SiteOne Landscape Supply Announces Second Quarter 2016 Earnings
Second Quarter 2016 Highlights:
-
Completed $241.5 million Initial Public Offering
-
Net sales increased by 7% year-over-year to $513.4 million
-
Organic sales declined by 2% reflecting pull-forward from first
quarter 2016
-
Gross profit increased by 14% to $168.5 million; gross margin expanded
by 220 basis points to 32.8%
-
Net income of $26.9 million includes $7.4 million of IPO and debt
recapitalization costs
-
Adjusted EBITDA increased by 12% to $74.9 million; Adjusted EBITDA
margin expanded by 80 basis points to 14.6%
-
Completed the acquisition of Blue Max Materials which includes 5
locations
ROSWELL, Ga.--(BUSINESS WIRE)--
SiteOne Landscape Supply, Inc. (the “Company” or “SiteOne”) (NYSE:SITE)
announced earnings for its second quarter ended July 3, 2016 of the
fiscal year ending January 1, 2017.
“During the second quarter we completed a successful initial public
offering as well as a recapitalization which provides us with an
attractive long-term capital structure to support our growth strategy,”
said Doug Black, SiteOne’s Chief Executive Officer. “We are pleased with
the execution of those significant transactions, along with our growth
in net sales and Adjusted EBITDA and our margin expansion despite the
balancing effect of the unusually strong first quarter on our organic
sales. Furthermore, we continued to execute our acquisition strategy
with the addition of Blue Max Materials in April and Bissett in August,
which provide us with leading positions in their respective markets. We
are confident in our ability to achieve strong performance and growth
for the full year 2016 given the continued strength in residential and
commercial construction markets, further progress with our commercial
and operational initiatives, and a robust pipeline of acquisitions.”
Second Quarter 2016 Results
Net sales for the second quarter of 2016 increased to $513.4 million, or
7%, compared to $481.5 million for the prior-year period. Organic sales
growth declined 2% for the second quarter. Second quarter organic sales
were negatively impacted by the pull forward benefit experienced in the
first quarter and the unfavorable April and May weather partially offset
by improving sales growth in June. Our recent acquisitions continue to
perform well and contributed good sales growth in the quarter.
Gross profit increased to $168.5 million, or 14%, compared to $147.5
million for the prior-year period. Gross margin expanded to 32.8% for
the second quarter 2016, which was a 220 basis point increase compared
to 30.6% in the second quarter 2015. Gross margin expansion was driven
primarily by ongoing improvements in pricing and category management.
Selling, general and administrative expenses (“SG&A”) in the second
quarter increased to $118.0 million from $91.3 million in the same
period last year, reflecting the impact from acquisitions, transaction
expenses related to our IPO and debt recapitalization, and investments
in personnel to support our sales growth and strategic initiatives. SG&A
as a percent of net sales increased to 23.0% from 19.0% in the prior
year period. Debt recapitalization and IPO related costs were $12.4
million on a pre-tax basis of which $11.2 million, or 2.2% of net sales,
were charged to SG&A.
Reported net income for the second quarter was $26.9 million, compared
to $33.2 million during the same period from the prior year. The
decrease in net income for the second quarter was primarily attributable
to our debt recapitalization and IPO related costs of $7.4 million on an
after-tax basis, and higher interest expense principally from the new
long-term debt.
Adjusted EBITDA increased by 12% to $74.9 million for the second
quarter, compared to $66.6 million for the prior-year period reflecting
strong gross margin improvement in the base business and good
contribution from acquisitions.
Net cash provided by operating activities for the six months ended July
3, 2016 was $12.2 million versus $12.6 million in the prior-year period.
Net debt, calculated as long-term debt plus capital leases, net of cash
and cash equivalents on our balance sheet as of July 3, 2016, was $397.3
million. Net debt to Adjusted EBITDA for the last twelve months was 3.2
times.
Outlook
For 2016, we continue to expect Adjusted EBITDA to be in the range of
$132 million to $140 million.
