On October 30, 2024, SiteOne Landscape Supply Inc (SITE, Financial) released its 8-K filing detailing the financial results for the third quarter of 2024. SiteOne Landscape Supply Inc is a leading supplier of landscape tools and equipment, serving businesses in the United States and Canada with a diverse product portfolio including irrigation supplies, fertilizers, nursery goods, and more.
Performance Overview
SiteOne reported a 6% increase in net sales to $1.21 billion, surpassing the analyst estimate of $1.192 billion. However, the company faced challenges with a 1% decrease in Organic Daily Sales, attributed to a 3% price deflation in commodity products. Despite these headwinds, the company achieved a 2% growth in Organic Daily Sales volume, partially offsetting the price decline.
Net income attributable to SiteOne decreased by $12.9 million to $44.4 million, missing the estimated earnings per share (EPS) of $1.19, with actual EPS at $0.97. The decline in net income was primarily due to lower gross margins in the Base Business and increased SG&A expenses.
Financial Achievements and Industry Context
Gross profit rose by 6% to $411.0 million, with a slight improvement in gross margin by 10 basis points to 34.0%. This reflects the positive impact of acquisitions, which contributed $77.3 million to net sales growth. However, SG&A expenses increased to $349.1 million, representing 28.9% of net sales, up by 170 basis points from the previous year, mainly due to acquisition impacts.
Adjusted EBITDA decreased by 4% to $114.8 million, with a margin contraction of 100 basis points to 9.5%. Despite these challenges, operating cash flow improved significantly, increasing by $27.2 million to $115.9 million, highlighting effective working capital management.
Income Statement and Balance Sheet Insights
The income statement reveals a decrease in operating income to $69.9 million from $81.2 million in the prior year, reflecting increased costs and lower margins. The balance sheet shows total assets of $3.146 billion, with a notable increase in inventory and accounts receivable, indicating robust business activity.
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Net Sales | $1.21 billion | $1.15 billion |
| Gross Profit | $411.0 million | $388.1 million |
| Net Income | $44.4 million | $57.3 million |
| Adjusted EBITDA | $114.8 million | $119.8 million |
Strategic Initiatives and Outlook
SiteOne's strategic initiatives include the acquisition of Millican Nurseries and refinancing of its term loan, extending maturity and reducing interest rates. These moves are aimed at strengthening its market position and financial flexibility.
“During the quarter we continued to face market headwinds with 3% price deflation and a softer repair and remodel market. Given these, we were pleased to achieve 2% Organic Daily Sales volume growth to partially offset the price decline,” said Doug Black, SiteOne’s Chairman and CEO.
Looking ahead, SiteOne anticipates continued challenges in the pricing environment and plans to consolidate or close 16 branches in the fourth quarter, incurring a one-time charge to adjusted EBITDA. The company expects its adjusted EBITDA for fiscal 2024 to range between $370 million and $380 million.
Overall, while SiteOne Landscape Supply Inc (SITE, Financial) has demonstrated resilience in a challenging market, the company faces ongoing pressures from price deflation and increased operational costs. Investors will be keen to see how SiteOne navigates these challenges and leverages its strategic initiatives for future growth.
Explore the complete 8-K earnings release (here) from SiteOne Landscape Supply Inc for further details.
