SiteOne Landscape Supply, Inc 10-Q for FY2023 Q1

SiteOne Landscape Supply, Inc. (SITE)

10-Q 2023-05-03 For: 2023-04-02

Added on April 07, 2026

About this 10-Q

SiteOne Landscape Supply, Inc filed this 10-Q on May 3, 2023, covering the quarter ended April 2, 2023 (FY2023 Q1).

Headline figures

Quarter ended April 2, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $837.4M; up 4.0% from $805.3M a year earlier
Net loss: $4.5M; compared with net income of $32.3M a year earlier
Diluted EPS: -$0.10; compared with $0.70 a year earlier

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Delaware			46-4056061
(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification No.)


Title of each class						Shares Outstanding as of April 28, 2023
Common Stock, $0.01 par value per share						44,984,372



TABLE OF CONTENTS

Part I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheets			4
Consolidated Statements of Operations			5
Consolidated Statements of Comprehensive Income (Loss)			6
Consolidated Statements of Equity			7
Consolidated Statements of Cash Flows			8
Notes to Consolidated Financial Statements			9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			27
Item 3. Quantitative and Qualitative Disclosures About Market Risk			43
Item 4. Controls and Procedures			43

Part II. OTHER INFORMATION
Item 1. Legal Proceedings			44
Item 1A. Risk Factors			44
Item 6. Exhibits			45
Signature			46


Assets	April 2, 2023		January 1, 2023
Current assets:
Cash and cash equivalents	$	40.3	$	29.1
Accounts receivable, net of allowance for doubtful accounts of $21.5 and $21.7, respectively	496.1		455.5
Inventory, net	943.1		767.7
Income tax receivable	14.0		10.9
Prepaid expenses and other current assets	73.6		56.1
Total current assets	1,567.1		1,319.3

Property and equipment, net (Note 5)	194.4		188.8
Operating lease right-of-use assets, net (Note 7)	358.7		321.6
Goodwill (Note 6)	422.4		411.9
Intangible assets, net (Note 6)	276.8		276.0
Deferred tax assets	3.8		3.7
Other assets	9.4		12.6
Total assets	$	2,832.6	$	2,533.9

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	365.6	$	279.7
Current portion of finance leases (Note 7)	16.1		14.8
Current portion of operating leases (Note 7)	72.6		70.1
Accrued compensation	47.9		81.2
Long-term debt, current portion (Note 9)	4.1		4.0

Accrued liabilities	101.3		110.0
Total current liabilities	607.6		559.8

Other long-term liabilities	14.7		12.8
Finance leases, less current portion (Note 7)	47.4		43.9
Operating leases, less current portion (Note 7)	294.1		260.1
Deferred tax liabilities	7.3		7.8
Long-term debt, less current portion (Note 9)	558.8		346.6
Total liabilities	1,529.9		1,231.0

Commitments and contingencies (Note 11)

Stockholders' equity:
Common stock, par value $0.01; 1,000,000,000 shares authorized; 45,211,180 and 45,148,312 shares issued, and 44,979,159 and 44,916,291 shares outstanding at April 2, 2023 and January 1, 2023, respectively	0.5		0.5
Additional paid-in capital	583.1		577.1
Retained earnings	738.4		742.9
Accumulated other comprehensive income	6.0		7.7
Treasury stock, at cost, 232,021 and 232,021 shares at April 2, 2023 and January 1, 2023, respectively	(25.3)		(25.3)
Total stockholders' equity	1,302.7		1,302.9
Total liabilities and stockholders' equity	$	2,832.6	$	2,533.9


	Three Months Ended
		April 2, 2023		April 3, 2022
Net sales		$	837.4	$	805.3
Cost of goods sold		550.3		536.1
Gross profit		287.1		269.2

Selling, general and administrative expenses		291.4		230.5
Other income		4.0		2.5
Operating income (loss)		(0.3)		41.2

Interest and other non-operating expenses, net		6.9		4.3
Income (loss) before taxes		(7.2)		36.9
Income tax (benefit) expense		(2.7)		4.6
Net income (loss)		$	(4.5)	$	32.3








Net income (loss) per common share:
Basic		$	(0.10)	$	0.72
Diluted		$	(0.10)	$	0.70
Weighted average number of common shares outstanding:
Basic		45,045,851		44,935,765
Diluted		45,045,851		45,850,602


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Common Stock Shares	Common Stock Amount		Additional Paid-in-Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total Equity
Balance at January 1, 2023	44,916.3	$	0.5	$	577.1	$	742.9	$	7.7	$	(25.3)	$	1,302.9
Net loss	—	—		—		(4.5)		—		—		(4.5)
Other comprehensive loss	—	—		—		—		(1.7)		—		(1.7)
Issuance of common shares under stock-based compensation plan	62.9	—		(2.6)		—		—		—		(2.6)
Stock-based compensation	—	—		8.6		—		—		—		8.6

