SiteOne Landscape Supply (SITE) Q3 2024 earnings summary

Executive summary

• Net sales grew 6% year-over-year to $1.21 billion in Q3 2024, driven by acquisitions, while organic daily sales declined 1% due to commodity price deflation and softer end-market demand.

• Acquisitions contributed 7% to net sales growth, with Millican Nurseries among several strategic additions in 2024.

• Adjusted EBITDA decreased 4% to $114.8 million, with margin down 100 basis points to 9.5% due to price deflation and acquisition dilution.

• Net income fell to $44.4 million, primarily from lower organic sales and reduced gross margin in the base business.

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

Financial highlights

• Gross profit increased 6% to $411 million, with gross margin up 10 basis points to 34% due to acquisitions.

• SG&A expenses rose 12% to $349 million, or 28.9% of net sales, mainly from acquisitions.

• Working capital increased to $991.7 million, mainly from acquisitions.

• Net debt at quarter-end: $449 million, with liquidity of $647 million and net debt/Adjusted EBITDA at 1.2x.

• Operating cash flow improved to $116 million in Q3 2024.

Outlook and guidance

• Full-year 2024 organic daily sales expected to decline 1%-2%, with price deflation of about 3%.

• Adjusted EBITDA for 2024 guided to $370–$380 million, including a $5 million charge for branch consolidations.

• Gross margin and adjusted EBITDA margin expected to be lower than 2023 due to continued price deflation and acquisition dilution.

• Commodity price declines expected to moderate in 2025, with a more stable pricing environment anticipated.

• Long-term industry outlook remains positive, supported by demographics and housing demand.