SiteOne Landscape Supply Inc (SITE, Financial) released its third quarter 2023 earnings on November 1, 2023. Despite facing market challenges and commodity price deflation, the company reported a 4% increase in net sales to $1.15 billion. However, net income decreased by 22% to $57.3 million, and Adjusted EBITDA fell by 12% to $119.8 million. The company also successfully closed six acquisitions during the quarter.
Financial Performance Overview
Net sales for the third quarter of 2023 increased by 4% to $1.15 billion, compared to $1.10 billion for the same period in 2022. However, Organic Daily Sales decreased by 2% due to a decline in prices for commodity products. Acquisitions contributed $64.7 million, or 6%, to net sales growth for the quarter.
Gross profit remained largely unchanged at $388.1 million, with a contraction of 130 basis points in gross margin to 33.9%. This was primarily due to lower prices and the absence of the price realization benefit in the prior year, partially offset by the positive impact of acquisitions and lower freight costs.
Selling, general and administrative expenses (SG&A) increased to $311.8 million from $289.2 million for the prior-year period. SG&A as a percentage of net sales increased 100 basis points to 27.2% due to the impact of acquisitions and higher operating costs supporting growth.
Net Income and Adjusted EBITDA
Net income for the third quarter of 2023 was $57.3 million, compared to net income of $73.3 million for the prior-year period. The decrease in net income was attributed to lower gross margin and increased SG&A expense. Adjusted EBITDA decreased 12% to $119.8 million for the third quarter of 2023, compared to $135.6 million for the prior-year period. Adjusted EBITDA margin contracted 180 basis points to 10.5%.
Acquisitions and Future Outlook
During the third quarter, SiteOne Landscape Supply Inc (SITE, Financial) closed six acquisitions: Hickory Hill Farm & Garden, New England Silica, Timothys Center for Gardening, Pioneer Landscape Centers, Regal Chemical, and JMJ Organics. These acquisitions are expected to expand the company's position in key markets and increase its ability to serve customers and grow.
Despite the challenges, the company remains confident in its long-term strategy and its ability to drive performance and growth. However, it expects Organic Daily Sales growth to be negative in the fourth quarter with price deflation more than offsetting positive sales volume growth.
Explore the complete 8-K earnings release (here) from SiteOne Landscape Supply Inc for further details.
