
Third Quarter 2021 Results
Net sales for the Third Quarter 2021 increased to
Gross profit increased
Selling, general and administrative expenses (“SG&A”) for the Third Quarter 2021 increased to
Net income for the Third Quarter 2021 increased
Adjusted EBITDA for the Third Quarter 2021 increased
Balance Sheet and Liquidity
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
As of
Outlook
“Organic sales growth has continued to be strong in October with elevated inflation and favorable market trends across all residential and commercial segments. Our customers are very busy with robust backlogs although they remained constrained by the tight labor market. Given these trends, we now expect organic sales growth to remain healthy through the end of the year,”
Reconciliation for the forward-looking full-year 2021 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,
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
Forward-Looking Statements
This release contains “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, but are not limited to, statements relating to our 2021 Adjusted EBITDA outlook. 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: the potential negative impact of the COVID-19 pandemic (which, among other things, may exacerbate each of the risk listed below); economic downturn or recession; cyclicality in residential and commercial construction markets; general economic and financial conditions; weather conditions, seasonality and availability of water to end-users; public perceptions that our products and services are not environmentally friendly; competitive industry pressures; product shortages and the loss of key suppliers; product price fluctuations; ability to pass along product cost increases; inventory management risks; ability to implement our business strategies and achieve our growth objectives; acquisition and integration risks; increased operating costs; risks associated with our large labor force (including work stoppages due to COVID-19); retention of key personnel; construction defect and product liability claims; impairment of goodwill; adverse credit and financial markets events and conditions; credit sale risks; performance of individual branches; 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; computer data processing systems; cybersecurity incidents (including the
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), interest expense, net of interest income, and depreciation and amortization. Adjusted EBITDA is further adjusted for stock-based compensation expense, (gain) loss on sale of assets and termination of finance leases and other non-cash items, other non-recurring (income) and loss. Adjusted EBITDA does not include pre-acquisition acquired Adjusted EBITDA. Adjusted EBITDA is not a measure of our liquidity or financial performance under GAAP and should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance with 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. 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.
Consolidated Balance Sheets (Unaudited) (In millions, except share and per share data) |
