Siteone Landscape Supply, Inc. · NYSE:SITE
Siteone Landscape Supply — Q3 2022 Earnings Presentation
27 slides from Siteone Landscape Supply's earnings presentation, November 2022
Slide 1: Third Quarter 2022 Earnings
SiteOne™ LANDSCAPE SUPPLY Stronger Together Third Quarter 2022 Earnings
Slide 2: Disclaimer
Disclaimer Forw ard-Looking Statements This presentation contains “forward-looking statements” w ithin the meaning of the Private Securities Litigation Reform Act of 1995. Forw ard-looking statements may include, but are not limited to, statements relating to our 2022 Adjusted EBITDA outlook and our
Slide 3: Conference call agenda
Conference call agenda Introduction John Guthrie, CFO Business Update Doug Black, Chairman and CEO Financial Update John Guthrie, CFO Development Update Scott Salmon, EVP Strategy & Development Closing & Outlook Doug Black, Chairman and CEO Q&A 3
Slide 4: Company and industry overview
Company and industry overview ■ Largest and only national full product line wholesale distributor of landscape supplies ■ $23 billion highly fragmented market(1) ■ More than five times the size of next competitor and only ~15% market share(1) ■ Serving residential and commercial landscape profession
Slide 5: SiteOne is poised for continued growth and margin enhancement
SiteOne is poised for continued growth and margin enhancement Current strategy ✓ Leverage strengths of both large and local company ■ Fully exploit our scale, resources and capabilities ■ Execute local market growth strategies ■ Deliver superior value to our customers and suppliers ■ Close and integ
Slide 6: Track record of performance and growth
Track record of performance and growth Net Sales Adjusted EBITDA (in Millions) (in Millions) 415 3,476 ’16-’21 ’16-’21 2,705 Growth Growth 2,358 2,112 260 1,862 Sales $ 11.9% Adj. EBITDA $ 1,648 34.9% 201 +111% 176 +209% 33.3% 157 32.8% 134 32.1% 9.6% Adj. EBITDA % 31.3% 32.0% GM % 8.5% +360 bps 8.4
Slide 7: Significant room to grow across product lines
Significant room to grow across product lines # of markets (1) Missing either Missing both Full Product No Hardscapes or Hardscapes Line Offering Presence Nursery and Nursery SiteOne offers all ~55 product lines in only ~21% of our target markets today… ~75 ~60 ~50 (1) Target markets as of Q4 2021 a
Slide 8: Third Quarter 2022 highlights and recent developments
Third Quarter 2022 highlights and recent developments Third Quarter 2022 highlights (compared to third quarter 2021): ✓ Net sales increased 18% to $1.1 billion ✓ Organic Daily Sales increased 12% ✓ Gross profit increased 14% to $388.6 million; gross margin was 35.2% ✓ SG&A as a percentage of Net sal
Slide 9: 2022 ESG Report Highlights
2022 ESG Report Highlights Formation of ESG Steering Associate Engagement Leadership Academy and Enhanced Supply Chain Committee Survey Overall Score of 85 Line of Business Certifications 2021 Lost Time Incident Enhanced Hourly Associate Compensation Programs Improved Fleet Efficiency Rate Lowest in
Slide 10: Review of Third Quarter 2022 financial results
Review of Third Quarter 2022 financial results Summary financials Financial highlights ($ in millions) +18% ■ Net sales increased 18% YoY to $1.1 billion – Organic Daily Sales increased 12% due to price inflation, Net sales 1,102.6 partially offset by lower volume 936.4 – Acquired sales growth was $
Slide 11: Balance sheet & cash flow highlights
Balance sheet & cash flow highlights Quarter ended October 2, 2022 Balance sheet & cash flow highlights (compared to prior-year period) ($ in millions) ■ Working capital increased to $869.2 million, compared to $715.2 million – Inventory remains elevated due to supply chain uncertainty, strategic Wo
Slide 12: Balanced Approach to Capital Allocation
Balanced Approach to Capital Allocation ✓Healthy cash flow generation ✓Low capex requirements Return capital to shareholders ✓Flexible balance sheet Maintain through share repurchase conservative balance sheet allowing flexibility now and in the future Execute our acquisition strategy Invest in the
Slide 13: Proven track record of successful acquisitions
