SiteOne Landscape Supply, Inc 10-Q for FY2023 Q3

SiteOne Landscape Supply, Inc. (SITE)

10-Q 2023-11-01 For: 2023-10-01

Added on April 07, 2026

About this 10-Q

SiteOne Landscape Supply, Inc filed this 10-Q on November 1, 2023, covering the quarter ended October 1, 2023 (FY2023 Q3).

Headline figures

Quarter ended October 1, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.15B; up 3.9% from $1.1B a year earlier
Net income: $57.3M; down 21.8% from net income of $73.3M a year earlier
Diluted EPS: $1.25; down 21.9% from $1.60 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 October 27, 2023
Common Stock, $0.01 par value per share						45,125,414



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			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			28
Item 3. Quantitative and Qualitative Disclosures About Market Risk			45
Item 4. Controls and Procedures			45

Part II. OTHER INFORMATION
Item 1. Legal Proceedings			46
Item 1A. Risk Factors			46
Item 5. Other Information			46
Item 6. Exhibits			47
Signature			48


Assets	October 1, 2023		January 1, 2023
Current assets:
Cash and cash equivalents	$	74.9	$	29.1
Accounts receivable, net of allowance for doubtful accounts of $24.2 and $21.7, respectively	540.4		455.5
Inventory, net	852.2		767.7
Income tax receivable	3.7		10.9
Prepaid expenses and other current assets	102.3		56.1
Total current assets	1,573.5		1,319.3

Property and equipment, net (Note 5)	232.0		188.8
Operating lease right-of-use assets, net (Note 7)	384.8		321.6
Goodwill (Note 6)	484.4		411.9
Intangible assets, net (Note 6)	304.2		276.0
Deferred tax assets	2.8		3.7
Other assets	7.8		12.6
Total assets	$	2,989.5	$	2,533.9

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	355.3	$	279.7
Current portion of finance leases (Note 7)	20.0		14.8
Current portion of operating leases (Note 7)	81.1		70.1
Accrued compensation	65.9		81.2
Long-term debt, current portion (Note 9)	5.3		4.0

Accrued liabilities	127.1		110.0
Total current liabilities	654.7		559.8

Other long-term liabilities	15.2		12.8
Finance leases, less current portion (Note 7)	62.0		43.9
Operating leases, less current portion (Note 7)	313.5		260.1
Deferred tax liabilities	15.0		7.8
Long-term debt, less current portion (Note 9)	433.6		346.6
Total liabilities	1,494.0		1,231.0

Commitments and contingencies (Note 11)

Stockholders' equity:
Common stock, par value $0.01; 1,000,000,000 shares authorized; 45,341,602 and 45,148,312 shares issued, and 45,109,581 and 44,916,291 shares outstanding at October 1, 2023 and January 1, 2023, respectively	0.5		0.5
Additional paid-in capital	594.9		577.1
Retained earnings	919.7		742.9
Accumulated other comprehensive income	5.7		7.7
Treasury stock, at cost, 232,021 and 232,021 shares at October 1, 2023 and January 1, 2023, respectively	(25.3)		(25.3)
Total stockholders' equity	1,495.5		1,302.9
Total liabilities and stockholders' equity	$	2,989.5	$	2,533.9


	Three Months Ended				Nine Months Ended
	October 1, 2023		October 2, 2022		October 1, 2023		October 2, 2022
Net sales	$	1,145.1	$	1,102.6	$	3,336.2	$	3,124.5
Cost of goods sold	757.0		714.0		2,171.6		2,005.6
Gross profit	388.1		388.6		1,164.6		1,118.9

Selling, general and administrative expenses	311.8		289.2		923.8		792.4
Other income	4.9		2.4		11.4		6.6
Operating income	81.2		101.8		252.2		333.1

Interest and other non-operating expenses, net	6.4		5.6		20.6		14.5
Income before taxes	74.8		96.2		231.6		318.6
Income tax expense	17.5		22.9		54.8		72.3
Net income	$	57.3	$	73.3	$	176.8	$	246.3








