SiteOne Landscape Supply Announces First Quarter 2018 Earnings
First Quarter 2018 Highlights (compared to First Quarter 2017)
-
Net sales increased by 11% to $371.4 million
-
Organic Daily Sales increased by 3%
-
Gross profit increased 8% to $108.5 million; gross margin decreased 90
basis points to 29.2%
-
Net loss of $17.0 million, compared to a net loss of $10.5 million in
the prior-year period
-
Adjusted EBITDA loss of $5.1 million
-
Successfully opened two distribution centers and launched our new
e-Commerce platform pilot
-
Completed the acquisitions of Pete Rose, Atlantic Irrigation, and
Village Nurseries Landscape Centers
Post-Quarter Highlights:
-
Completed the acquisition of Terrazzo & Stone Supply in April
ROSWELL, Ga.--(BUSINESS WIRE)--
SiteOne® Landscape Supply, Inc. (the “Company” or “SiteOne”)
(NYSE: SITE) announced earnings for its first quarter ended April 1,
2018 (“First Quarter 2018”).
“Our first quarter results reflect a late start to the spring season
this year which delayed business during our seasonally slowest and
traditionally loss-making quarter,” said Doug Black, SiteOne’s Chairman
and CEO. “The quarter also included the opening of our two strategic
distribution centers in California and Pennsylvania, completing our
major supply chain investments. Given these factors, we are pleased with
our overall 11% net sales growth in the quarter and with the underlying
market trends that we see developing for the year. We continue to expect
good organic growth and EBITDA margin expansion in 2018 driven by our
strong teams and by the execution of our commercial and operational
initiatives. We are also off to a great start with four acquisitions
year to date and a healthy level of activity to support more
acquisitions during the remainder of the year.”
First Quarter 2018 Results
Net sales for the First Quarter 2018 increased to $371.4 million, or
11%, compared to $335.0 million for the prior-year period. Organic Daily
Sales increased 3% compared to the prior-year period driven by strength
in our irrigation, hardscapes and ice melt product sales and positive
pricing for the quarter. Partially offsetting the sales growth was the
unfavorable weather patterns in March which negatively impacted nursery,
fertilizer and control product sales. Acquisitions contributed
approximately $27.9 million in sales, or 8%, to overall growth for the
quarter.
Gross profit increased to $108.5 million, or 8%, compared to $100.9
million for the prior-year period. Gross margin declined by 90 bps to
29.2% for the First Quarter 2018. The decline in gross margin was due to
the rollout of the new distribution centers and the adoption of the new
revenue standard which impacted the timing of revenue and expense
recognition for our customer loyalty rewards program.
Selling, general and administrative expenses (“SG&A”) in the First
Quarter 2018 increased to $131.7 million from $113.7 million in the same
period last year due to the additional contribution from acquisitions
and continued investment in e-Commerce.
Net loss for the First Quarter 2018 was $17.0 million, compared to a net
loss of $10.5 million during the same period in the prior year. The net
loss for the quarter is attributable to the seasonality of the business
as well as continued investments in the Company.
Adjusted EBITDA decreased to a loss of $5.1 million for the First
Quarter 2018, compared to Adjusted EBITDA of $1.2 million for the
prior-year period.
Outlook
For fiscal 2018, we continue to expect Adjusted EBITDA to be in the
range of $180 million to $192 million.
Reconciliation for the forward-looking full-year 2018 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, May 2, 2018, 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 (844) 512-2921, or for
international callers, (412) 317-6671. The passcode for the live call
and the replay is 13678838. The replay will be available until 11:59
p.m. (ET) on May 16, 2018.
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 2018 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 described in Item 1A, “Risk
Factors,” and elsewhere in our Annual Report on Form 10-K for the fiscal
year ended December 31, 2017.
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 (loss) plus the
sum of income tax (benefit), depreciation and amortization and interest
expense, net of interest income. Adjusted EBITDA is further adjusted for
stock-based compensation expense, related party advisory fees, (gain)
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 (net of issuance costs and discounts) plus capital
leases, net of cash and cash-equivalents on our balance sheet. Leverage
Ratio is defined as Net Debt to trailing twelve months Adjusted EBITDA.
