SiteOne(US:SITE)2024-07-31 10:00Financial Performance - The company achieved net sales growth of 4% and 6% for the three and six months ended June 30, 2024, primarily driven by positive contributions from acquisitions [81]. - Organic Daily Sales decreased by 3% and 2% for the three and six months ended June 30, 2024, primarily due to commodity price deflation, which is estimated to have reduced Organic Daily Sales by 3% [81]. - Net income attributable to common shares decreased to $120.2 million and $100.9 million for the three and six months ended June 30, 2024, compared to $124.0 million and $119.5 million for the same periods in 2023 [81]. - Gross margin decreased by 10 and 40 basis points for the three and six months ended June 30, 2024, respectively, primarily due to lower price realization [81]. - Selling, general and administrative expenses (SG&A) increased by 7% and 10% for the three and six months ended June 30, 2024, respectively, primarily due to the impact of acquisitions [81]. - The company reported net sales of $1,413.9 million for the three months ended June 30, 2024, compared to $1,353.7 million for the same period in 2023, reflecting a year-over-year increase of 4.4% [98]. - Gross profit for the three months ended June 30, 2024, was $510.3 million, representing a gross margin of 36.1%, slightly down from 36.2% in the prior year [98]. - The company achieved a net income of $120.6 million for the three months ended June 30, 2024, which is 8.5% of net sales, compared to 9.2% in the prior year [98]. - Net sales for Q2 2024 reached $1,413.9 million, a 4.4% increase compared to $1,353.7 million in Q2 2023 [120]. - Gross profit for Q2 2024 was $510.3 million, a 4% increase from $489.4 million in Q2 2023, while gross margin decreased to 36.1% from 36.2% [122]. - Net income attributable to common shares for Q2 2024 was $120.2 million, compared to a loss of $19.3 million in Q1 2024 [129]. Tax and Financial Obligations - The company's effective tax rate was approximately 23.0% for the six months ended June 30, 2024, down from 23.8% for the same period in 2023, primarily due to an increase in excess tax benefits from stock-based compensation [72]. - The company recorded excess tax benefits of $2.8 million for the six months ended June 30, 2024, compared to $1.9 million for the same period in 2023 [72]. - The effective tax rate decreased to 23.0% for the six months ended June 30, 2024, down from 23.8% for the same period in 2023 [123]. - The company recognized excess tax benefits of $2.8 million for the six months ended June 30, 2024, compared to $1.9 million for the same period in 2023 [123]. - The total amount of interest on long-term debt increased to $124.9 million as of June 30, 2024, primarily due to increased borrowings under the ABL Facility [162]. - The interest rate on the outstanding balance of the New Term Loans was 7.45841% as of June 30, 2024 [169]. - The Tranche B Term Loans bear interest at either an adjusted Term SOFR rate plus an applicable margin of 1.75% or an alternative base rate plus an applicable margin of 0.75% [172]. - The interest rate on outstanding balances under the ABL Facility ranged from 6.55130% to 6.55252% as of June 30, 2024 [177]. - The commitment fee paid on unfunded amounts under the ABL Facility was 0.25% as of June 30, 2024 [177]. Acquisitions and Growth Strategy - The company has a robust acquisition pipeline and remains committed to driving growth organically and through acquisitions [63]. - In August 2023, the company acquired Pioneer Landscape Centers, Inc. and JLL Pioneer LLC, expanding its presence with 34 locations across Colorado and Arizona [94]. - The company has made several acquisitions in 2023, including Timothy's Center for Gardening and New England Silica, to strengthen its distribution network [94]. Operational Initiatives - The company has implemented marketing initiatives focusing on customer analytics, digital marketing strategy, and a new Partners Program to enhance customer engagement [97]. - Operational excellence initiatives are being pursued, including best practices in branch operations and enhanced automation of branch systems [97]. - The company is focusing on supply chain initiatives, including new inventory planning systems and expanding distribution network capabilities [115]. - Future strategies include enhancing the B2B e-Commerce platform and improving sales and delivery processes through local branch collaboration [115]. Market Conditions and Risks - The company continues to monitor market conditions and geopolitical risks, including the ongoing war in Ukraine and unrest in the Middle East, which may impact business operations [104]. - The company expects prices to be down approximately 3% for the 2024 Fiscal Year, which is higher than the initial anticipated range of 1% to 2% [81]. Cash Flow and Capital Management - The company had total cash and cash equivalents of $71.9 million and total gross long-term debt of $485.6 million as of June 30, 2024 [134]. - Working capital increased by $179.6 million to $1,006.6 million as of June 30, 2024, compared to $827.0 million as of December 31, 2023 [135]. - Net cash used in investing activities was $119.8 million for the six months ended June 30, 2024, up from $74.9 million for the same period in 2023 [137]. - Net cash provided by operating activities decreased to $48.1 million for the six months ended June 30, 2024, compared to $101.2 million for the same period in 2023 [148]. - The company repurchased 128,922 shares at an average price of $153.84 during the three and six months ended June 30, 2024, with $343.8 million remaining under the share repurchase authorization [145]. - The borrowing base capacity under the ABL Facility was $470.6 million as of June 30, 2024, down from $578.2 million as of December 31, 2023 [134]. - Total finance lease obligations (excluding interest) amounted to $115.3 million as of June 30, 2024 [134]. - Cash used in investing activities amounted to $(119.8) million for the six months ended June 30, 2024, compared to $(74.9) million for the same period ended July 2, 2023, indicating an increase in investment outflows [163]. - Cash provided by financing activities was $61.4 million for the six months ended June 30, 2024, compared to $14.0 million for the same period ended July 2, 2023, reflecting a significant increase in financing [163]. - The ability of subsidiaries to make distributions and dividends depends on their operating results, cash requirements, financial condition, and general business conditions [181]. - The company entered into an additional $120.0 million of New Term Loans on July 12, 2023, to enhance its financing capabilities [167]. - The Second Amendment to the Second Amended and Restated Credit Agreement provides for an aggregate principal amount of approximately $392.7 million in term loans [172].