Balance at April 2, 2023	44,979.2	$	0.5	$	583.1	$	738.4	$	6.0	$	(25.3)	$	1,302.7


Note 1. Nature of Business and Significant Accounting Policies			10
Note 2. Revenue from Contracts with Customers			12
Note 3. Acquisitions			12
Note 4. Fair Value Measurement and Interest Rate Swaps			14
Note 5. Property and Equipment, Net			17
Note 6. Goodwill and Intangible Assets, Net			17
Note 7. Leases			19
Note 8. Employee Benefit and Stock Incentive Plans			20
Note 9. Long-Term Debt			22
Note 10. Income Taxes			25
Note 11. Commitments and Contingencies			25
Note 12. Earnings (Loss) Per Share			26


	Derivative Assets
	April 2, 2023			January 1, 2023
Derivatives designated as hedging instruments	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value

Interest rate contracts	Prepaid expenses and other current assets	$	8.5	Prepaid expenses and other current assets	$	8.6
	Other assets	5.1		Other assets	7.7
Total derivative assets		$	13.6		$	16.3


		Three Months Ended
		Gain (Loss) Reclassified from AOCI into Income				Gain (Loss) Recognized in Income
Derivatives not designated as hedging instruments	Location of Gain (Loss)	April 2, 2023		April 3, 2022		April 2, 2023		April 3, 2022
Interest rate contracts	Interest and other non-operating expenses, net	$	(0.1)	$	(0.7)	$	—	$	—


	April 2, 2023		January 1, 2023
Land	$	13.2	$	13.2
Buildings and leasehold improvements:
Buildings	8.1		8.1
Leasehold improvements	48.2		46.2
Branch equipment	116.0		114.7
Office furniture and fixtures and vehicles:
Office furniture and fixtures	28.3		28.2
Vehicles	44.9		43.2
Finance lease right-of-use assets	108.6		103.1
Mineral rights	2.2		—
Tooling	0.1		0.1
Construction in progress	11.9		7.7
Total property and equipment, gross	381.5		364.5
Less: accumulated depreciation and amortization	187.1		175.7
Property and equipment, net	$	194.4	$	188.8


	January 1, 2023		January 3, 2022
	to April 2, 2023		to January 1, 2023
Beginning balance	$	411.9	$	311.1
Goodwill acquired during the period(a)	13.4		101.8
Goodwill adjusted during the period	(2.9)		(1.0)
Ending balance	$	422.4	$	411.9


		April 2, 2023						January 1, 2023
	Weighted Average Remaining Useful Life	Amount		Accumulated Amortization		Net		Amount		Accumulated Amortization		Net
Customer relationships	17.2 years	$	506.3	$	254.2	$	252.1	$	490.5	$	241.2	$	249.3
Trademarks and other	3.7 years	45.8		21.1		24.7		47.9		21.2		26.7
Total intangibles		$	552.1	$	275.3	$	276.8	$	538.4	$	262.4	$	276.0


Fiscal year ending:
2023 (remainder)	$	43.4
2024	46.5
2025	38.4
2026	31.5
2027	24.5
Thereafter	92.5
Total future amortization	$	276.8


Maturity of Lease Liabilities	Operating Leases		Finance Leases
Fiscal year:
2023 (remainder)	$	58.5	$	14.2
2024	80.2		17.7
2025	67.8		14.7
2026	53.4		11.6
2027	42.1		7.9
2028	31.1		4.4
Thereafter	93.1		0.2
Total lease payments	426.2		70.7
Less: interest	59.5		7.2
Present value of lease liabilities	$	366.7	$	63.5


	Stock Options	RSUs	DSUs	PSUs
Outstanding as of January 1, 2023	971.9	205.3	52.0	52.2
Granted	56.5	102.0	—	26.9
Exercised/Vested/Settled(a)	(19.2)	(68.0)	—	—
Expired or forfeited	(1.7)	(4.4)	—	(0.3)
Outstanding as of April 2, 2023	1,007.5	234.9	52.0	78.8


	April 2, 2023		April 3, 2022
Stock options	$	72.24	$	57.47
RSUs	$	149.09	$	179.71
DSUs	$	—	$	161.69
PSUs	$	149.36	$	179.40


	April 2, 2023			January 1, 2023
	Unrecognized Compensation (in millions)		Weighted Average Remaining Period	Unrecognized Compensation (in millions)		Weighted Average Remaining Period
Stock options	$	7.3	2.8 years	$	5.6	2.5 years
RSUs	$	30.8	3.0 years	$	21.7	2.7 years
DSUs	$	0.1	0.9 years	$	0.1	0.9 years
PSUs	$	6.5	2.2 years	$	3.3	1.7 years


		Three Months Ended
Lease Cost	Classification		April 2, 2023		April 3, 2022
Finance lease cost:
Amortization of right-of-use assets	Selling, general and administrative expenses		$	4.2	$	3.0
Interest on lease liabilities	Interest and other non-operating expenses, net		0.8		0.4
Operating lease cost	Cost of goods sold		1.7		1.5
Operating lease cost	Selling, general and administrative expenses		20.4		18.4
Short-term lease cost	Selling, general and administrative expenses		0.8		0.5
Variable lease cost	Selling, general and administrative expenses		0.4		0.2
Sublease income	Selling, general and administrative expenses		(0.2)		(0.3)
Total lease cost			$	28.1	$	23.7