Free Cash Flow is defined as Cash Flow from Operating Activities, less
capital expenditures. We define Organic Daily Sales as Organic Sales
divided by the number of Selling Days in the relevant reporting period.
We define Organic Sales as Net sales, including Net sales from
newly-opened greenfield stores, but excluding Net sales from acquired
branches until they have been under our ownership for at least four full
fiscal quarters at the start of the fiscal year. Selling Days are the
number of business days, excluding Saturdays, Sundays and holidays, that
SiteOne branches are open during the relevant reporting period.
|
|
|
| | | |
|
| | | |
SiteOne Landscape Supply, Inc. Consolidated Balance Sheets (In millions, except share and per share data) |
| | | | | | | | | | |
|
| Assets | | | | April 1, 2018 | | | December 31, 2017 |
|
Current assets:
| | | | | | | | | | | |
|
Cash and cash equivalents
| | | |
$
|
31.7
| | | |
$
|
16.7
| |
|
Accounts receivable, net of allowance for doubtful accounts of $5.8
and $4.7, respectively
| | | |
233.0
| | | |
219.9
| |
|
Inventory, net
| | | |
464.3
| | | |
338.3
| |
|
Income tax receivable
| | | |
13.9
| | | |
2.7
| |
|
Prepaid expenses and other current assets
| | | |
28.4
|
| | |
24.3
|
|
| Total current assets | | | |
771.3
| | | |
601.9
| |
| | | | | | | | | | |
|
|
Property and equipment, net
| | | |
79.2
| | | |
75.5
| |
|
Goodwill
| | | |
122.2
| | | |
106.5
| |
|
Intangible assets, net
| | | |
127.7
| | | |
112.8
| |
|
Other assets
| | | |
18.2
|
| | |
14.0
|
|
| Total assets | | | |
$
|
1,118.6
|
| | |
$
|
910.7
|
|
| | | | | | | | | | |
|
| Liabilities and Equity | | | |
|
|
| | |
|
|
|
|
Current liabilities:
| | | | | | | | | | | |
|
Accounts payable
| | | |
$
|
236.8
| | | |
$
|
124.1
| |
|
Current portion of capital leases
| | | |
5.1
| | | |
4.9
| |
|
Accrued compensation
| | | |
27.8
| | | |
40.1
| |
|
Long term debt, current portion
| | | |
3.5
| | | |
3.5
| |
|
Accrued liabilities
| | | |
37.7
|
| | |
33.2
|
|
| Total current liabilities | | | |
310.9
| | | |
205.8
| |
| | | | | | | | | | |
|
|
Other long-term liabilities
| | | |
12.5
| | | |
16.8
| |
|
Capital leases, less current portion
| | | |
8.9
| | | |
6.8
| |
|
Deferred tax liabilities
| | | |
12.5
| | | |
8.4
| |
|
Long-term debt, less current portion
| | | |
572.7
|
| | |
460.1
|
|
| Total liabilities | | | |
917.5
|
| | |
697.9
|
|
| | | | | | | | | | |
|
|
Commitments and contingencies
| | | | | | | | | | | |
| | | | | | | | | | |
|
|
Stockholders' equity:
| | | | | | | | | | | |
Common stock, par value $0.01; 1,000,000,000 shares authorized;
40,170,993
and 39,977,181 shares issued, and 40,150,082 and
39,956,270 shares
outstanding at April 1, 2018 and December
31, 2017, respectively
| | | |
0.4
| | | |
0.4
| |
|
Additional paid-in capital
| | | |
230.8
| | | |
227.8
| |
|
Accumulated deficit
| | | |
(30.8
|
)
| | |
(15.1
|
)
|
|