Reconciliation for the forward-looking full-year 2016 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, August 17, 2016,
at 8 a.m. Eastern Time, to discuss the Company’s financial results. The
conference call may be accessed by dialing (877) 705-6003 (domestic) or
(201) 493-6725 (international). A telephonic replay will be available
approximately two hours after the call by dialing (877) 870-5176, or for
international callers, (858) 384-5517. The passcode for the live call
and the replay is 13642450. The replay will be available until 11:59
p.m. (ET) on August 31, 2016.
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
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 Federal Private Securities Litigation Reform Act of 1995.
Forward-looking statements may include, but are not limited to,
statements relating to our 2016 Adjusted EBITDA outlook. 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; weather conditions, seasonality and availability
of water to end-users; laws and government regulations applicable to our
business that could negatively impact demand for our products; public
perceptions that our products and services are not environmentally
friendly; competitive industry pressures; product shortages and the loss
of key suppliers; product price fluctuations; inventory management
risks; ability to implement our business strategies and achieve our
growth objectives; acquisition and integration risks; increased
operating costs; and other risks, as indicated in our final prospectus
filed pursuant to Rule 424(b)(4) under the Securities Act of 1933, as
amended, filed with the U.S. Securities and Exchange Commission on May
12, 2016 (Registration No. 333-206444).
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 plus the sum of
interest expense, net of interest income and excluding amortization of
debt discount, income tax expense, depreciation, and amortization.
Adjusted EBITDA is further adjusted for stock-based compensation
expense, related party advisory fees, loss on sale of assets and other
non-cash items, other non-recurring (income) and loss. Adjusted EBITDA
does not include pre-acquisition acquired Adjusted EBITDA. Adjusted
EBITDA is not a measure of our liquidity or financial performance under
GAAP and should not be considered as an alternative to net income,
operating income or any other performance measures derived in accordance
with 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 plus capital leases, net of cash and cash-equivalents on
our balance sheet.
|
|
SiteOne Landscape Supply, Inc.
Condensed
Consolidated Balance Sheets (Unaudited)
(In millions,
except share and per share data) |
|
|
| Assets |
|
| July 3, 2016 |
| January 3, 2016 |
|
Current assets:
| | | | | |
|
Cash and cash equivalents
| | |
$
|
19.0
| | |
$
|
20.1
| |
|
Accounts receivable, net of allowance for doubtful accounts of $3.8
and $3.6, respectively
| | |
228.0
| | |
136.8
| |
|
Inventory, net
| | |
323.3
| | |
265.9
| |
|
Income tax receivable
| | |
—
| | |
7.3
| |
|
Prepaid expenses and other current assets
| | |
21.5
|
| |
12.1
|
|
| Total current assets | | |
591.8
| | |
442.2
| |
| | | | |
|
|
Property and equipment, net
| | |
66.5
| | |
66.2
| |
|
Goodwill
| | |
63.4
| | |
48.0
| |
|
Intangible assets, net
| | |
102.1
| | |
104.3
| |
|
Other Assets
| | |
9.5
|
| |
8.0
|
|
| Total assets | | |
$
|
833.3
|
| |
$
|
668.7
|
|
| | | | |
|
| Liabilities and Equity | | |
| |
|
|
Current liabilities:
| | | | | |
|
Accounts payable
| | |
$
|
174.2
| | |
$
|
86.4
| |
|
Current portion of capital leases
| | |
3.9
| | |
4.0
| |
|
Accrued compensation
| | |
25.9
| | |
30.0
| |
|
Long term debt, current portion
| | |
2.8
| | |
0.6
| |
|
Income tax payable
| | |
10.0
| | |
—
| |
|
Accrued liabilities
| | |
33.1
|
| |
23.8
|
|
| Total current liabilities | | |
249.9
| | |
144.8
| |
| | | | |
|
|
Other long-term liabilities
| | |
9.0
| | |
8.9
| |
|
Capital leases, less current portion
| | |
6.1
| | |
7.1
| |
|
Deferred tax liabilities
| | |
27.7
| | |
26.2
| |
|
Long term debt, less current portion
| | |
403.5
|
| |
177.1
|
|
| Total liabilities | | |
696.2
|
| |
364.1
|
|
| | | | |
|
|
Commitment and contingencies
| | | | | |
|
Redeemable convertible preferred stock
| | |
—
| | |
216.8
| |
| | | | |
|
|
Stockholders' equity:
| | | | | |
Common stock, par value $0.01; 1,000,000,000 shares authorized;
39,563,150
and 14,259,998 shares issued, and 39,542,239 and
14,250,111 shares
outstanding at July 3, 2016 and January 3,
2016 , respectively1 | | |
0.4
| | |
0.1
| |
|
Additional paid-in capital
| | |
216.7
| | |
113.1
| |
|
Accumulated deficit
| | |
(79.1
|
)
| |
(24.2
|
)
|
|
Accumulated other comprehensive loss
| | |
(0.9
|
)
| |
(1.2
|
)
|
| Total equity | | |
137.1
|
| |
87.8
|
|
| Total liabilities and equity | | |
$
|
833.3
|
| |
$
|
668.7
|
|
__________
|
| 1 |
|
All applicable share data and related information in the
consolidated financial statements have been adjusted retroactively
to give effect to the 11.6181 for 1 common stock split.
