First Quarter 2019 Highlights (compared to First Quarter 2018)
- Net sales increased by 12% to $417.3 million
- Organic Daily Sales increased by 5%
-
Gross profit increased 20% to $130.0 million; gross margin expanded
200 basis points to 31.2% -
Net loss of $24.1 million, compared to net loss of $17.0 million in
the prior year period -
Adjusted EBITDA loss of $5.9 million, compared to loss of $5.1 million
in the prior year period - Completed two acquisitions: Cutting Edge and All Pro Horticulture
Post-Quarter Highlights:
-
Completed two acquisitions: Landscape Depot Supply and Fisher’s
Landscape Depot
ROSWELL, Ga.–(BUSINESS WIRE)–SiteOne Landscape Supply, Inc. (the “Company” or “SiteOne”) (NYSE: SITE)
announced earnings for its first quarter ended March 31, 2019 (“First
Quarter 2019”).
“We are off to a solid start in 2019 with mid-single digit organic sales
growth and excellent gross margin expansion, though Adjusted EBITDA was
dampened by the timing of costs during our slowest part of the year.
Organic Daily Sales ramped up in the last two weeks of March and we are
seeing good momentum continue in April as we move through our busy
spring season. Market demand is healthy and we remain focused on
delivering superior value to our customers and suppliers in order to
gain organic market share,” said Doug Black, SiteOne’s Chairman and
Chief Executive Officer. “During the quarter we made good progress on
our initiatives to build new commercial and operational capabilities for
the future. We also completed two acquisitions during the quarter and
two more since quarter end which have enhanced our competitive position
in those markets. With solid market demand, our initiatives on track,
and a robust acquisition pipeline, we remain confident in our outlook
for the full year.”
First Quarter 2019 Results
Net sales for the First Quarter 2019 increased to $417.3 million, or
12%, compared to $371.4 million for the prior-year period. Organic Daily
Sales increased 5% compared to the prior-year period driven by strength
in our agronomics product line. Acquisitions contributed $29.5 million,
or 8%, to net sales growth for the quarter.
Gross profit increased to $130.0 million, or 20%, compared to $108.5
million for the prior-year period. Gross margin increased by 200 basis
points to 31.2%. Gross margin during the quarter was positively impacted
by improved pricing, opportunistic inventory buys, and contributions
from acquisitions.
Selling, general and administrative expenses (“SG&A”) increased to
$155.8 million from $131.7 million in the same period last year
primarily due to operating expenses from acquisitions and investments to
support our growth. SG&A as a percentage of net sales increased 180
basis points to 37.3% primarily due to the increased SG&A in our
seasonally lowest sales volume quarter.
Net loss was $24.1 million, compared to a net loss of $17.0 million
during the same period in the prior year. The net loss was driven by
higher SG&A and interest expense.
Adjusted EBITDA decreased to a loss of $5.9 million, compared to a loss
of $5.1 million for the prior-year period.
Outlook
For 2019, we continue to expect Adjusted EBITDA to be in the range of
$193 million to $207 million, representing year-over-year growth of
10-18%. This guidance does not include any contributions from
unannounced acquisitions.
Reconciliation for the forward-looking full-year 2019 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 1, 2019, at
8:00 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 13689803. The replay will be available until 11:59
p.m. (ET) on May 15, 2019.
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 2019 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, including inflation; 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 30, 2018.
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, (gain) loss on sale of assets not in
the ordinary course of business, other non-cash items, financing fees,
other fees, and expenses related to acquisitions and other non-recurring
(income) loss. Adjusted EBITDA excludes any earnings or loss of
acquisitions prior to their respective acquisition dates for all periods
presented. 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 finance 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 branches, 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 (Unaudited) (In millions, except share and per share data) |
