First Quarter 2023 Highlights (Compared to First Quarter
2022):
- Net sales increased 4% to $837.4 million
- Organic Daily Sales decreased 2%
- Gross profit increased 7% to $287.1 million; gross margin
expanded 90 basis points to 34.3%
- SG&A as a percentage of Net sales increased 620 basis
points to 34.8%
- Net loss of $4.5 million, compared to Net income of $32.3
million
- Adjusted EBITDA decreased 41% to $39.8 million; Adjusted EBITDA
margin was 4.8%
- Closed two acquisitions: J&J Materials and Triangle
Landscape Supplies
SiteOne Landscape Supply, Inc. (the “Company” or “SiteOne”)
(NYSE: SITE) announced earnings for its first quarter ended April
2, 2023 (“First Quarter 2023”).
“Given the difficult weather this year and tough comparisons
with the first quarter of last year, in which we achieved 17%
Organic Daily Sales growth and strong margin expansion, I am
pleased to report that SiteOne delivered Net sales growth and gross
margin expansion in the first quarter of 2023,” said Doug Black,
SiteOne’s Chairman and CEO. “We are serving our customers well and
effectively managing the slowing pace of inflation to drive
better-than-market organic growth. We also continue to execute our
acquisition strategy, adding two excellent companies to the SiteOne
family during the quarter, with many more opportunities in the
pipeline. Our increase in SG&A as a percentage of Net sales
reflects the business mix and seasonality of our recent
acquisitions and a later start to the spring selling season.
Overall, we are off to a solid start to the year, and we feel good
about the resilient market demand and our outlook for 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.”
First Quarter 2023 Results
Net sales for the First Quarter 2023 increased to $837.4
million, or 4%, compared to $805.3 million for the prior-year
period. Organic Daily Sales decreased 2% compared to the prior-year
period primarily due to unfavorable weather in Western and Northern
markets and moderating economic conditions. Acquisitions
contributed $56.5 million, or 7%, to Net sales growth for the
quarter.
Gross profit increased 7% to $287.1 million for the First
Quarter 2023 compared to $269.2 million for the prior-year period.
Gross margin increased 90 basis points to 34.3% for the First
Quarter 2023 as lower freight costs and contributions from
acquisitions with higher gross margin offset the absence of the
large price realization benefit in the First Quarter 2022.
Selling, general and administrative expenses (“SG&A”) for
the First Quarter 2023 increased to $291.4 million from $230.5
million for the prior-year period. SG&A as a percentage of Net
sales increased 620 basis points to 34.8% due to the impact of
acquisitions, cost inflation, and higher operating costs supporting
our growth combined with a later start to the spring season in a
low-volume quarter.
Net loss for the First Quarter 2023 was $4.5 million, compared
to Net income of $32.3 million for the same period in the prior
year, as higher Net sales and gross margin were offset by the
increase in SG&A expense. Adjusted EBITDA decreased 41% to
$39.8 million for the First Quarter 2023, compared to $67.8 million
for the prior-year period. Adjusted EBITDA margin decreased 360
basis points to 4.8%.
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 April 2, 2023, was $586.1
million compared to $416.6 million as of April 3, 2022. Net debt to
Adjusted EBITDA for the last twelve months was 1.3 times compared
to 0.9 times at the same period last year.
Outlook
“Net sales improved in April with the arrival of spring in the
North and with more favorable weather in the West. While we expect
demand for the full year to be lower than in 2022, we are pleased
that our markets have remained resilient so far this year,” Doug
Black continued. “Additionally, we have seen high product inflation
continue to moderate, and we expect prices in the second half of
2023 to be relatively flat versus the second half of 2022. Taken
together with our ability to gain market share, we continue to
expect Organic Daily Sales to be flat to down mid-single digits for
the full year. We also continue to expect gross margin and EBITDA
margin to normalize this year without the substantial benefits that
we saw in 2022 due to our strategic inventory purchases ahead of
the rapid inflation. Acquisitions will increase gross margin but
will also increase SG&A, thereby having a minimal effect on
EBITDA margin.”