||||||||
Assets |
|
|
|
|
||||
Current assets: |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
158.0 |
|
|
$ |
55.2 |
|
Accounts receivable, net of allowance for doubtful accounts of |
|
416.2 |
|
|
292.8 |
|
||
Inventory, net |
|
628.9 |
|
|
458.6 |
|
||
Income tax receivable |
|
3.4 |
|
|
6.8 |
|
||
Prepaid expenses and other current assets |
|
49.0 |
|
|
38.2 |
|
||
Total current assets |
|
1,255.5 |
|
|
851.6 |
|
||
|
|
|
|
|
||||
Property and equipment, net |
|
140.3 |
|
|
130.0 |
|
||
Operating lease right-of-use assets, net |
|
265.3 |
|
|
256.5 |
|
||
|
|
278.4 |
|
|
250.6 |
|
||
Intangible assets, net |
|
202.1 |
|
|
196.3 |
|
||
Deferred tax assets |
|
2.2 |
|
|
2.4 |
|
||
Other assets |
|
8.0 |
|
|
8.3 |
|
||
Total assets |
|
$ |
2,151.8 |
|
|
$ |
1,695.7 |
|
|
|
|
|
|
||||
Liabilities and Stockholders' Equity |
|
|
|
|
||||
Current liabilities: |
|
|
|
|
||||
Accounts payable |
|
$ |
295.3 |
|
|
$ |
172.8 |
|
Current portion of finance leases |
|
10.4 |
|
|
9.2 |
|
||
Current portion of operating leases |
|
58.5 |
|
|
54.6 |
|
||
Accrued compensation |
|
81.4 |
|
|
69.2 |
|
||
Long-term debt, current portion |
|
4.7 |
|
|
2.8 |
|
||
Accrued liabilities |
|
90.0 |
|
|
60.0 |
|
||
Total current liabilities |
|
540.3 |
|
|
368.6 |
|
||
|
|
|
|
|
||||
Other long-term liabilities |
|
17.2 |
|
|
25.3 |
|
||
Finance leases, less current portion |
|
33.6 |
|
|
32.4 |
|
||
Operating leases, less current portion |
|
213.9 |
|
|
208.3 |
|
||
Deferred tax liabilities |
|
6.4 |
|
|
5.4 |
|
||
Long-term debt, less current portion |
|
317.7 |
|
|
260.7 |
|
||
Total liabilities |
|
1,129.1 |
|
|
900.7 |
|
||
|
|
|
|
|
||||
Commitments and contingencies |
|
|
|
|
||||
|
|
|
|
|
||||
Stockholders' equity: |
|
|
|
|
||||
Common stock, par value |
|
0.4 |
|
|
0.4 |
|
||
Additional paid-in capital |
|
557.0 |
|
|
541.8 |
|
||
Retained earnings |
|
470.0 |
|
|
259.1 |
|
||
Accumulated other comprehensive loss |
|
(4.7) |
|
|
(6.3) |
|
||
Total stockholders' equity |
|
1,022.7 |
|
|
795.0 |
|
||
Total liabilities and stockholders' equity |
$ |
2,151.8 |
$ |
1,695.7 |
||||
Consolidated Statements of Operations (Unaudited) (In millions, except share and per share data) |
||||||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net sales |
|
$ |
936.4 |
|
|
$ |
751.9 |
|
|
$ |
2,670.5 |
|
|
$ |
2,029.4 |
|
Cost of goods sold |
|
595.9 |
|
|
501.8 |
|
|
1,740.3 |
|
|
1,350.4 |
|
||||
Gross profit |
|
340.5 |
|
|
250.1 |
|
|
930.2 |
|
|
679.0 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative expenses |
|
235.3 |
|
|
183.3 |
|
|
653.4 |
|
|
525.4 |
|
||||
Other (income) expense, net |
|
1.8 |
|
|
(1.8) |
|
|
(1.6) |
|
|
(4.0) |
|
||||
Operating income |
|
103.4 |
|
|
68.6 |
|
|
278.4 |
|
|
157.6 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Interest and other non-operating expenses, net |
|
4.3 |
|
|
6.6 |
|
|
14.1 |
|
|
21.9 |
|
||||
Net income before taxes |
|
99.1 |
|
|
62.0 |
|
|
264.3 |
|
|
135.7 |
|
||||
Income tax expense |
|
19.1 |
|
|
13.8 |
|
|
53.4 |
|
|
25.9 |
|
||||
Net income |
|
$ |
80.0 |
|
|
$ |
48.2 |
|
