SiteOne(SITE) - 2025 Q2 - Quarterly Results

Performance Highlights & Management Commentary SiteOne reported a 4% net sales increase in Q2 2024, driven by acquisitions, offsetting a 3% organic daily sales decline, with Adjusted EBITDA nearly flat Q2 2024 Key Performance Indicators (vs. Q2 2023) | Metric | Q2 2024 | Change vs. Q2 2023 | | :--- | :--- | :--- | | Net Sales | $1.41 billion | +4% | | Organic Daily Sales | - | -3% | | Gross Margin | 36.1% | -10 bps | | Net Income | $120.2 million | -3% | | Adjusted EBITDA | $210.5 million | -0.3% | - CEO Doug Black noted that while Q2 Organic Daily Sales were initially trending down 4-5%, conditions improved in June, resulting in only a 3% decline for the quarter[2] - The company continues to execute its acquisition strategy, adding four companies in Q2 (Eggemeyer, Devil Mountain Wholesale Nursey, Hardscape.com, Cohen & Cohen) and one in July (Millican Nurseries)[2][4][6] Financial Performance Analysis Q2 2024 net sales rose 4% to $1.41 billion due to acquisitions, masking a 3% organic daily sales decline and contributing to a 3% net income decrease - Net sales growth was driven by an 8% contribution from acquisitions, offsetting a 3% decrease in Organic Daily Sales[7] - Gross margin contracted by 10 basis points to 36.1% due to lower price realization, which was partially offset by a positive impact from acquisitions[8] - SG&A as a percentage of Net sales increased by 60 basis points to 24.3%, primarily due to the impact of acquisitions[9] - Net income attributable to common shares fell to $120.2 million from $124.0 million in the prior year, attributed to increased SG&A from acquisitions and lower gross margin[5] Financial Position and Cash Flow Net debt increased to $523.6 million, raising the leverage ratio to 1.3x, while operating cash flow significantly decreased to $147.4 million Net Debt and Leverage Ratio | Metric | June 30, 2024 | July 2, 2023 | | :--- | :--- | :--- | | Net Debt | $523.6 million | $385.4 million | | Leverage Ratio (Net debt to TTM Adj. EBITDA) | 1.3x | 0.9x | - Operating cash flow decreased from $253.8 million in Q2 2023 to $147.4 million in Q2 2024, primarily due to seasonal working capital timing differences[28] Outlook SiteOne revised 2024 Adjusted EBITDA guidance to $380-400 million, expecting continued market softness and a low single-digit organic daily sales decline - The company updated its Fiscal 2024 Adjusted EBITDA guidance to a range of $380 million to $400 million, excluding unannounced acquisitions[30] - Management expects continued soft demand, particularly from the repair and remodel end market, and ongoing price deflation in commodities for the second half of 2024[37] - A low single-digit Organic Daily Sales decline is projected for the rest of the year, though overall sales growth is expected to be positive due to acquisitions[37] Post-Quarter Events Post-quarter, SiteOne acquired Millican Nurseries and refinanced its term loan, increasing principal, extending maturity, and reducing interest - In July, the company closed the acquisition of Millican Nurseries[6] - On July 2, 2024, the term loan was refinanced, increasing it to $392.7 million, extending maturity by two years to March 2030, and lowering the interest rate to Term SOFR plus 175 basis points[35] Consolidated Financial Statements This section presents the company's consolidated financial statements, including statements of operations, balance sheets, and cash flows Consolidated Statements of Operations This statement details Q2 2024 financial performance, reporting $1.41 billion net sales, $510.3 million gross profit, and $120.2 million net income Consolidated Statements of Operations (in millions, except per share data) | Metric | Three Months Ended June 30, 2024 | Three Months Ended July 2, 2023 | | :--- | :--- | :--- | | Net sales | $1,413.9 | $1,353.7 | | Gross profit | $510.3 | $489.4 | | Operating income | $169.6 | $171.3 | | Net income attributable to common shares | $120.2 | $124.0 | | Diluted EPS | $2.63 | $2.71 | Consolidated Balance Sheets This statement presents the financial position as of June 30, 2024, showing total assets at $3.19 billion and total liabilities at $1.59 billion Consolidated Balance Sheet Highlights (in millions) | Metric | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $71.9 | $82.5 | | Inventory, net | $935.1 | $771.2 | | Total current assets | $1,689.6 | $1,405.3 | | Total assets | $3,185.4 | $2,828.9 | | Liabilities & Equity | | | | Accounts payable | $347.6 | $270.8 | | Long-term debt, total | $480.2 | $372.9 | | Total liabilities | $1,589.5 | $1,342.8 | | Total stockholders' equity | $1,576.9 | $1,486.1 | Consolidated Statements of Cash Flows This statement shows cash movements for the six months ended June 30, 2024, with operating cash flow at $48.1 million and a $10.6 million net cash decrease Consolidated Statements of Cash Flows (in millions) | Metric | Six Months Ended June 30, 2024 | Six Months Ended July 2, 2023 | | :--- | :--- | :--- | | Net Cash Provided By Operating Activities | $48.1 | $101.2 | | Net Cash Used In Investing Activities | $(119.8) | $(74.9) | | Net Cash Provided By Financing Activities | $61.4 | $14.0 | | Net change in cash | $(10.6) | $40.5 | | Cash and cash equivalents, ending | $71.9 | $69.6 | Non-GAAP Financial Measures & Reconciliations This section provides reconciliations and definitions for non-GAAP financial measures used in the report Reconciliation of Adjusted EBITDA to Net Income This section reconciles Q2 2024 Net Income of $120.6 million to Adjusted EBITDA of $210.5 million, detailing key adjustments Adjusted EBITDA to Net Income Reconciliation - Q2 2024 (in millions) | Line Item | Q2 2024 | | :--- | :--- | | Net income (loss) | $120.6 | | Income tax expense | $40.0 | | Interest expense, net | $9.0 | | Depreciation and amortization | $34.6 | | EBITDA | $204.2 | | Stock-based compensation | $3.8 | | Acquisitions and other adjustments | $2.8 | | Adjusted EBITDA | $210.5 | Reconciliation of Organic Daily Sales to Net Sales This table reconciles Q2 2024 Net Sales of $1.41 billion to Organic Daily Sales of $20.2 million, adjusting for acquisitions Organic Daily Sales Reconciliation - Q2 2024 (in millions) | Metric | Q2 2024 | | :--- | :--- | | Reported Net sales | $1,413.9 | | Acquisition contribution | $122.4 | | Organic Sales | $1,291.5 | | Selling Days | 64 | | Organic Daily Sales | $20.2 | Definitions of Non-GAAP Measures This section defines key non-GAAP financial measures such as Adjusted EBITDA, Organic Daily Sales, and Net Debt, clarifying their calculation - Adjusted EBITDA: Defined as Net income plus taxes, interest, D&A, and further adjusted for stock-based compensation, certain gains/losses, financing fees, and acquisition-related costs[11] - Organic Daily Sales: Defined as Organic Sales (Net sales excluding sales from branches acquired within the last four full fiscal quarters) divided by the number of Selling Days in the period[11][12] - Net Debt: Defined as long-term debt (net of issuance costs) plus finance leases, minus cash and cash equivalents[11]