Accumulated other comprehensive income (loss)
| | | |
0.7
|
| | |
(0.3
|
)
|
| Total equity | | | |
201.1
|
| | |
212.8
|
|
| Total liabilities and equity | | | |
$
|
1,118.6
|
| | |
$
|
910.7
|
|
| | | | | | | | | | |
|
|
|
|
| | | |
|
| | | |
SiteOne Landscape Supply, Inc. Consolidated Statements of Operations (In millions, except share and per share data) |
| | | | | | | | | | |
|
| | | | Three Months Ended |
|
| | | | April 1, 2018 | | | April 2, 2017 |
| | | | | | | | | | |
|
|
Net sales
| | | |
$
|
371.4
| | | |
$
|
335.0
| |
|
Cost of goods sold
| | | |
262.9
|
| | |
234.1
|
|
| Gross profit | | | |
108.5
| | | |
100.9
| |
| | | | | | | | | | |
|
|
Selling, general and administrative expenses
| | | |
131.7
| | | |
113.7
| |
|
Other income
| | | |
2.6
|
| | |
0.9
|
|
| Operating loss | | | |
(20.6
|
)
| | |
(11.9
|
)
|
| | | | | | | | | | |
|
|
Interest and other non-operating expenses, net
| | | |
6.6
|
| | |
6.2
|
|
| Net loss before taxes | | | |
(27.2
|
)
| | |
(18.1
|
)
|
|
Income tax benefit
| | | |
(10.2
|
)
| | |
(7.6
|
)
|
| Net loss | | | |
(17.0
|
)
| | |
(10.5
|
)
|
| | | | | | | | | | |
|
| Net loss per common share: | | | | | | | | | | | |
|
Basic
| | | |
$
|
(0.43
|
)
| | |
$
|
(0.26
|
)
|
|
Diluted
| | | |
$
|
(0.43
|
)
| | |
$
|
(0.26
|
)
|
| Weighted average number of common shares outstanding: | | | | | | | | | | | |
|
Basic
| | | |
|
40,071,233
| | | |
|
39,618,997
| |
|
Diluted
| | | |
|
40,071,233
| | | |
|
39,618,997
| |
| | | | | | | | | | |
|
|
|
|
| | | |
|
| | | |
SiteOne Landscape Supply, Inc. Consolidated Statements of Cash Flows (Unaudited) (In millions) |
| | | | | | | | | | |
|
| | | | Three Months Ended |
|
| | | | April 1, 2018 | | | April 2, 2017 |
|
Cash Flows from Operating Activities:
| | | | | | | | | | | |
|
Net loss
| | | |
$
|
(17.0
|
)
| | |
$
|
(10.5
|
)
|
|
Adjustments to reconcile net loss to net cash (used in) provided by
operating activities:
| | | | | | | | | | | |
|
Depreciation
| | | |
4.8
| | | |
4.0
| |
|
Stock-based compensation
| | | |
2.1
| | | |
1.4
| |
|
Amortization of software and intangible assets
| | | |
6.9
| | | |
5.8
| |
|
Amortization of debt related costs
| | | |
0.8
| | | |
0.7
| |
|
(Gain) loss on sale of equipment
| | | |
(0.1
|
)
| | |
0.1
| |
|
Other
| | | |
(1.3
|
)
| | |
—
| |
|
Changes in operating assets and liabilities, net of the effects of
acquisitions:
| | | | | | | | | | | |
|
Receivables
| | | |
(4.1
|
)
| | |
(29.1
|
)
|
|
Inventory
| | | |
(109.3
|
)
| | |
(87.1
|
)
|
|
Income tax receivable
| | | |
(9.7
|
)
| | |
(7.5
|
)
|
|
Prepaid expenses and other assets
| | | |
(3.5
|
)
| | |
(5.4
|
)
|
|
Accounts payable
| | | |
103.5
| | | |
85.8
| |
|
Accrued expenses and other liabilities
| | | |
(13.9
|
)
| | |
(12.9
|
)
|
| Net Cash Used In Operating Activities | | | |
$
|
(40.8
|
)
| | |
$
|
(54.7
|
)
|
| | | | | | | | | | |
|
|
Cash Flows from Investing Activities:
| | | | | | | | | | | |