|||||||||||
| Assets | March 31, 2019 | December 30, 2018 | |||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 21.1 | $ | 17.3 | |||||||
|
Accounts receivable, net of allowance for doubtful accounts of $6.7 and $5.9, respectively |
265.7 | 285.3 | |||||||||
| Inventory, net | 503.4 | 411.7 | |||||||||
| Income tax receivable | 18.3 | 10.0 | |||||||||
| Prepaid expenses and other current assets | 23.7 | 41.1 | |||||||||
| Total current assets | 832.2 | 765.4 | |||||||||
| Property and equipment, net | 91.2 | 88.4 | |||||||||
| Operating lease right-of-use assets, net | 202.1 | — | |||||||||
| Goodwill | 153.0 | 148.4 | |||||||||
| Intangible assets, net | 151.6 | 155.6 | |||||||||
| Other assets | 9.2 | 10.7 | |||||||||
| Total assets | $ | 1,439.3 | $ | 1,168.5 | |||||||
| Liabilities and Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 230.2 | $ | 184.6 | |||||||
| Current portion of finance leases | 5.1 | 5.2 | |||||||||
| Current portion of operating leases | 45.2 | — | |||||||||
| Accrued compensation | 24.7 | 42.1 | |||||||||
| Long term debt, current portion | 4.5 | 4.5 | |||||||||
| Accrued liabilities | 39.6 | 46.0 | |||||||||
| Total current liabilities | 349.3 | 282.4 | |||||||||
| Other long-term liabilities | 8.9 | 14.0 | |||||||||
| Finance leases, less current portion | 11.0 | 9.5 | |||||||||
| Operating leases, less current portion | 158.6 | — | |||||||||
| Deferred tax liabilities | 6.3 | 7.1 | |||||||||
| Long-term debt, less current portion | 627.5 | 553.7 | |||||||||
| Total liabilities | 1,161.6 | 866.7 | |||||||||
| Commitments and contingencies | |||||||||||
| Stockholders’ equity: | |||||||||||
|
Common stock, par value $0.01; 1,000,000,000 shares authorized; |
0.4 | 0.4 | |||||||||
| Additional paid-in capital | 244.1 | 242.1 | |||||||||
| Retained earnings | 36.0 | 60.1 | |||||||||
| Accumulated other comprehensive loss | (2.8 | ) | (0.8 | ) | |||||||
| Total equity | 277.7 | 301.8 | |||||||||
| Total liabilities and equity | $ | 1,439.3 | $ | 1,168.5 | |||||||
|
SiteOne Landscape Supply, Inc. Consolidated Statements of Operations (Unaudited) (In millions, except share and per share data) |
|||||||||||
| Three Months Ended | |||||||||||
| March 31, 2019 | April 1, 2018 | ||||||||||
| Net sales | $ | 417.3 | $ | 371.4 | |||||||
| Cost of goods sold | 287.3 | 262.9 | |||||||||
| Gross profit | 130.0 | 108.5 | |||||||||
| Selling, general and administrative expenses | 155.8 | 131.7 | |||||||||
| Other income | 1.1 | 2.6 | |||||||||
| Operating loss | (24.7 | ) | (20.6 | ) | |||||||
| Interest and other non-operating expenses, net | 9.0 | 6.6 | |||||||||
| Net loss before taxes | (33.7 | ) | (27.2 | ) | |||||||
| Income tax benefit | (9.6 | ) | (10.2 | ) | |||||||
| Net loss | (24.1 | ) | (17.0 | ) | |||||||
| Net loss per common share: | |||||||||||
| Basic | $ | (0.59 | ) | $ | (0.43 | ) | |||||
| Diluted | $ | (0.59 | ) | $ | (0.43 | ) | |||||
| Weighted average number of common shares outstanding: | |||||||||||
| Basic | 40,964,224 | 40,071,233 | |||||||||
| Diluted | 40,964,224 | 40,071,233 | |||||||||
|
SiteOne Landscape Supply, Inc. Consolidated Statements of Cash Flows (Unaudited) (In millions) |
|||||||||||
|
|
Three Months Ended | ||||||||||
| March 31, 2019 | April 1, 2018 | ||||||||||
| Cash Flows from Operating Activities: | |||||||||||
| Net loss | $ | (24.1 | ) | $ | (17.0 | ) | |||||
|
Adjustments to reconcile net loss to net cash used in operating activities: |
|||||||||||
| Depreciation and amortization of finance lease right-of-use assets | 6.8 | 4.8 | |||||||||
| Stock-based compensation | 1.8 | 2.1 | |||||||||
| Amortization of software and intangible assets | 8.6 | 6.9 | |||||||||
| Amortization of debt related costs | 0.5 | 0.8 | |||||||||
| Loss on extinguishment of debt | 0.4 | — | |||||||||
| (Gain) loss on sale of equipment | 0.1 | (0.1 | ) | ||||||||
| Other | 0.7 | (1.3 | ) | ||||||||
|
Changes in operating assets and liabilities, net of the effects of acquisitions: |
|||||||||||
| Receivables | 21.1 | (4.1 | ) | ||||||||
| Inventory | (88.1 | ) | (109.3 | ) | |||||||
| Income tax receivable | (8.3 | ) | (9.7 | ) | |||||||
| Prepaid expenses and other assets | 12.8 | (3.5 | ) | ||||||||
| Accounts payable | 42.9 | 103.5 | |||||||||
| Accrued expenses and other liabilities | (23.7 | ) | (13.9 | ) | |||||||
