SiteOne Landscape Supply, Inc 10-Q for FY2023 Q2

SiteOne Landscape Supply, Inc. (SITE)

10-Q 2023-08-02 For: 2023-07-02

Added on April 07, 2026

About this 10-Q

SiteOne Landscape Supply, Inc filed this 10-Q on August 2, 2023, covering the quarter ended July 2, 2023 (FY2023 Q2).

Headline figures

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

Revenue: $1.35B; up 11.3% from $1.22B a year earlier
Net income: $124M; down 11.9% from net income of $140.7M a year earlier
Diluted EPS: $2.71; down 11.7% from $3.07 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 July 28, 2023
Common Stock, $0.01 par value per share						45,058,416



TABLE OF CONTENTS

Part I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheets			5
Consolidated Statements of Operations			6
Consolidated Statements of Comprehensive Income			7
Consolidated Statements of Equity			8
Consolidated Statements of Cash Flows			9
Notes to Consolidated Financial Statements			10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			29
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	July 2, 2023		January 1, 2023
Current assets:
Cash and cash equivalents	$	69.6	$	29.1
Accounts receivable, net of allowance for doubtful accounts of $22.2 and $21.7, respectively	569.6		455.5
Inventory, net	865.4		767.7
Income tax receivable	—		10.9
Prepaid expenses and other current assets	81.4		56.1
Total current assets	1,586.0		1,319.3

Property and equipment, net (Note 5)	201.8		188.8
Operating lease right-of-use assets, net (Note 7)	364.0		321.6
Goodwill (Note 6)	433.9		411.9
Intangible assets, net (Note 6)	274.2		276.0
Deferred tax assets	3.8		3.7
Other assets	8.8		12.6
Total assets	$	2,872.5	$	2,533.9

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	382.3	$	279.7
Current portion of finance leases (Note 7)	18.4		14.8
Current portion of operating leases (Note 7)	73.4		70.1
Accrued compensation	57.9		81.2
Long-term debt, current portion (Note 9)	4.1		4.0
Income tax payable	24.8		—
Accrued liabilities	122.0		110.0
Total current liabilities	682.9		559.8

Other long-term liabilities	14.8		12.8
Finance leases, less current portion (Note 7)	56.1		43.9
Operating leases, less current portion (Note 7)	299.7		260.1
Deferred tax liabilities	7.6		7.8
Long-term debt, less current portion (Note 9)	376.4		346.6
Total liabilities	1,437.5		1,231.0

Commitments and contingencies (Note 11)

Stockholders' equity:
Common stock, par value $0.01; 1,000,000,000 shares authorized; 45,273,918 and 45,148,312 shares issued, and 45,041,897 and 44,916,291 shares outstanding at July 2, 2023 and January 1, 2023, respectively	0.5		0.5
Additional paid-in capital	589.3		577.1
Retained earnings	862.4		742.9
Accumulated other comprehensive income	8.1		7.7
Treasury stock, at cost, 232,021 and 232,021 shares at July 2, 2023 and January 1, 2023, respectively	(25.3)		(25.3)
Total stockholders' equity	1,435.0		1,302.9
Total liabilities and stockholders' equity	$	2,872.5	$	2,533.9


	Three Months Ended				Six Months Ended
	July 2, 2023		July 3, 2022		July 2, 2023		July 3, 2022
Net sales	$	1,353.7	$	1,216.6	$	2,191.1	$	2,021.9
Cost of goods sold	864.3		755.5		1,414.6		1,291.6
Gross profit	489.4		461.1		776.5		730.3

Selling, general and administrative expenses	320.6		272.7		612.0		503.2
Other income	2.5		1.7		6.5		4.2
Operating income	171.3		190.1		171.0		231.3

Interest and other non-operating expenses, net	7.3		4.6		14.2		8.9
Income before taxes	164.0		185.5		156.8		222.4
Income tax expense	40.0		44.8		37.3		49.4
Net income	$	124.0	$	140.7	$	119.5	$	173.0








Net income per common share:
Basic	$	2.75	$	3.12	$	2.65	$	3.85
Diluted	$	2.71	$	3.07	$	2.62	$	3.78
Weighted average number of common shares outstanding:
Basic	45,093,712		45,034,633		45,069,781		44,985,199
Diluted	45,682,976		45,779,173		45,661,533		45,814,054


☒			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


Note 1. Nature of Business and Significant Accounting Policies			11
Note 2. Revenue from Contracts with Customers			13
Note 3. Acquisitions			13
Note 4. Fair Value Measurement and Interest Rate Swaps			15
Note 5. Property and Equipment, Net			18
Note 6. Goodwill and Intangible Assets, Net			18
Note 7. Leases			20
Note 8. Employee Benefit and Stock Incentive Plans			21
Note 9. Long-Term Debt			24
Note 10. Income Taxes			26
Note 11. Commitments and Contingencies			27
Note 12. Earnings (Loss) Per Share			27
Note 13. Subsequent Events			28


