On May 1, 2024, SiteOne Landscape Supply Inc (SITE, Financial) disclosed its first-quarter earnings for 2024 through its 8-K filing. The report highlighted a challenging quarter for the company, marked by significant commodity pricing deflation which impacted its financial outcomes negatively compared to the same period last year.
Company Overview
SiteOne Landscape Supply Inc is a leading supplier in the United States and Canada, providing a comprehensive range of products for landscape maintenance and construction. The company’s extensive portfolio includes irrigation supplies, fertilizers, outdoor lighting, and nursery goods, among others, catering primarily to residential and commercial landscape professionals.
Quarterly Financial Performance
The first quarter of 2024 saw SiteOne generating net sales of $904.8 million, an increase of 8% from $837.4 million in the first quarter of 2023. This growth was partly due to acquisitions contributing $62.5 million. However, organic daily sales saw a modest increase of 1%, reflecting the impact of price deflation offset by solid demand. Gross profit rose by 5% to $301.2 million, but gross margin declined by 100 basis points to 33.3%, primarily due to lower price realization.
Operating expenses presented a challenge, with Selling, General and Administrative (SG&A) expenses climbing to $327.7 million from $291.4 million, pushing SG&A as a percentage of net sales up by 140 basis points to 36.2%. This increase was largely attributed to the costs associated with recent acquisitions.
The net result was a net loss of $19.3 million for the quarter, a significant drop from a net loss of $4.5 million in the prior year. Adjusted EBITDA also decreased by 47% to $21.1 million, with the margin contracting by 250 basis points to 2.3%.
Balance Sheet and Cash Flow Insights
As of March 31, 2024, SiteOne reported cash and cash equivalents of $41.5 million, a decrease from $82.5 million at the end of 2023. The total current assets stood at $1,580.0 million. The company's net debt was $508.0 million, maintaining a leverage ratio of 1.3 times net debt to adjusted EBITDA, consistent with the previous year.
The cash flow from operating activities was notably negative at $99.3 million, compared to a negative $152.6 million in the first quarter of 2023, reflecting ongoing challenges in managing working capital, particularly in inventory and receivables.
Strategic Moves and Outlook
Despite the tough quarter, CEO Doug Black emphasized the company's resilience and strategic initiatives aimed at overcoming market challenges. SiteOne continues to expand through acquisitions, including the recent addition of Devil Mountain Nursery, and remains focused on enhancing its market leadership and operational efficiency.
Looking ahead, the company anticipates commodity price deflation to persist into the third quarter of 2024, with an expected overall price decline of about 2% for the year. However, SiteOne is optimistic about achieving low single-digit organic daily sales growth and improving the adjusted EBITDA margin through strategic SG&A management and further acquisitions.
This earnings report underscores the volatile conditions in the landscape supply sector and SiteOne's proactive measures to navigate these challenges. Investors and stakeholders will likely watch closely how these strategies unfold in upcoming quarters.
For detailed financial figures and further information, please refer to the full earnings report on SiteOne Landscape Supply Inc's Investor Relations website.
Explore the complete 8-K earnings release (here) from SiteOne Landscape Supply Inc for further details.
