SiteOne Landscape Supply (SITE) Q2 2024 earnings summary

Executive summary

• Net sales for Q2 2024 increased 4% year-over-year to $1.41 billion, driven by acquisitions despite a 3% decline in Organic Daily Sales due to soft demand and price deflation.

• Adjusted EBITDA was $210.5 million, nearly flat year-over-year, with margin down 70 basis points to 14.9%.

• Net income attributable to common shares decreased 3% to $120.2 million, impacted by higher SG&A and lower gross margin.

• Five acquisitions closed year-to-date, expanding product lines and geographic reach, and term loan was refinanced to extend maturity and reduce interest rate.

• Management expects continued pressure from price deflation and soft demand but remains focused on long-term growth through organic initiatives and acquisitions.

Financial highlights

• Gross profit increased 4% to $510.3 million, but gross margin fell 10 basis points to 36.1% due to price deflation.

• SG&A expenses rose 7% to $343.8 million, with SG&A as a percent of sales up 60 basis points to 24.3%, mainly from acquisitions.

• Net cash from operating activities was $147.4 million, down from $253.8 million last year, mainly due to working capital timing.

• Net debt increased to $523.6 million, with leverage at 1.3x trailing 12-month adjusted EBITDA.

• Acquisitions contributed $103.2 million (8%) to net sales growth in the quarter.

Outlook and guidance

• Full-year 2024 organic daily sales expected to be down low single digits, with price deflation of about 3%.

• Adjusted EBITDA guidance for 2024 is $380–$400 million, with margin expected to be lower than 2023.

• Price deflation in H2 forecasted at 2%-3%, with Q3 at the higher end and Q4 potentially below 2%.

• Management expects continued pressure on net sales and net income for the remainder of 2024 due to elevated interest rates, tighter financial markets, and reduced consumer spending.

• Long-term industry outlook remains strong, supported by population trends, housing demand, and outdoor living interest.