For Fiscal 2023, we continue to expect our Adjusted EBITDA to be
in the range of $395 million to $425 million. Our guidance does not
include any contributions from unannounced acquisitions.
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, May 3,
2023, at 8:00 a.m. Eastern Time, to discuss the Company’s financial
results. The conference call can 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 live call and the replay is
13737885. The replay will be available until 11:59 p.m. (ET) on May
17, 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
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 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 Russia
and Ukraine; financial institution disruptions; risks related to
our current indebtedness and our ability to obtain financing in the
future; 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 January 1, 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 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 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.
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
April 2, 2023
January 1, 2023
Current assets:
Cash and cash equivalents
$
40.3
$
29.1
Accounts receivable, net of allowance for
doubtful accounts of $21.5 and $21.7, respectively
496.1
455.5
Inventory, net
943.1
767.7
Income tax receivable
14.0
10.9
Prepaid expenses and other current
assets
73.6
56.1
Total current assets
1,567.1
1,319.3
Property and equipment, net
194.4
188.8
Operating lease right-of-use assets,
net
358.7
321.6
Goodwill
422.4
411.9
Intangible assets, net
276.8
276.0
Deferred tax assets
3.8
3.7
Other assets
9.4
12.6
Total assets
$
2,832.6
$
2,533.9
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable
$
365.6
$
279.7
Current portion of finance leases
16.1
14.8
Current portion of operating leases
72.6
70.1
Accrued compensation
47.9
81.2
Long-term debt, current portion
4.1
4.0
Accrued liabilities
101.3
110.0
Total current liabilities
607.6
559.8
Other long-term liabilities
14.7
12.8
Finance leases, less current portion
47.4
43.9
Operating leases, less current portion
294.1
260.1
Deferred tax liabilities
7.3
7.8
Long-term debt, less current portion
558.8
346.6
Total liabilities
1,529.9
1,231.0
Commitments and contingencies
Stockholders' equity:
Common stock, par value $0.01;
1,000,000,000 shares authorized; 45,211,180 and 45,148,312 shares
issued, and 44,979,159 and 44,916,291 shares outstanding at April
2, 2023 and January 1, 2023, respectively
0.5
0.5
Additional paid-in capital
583.1
577.1
Retained earnings
738.4
742.9
Accumulated other comprehensive income
6.0
7.7
Treasury stock, at cost, 232,021 and
232,021 shares at April 2, 2023 and January 1, 2023,
respectively
(25.3)
(25.3)
Total stockholders' equity
1,302.7
1,302.9
Total liabilities and stockholders'
equity
$
2,832.6
$
2,533.9
SiteOne Landscape Supply,
Inc.
Consolidated Statements of
Operations (Unaudited)
(In millions, except share and
per share data)
Three Months Ended
April 2, 2023
April 3, 2022
Net sales
$
837.4
$
805.3
Cost of goods sold
550.3
536.1
Gross profit
287.1
269.2
Selling, general and administrative
expenses
291.4
230.5
Other income
4.0
2.5
Operating income (loss)
(0.3)
41.2
Interest and other non-operating expenses,
net
6.9
4.3
Income (loss) before taxes
(7.2)
36.9
Income tax (benefit) expense
(2.7)
4.6
Net income (loss)
$
(4.5)
$
32.3
Net income (loss) per common
share:
Basic
$
(0.10)
$
0.72
Diluted
$
(0.10)
$
0.70
Weighted average number of common
shares outstanding:
Basic
45,045,851
44,935,765
Diluted
45,045,851
45,850,602
SiteOne Landscape Supply,
Inc.