|
$ |
210.9 |
|
|
$ |
109.8 |
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per common share: |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
$ |
1.79 |
|
|
$ |
1.11 |
|
|
$ |
4.74 |
|
|
$ |
2.59 |
|
Diluted |
|
$ |
1.74 |
|
|
$ |
1.08 |
|
|
$ |
4.61 |
|
|
$ |
2.52 |
|
Weighted average number of common shares outstanding: |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
44,645,126 |
|
|
43,316,470 |
|
|
44,511,675 |
|
|
42,344,567 |
|
||||
Diluted |
|
45,849,338 |
|
|
44,561,488 |
|
|
45,762,387 |
|
|
43,573,559 |
|
||||
Consolidated Statements of Cash Flows (Unaudited) (In millions) |
||||||||
| Nine Months Ended | ||||||||
2021 |
2020 |
|||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income | $ |
210.9 |
|
|
$ | 109.8 |
||
| Adjustments to reconcile Net income to net cash provided by operating activities: |
|
|
|
|||||
| Amortization of finance lease right-of-use assets and depreciation | 25.8 |
|
|
21.5 |
||||
| Stock-based compensation | 11.2 |
|
|
7.9 |
||||
| Amortization of software and intangible assets | 34.9 |
|
|
27.5 |
||||
| Amortization of debt related costs | 1.1 |
|
|
1.5 |
||||
| Loss on extinguishment of debt | 0.8 |
|
|
— |
||||
| Gain on sale of equipment | (0.3) |
|
|
(0.2) |
||||
| Other | 3.8 |
|
|
1.9 |
||||
| Changes in operating assets and liabilities, net of the effects of acquisitions: |
|
|
|
|||||
| Receivables | (118.0) |
|
|
(34.6) |
||||
| Inventory | (159.5) |
|
|
(35.8) |
||||
| Income tax receivable | 3.4 |
|
|
5.3 |
||||
| Prepaid expenses and other assets | (10.7) |
|
|
(12.3) |
||||
| Accounts payable | 117.5 |
|
|
54.8 |
||||
| Accrued expenses and other liabilities | 38.5 |
|
|
33.4 |
||||
| Net Cash Provided By Operating Activities | $ | 159.4 |
|
|
$ | 180.7 |
||
|
|
|
||||||
| Cash Flows from Investing Activities: |
|
|
|
|||||
| Purchases of property and equipment | (24.2) |
|
|
(11.8) |
||||
| Purchases of intangible assets | (3.7) |
|
|
(2.3) |
||||
| Acquisitions, net of cash acquired | (71.1) |
|
|
(73.5) |
||||
| Proceeds from the sale of property and equipment | 1.7 |
|
|
0.7 |
||||
| $ | (97.3) |
|
|
$ | (86.9) |
|||
|
|
|
||||||
| Cash Flows from Financing Activities: |
|
|
|
|||||
| Equity proceeds from common stock | 7.3 |
|
|
270.8 |
||||
| Borrowings under term loan | 325.0 |
|
|
— |
||||
| Repayments under term loan | (270.6) |
|
|
(3.4) |
||||
| Borrowings on asset-based credit facility | 161.9 |
|
|
285.4 |
||||
| Repayments on asset-based credit facility | (161.9) |
|
|
(378.2) |
||||
| Payments of debt issuance costs | (2.4) |
|
|
— |
||||
| Payments on finance lease obligations | (7.7) |
|
|
(6.2) |
||||
| Payments of acquisition related contingent obligations | (6.8) |
|
|
(4.8) |
||||
| Other financing activities | (4.2) |
|
|
(1.7) |
||||
| Net Cash Provided By Financing Activities | $ | 40.6 |
|
|
$ | 161.9 |
||
|
|
|
||||||
| Effect of exchange rate on cash | 0.1 |
|
|
(0.1) |
||||
| Net Change In Cash | 102.8 |
|
|
255.6 |
||||
|
|
|
||||||
| Cash and cash equivalents: |
|
|
|
|||||
| Beginning | 55.2 |
|
|
19.0 |
||||
| Ending | $ | 158.0 |
|
|