	Derivative Assets
	July 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	$	9.9	Prepaid expenses and other current assets	$	8.6
	Other assets	5.1		Other assets	7.7
Total derivative assets		$	15.0		$	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)	July 2, 2023		July 3, 2022		July 2, 2023		July 3, 2022
Interest rate contracts	Interest and other non-operating expenses, net	$	—	$	(0.8)	$	—	$	—


	July 2, 2023		January 1, 2023
Land	$	13.2	$	13.2
Buildings and leasehold improvements:
Buildings	8.1		8.1
Leasehold improvements	49.9		46.2
Branch equipment	114.2		114.7
Office furniture and fixtures and vehicles:
Office furniture and fixtures	29.1		28.2
Vehicles	46.6		43.2
Finance lease right-of-use assets	123.7		103.1
Mineral rights	2.2		—
Tooling	0.1		0.1
Construction in progress	15.0		7.7
Total property and equipment, gross	402.1		364.5
Less: accumulated depreciation and amortization	200.3		175.7
Property and equipment, net	$	201.8	$	188.8


	January 1, 2023		January 3, 2022
	to July 2, 2023		to January 1, 2023
Beginning balance	$	411.9	$	311.1
Goodwill acquired during the period(a)	22.8		101.8
Goodwill adjusted during the period	(0.8)		(1.0)
Ending balance	$	433.9	$	411.9


		July 2, 2023						January 1, 2023
	Weighted Average Remaining Useful Life	Amount		Accumulated Amortization		Net		Amount		Accumulated Amortization		Net
Customer relationships	17.1 years	$	518.2	$	267.7	$	250.5	$	490.5	$	241.2	$	249.3
Trademarks and other	3.6 years	46.1		22.4		23.7		47.9		21.2		26.7
Total intangibles		$	564.3	$	290.1	$	274.2	$	538.4	$	262.4	$	276.0


Fiscal year ending:
2023 (remainder)	$	29.5
2024	48.7
2025	40.3
2026	33.0
2027	25.7
Thereafter	97.0
Total future amortization	$	274.2


	Six Months Ended
	July 2, 2023		July 3, 2022
Cash Flows from Operating Activities:
Net income	$	119.5	$	173.0
Adjustments to reconcile Net income to net cash provided by (used in) operating activities:
Amortization of finance lease right-of-use assets and depreciation	31.0		21.1
Stock-based compensation	15.7		9.5
Amortization of software and intangible assets	30.8		23.7
Amortization of debt related costs	0.5		0.6

Gain on sale of equipment	(0.2)		(0.3)

Other	(2.5)		0.6
Changes in operating assets and liabilities, net of the effects of acquisitions:
Receivables	(111.2)		(122.5)
Inventory	(84.8)		(215.2)
Income tax receivable	10.9		3.3
Prepaid expenses and other assets	(16.7)		(9.1)
Accounts payable	98.5		80.8
Income tax payable	24.8		34.6
Accrued expenses and other liabilities	(15.1)		(23.7)
Net Cash Provided By (Used In) Operating Activities	$	101.2	$	(23.6)

Cash Flows from Investing Activities:
Purchases of property and equipment	(16.3)		(16.6)
Purchases of intangible assets	(1.1)		(7.2)
Acquisitions, net of cash acquired	(58.6)		(122.0)
Proceeds from the sale of property and equipment	1.1		1.1
Net Cash Used In Investing Activities	$	(74.9)	$	(144.7)

Cash Flows from Financing Activities:
Equity proceeds from common stock	2.1		2.3
Repurchases of common stock	(0.6)		—

Repayments under term loan	(1.3)		(1.3)
Borrowings on asset-based credit facility	302.8		319.8
Repayments on asset-based credit facility	(271.5)		(133.8)

Payments on finance lease obligations	(8.3)		(5.8)


Maturity of Lease Liabilities	Operating Leases		Finance Leases
Fiscal year:
2023 (remainder)	$	38.3	$	11.1
2024	86.0		20.9
2025	73.4		17.8
2026	58.8		14.7
2027	46.7		10.9
2028	35.4		7.3
Thereafter	105.3		1.2
Total lease payments	443.9		83.9
Less: interest	70.8		9.4
Present value of lease liabilities	$	373.1	$	74.5


	Stock Options	RSUs	DSUs	PSUs
Outstanding as of January 1, 2023	971.9	205.3	52.0	52.2
Granted(a)	56.5	116.3	2.7	42.9
Exercised/Vested/Settled(a)(b)	(60.8)	(71.5)	—	(32.0)
Expired or forfeited	(5.1)	(5.7)	—	(0.3)
Outstanding as of July 2, 2023	962.5	244.4	54.7	62.8


	July 2, 2023		July 3, 2022
Stock options	$	72.24	$	57.47
RSUs	$	148.31	$	176.45
DSUs	$	148.09	$	120.83
PSUs(a)	$	148.89	$	146.06