Net income per common share:
Basic	$	1.27	$	1.63	$	3.92	$	5.47
Diluted	$	1.25	$	1.60	$	3.87	$	5.38
Weighted average number of common shares outstanding:
Basic	45,149,650		45,102,574		45,096,404		45,024,324
Diluted	45,747,398		45,774,367		45,690,285		45,804,041


☒			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
Net income	—	—		—		124.0		—		—		124.0
Other comprehensive income	—	—		—		—		2.1		—		2.1
Issuance of common shares under stock-based compensation plan	62.7	—		(0.9)		—		—		—		(0.9)
Stock-based compensation	—	—		7.1		—		—		—		7.1

Balance at July 2, 2023	45,041.9	$	0.5	$	589.3	$	862.4	$	8.1	$	(25.3)	$	1,435.0
Net income	—	—		—		57.3		—		—		57.3
Other comprehensive loss	—	—		—		—		(2.4)		—		(2.4)
Issuance of common shares under stock-based compensation plan	67.7	—		0.6		—		—		—		0.6
Stock-based compensation	—	—		5.0		—		—		—		5.0

Balance at October 1, 2023	45,109.6	$	0.5	$	594.9	$	919.7	$	5.7	$	(25.3)	$	1,495.5


Note 1. Nature of Business and Significant Accounting Policies			10
Note 2. Revenue from Contracts with Customers			12
Note 3. Acquisitions			13
Note 4. Fair Value Measurement and Interest Rate Swaps			14
Note 5. Property and Equipment, Net			17
Note 6. Goodwill and Intangible Assets, Net			18
Note 7. Leases			19
Note 8. Employee Benefit and Stock Incentive Plans			21
Note 9. Long-Term Debt			23
Note 10. Income Taxes			26
Note 11. Commitments and Contingencies			26
Note 12. Earnings (Loss) Per Share			27


	Derivative Assets
	October 1, 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	$	9.9	Prepaid expenses and other current assets	$	8.6
	Other assets	3.7		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)	October 1, 2023		October 2, 2022		October 1, 2023		October 2, 2022
Interest rate contracts	Interest and other non-operating expenses, net	$	—	$	(0.8)	$	—	$	—


	October 1, 2023		January 1, 2023
Land	$	13.2	$	13.2
Buildings and leasehold improvements:
Buildings	8.1		8.1
Leasehold improvements	52.3		46.2
Branch equipment	122.4		114.7
Office furniture and fixtures and vehicles:
Office furniture and fixtures	30.1		28.2
Vehicles	60.9		43.2
Finance lease right-of-use assets	136.3		103.1
Mineral rights	2.2		—
Tooling	0.1		0.1
Construction in progress	18.8		7.7
Total property and equipment, gross	444.4		364.5
Less: accumulated depreciation and amortization	212.4		175.7
Property and equipment, net	$	232.0	$	188.8


	January 1, 2023		January 3, 2022
	to October 1, 2023		to January 1, 2023
Beginning balance	$	411.9	$	311.1
Goodwill acquired during the period(a)	74.8		101.8
Goodwill adjusted during the period	(2.3)		(1.0)
Ending balance	$	484.4	$	411.9


		October 1, 2023						January 1, 2023
	Weighted Average Remaining Useful Life	Amount		Accumulated Amortization		Net		Amount		Accumulated Amortization		Net
Customer relationships	17.3 years	$	556.8	$	281.4	$	275.4	$	490.5	$	241.2	$	249.3
Trademarks and other	3.6 years	52.3		23.5		28.8		47.9		21.2		26.7
Total intangibles		$	609.1	$	304.9	$	304.2	$	538.4	$	262.4	$	276.0


Fiscal year ending:
2023 (remainder)	$	16.9
2024	58.0
2025	48.0
2026	39.3
2027	30.4
Thereafter	111.6
Total future amortization	$	304.2