|
Purchases of property and equipment
| | | |
(2.0
|
)
| | |
(2.8
|
)
|
|
Purchases of intangible assets
| | | |
(1.9
|
)
| | |
—
| |
|
Acquisitions, net of cash acquired
| | | |
(51.6
|
)
| | |
(56.2
|
)
|
|
Proceeds from the sale of property and equipment
| | | |
0.2
|
| | |
—
|
|
| Net Cash Used In Investing Activities | | | |
$
|
(55.3
|
)
| | |
$
|
(59.0
|
)
|
| | | | | | | | | | |
|
|
Cash Flows from Financing Activities:
| | | | | | | | | | | |
|
Equity proceeds from common stock
| | | |
1.4
| | | |
0.3
| |
|
Repayments under term loan
| | | |
(0.9
|
)
| | |
(0.7
|
)
|
|
Borrowings on asset-based credit facility
| | | |
168.5
| | | |
162.0
| |
|
Repayments on asset-based credit facility
| | | |
(55.8
|
)
| | |
(47.2
|
)
|
|
Payments on capital lease obligations
| | | |
(1.7
|
)
| | |
(1.1
|
)
|
|
Other financing activities
| | | |
(0.3
|
)
| | |
—
|
|
| Net Cash Provided By Financing Activities | | | |
$
|
111.2
|
| | |
$
|
113.3
|
|
| | | | | | | | | | |
|
|
Effect of exchange rate on cash
| | | |
(0.1
|
)
| | |
—
|
|
| Net Change In Cash | | | |
15.0
| | | |
(0.4
|
)
|
| | | | | | | | | | |
|
|
Cash and cash equivalents:
| | | | | | | | | | | |
|
Beginning
| | | |
16.7
|
| | |
16.3
|
|
|
Ending
| | | |
$
|
31.7
|
| | |
$
|
15.9
|
|
| | | | | | | | | | |
|
|
Supplemental Disclosures of Cash Flow Information:
| | | | | | | | | | | |
|
Cash paid during the year for interest
| | | |
5.8
| | | |
5.4
| |
|
Cash paid during the year for income taxes
| | | |
0.1
| | | |
0.4
| |
| | | | | | | | | | |
|
|
Supplemental Disclosures of Noncash Investing and Financing
Information:
| | | | | | | | | | | |
|
Acquisition of property and equipment through capital leases
| | | |
3.2
| | | |
1.2
| |
| | | | | | | | | | |
|
|
|
| |
|
|
| | | |
|
| | | |
|
| | | |
|
| | | |
|
| | | |
|
| | | |
|
| | | |
|
| | |
SiteOne Landscape Supply, Inc. Adjusted EBITDA Reconciliation (In millions, unaudited) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | 2018 | | | 2017 | | | 2016 |
| | | | | | Qtr 1 | | | Qtr 4 | | | Qtr 3 | | | Qtr 2 | | | Qtr 1 | | | Qtr 4 | | | Qtr 3 | | | Qtr 2 |
| Net income (loss) | | | |
$
|
(17.0
|
)
| | |
$
|
4.0
| | | |
$
|
16.9
| | | |
$
|
44.2
| | | |
$
|
(10.5
|
)
| | |
$
|
(5.6
|
)
| | |
$
|
14.9
| | | |
$
|
26.9
|
|
Income tax (benefit) expense
| | | |
(10.2
|
)
| | |
(11.4
|
)
| | |
10.7
| | | |
26.3
| | | |
(7.6
|
)
| | |
(4.1
|
)
| | |
10.7
| | | |
18.1
|
|
Interest expense, net
| | | |
6.6
| | | |
6.2
| | | |
6.2
| | | |
6.6
| | | |
6.2
| | | |
6.7
| | | |
6.3
| | | |
6.5
|
|
Depreciation and amortization
| | | |
11.7
|
| | |
11.4
|
| | |
11.1
|
| | |
10.8
|
| | |
9.8
|
| | |
9.6
|
| | |
9.7
|
| | |
9.1
|
| EBITDA | | | |
(8.9
|
)
| | |
10.2
| | | |
44.9
| | | |
87.9
| | | |
(2.1
|
)
| | |
6.6
| | | |
41.6
| | | |
60.6
|
|
Stock-based compensation(a) | | | |
2.1
| | | |
1.4
| | | |
1.5
| | | |
1.6
| | | |
1.4
| | | |
1.3
| | | |
1.1