$ | 274.6 |
||
|
|
|
||||||
| Supplemental Disclosures of Cash Flow Information: |
|
|
|
|||||
| Cash paid during the year for interest | $ | 12.2 |
|
|
$ | 20.5 |
||
| Cash paid during the year for income taxes | $ | 50.3 |
|
|
$ | 17.9 |
||
Adjusted EBITDA Reconciliation (In millions, unaudited) |
||||||||||||||||||||||||||||||||
The following table presents a reconciliation of Adjusted EBITDA to Net income (loss) (in millions): |
||||||||||||||||||||||||||||||||
|
|
2021 |
|
2020 |
|
2019 |
||||||||||||||||||||||||||
|
|
Qtr 3 |
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
||||||||||||||||
Reported Net income (loss) |
$ |
80.0 |
|
|
$ |
123.5 |
|
|
$ |
7.4 |
|
|
$ |
11.5 |
|
|
$ |
48.2 |
|
|
$ |
79.1 |
|
|
$ |
(17.5) |
|
|
$ |
2.5 |
|
|
|
Income tax (benefit) expense |
19.1 |
|
|
36.8 |
|
|
(2.5) |
|
|
1.6 |
|
|
13.8 |
|
|
25.6 |
|
|
(13.5) |
|
|
(5.6) |
|
||||||||
|
Interest expense, net |
4.3 |
|
|
4.3 |
|
|
5.5 |
|
|
9.1 |
|
|
6.6 |
|
|
7.6 |
|
|
7.7 |
|
|
7.5 |
|
||||||||
|
Depreciation and amortization |
21.0 |
|
|
20.3 |
|
|
19.4 |
|
|
18.2 |
|
|
16.3 |
|
|
16.4 |
|
|
16.3 |
|
|
14.8 |
|
||||||||
EBITDA |
124.4 |
|
|
184.9 |
|
|
29.8 |
|
|
40.4 |
|
|
84.9 |
|
|
128.7 |
|
|
(7.0) |
|
|
19.2 |
|
|||||||||
|
Stock-based compensation(a) |
3.5 |
|
|
4.6 |
|
|
3.1 |
|
|
2.7 |
|
|
2.6 |
|
|
2.8 |
|
|
2.5 |
|
|
2.0 |
|
||||||||
|
(Gain) loss on sale of assets(b) |
(0.2) |
|
|
(0.2) |
|
|
0.1 |
|
|
(0.2) |
|
|
(0.4) |
|
|
0.1 |
|
|
0.1 |
|
|
0.1 |
|
||||||||
|
Financing fees(c) |
— |
|
|
— |
|
|
0.7 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||||||||
|
Acquisitions and other adjustments(d) |
0.5 |
|
|
1.3 |
|
|
0.8 |
|
|
1.0 |
|
|
0.7 |
|
|
0.5 |
|
|
0.8 |
|
|
0.9 |
|
||||||||
Adjusted EBITDA(e) |
$ |
128.2 |
|
|
$ |
190.6 |
|
|
$ |
34.5 |
|
|
$ |
43.9 |
|
|
$ |
87.8 |
|
|
$ |
132.1 |
|
|
$ |
(3.6) |
|
|
$ |
22.2 |
|
|
_____________________________________
| (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. |
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 (in millions): |
||||||||||||||||||||||||
|
|
2021 |
|
2020 |
||||||||||||||||||||
|
|
Qtr 3 |
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 3 |
|
Qtr 2 |
|
Qtr 1 |
||||||||||||
Reported Net sales |
$ |
936.4 |
|
|
$ |
1,083.9 |
|
|
$ |
650.2 |
|
|
$ |
751.9 |
|
|
$ |
817.7 |
|
|
$ |
459.8 |
|
|
|
Organic Sales(a) |
843.7 |
|
|
975.0 |
|
|
613.3 |
|
|
732.7 |
|
|
799.2 |
|
|
456.4 |
|
||||||
|
Acquisition contribution(b) |
92.7 |
|
|
108.9 |
|
|
36.9 |
|
|
19.2 |
|
|
18.5 |
|
|
3.4 |
|
||||||
Selling Days |
63 |
|
|
64 |
|
|
65 |
|
|
63 |
|
|
64 |
|
|
64 |
|
|||||||
Organic Daily Sales |
$ |
13.4 |
|
|
$ |
15.2 |
|
|
$ |
9.4 |
|
|
$ |
11.6 |
|
|
$ |
12.5 |
|
|
$ |
7.1 |
|
|
_____________________________________
| (a) | Organic Sales equal Net sales less Net sales from branches acquired in 2020 and 2021. | ||
| (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 2021 Fiscal Year. Includes Net sales from branches acquired in 2020 and 2021. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20211103005354/en/
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