|
| |
|
|
|
SiteOne Landscape Supply, Inc.
Condensed
Consolidated Statements of Operations (Unaudited)
(In
millions, except share and per share data) |
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
| | |
July 3, 2016
|
|
June 28, 2015
| |
July 3, 2016
|
|
June 28, 2015
|
| | | | | | | | |
|
|
Net sales
| | |
$
|
513.4
| | |
$
|
481.5
| | |
$
|
841.9
| | |
$
|
707.3
|
|
Cost of goods sold (exclusive of depreciation)
| | |
344.9
|
| |
334.0
|
| |
576.4
|
| |
501.2
|
| Gross profit | | |
168.5
| | |
147.5
| | |
265.5
| | |
206.1
|
| | | | | | | | |
|
|
Selling, general and administrative expenses
| | |
118.0
| | |
91.3
| | |
222.6
| | |
164.4
|
|
Other income
| | |
1.0
|
| |
0.7
|
| |
2.2
|
| |
1.5
|
| Operating income | | |
51.5
|
| |
56.9
|
| |
45.1
|
| |
43.2
|
| | | | | | | | |
|
|
Interest and other non-operating expenses, net
| | |
6.5
|
| |
2.6
|
| |
9.1
|
| |
5.0
|
| Net income before taxes | | |
45.0
| | |
54.3
| | |
36.0
| | |
38.2
|
|
Income tax expense
| | |
18.1
|
| |
21.1
|
| |
14.7
|
| |
14.8
|
| Net income | | |
26.9
|
| |
33.2
|
| |
21.3
|
| |
23.4
|
|
Less:
| | | | | | | | | |
|
Redeemable convertible preferred stock dividends
| | |
3.1
| | |
6.1
| | |
9.6
| | |
11.9
|
|
Redeemable convertible preferred stock beneficial conversion feature
| | |
—
| | |
4.8
| | |
—
| | |
6.6
|
|
Special cash dividend paid to preferred stockholders
| | |
112.4
| | |
—
| | |
112.4
| | |
—
|
|
Undistributed earnings allocated to redeemable convertible preferred
stock
| | |
—
|
|
|
13.9
|
| |
—
|
|
|
3.0
|
| Net income (loss) attributable to common shares | | |
$
|
(88.6
|
)
| |
$
|
8.4
|
| |
$
|
(100.7
|
)
| |
$
|
1.9
|
| | | | | | | | |
|
| Net income (loss) per common share: | | | | | | | | | |
|
Basic
| | |
$
|
(3.18
|
)
| |
$
|
0.59
| | |
$
|
(4.78
|
)
| |
$
|
0.13
|
|
Diluted
| | |
$
|
(3.18
|
)
| |
$
|
0.59
| | |
$
|
(4.78
|
)
| |
$
|
0.13
|
| Weighted average number of common shares outstanding 1 | | | | | | | | | |
|
Basic
| | |
27,874,619
| | |
14,195,380
| | |
21,062,057
| | |
14,184,513
|
|
Diluted
| | |
27,874,619
| | |
14,386,718
| | |
21,062,057
| | |
14,280,182
|
__________
|
| 1 |
|
All applicable share data and related information in the
consolidated financial statements have been adjusted retroactively
to give effect to the 11.6181 for 1 common stock split.
|
| |
|
|
|
SiteOne Landscape Supply, Inc.