| Net Cash Used In Operating Activities | $ | (48.5 | ) | $ | (40.8 | ) | |||||
| Cash Flows from Investing Activities: | |||||||||||
| Purchases of property and equipment | (6.4 | ) | (2.0 | ) | |||||||
| Purchases of intangible assets | (0.2 | ) | (1.9 | ) | |||||||
| Acquisitions, net of cash acquired | (12.8 | ) | (51.6 | ) | |||||||
| Proceeds from the sale of property and equipment | 0.2 | 0.2 | |||||||||
| Net Cash Used In Investing Activities | $ | (19.2 | ) | $ | (55.3 | ) | |||||
| Cash Flows from Financing Activities: | |||||||||||
| Equity proceeds from common stock | 0.6 | 1.4 | |||||||||
| Repayments under term loan | (2.2 | ) | (0.9 | ) | |||||||
| Borrowings on asset-based credit facility | 140.5 | 168.5 | |||||||||
| Repayments on asset-based credit facility | (64.5 | ) | (55.8 | ) | |||||||
| Payments of debt issuance costs | (0.9 | ) | — | ||||||||
| Payments on finance lease obligations | (1.7 | ) | (1.7 | ) | |||||||
| Other financing activities | (0.4 | ) | (0.3 | ) | |||||||
| Net Cash Provided By Financing Activities | $ | 71.4 | $ | 111.2 | |||||||
| Effect of exchange rate on cash | 0.1 | (0.1 | ) | ||||||||
| Net Change In Cash | 3.8 | 15.0 | |||||||||
| Cash and cash equivalents: | |||||||||||
| Beginning | 17.3 | 16.7 | |||||||||
| Ending | $ | 21.1 | $ | 31.7 | |||||||
| Supplemental Disclosures of Cash Flow Information: | |||||||||||
| Cash paid during the year for interest | 8.9 | 5.8 | |||||||||
| Cash paid during the year for income taxes | 0.2 | 0.1 | |||||||||
|
SiteOne Landscape Supply, Inc. Adjusted EBITDA Reconciliation (In millions, unaudited) |
|||||||||||||||||||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||||||||||||||
| 2019 | 2018 | 2017 | |||||||||||||||||||||||||||||||||||||||
| Qtr 1 | Qtr 4 | Qtr 3 | Qtr 2 | Qtr 1 | Qtr 4 | Qtr 3 | Qtr 2 | ||||||||||||||||||||||||||||||||||
| Reported net income (loss) | $ | (24.1 | ) | $ | (2.1 | ) | $ | 29.9 | $ | 63.1 | $ | (17.0 | ) | $ | 4.0 | $ | 16.9 | $ | 44.2 | ||||||||||||||||||||||
| Income tax (benefit) expense | (9.6 | ) | (5.6 | ) | 2.4 | 14.7 | (10.2 | ) | (11.4 | ) | 10.7 | 26.3 | |||||||||||||||||||||||||||||
| Interest expense, net | 9.0 | 8.3 | 9.2 | 8.0 | 6.6 | 6.2 | 6.2 | 6.6 | |||||||||||||||||||||||||||||||||
| Depreciation and amortization | 15.4 | 14.0 | 14.1 | 12.5 | 11.7 | 11.4 | 11.1 | 10.8 | |||||||||||||||||||||||||||||||||
| EBITDA | (9.3 | ) | 14.6 | 55.6 | 98.3 | (8.9 | ) | 10.2 | 44.9 | 87.9 | |||||||||||||||||||||||||||||||
| Stock-based compensation(a) | 1.8 | 1.8 | 1.9 | 2.1 | 2.1 | 1.4 | 1.5 | 1.6 | |||||||||||||||||||||||||||||||||
| (Gain) loss on sale of assets(b) | 0.1 | (0.1 | ) | (0.3 | ) | 0.1 | (0.1 | ) | 0.4 | — | 0.1 | ||||||||||||||||||||||||||||||
| Financing fees(c) | — | 0.1 | 0.7 | — | — | 0.2 | 0.4 | 1.1 | |||||||||||||||||||||||||||||||||
| Acquisitions and other adjustments(d) | 1.5 | 1.7 | 2.1 | 2.5 | 1.8 | 3.1 | 1.6 | 1.6 | |||||||||||||||||||||||||||||||||
| Adjusted EBITDA(e) | $ | (5.9 | ) | $ | 18.1 | $ | 60.0 | $ | 103.0 | $ | (5.1 | ) | $ | 15.3 | $ | 48.4 | $ | 92.3 | |||||||||||||||||||||||
| _____________________________________ | |||
| (a) |
Represents stock-based compensation expense recorded during the period. |
||
| (b) |
Represents any gain or loss associated with the sale of assets not in the ordinary course of business. |
||
| (c) |
Represents fees associated with our debt refinancing and debt amendments, as well as fees incurred in connection with our secondary offerings. |
||
| (d) |
Represents 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. |
||
| (e) |
Adjusted EBITDA excludes any earnings or loss of acquisitions prior to their respective acquisition dates for all periods presented. |
||
|
SiteOne Landscape Supply, Inc. |
|||||||||||
|
The following table presents a reconciliation of Organic Daily |
|||||||||||
| (In millions, except Selling Days) | |||||||||||
| 2019 | 2018 | ||||||||||
| Qtr 1 | Qtr 1 | ||||||||||
| Reported net sales | $ | 417.3 | $ | 371.4 | |||||||
| Organic Sales | 377.3 | 360.9 | |||||||||
| Acquisition contribution(a) | 40.0 | 10.5 | |||||||||
| Selling Days | 64 | 64 | |||||||||
| Organic Daily Sales | $ | 5.9 | $ | 5.6 | |||||||
| _____________________________________ | ||
| (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 2019 fiscal year. |
|
Contacts
Investor Relations:
SiteOne Landscape Supply, Inc.
Investor
Relations
470-270-7011
[email protected]