Consolidated Statements of
Cash Flows (Unaudited)
(In millions)
Three Months Ended
April 2, 2023
April 3, 2022
Cash Flows from Operating Activities:
Net income (loss)
$
(4.5)
$
32.3
Adjustments to reconcile Net income (loss)
to net cash used in operating activities:
Amortization of finance lease right-of-use
assets and depreciation
15.5
10.0
Stock-based compensation
8.6
3.7
Amortization of software and intangible
assets
15.3
11.7
Amortization of debt related costs
0.3
0.3
Gain on sale of equipment
(0.4)
(0.1)
Other
(3.2)
(0.5)
Changes in operating assets and
liabilities, net of the effects of acquisitions:
Receivables
(39.3)
(39.9)
Inventory
(168.2)
(216.1)
Income tax receivable
(3.1)
3.3
Prepaid expenses and other assets
(14.8)
(6.3)
Accounts payable
81.8
134.3
Income tax payable
—
1.6
Accrued expenses and other liabilities
(40.6)
(52.6)
Net Cash Used In Operating
Activities
$
(152.6)
$
(118.3)
Cash Flows from Investing Activities:
Purchases of property and equipment
(7.1)
(7.5)
Purchases of intangible assets
—
(2.5)
Acquisitions, net of cash acquired
(33.2)
(31.5)
Proceeds from the sale of property and
equipment
0.7
0.5
Net Cash Used In Investing
Activities
$
(39.6)
$
(41.0)
Cash Flows from Financing Activities:
Equity proceeds from common stock
1.1
1.2
Repurchases of common stock
(0.6)
—
Repayments under term loan
(0.6)
(0.6)
Borrowings on asset-based credit
facility
298.3
223.5
Repayments on asset-based credit
facility
(85.3)
(60.8)
Payments on finance lease obligations
(3.9)
(2.9)
Payments of acquisition related contingent
obligations
(1.6)
(5.6)
Other financing activities
(4.0)
(4.2)
Net Cash Provided By Financing
Activities
$
203.4
$
150.6
Effect of exchange rate on cash
—
0.1
Net change in cash
11.2
(8.6)
Cash and cash equivalents:
Beginning
29.1
53.7
Ending
$
40.3
$
45.1
Supplemental Disclosures of Cash Flow
Information:
Cash paid during the year for interest
$
6.0
$
3.2
Cash paid during the year for income
taxes
$
1.2
$
2.4
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 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Reported Net income (loss)
$
(4.5)
$
(0.9)
$
73.3
$
140.7
$
32.3
$
27.5
$
80.0
$
123.5
Income tax (benefit) expense
(2.7)
(4.6)
22.9
44.8
4.6
2.7
19.1
36.8
Interest expense, net
6.9
5.5
5.6
4.6
4.3
5.1
4.3
4.3
Depreciation and amortization
30.8
31.6
27.4
23.1
21.7
22.3
21.0
20.3
EBITDA
30.5
31.6
129.2
213.2
62.9
57.6
124.4
184.9
Stock-based compensation(a)
8.6
4.3
4.5
5.8
3.7
3.1
3.5
4.6
(Gain) loss on sale of assets(b)
(0.4)
0.2
(0.7)
(0.2)
(0.1)
0.2
(0.2)
(0.2)
Financing fees(c)
—
—
0.1
0.2
—
—
—
—
Acquisitions and other adjustments(d)
1.1
2.8
2.5
3.0
1.3
0.9
0.5
1.3
Adjusted EBITDA(e)
$
39.8
$
38.9
$
135.6
$
222.0
$
67.8
$
61.8
$
128.2
$
190.6
_____________________________________
(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 1
Qtr 1
Reported Net sales
$
837.4
$
805.3
Organic Sales(a)
777.6
802.0
Acquisition contribution(b)
59.8
3.3
Selling Days
64
65
Organic Daily Sales
$
12.2
$
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/20230503005173/en/
Investor Relations: SiteOne Landscape Supply, Inc.
Investor Relations 470-270-7011 investors@siteone.com
SiteOne Landscape Supply (NYSE:SITE)
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