Condensed
Consolidated Statements of Cash Flows (Unaudited)
(In
millions) |
|
|
|
|
|
Six Months Ended
|
|
| | |
July 3, 2016
|
|
June 28, 2015
|
|
Cash Flows from Operating Activities:
| | | | | |
|
Net income
| | |
$
|
21.3
| | |
$
|
23.4
| |
|
Adjustments to reconcile net income to net cash provided by
operating activities:
| | | | | |
|
Depreciation
| | |
6.8
| | |
5.8
| |
|
Stock-based compensation
| | |
2.3
| | |
1.5
| |
|
Amortization of software and intangible assets
| | |
10.9
| | |
8.4
| |
|
Amortization of debt related costs
| | |
1.2
| | |
1.6
| |
|
Loss on extinguishment of debt
| | |
1.2
| | |
—
| |
|
(Gain) loss on sale of equipment
| | |
(0.1
|
)
| |
0.2
| |
|
Deferred income taxes
| | |
—
| | |
(3.9
|
)
|
|
Other
| | |
(0.2
|
)
| |
0.1
| |
|
Changes in operating assets and liabilities, net of the effect of
acquisitions:
| | | | | |
|
Receivables
| | |
(82.8
|
)
| |
(79.0
|
)
|
|
Inventory
| | |
(41.0
|
)
| |
(45.6
|
)
|
|
Income tax receivable
| | |
7.3
| | |
12.0
| |
|
Prepaid expenses and other assets
| | |
(8.0
|
)
| |
(6.4
|
)
|
|
Accounts payable
| | |
80.1
| | |
80.4
| |
|
Income tax payable
| | |
9.9
| | |
6.3
| |
|
Accrued expenses and other liabilities:
| | |
3.3
|
| |
7.8
|
|
| Net Cash Provided By Operating Activities | | |
$
|
12.2
|
| |
$
|
12.6
|
|
| | | | |
|
|
Cash Flows from Investing Activities:
| | | | | |
|
Purchases of property and equipment
| | |
(4.4
|
)
| |
(3.2
|
)
|
|
Acquisitions, net of cash acquired
| | |
(41.7
|
)
| |
(64.2
|
)
|
|
Proceeds from the sale of property and equipment
| | |
0.2
|
| |
0.1
|
|
| Net Cash Used In Investing Activities | | |
$
|
(45.9
|
)
| |
$
|
(67.3
|
)
|
| | | | |
|
|
Cash Flows from Financing Activities:
| | | | | |
|
Equity proceeds from common stock
| | |
—
| | |
1.5
| |
|
Purchase of treasury stock
| | |
(0.2
|
)
| |
(0.1
|
)
|
|
Special cash dividend
| | |
(176.0
|
)
| |
—
| |
|
Other dividends paid
| | |
(13.0
|
)
| |
—
| |
|
Borrowings under term loan
| | |
272.3
| | |
—
| |
|
Repayments under term loan
| | |
(61.4
|
)
| |
(0.3
|
)
|
|
Borrowings on asset-based credit facility
| | |
200.2
| | |
195.9
| |
|
Repayments on asset-based credit facility
| | |
(181.7
|
)
| |
(128.7
|
)
|
|
Debt issuance costs paid
| | |
(3.5
|
)
| |
—
| |
|
Payments on capital lease obligations
| | |
(2.1
|
)
| |
(2.0
|
)
|
|
Other financing activities
| | |
(2.2
|
)
| |
—
|
|
| Net Cash Provided By Financing Activities | | |
$
|
32.4
|
| |
$
|
66.3
|
|
| | | | |
|
|
Effect of exchange rate on cash
| | |
0.2
|
| |
(0.1
|
)
|
| Net Change In Cash | | |
(1.1
|
)
| |
11.5
| |
| | | | |
|
|
Cash and cash equivalents:
| | | | | |
|
Beginning
| | |
20.1
|
| |
10.6
|
|
|
Ending
| | |
$
|
19.0
|
| |
$
|
22.1
|
|
| | | | |
|
|
Supplemental Disclosures of Cash Flow Information:
| | | | | |
|
Cash paid during the year for interest
| | |
3.9
| | |
3.4
| |
|
Cash paid (received) during the year for income taxes
| | |
(2.6
|
)
| |
0.7
| |
| | | | |
|
|
Supplemental Disclosures of Noncash Investing and Financing
Information:
| | | | | |
|
Acquisition of property and equipment through capital leases
