SiteOne(US:SITE)2023-05-03 10:00Financial Performance - For the three months ended April 2, 2023, SiteOne achieved net sales growth of 4%, primarily due to contributions from acquisitions and price inflation, while organic daily sales decreased by 2%[118]. - Net sales increased by 4% to $837.4 million for the three months ended April 2, 2023, compared to $805.3 million for the same period in 2022, driven by acquisitions and price inflation[146]. - Organic Daily Sales decreased by 2% in Q1 2023, primarily due to unfavorable weather and moderating economic conditions, with price inflation contributing approximately 6% to Organic Daily Sales growth[146]. - Acquisitions contributed $56.5 million, or 7%, to the net sales growth for the first quarter of 2023[146]. - Gross profit increased by 7% to $287.1 million, with gross margin rising 90 basis points to 34.3% compared to 33.4% in Q1 2022, reflecting lower freight costs and contributions from higher-margin acquisitions[148]. - The company reported a net loss of $4.5 million in Q1 2023, compared to a net income of $32.3 million in Q1 2022[158]. - Adjusted EBITDA for Q1 2023 was $39.8 million, compared to $67.8 million in Q1 2022, reflecting a decrease of 41.3%[158]. Expenses and Margins - Selling, general and administrative expenses (SG&A) rose by 26% to $291.4 million, with SG&A as a percentage of net sales increasing by 620 basis points to 34.8%[149]. - Net loss for the three months ended April 2, 2023, was $(4.5) million, a decrease of $36.8 million compared to net income of $32.3 million for the same period in 2022, primarily due to higher SG&A expenses[152]. - Cost of goods sold increased by 3% to $550.3 million, attributed to acquisitions and product cost inflation[147]. Operational Changes - The company is transitioning its West distribution center operations from Colton, California (179,000 square feet) to Goodyear, Arizona (392,000 square feet), which commenced operations at the end of Q1 2023[119]. - SiteOne operates over 640 branch locations across 45 U.S. states and six Canadian provinces, offering more than 155,000 SKUs[117]. Market Outlook - The long-term outlook for the landscape supply industry remains strong, driven by favorable population trends, housing demand, and increased interest in outdoor living[119]. - The company is closely monitoring the impact of economic conditions and geopolitical factors, including the war in Ukraine, on its business operations[120]. - SiteOne has a robust acquisition pipeline and is committed to strategic initiatives to drive margin expansion[119]. Cash Flow and Debt - Net cash used in operating activities for the three months ended April 2, 2023, was $152.6 million, an increase from $118.3 million for the same period in 2022, primarily due to a decline in net income to a net loss and higher seasonal investment in working capital[170]. - Net cash used in investing activities was $39.6 million for the three months ended April 2, 2023, compared to $41.0 million for the same period in 2022, reflecting a small decline in acquisition investments[171]. - Net cash provided by financing activities was $203.4 million for the three months ended April 2, 2023, up from $150.6 million for the same period in 2022, primarily due to a seasonal increase in borrowings[172]. - Total cash and cash equivalents were $40.3 million as of April 2, 2023, with total gross long-term debt at $568.2 million[165]. Interest Rates and Financial Instruments - The interest rate on the outstanding balance of the New Term Loans was 7.15994% as of April 2, 2023[179]. - The ABL Facility provides for an asset-based credit facility of up to $600.0 million, with a maturity date of July 22, 2027[182]. - The interest rate on outstanding balances under the ABL Facility ranged from 6.07431% to 8.00000% as of April 2, 2023[184]. - The Company utilizes interest rate swap contracts to reduce exposure to fluctuations in variable interest rates for future interest payments on existing debt[193]. Accounting and Risk Management - Critical accounting estimates include inventory valuation, acquisitions, and goodwill, with no material changes reported since the last annual report[200]. - There have been no material changes in market risk disclosures from the previous annual report[204].