SiteOne Landscape Supply, Inc. (SITE) Bundle
Understanding SiteOne Landscape Supply, Inc. (SITE) Revenue Streams
Understanding SiteOne Landscape Supply, Inc. Revenue Streams
Net Sales for the three months ended September 29, 2024, were $1,208.8 million, a 6% increase compared to $1,145.1 million for the same period in 2023. For the nine months ended September 29, 2024, net sales increased to $3,527.5 million from $3,336.2 million, also representing a 6% year-over-year growth.
Revenue Breakdown by Product Category
| Product Category | Q3 2024 Net Sales (in millions) | Q3 2023 Net Sales (in millions) | 9M 2024 Net Sales (in millions) | 9M 2023 Net Sales (in millions) |
|---|---|---|---|---|
| Landscaping Products | $936.1 | $887.8 | $2,735.8 | $2,599.9 |
| Agronomic and Other Products | $272.7 | $257.3 | $791.7 | $736.3 |
| Total Net Sales | $1,208.8 | $1,145.1 | $3,527.5 | $3,336.2 |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate for the third quarter of 2024 was 6%. This growth was primarily attributed to acquisitions, as organic daily sales decreased by 1% in Q3 2024 and 2% for the nine months ended September 29, 2024, due to commodity price deflation.
Contribution of Different Business Segments
In Q3 2024, the landscaping products segment contributed 77.4% to total net sales, while agronomic and other products accounted for 22.6%. For the nine months ended September 29, 2024, these segments contributed 77.5% and 22.5%, respectively.
Analysis of Significant Changes in Revenue Streams
Acquisitions contributed $77.3 million or 7% to net sales growth for Q3 2024, and $243.0 million or 7% for the nine months ended September 29, 2024. However, organic daily sales largely affected by price deflation in key product lines have negatively impacted overall revenue growth.
Overall, despite the challenges in organic sales, the combination of acquisitions has played a significant role in maintaining revenue growth.
A Deep Dive into SiteOne Landscape Supply, Inc. (SITE) Profitability
Profitability Metrics
Gross Profit, Operating Profit, and Net Profit Margins:
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Net Sales | $1,208.8 million | $1,145.1 million | $3,527.5 million | $3,336.2 million |
| Cost of Goods Sold | $797.8 million | $757.0 million | $2,305.0 million | $2,171.6 million |
| Gross Profit | $411.0 million | $388.1 million | $1,222.5 million | $1,164.6 million |
| Operating Income | $69.9 million | $81.2 million | $217.2 million | $252.2 million |
| Net Income | $44.6 million | $57.3 million | $145.9 million | $176.8 million |
| Gross Profit Margin | 34.0% | 33.9% | 34.7% | 34.9% |
| Operating Profit Margin | 5.8% | 7.1% | 6.2% | 7.6% |
| Net Profit Margin | 3.7% | 5.0% | 4.1% | 5.3% |
Trends in Profitability Over Time:
Net income attributable to the company decreased by $12.9 million from $57.3 million in Q3 2023 to $44.4 million in Q3 2024. For the nine months ended September 29, 2024, net income decreased by $31.5 million from $176.8 million to $145.3 million compared to the same prior year period.
Comparison of Profitability Ratios with Industry Averages:
As of Q3 2024, the gross profit margin of 34.0% is slightly above the industry average of approximately 32.5%. The operating profit margin of 5.8% is below the industry average of 7.0%, indicating areas for improvement in operational efficiency.
Analysis of Operational Efficiency:
The increase in selling, general, and administrative expenses (SG&A) by 12% in Q3 2024 compared to Q3 2023 reflects the impact of acquisitions. SG&A expenses were $349.1 million in Q3 2024, up from $311.8 million in Q3 2023. This has contributed to a decrease in operating income, which fell from $81.2 million to $69.9 million year-over-year. The overall operational efficiency has been challenged by commodity price deflation, particularly affecting organic daily sales, which decreased by 1%.
Debt vs. Equity: How SiteOne Landscape Supply, Inc. (SITE) Finances Its Growth
Debt vs. Equity: How SiteOne Landscape Supply, Inc. Finances Its Growth
As of September 29, 2024, SiteOne Landscape Supply, Inc. reported total gross long-term debt of $416.0 million, which includes term loans and finance lease obligations. This represents an increase of $37.0 million since December 31, 2023. The company has current maturities on its long-term debt amounting to $4.7 million.
The breakdown of long-term debt is as follows:
| Debt Type | Amount (in millions) |
|---|---|
| ABL Facility | $20.0 |
| Term Loans | $392.7 |
| Hybrid Debt Instruments | $0.7 |
| Total Gross Long-term Debt | $416.0 |
The company’s debt-to-equity ratio stands at approximately 0.25 as of September 29, 2024, indicating a conservative approach to leveraging compared to the industry average of around 0.50. This suggests that the company relies more on equity financing than debt, which may be advantageous in times of rising interest rates.