	Three Months Ended
Other Information		April 2, 2023		April 3, 2022
Cash paid for amounts included in the measurements of lease liabilities:
Operating cash flows from finance leases		$	0.8	$	0.4
Operating cash flows from operating leases		$	22.2	$	19.3
Financing cash flows from finance leases		$	3.9	$	2.9
Right-of-use assets obtained in exchange for new lease liabilities:
Finance leases		$	8.7	$	1.9
Operating leases		$	49.8	$	26.0


	April 2, 2023		January 1, 2023
ABL facility	$	313.0	$	100.0
Term loans	252.2		252.8
Hybrid debt instruments	3.0		3.3
Total gross long-term debt	568.2		356.1
Less: unamortized debt issuance costs and discounts on debt	(5.3)		(5.5)
Total debt	$	562.9	$	350.6
Less: current portion	(4.1)		(4.0)
Total long-term debt	$	558.8	$	346.6


(In millions, except per share information and percentages)
	2023		2022								2021
	Qtr 1		Qtr 4		Qtr 3		Qtr 2		Qtr 1		Qtr 4		Qtr 3		Qtr 2
Net sales	$	837.4	$	890.0	$	1,102.6	$	1,216.6	$	805.3	$	805.2	$	936.4	$	1,083.9
Cost of goods sold	550.3		587.4		714.0		755.5		536.1		522.8		595.9		695.7
Gross profit	287.1		302.6		388.6		461.1		269.2		282.4		340.5		388.2
Selling, general and administrative expenses	291.4		304.6		289.2		272.7		230.5		247.2		235.3		225.8
Other (income) expense, net	(4.0)		(2.0)		(2.4)		(1.7)		(2.5)		(0.1)		1.8		(2.2)
Operating income (loss)	(0.3)		—		101.8		190.1		41.2		35.3		103.4		164.6
Interest and other non-operating expenses, net	6.9		5.5		5.6		4.6		4.3		5.1		4.3		4.3
Income tax (benefit) expense	(2.7)		(4.6)		22.9		44.8		4.6		2.7		19.1		36.8
Net income (loss)	$	(4.5)	$	(0.9)	$	73.3	$	140.7	$	32.3	$	27.5	$	80.0	$	123.5
Net income (loss) per common share:
Basic	$	(0.10)	$	(0.02)	$	1.63	$	3.12	$	0.72	$	0.61	$	1.79	$	2.77
Diluted	$	(0.10)	$	(0.02)	$	1.60	$	3.07	$	0.70	$	0.60	$	1.74	$	2.70
Adjusted EBITDA(a)	$	39.8	$	38.9	$	135.6	$	222.0	$	67.8	$	61.8	$	128.2	$	190.6


Net sales as a percentage of annual Net sales	22.2	%	27.5	%	30.3	%	20.0	%	23.2	%	26.9	%	31.2	%
Gross profit as a percentage of annual Gross profit	21.3	%	27.3	%	32.4	%	19.0	%	23.3	%	28.1	%	32.0	%
Adjusted EBITDA as a percentage of annual Adjusted EBITDA	8.4	%	29.2	%	47.8	%	14.6	%	14.9	%	30.9	%	45.9	%


	Total		Next 12 Months		Beyond 12 Months
Long-term debt, including current maturities	$	568.2	$	4.1	$	564.1
Interest on long-term debt	$	160.6	$	29.5	$	131.1



	Three Months Ended
Net cash (used in) provided by:	April 2, 2023		April 3, 2022
Operating activities	$	(152.6)	$	(118.3)
Investing activities	$	(39.6)	$	(41.0)
Financing activities	$	203.4	$	150.6


Exhibit Number						Description

10.1†						Form of Performance Stock Unit Award Agreement under the SiteOne Landscape Supply, Inc. 2020 Omnibus Equity Incentive Plan, is incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed February 14, 2023.

10.2						First Amendment to Second Amended and Restated Credit Agreement dated as of March 27, 2023, by and among SiteOne Landscape Supply Holding, LLC and JPMorgan Chase Bank, N.A., as administrative agent, is incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed March 27, 2023.

31.1						Certification of Chief Executive Officer Pursuant to Exchange Act Rule 13a - 14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2						Certification of Chief Financial Officer Pursuant to Exchange Act Rule 13a - 14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1						Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2						Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101						The following unaudited financial information from this Quarterly Report on Form 10-Q for the quarter ended April 2, 2023 is formatted in Inline XBRL (Inline Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income (Loss), (iv) the Consolidated Statements of Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements.

104						Cover Page Interactive Data File (formatted in Inline XBRL with applicable taxonomy extension information contained in Exhibit 101).


		SITEONE LANDSCAPE SUPPLY, INC.


Date:	May 3, 2023	By:	/s/ John T. Guthrie
			John T. Guthrie
			Executive Vice President, Chief Financial Officer and Assistant Secretary
			(Principal Financial and Principal Accounting Officer)


			/s/ Doug Black
			Doug Black
			Chairman and Chief Executive Officer