| | | |
2.2
|
|
(Gain) loss on sale of assets(b) | | | |
(0.1
|
)
| | |
0.4
| | | |
—
| | | |
0.1
| | | |
0.1
| | | |
0.1
| | | |
—
| | | |
—
|
|
Advisory fees(c) | | | |
—
| | | |
—
| | | |
—
| | | |
—
| | | |
—
| | | |
—
| | | |
—
| | | |
8.0
|
|
Financing fees(d) | | | |
—
| | | |
0.2
| | | |
0.4
| | | |
1.1
| | | |
—
| | | |
1.1
| | | |
0.4
| | | |
3.1
|
Rebranding, acquisitions and
other adjustments(e) | | | |
1.8
|
| | |
3.1
|
| | |
1.6
|
| | |
1.6
|
| | |
1.8
|
| | |
2.1
|
| | |
0.6
|
| | |
1.0
|
| Adjusted EBITDA(f) | | | |
$
|
(5.1
|
)
| | |
$
|
15.3
|
| | |
$
|
48.4
|
| | |
$
|
92.3
|
| | |
$
|
1.2
|
| | |
$
|
11.2
|
| | |
$
|
43.7
|
| | |
$
|
74.9
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
|
_____________________________________
|
|
(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)
| |
Represents fees paid to CD&R and Deere for consulting services. In
connection with our initial public offering (the “IPO”), we entered
into termination agreements with CD&R and Deere pursuant to which
the parties agreed to terminate the Consulting Agreements.
|
|
(d)
| |
Represents fees associated with our debt refinancing and debt
amendments, as well as fees incurred in connection with our IPO and
secondary offerings.
|
|
(e)
| |
Represents (i) expenses related to our rebranding to the name
SiteOne and (ii) professional fees, retention and severance
payments, and performance bonuses related to historical
acquisitions. Although we have incurred professional fees, retention
and severance payments, and performance bonuses related to
acquisitions in several historical periods and expect to incur such
fees and payments for any future acquisitions, we cannot predict the
timing or amount of any such fees or payments.
|
|
(f)
| |
Adjusted EBITDA excludes any earnings or loss of acquisitions prior
to their respective acquisition dates for all periods presented.
|
| |
|
|
| |
|
|
| | | |
|
| | |
SiteOne Landscape Supply, Inc. Organic Daily Sales to Net sales Reconciliation (In millions, except Selling Days; unaudited) |
| | | | | | | | | | |
|
| | | | | 2018 | | | 2017 |
| | | | | Qtr 1 | | | Qtr 1 |
| Net sales | | | |
$
|
371.4
| | | |
$
|
335.0
|
|
Organic Sales
| | | |
337.9
| | | |
329.4
|
|
Acquisition contribution(a) | | | |
33.5
|
| | |
5.6
|
| Selling Days | | | |
64
|
| | |
64
|
| Organic Daily Sales | | | |
$
|
5.3
|
| | |
$
|
5.1
|
| | | | | | | | | | |
|
|
|
_____________________________________
|
|
(a)
| |
Represents Net Sales from acquired branches that have not been under
our ownership for at least four full fiscal quarters at the start of
the 2018 fiscal year.
|
| |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20180502005510/en/
Investor Relations:
SiteOne Landscape Supply, Inc.
Pascal
Convers, 470-270-7011
Executive Vice President, Strategy,
Development and Investor Relations
[email protected]
Source: SiteOne Landscape Supply, Inc.