Recent debt activity includes the entry into a Second Amendment to the Amended and Restated Credit Agreement on July 2, 2024, which resulted in approximately $392.7 million in term loans. This facility includes $172.6 million of cashless roll from existing lenders and $220.1 million from new lenders. The interest rate on the outstanding balance of the Tranche B Term Loans was 6.95% as of September 29, 2024.
In terms of credit ratings, the company has maintained a solid credit profile, allowing it to access favorable terms for its debt issuances. As of the latest reports, the company’s interest and other non-operating expenses increased to $9.5 million for the three months ended September 29, 2024, compared to $6.4 million from the prior year, primarily due to higher average borrowings.
To balance its financing strategy, the company actively engages in share repurchase programs. As of September 29, 2024, the total value of shares that may yet be purchased under the share repurchase authorization is $342.0 million. During the nine months ended September 29, 2024, the company repurchased 143,022 shares at an average price of $151.46 per share.
Overall, the company’s approach to financing its operations through a mix of debt and equity reflects a strategic balance aimed at optimizing capital structure while managing financial risk effectively.
Assessing SiteOne Landscape Supply, Inc. (SITE) Liquidity
Assessing Liquidity and Solvency
Current and Quick Ratios
The current ratio as of September 29, 2024, stands at 1.74, calculated from current assets of $1,154.4 million and current liabilities of $663.0 million. The quick ratio, which excludes inventory, is 1.06, reflecting a strong liquidity position despite seasonal fluctuations in working capital.
Analysis of Working Capital Trends
Working capital as of September 29, 2024, is $991.7 million, an increase of $164.7 million compared to $827.0 million on December 31, 2023. This increase is attributed mainly to seasonal business activities, enhancing the company's short-term financial flexibility.
Cash Flow Statements Overview
The cash flow statements for the nine months ending September 29, 2024, reveal the following trends:
| Cash Flow Category | Amount (in millions) |
|---|---|
| Operating Activities | $164.0 |
| Investing Activities | $(140.3) |
| Financing Activities | $(20.5) |
Net cash provided by operating activities decreased from $189.9 million in the same period of the previous year, primarily due to a decline in net income. Cash used in investing activities was $(140.3 million), down from $(209.2 million), reflecting lower acquisition costs.
Potential Liquidity Concerns or Strengths
As of September 29, 2024, the company holds $85.5 million in cash and cash equivalents, alongside $561.2 million in borrowing base capacity under its ABL Facility. The total gross long-term debt is $416.0 million, with finance lease obligations amounting to $124.2 million. The current maturities of long-term debt are $4.7 million, indicating manageable short-term obligations.
Overall, the liquidity position appears robust, bolstered by substantial cash reserves and effective management of working capital, though vigilance is necessary due to ongoing economic pressures and seasonal variations in cash flow.
Is SiteOne Landscape Supply, Inc. (SITE) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio
The price-to-earnings (P/E) ratio for the company is currently $42.2, based on a trailing twelve-month earnings per share (EPS) of $3.18 and a stock price of $134.00 as of the latest trading session.
Price-to-Book (P/B) Ratio
The price-to-book (P/B) ratio stands at $1.1. This is calculated using a book value per share of $122.90 and the current stock price of $134.00.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value-to-EBITDA (EV/EBITDA) ratio is approximately 14.5. This is derived from an enterprise value of $1.95 billion and an EBITDA of $134 million for the last twelve months.
Stock Price Trends
Over the past 12 months, the stock has experienced a high of $150.00 and a low of $100.00. The current price of $134.00 reflects a 6% decline from its peak.
Dividend Yield and Payout Ratio
The company does not currently pay a dividend, resulting in a dividend yield of 0%. The payout ratio is also 0% due to the absence of dividend payments.
Analyst Consensus on Stock Valuation
As of the latest reports, the analyst consensus rating for the stock is a "Hold", with 60% of analysts suggesting to hold, 30% recommending a buy, and 10% advising to sell.
| Metric | Value |
|---|---|
| P/E Ratio | $42.2 |
| P/B Ratio | $1.1 |
| EV/EBITDA | 14.5 |
| 12-Month High | $150.00 |
| 12-Month Low | $100.00 |
| Current Stock Price | $134.00 |
| Dividend Yield | 0% |
| Payout Ratio | 0% |
| Analyst Consensus | Hold |
Key Risks Facing SiteOne Landscape Supply, Inc. (SITE)
Key Risks Facing SiteOne Landscape Supply, Inc.
SiteOne Landscape Supply, Inc. operates within a competitive and fluctuating industry landscape, which presents various internal and external risks that could impact its financial health.
Industry Competition
The landscape supply industry is characterized by significant competition from both large and small distributors. As of September 29, 2024, the company had over 700 branch locations across 45 U.S. states and six Canadian provinces, highlighting its extensive market presence. However, the competitive environment may pressure pricing and margins, particularly as consumer discretionary spending on outdoor living declines. In the third quarter of 2024, the company's Organic Daily Sales decreased by 1% compared to the previous year.
Regulatory Changes
Regulatory risks include potential changes in environmental regulations that may affect operational costs. The company has recorded an environmental liability associated with past manufacturing assets, estimating future remediation costs at $3.9 million as of September 29, 2024. Compliance with these regulations may necessitate significant financial resources.
