SiteOne(US:SITE)2022-05-07 06:52Financial Data and Key Metrics Changes - The company reported a net sales increase of 24% to $805 million in Q1 2022, with organic daily sales growth of 17% driven by continued demand and price inflation [21][28] - Adjusted EBITDA increased by 97% to $67.8 million, with an adjusted EBITDA margin expansion of 310 basis points to 8.4% [25][37] - Gross profit increased by 34% to $269 million, with gross margin improving by 240 basis points to 33.4% [34][22] Business Line Data and Key Metrics Changes - Organic daily sales for landscaping products increased by 20%, while agronomic products saw a 10% increase [30][31] - The company achieved 7% net sales growth through acquisitions, contributing approximately $43 million to first-quarter net sales [28][21] - SG&A expenses increased by 20% to $231 million, but as a percentage of net sales, it decreased by 100 basis points to 28.6% [35][24] Market Data and Key Metrics Changes - Organic daily sales growth was 13% in northern markets compared to 23% in southern and western markets, indicating regional performance variations [30][88] - The company estimates a 15% market share in the fragmented $23 billion wholesale landscaping products distribution market, indicating significant growth opportunities [11][12] Company Strategy and Development Direction - The company aims to leverage its scale and resources to deliver superior value to customers and suppliers while focusing on organic growth and acquisitions [16][17] - The acquisition strategy remains robust, with 67 acquisitions completed since 2014, and three completed in 2022, adding approximately $50 million in trailing 12-month sales [19][43] - The company is focused on filling its product portfolio through acquisitions, particularly in nursery, hardscapes, and landscape supplies [20][48] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving high single-digit organic daily sales growth for 2022, primarily driven by price inflation [53][56] - The company anticipates challenges due to inflation and supply chain uncertainties but remains optimistic about maintaining strong demand across all end markets [51][52] - Management noted that while gross margin is expected to decline somewhat, initiatives are in place to mitigate this impact [54][23] Other Important Information - The company has a strong balance sheet with liquidity of $243 million, consisting of $45 million in cash and approximately $198 million in available capacity under its ABL facility [40][41] - The company is committed to maintaining financial strength and flexibility while pursuing long-term growth opportunities [41] Q&A Session Summary Question: Can you break out price across agronomics versus landscape products? - Agronomics saw about 17% price increase, while landscaping products were a little over 20% [61] Question: How do you think a housing slowdown would impact SiteOne? - The company has a balanced business model, with 37% in maintenance, which should hold up well regardless of market conditions [68][69] Question: How far are customers booked out? - Commercial backlogs are typically 9 to 12 months, while new home construction is about 3 to 6 months [75] Question: What do you expect for price now in 2022? - The company maintains a forecast of high single-digit organic growth, primarily driven by price [77] Question: Is it more difficult to acquire businesses in hardscapes and nursery? - There is no fundamental difference in acquiring across business lines, but hardscapes and nursery are more fragmented [82][84] Question: Have you seen any improvement with material availability? - The supply environment remains similar, with specific products still in tight supply [106] Question: Are you expecting a similar pace of share gains as last year? - The company feels confident in continuing to gain market share despite supply challenges [109]