		Three Months Ended				Six Months Ended
Lease Cost	Classification	July 2, 2023		July 3, 2022		July 2, 2023		July 3, 2022
Finance lease cost:
Amortization of right-of-use assets	Selling, general and administrative expenses	$	4.7	$	3.0	$	8.9	$	6.0
Interest on lease liabilities	Interest and other non-operating expenses, net	0.9		0.4		1.7		0.8
Operating lease cost	Cost of goods sold	2.4		1.5		4.1		3.0
Operating lease cost	Selling, general and administrative expenses	21.1		18.7		41.5		37.1
Short-term lease cost	Selling, general and administrative expenses	0.7		0.5		1.5		1.0
Variable lease cost	Selling, general and administrative expenses	0.2		0.4		0.6		0.6
Sublease income	Selling, general and administrative expenses	(0.2)		(0.3)		(0.4)		(0.6)
Total lease cost		$	29.8	$	24.2	$	57.9	$	47.9


	Three Months Ended				Six Months Ended
Other Information	July 2, 2023		July 3, 2022		July 2, 2023		July 3, 2022
Cash paid for amounts included in the measurements of lease liabilities:
Operating cash flows from finance leases	$	0.9	$	0.4	$	1.7	$	0.8
Operating cash flows from operating leases	$	22.0	$	20.1	$	44.2	$	39.4
Financing cash flows from finance leases	$	4.4	$	2.9	$	8.3	$	5.8
Right-of-use assets obtained in exchange for new lease liabilities:
Finance leases	$	15.3	$	5.2	$	24.0	$	7.1
Operating leases	$	22.9	$	11.3	$	72.7	$	37.3


	July 2, 2023			January 1, 2023
	Unrecognized Compensation (in millions)		Weighted Average Remaining Period	Unrecognized Compensation (in millions)		Weighted Average Remaining Period
Stock options	$	6.5	2.7 years	$	5.6	2.5 years
RSUs	$	29.4	2.8 years	$	21.7	2.7 years
DSUs	$	0.3	1.3 years	$	0.1	0.9 years
PSUs	$	6.0	1.9 years	$	3.3	1.7 years


	July 2, 2023		January 1, 2023
ABL facility	$	131.3	$	100.0
Term loans	251.5		252.8
Hybrid debt instruments	2.6		3.3
Total gross long-term debt	385.4		356.1
Less: unamortized debt issuance costs and discounts on debt	(4.9)		(5.5)
Total debt	$	380.5	$	350.6
Less: current portion	(4.1)		(4.0)
Total long-term debt	$	376.4	$	346.6


(In millions, except per share information and percentages)
	2023				2022								2021
	Qtr 2		Qtr 1		Qtr 4		Qtr 3		Qtr 2		Qtr 1		Qtr 4		Qtr 3
Net sales	$	1,353.7	$	837.4	$	890.0	$	1,102.6	$	1,216.6	$	805.3	$	805.2	$	936.4
Cost of goods sold	864.3		550.3		587.4		714.0		755.5		536.1		522.8		595.9
Gross profit	489.4		287.1		302.6		388.6		461.1		269.2		282.4		340.5
Selling, general and administrative expenses	320.6		291.4		304.6		289.2		272.7		230.5		247.2		235.3
Other (income) expense, net	(2.5)		(4.0)		(2.0)		(2.4)		(1.7)		(2.5)		(0.1)		1.8
Operating income (loss)	171.3		(0.3)		—		101.8		190.1		41.2		35.3		103.4
Interest and other non-operating expenses, net	7.3		6.9		5.5		5.6		4.6		4.3		5.1		4.3
Income tax (benefit) expense	40.0		(2.7)		(4.6)		22.9		44.8		4.6		2.7		19.1
Net income (loss)	$	124.0	$	(4.5)	$	(0.9)	$	73.3	$	140.7	$	32.3	$	27.5	$	80.0
Net income (loss) per common share:
Basic	$	2.75	$	(0.10)	$	(0.02)	$	1.63	$	3.12	$	0.72	$	0.61	$	1.79
Diluted	$	2.71	$	(0.10)	$	(0.02)	$	1.60	$	3.07	$	0.70	$	0.60	$	1.74
Adjusted EBITDA(a)	$	211.2	$	39.8	$	38.9	$	135.6	$	222.0	$	67.8	$	61.8	$	128.2


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


	Total		Next 12 Months		Beyond 12 Months
Long-term debt, including current maturities	$	385.4	$	4.1	$	381.3
Interest on long-term debt	$	109.0	$	18.2	$	90.8



	Six Months Ended
Net cash provided by (used in):	July 2, 2023		July 3, 2022
Operating activities	$	101.2	$	(23.6)
Investing activities	$	(74.9)	$	(144.7)
Financing activities	$	14.0	$	164.9


Exhibit Number						Description

10.1†						Summary of Non-Employee Director Compensation, as amended and restated on May 11, 2023.

10.2						Increase Supplement, dated as of July 12, 2023, by and between SiteOne Landscape Supply Holding, LLC and JPMorgan Chase Bank, N.A., as increasing lender, is incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed July 12, 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 July 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, (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:	August 2, 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