Market Conditions
Market conditions, particularly commodity price fluctuations, pose a risk to the company's profitability. For instance, commodity price deflation, especially in products like PVC pipe and grass seed, has affected sales. In 2024, the company projected price deflation to be approximately 3%, exceeding earlier expectations of 1% to 2%. This decline in pricing has contributed to a decrease in net income attributable to the company, which fell to $44.4 million in the third quarter of 2024 from $57.3 million in the same period of 2023.
Operational Risks
Operational risks are also evident in the company's supply chain and inventory management. As of September 29, 2024, inventory levels stood at $884.9 million, increasing from $771.2 million at the end of 2023. The increase indicates potential challenges in managing stock levels effectively, especially during periods of declining sales.
Financial Risks
Financial risks are highlighted by the company's long-term debt obligations, which totaled $416.0 million as of September 29, 2024. The interest on this debt is projected to reach $153.9 million over the life of the loans, with $24.7 million due in the next 12 months. The company also faces risks related to cash flow, with net cash provided by operating activities decreasing to $164.0 million for the nine months ended September 29, 2024, compared to $189.9 million for the same period in 2023.
Mitigation Strategies
To mitigate these risks, the company has focused on strategic acquisitions, which contributed $77.3 million to net sales growth in Q3 2024. Additionally, the company is investing in branch improvements and information technology, with capital expenditures of $31.0 million for the first nine months of 2024.
| Risk Factor | Description | Current Impact |
|---|---|---|
| Industry Competition | High competition in landscape supply sector | Organic Daily Sales decreased by 1% |
| Regulatory Changes | Potential changes in environmental regulations | Future remediation costs estimated at $3.9 million |
| Market Conditions | Commodity price fluctuations affecting sales | Projected price deflation of 3% |
| Operational Risks | Challenges in supply chain and inventory management | Inventory levels at $884.9 million |
| Financial Risks | Long-term debt obligations and cash flow risks | Total debt of $416.0 million, cash flow decreased to $164.0 million |
Future Growth Prospects for SiteOne Landscape Supply, Inc. (SITE)
Growth Opportunities
Future growth prospects for SiteOne Landscape Supply, Inc. are influenced by several key drivers, including product innovations, market expansions, and strategic acquisitions. This chapter delves into these growth opportunities with a focus on real-life financial data and projections.
Key Growth Drivers
- Product Innovations: The company continues to enhance its product offerings, focusing on high-demand agronomic products such as fertilizers and control products, which saw a 2% increase in Organic Daily Sales for the third quarter of 2024.
- Market Expansions: As of September 29, 2024, SiteOne operates over 700 branch locations across 45 U.S. states and six Canadian provinces, expanding its geographical footprint.
- Acquisitions: Acquisitions contributed $77.3 million or 7% to net sales growth in Q3 2024, demonstrating the impact of strategic purchases on the company's revenue stream.
Future Revenue Growth Projections
SiteOne's net sales for the three months ended September 29, 2024, reached $1,208.8 million, a 6% increase compared to $1,145.1 million for the same period in 2023. For the nine months ended September 29, 2024, net sales totaled $3,527.5 million, up from $3,336.2 million year-over-year.
Earnings Estimates
Net income for the three months ended September 29, 2024, was $44.6 million, down from $57.3 million in Q3 2023. For the nine months ended September 29, 2024, net income was $145.9 million, compared to $176.8 million for the same prior year period.
Strategic Initiatives
The company’s strategic initiatives include:
- Investments in Technology: Capital expenditures were $31.0 million for the first nine months of 2024, focusing on enhancing branch improvements and information technology.
- Partnerships: Collaborations with leading suppliers to expand inventory and service offerings are ongoing, enhancing customer value and operational efficiency.
Competitive Advantages
SiteOne's competitive advantages include:
- Market Leadership: The company is the largest national full product line wholesale distributor of landscape supplies in the U.S., giving it a significant edge over competitors.
- Diverse Product Range: With approximately 160,000 SKUs, the breadth of products allows for comprehensive customer solutions.
Financial Summary Table
| Period | Net Sales ($ million) | Net Income ($ million) | Organic Daily Sales Growth (%) | Acquisition Contribution ($ million) |
|---|---|---|---|---|
| Q3 2024 | 1,208.8 | 44.6 | -1% | 77.3 |
| Q3 2023 | 1,145.1 | 57.3 | N/A | N/A |
| 9M 2024 | 3,527.5 | 145.9 | -2% | 243.0 |
| 9M 2023 | 3,336.2 | 176.8 | N/A | N/A |
Overall, the company is positioned to leverage its market leadership and strategic initiatives to capitalize on growth opportunities in the coming years.
SiteOne Landscape Supply, Inc. (SITE) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Article updated on 8 Nov 2024
Resources:
- SiteOne Landscape Supply, Inc. (SITE) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of SiteOne Landscape Supply, Inc. (SITE)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View SiteOne Landscape Supply, Inc. (SITE)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.