	Nine Months Ended
	October 1, 2023		October 2, 2022
Cash Flows from Operating Activities:
Net income	$	176.8	$	246.3
Adjustments to reconcile Net income to net cash provided by operating activities:
Amortization of finance lease right-of-use assets and depreciation	46.1		34.1
Stock-based compensation	20.7		14.0
Amortization of software and intangible assets	47.0		38.1
Amortization of debt related costs	0.9		0.9
Loss on extinguishment of debt	—		0.6
Gain on sale of equipment	(0.4)		(1.0)

Other	(3.8)		1.0
Changes in operating assets and liabilities, net of the effects of acquisitions:
Receivables	(68.8)		(96.1)
Inventory	(45.4)		(196.2)
Income tax receivable	7.2		3.3
Prepaid expenses and other assets	(37.2)		(7.5)
Accounts payable	55.2		75.0
Income tax payable	—		7.0
Accrued expenses and other liabilities	(8.4)		(7.0)
Net Cash Provided By Operating Activities	$	189.9	$	112.5

Cash Flows from Investing Activities:
Purchases of property and equipment	(24.1)		(20.5)
Purchases of intangible assets	(5.3)		(10.2)
Acquisitions, net of cash acquired	(181.7)		(182.2)
Proceeds from the sale of property and equipment	1.9		1.9
Net Cash Used In Investing Activities	$	(209.2)	$	(211.0)

Cash Flows from Financing Activities:
Equity proceeds from common stock	3.0		3.2
Repurchases of common stock	(0.6)		—
Borrowings under term loan	120.0		—
Repayments under term loan	(2.2)		(1.9)
Borrowings on asset-based credit facility	434.3		593.2
Repayments on asset-based credit facility	(461.8)		(456.7)
Payments of debt issuance costs	(1.8)		(2.3)
Payments on finance lease obligations	(13.2)		(9.0)


Maturity of Lease Liabilities	Operating Leases		Finance Leases
Fiscal year:
2023 (remainder)	$	17.7	$	6.2
2024	96.4		23.5
2025	80.5		20.4
2026	65.1		17.3
2027	52.1		13.5
2028	40.3		9.9
Thereafter	116.1		2.3
Total lease payments	468.2		93.1
Less: interest	73.6		11.1
Present value of lease liabilities	$	394.6	$	82.0


	Stock Options	RSUs	DSUs	PSUs
Outstanding as of January 1, 2023	971.9	205.3	52.0	52.2
Granted(a)	56.6	121.5	2.7	42.9
Exercised/Vested/Settled(a)(b)	(125.9)	(75.3)	—	(32.0)
Expired or forfeited	(5.0)	(7.3)	—	(0.3)
Outstanding as of October 1, 2023	897.6	244.2	54.7	62.8


	October 1, 2023		October 2, 2022
Stock options	$	72.27	$	57.39
RSUs	$	149.18	$	174.37
DSUs	$	148.09	$	120.22
PSUs(a)	$	148.89	$	143.86


		Three Months Ended				Nine Months Ended
Lease Cost	Classification	October 1, 2023		October 2, 2022		October 1, 2023		October 2, 2022
Finance lease cost:
Amortization of right-of-use assets	Selling, general and administrative expenses	$	5.2	$	3.4	$	14.1	$	9.4
Interest on lease liabilities	Interest and other non-operating expenses, net	1.1		0.5		2.8		1.3
Operating lease cost	Cost of goods sold	2.0		1.3		6.1		4.3
Operating lease cost	Selling, general and administrative expenses	22.4		19.3		63.9		56.4
Short-term lease cost	Selling, general and administrative expenses	0.8		0.2		2.3		1.2
Variable lease cost	Selling, general and administrative expenses	0.5		0.5		1.1		1.1
Sublease income	Selling, general and administrative expenses	(0.2)		(0.2)		(0.6)		(0.8)
Total lease cost		$	31.8	$	25.0	$	89.7	$	72.9