| | |
1.0
| | |
3.0
| |
| | | | | | |
|
| SiteOne Landscapes Supply, Inc. |
| Adjusted EBITDA Reconciliation (Unaudited) (In millions) |
|
|
|
|
|
| Twelve Months
Ended |
|
| Three Months Ended |
|
|
| July 3, 2016 | | | July 3, 2016 |
|
| June 28, 2015 |
|
|
| Net income | | |
$
|
26.8
| | |
$
|
26.9
| | |
$
|
33.2
|
|
Income tax expense
| | | |
19.4
| | | |
18.1
| | | |
21.1
|
|
Interest expense, net
| | | |
15.4
| | | |
6.5
| | | |
2.7
|
|
Depreciation & amortization
| | |
|
34.7
| | |
|
9.1
| | |
|
7.8
|
| EBITDA | | | |
96.3
| | | |
60.6
| | | |
64.8
|
|
Stock-based compensation(a) | | | |
4.4
| | | |
2.2
| | | |
0.8
|
|
Loss on sale of assets(b) | | | |
0.1
| | | |
—
| | | |
0.2
|
|
Advisory fees(c) | | | |
9.5
| | | |
8.0
| | | |
0.5
|
|
Financing fees(d) | | | |
8.6
| | | |
3.1
| | | |
—
|
|
Rebranding and other adjustments(e) | | |
|
6.1
| | |
|
1.0
| | |
|
0.3
|
| Adjusted EBITDA | | |
$
|
125.0
| | |
$
|
74.9
| | |
$
|
66.6
|
__________
|
|
(a)
|
|
Represents stock-based compensation expense recorded during the
period.
|
|
(b)
| |
Represents any gain or loss associated with the sale or write-down
of assets not in the ordinary course of business.
|
|
(c)
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Represents fees paid to CD&R and Deere for consulting services. In
connection with the IPO, we entered into termination agreements with
CD&R and Deere pursuant to which the parties agreed to terminate the
related consulting agreements. See “Certain Relationships and
Related Party Transactions-Consulting Agreements” within our final
prospectus.
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(d)
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Represents fees associated with our debt refinancing activities
completed during the second quarter of the 2016 Fiscal Year and debt
amendment completed during the fourth quarter of the 2015 Fiscal
Year; as well as fees incurred in connection with our initial
registration process, which were recorded as an expense during the
second quarter of the 2016 Fiscal Year and the third and fourth
quarter of the 2015 Fiscal Year.
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(e)
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Represents (i) expenses related to our rebranding to the name
SiteOne, (ii) professional fees, retention and performance bonuses
related to historical acquisitions, (iii) severance payments and
(iv) consulting and professional fees. Although we have incurred
professional fees, retention and performance bonuses related to
acquisitions in several historical periods and expect to incur such
fees for any future acquisitions, we cannot predict the timing or
amount of any such fees.
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View source version on businesswire.com: http://www.businesswire.com/news/home/20160817005171/en/
Investor Relations:
SiteOne Landscape Supply, Inc.
Pascal
Convers, 470-270-7011
Executive Vice President, Strategy and
Development
[email protected]
Source: SiteOne Landscape Supply, Inc.