	Three Months Ended				Nine Months Ended
Other Information	October 1, 2023		October 2, 2022		October 1, 2023		October 2, 2022
Cash paid for amounts included in the measurements of lease liabilities:
Operating cash flows from finance leases	$	1.1	$	0.5	$	2.8	$	1.3
Operating cash flows from operating leases	$	24.7	$	20.9	$	68.9	$	60.3
Financing cash flows from finance leases	$	4.9	$	3.2	$	13.2	$	9.0
Right-of-use assets obtained in exchange for new lease liabilities:
Finance leases	$	12.5	$	8.0	$	36.5	$	15.1
Operating leases	$	22.8	$	26.2	$	95.5	$	63.5


	October 1, 2023			January 1, 2023
	Unrecognized Compensation (in millions)		Weighted Average Remaining Period	Unrecognized Compensation (in millions)		Weighted Average Remaining Period
Stock options	$	5.7	2.5 years	$	5.6	2.5 years
RSUs	$	26.9	2.7 years	$	21.7	2.7 years
DSUs	$	0.2	1.1 years	$	0.1	0.9 years
PSUs	$	5.0	1.8 years	$	3.3	1.7 years


	October 1, 2023		January 1, 2023
ABL facility	$	72.5	$	100.0
Term loans	370.6		252.8
Hybrid debt instruments	2.2		3.3
Total gross long-term debt	445.3		356.1
Less: unamortized debt issuance costs and discounts on debt	(6.4)		(5.5)
Total debt	$	438.9	$	350.6
Less: current portion	(5.3)		(4.0)
Total long-term debt	$	433.6	$	346.6


(In millions, except per share information and percentages)
	2023						2022								2021
	Qtr 3		Qtr 2		Qtr 1		Qtr 4		Qtr 3		Qtr 2		Qtr 1		Qtr 4
Net sales	$	1,145.1	$	1,353.7	$	837.4	$	890.0	$	1,102.6	$	1,216.6	$	805.3	$	805.2
Cost of goods sold	757.0		864.3		550.3		587.4		714.0		755.5		536.1		522.8
Gross profit	388.1		489.4		287.1		302.6		388.6		461.1		269.2		282.4
Selling, general and administrative expenses	311.8		320.6		291.4		304.6		289.2		272.7		230.5		247.2
Other (income) expense, net	(4.9)		(2.5)		(4.0)		(2.0)		(2.4)		(1.7)		(2.5)		(0.1)
Operating income (loss)	81.2		171.3		(0.3)		—		101.8		190.1		41.2		35.3
Interest and other non-operating expenses, net	6.4		7.3		6.9		5.5		5.6		4.6		4.3		5.1
Income tax (benefit) expense	17.5		40.0		(2.7)		(4.6)		22.9		44.8		4.6		2.7
Net income (loss)	$	57.3	$	124.0	$	(4.5)	$	(0.9)	$	73.3	$	140.7	$	32.3	$	27.5
Net income (loss) per common share:
Basic	$	1.27	$	2.75	$	(0.10)	$	(0.02)	$	1.63	$	3.12	$	0.72	$	0.61
Diluted	$	1.25	$	2.71	$	(0.10)	$	(0.02)	$	1.60	$	3.07	$	0.70	$	0.60
Adjusted EBITDA(a)	$	119.8	$	211.2	$	39.8	$	38.9	$	135.6	$	222.0	$	67.8	$	61.8


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


	Total		Next 12 Months		Beyond 12 Months
Long-term debt, including current maturities	$	445.3	$	5.3	$	440.0
Interest on long-term debt	$	132.5	$	24.2	$	108.3



	Nine Months Ended
Net cash provided by (used in):	October 1, 2023		October 2, 2022
Operating activities	$	189.9	$	112.5
Investing activities	$	(209.2)	$	(211.0)
Financing activities	$	65.1	$	108.5


Exhibit Number						Description

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 October 1, 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, (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:	November 1, 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