Proven track record of successful acquisitions 2014 - 2018 2019 2020 2021 2022 YTD Total 2017 ▪ Pete Rose ▪ Cutting Edge ▪ Wittkopf Landscape ▪ Lucky Landscape ▪ JK Enterprise Supplies ▪ Atlantic Irrigation ▪ All Pro Horticulture ▪ Arizona Stone & ▪ BellStone Masonry ▪ Empire Supplies Solstice ▪ Vil
Slide 14: M&A continues to add significant value: River Valley Horticultural
M&A continues to add significant value River Valley Horticultural ✓Closed on July 22nd ✓Establishes a nursery platform and expands our hardscapes product offering in the Little Rock, Arkansas market ✓Purchasing synergies ✓Cross-selling synergies SiteOne River Valley Source: Company data 14
Slide 15: M&A continues to add significant value: Cape Cod Stone
M&A continues to add significant value Cape Cod Stone ✓Closed on August 11th ✓Establishes hardscapes leadership in Cape Cod, Massachusetts market ✓Purchasing synergies ✓Cross-selling synergies SiteOne Cape Cod Source: Company data 15
Slide 16: M&A continues to add significant value: Linzel Distributing
M&A continues to add significant value Linzel Distributing ✓Closed on August 12th ✓Establishes a leading exterior lighting presence in the Greater Toronto and Hamilton Area ✓Purchasing synergies ✓Cross-selling synergies SiteOne Linzel Source: Company data 16
Slide 17: M&A continues to add significant value: Jim Stone
M&A continues to add significant value Jim Stone ✓Closed on August 18th ✓Extends our hardscapes presence into three Louisiana markets ✓Purchasing synergies ✓Cross-selling synergies SiteOne Jim Stone Source: Company data 17
Slide 18: M&A continues to add significant value: Stone Plus
M&A continues to add significant value Stone Plus ✓Closed on August 31st ✓Establishes a leading hardscapes and bulk landscape supplies presence in the Jacksonville, Florida market ✓Purchasing synergies SiteOne ✓Cross-selling synergies Stone Plus Source: Company data 18
Slide 19: M&A continues to add significant value: Kaknes Landscape Supply
M&A continues to add significant value Kaknes Landscape Supply ✓Closed on August 31st ✓Extends our nursery presence in the Chicago market ✓Purchasing synergies ✓Cross-selling synergies SiteOne Kaknes Landscape Source: Company data 19
Slide 20: M&A continues to add significant value: Madison Block & Stone
M&A continues to add significant value Madison Block & Stone ✓Closed on October 13th ✓Establishes leading hardscapes presence in the Madison, Wisconsin market ✓Purchasing synergies ✓Cross-selling synergies SiteOne Madison Block & Stone Source: Company data 20
Slide 21: Robust pipeline provides significant growth opportunity
Robust pipeline provides significant growth opportunity ✓ SiteOne is the leading industry consolidator 15% ✓ Significant sourcing advantage with 80+ associates scouting new growth opportunities 85% ✓ Our pipeline is deep and expanding ~$23bn market(1) ✓ Experienced M&A team recently expanded to driv
Slide 22: 2022 Outlook
2022 Outlook ✓ Market trends remain reasonable in the face of macroeconomic headwinds ✓ Key commercial and operational initiatives are expected to support market share gains and low double digit organic daily sales growth for the year ✓ Continued M&A activity with robust pipeline ✓ Raising 2022 Adju
Slide 23: Investment highlights
Investment highlights Uniquely Clear market leader attractive industry Compelling and Proven management sustainable team growth strategy Operational and Value-creating commercial acquisitions excellence 23
Slide 24: Appendix: Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations
Slide 25: Non-GAAP reconciliations
Non-GAAP reconciliations Adjusted EBITDA Reconciliation 2022 2021 2020 ($ in millions) Q3’22 Q2’22 Q1’22 Q4’21 Q3’21 Q2’21 Q1’21 Q4’20 Reported Net income $73.3 $140.7 $32.3 $27.5 $80.0 $123.5 $7.4 $11.5 Income tax (benefit) expense 22.9 44.8 4.6 2.7 19.1 36.8 (2.5) 1.6 Interest expense, net 5.6 4.6
Slide 26: Non-GAAP reconciliations
Non-GAAP reconciliations Adjusted EBITDA Reconciliation ($ in millions) 2021 2020 2019 2018 2017 2016 Reported Net income $238.4 $121.3 $77.7 $73.9 $54.6 $30.6 Income tax expense 56.1 27.5 13.8 1.3 18.0 21.3 Interest expense, net 19.2 31.0 33.4 32.1 25.2 22.1 Depreciation & amortization 83.0 67.2 59
Slide 27: Non-GAAP reconciliations
Non-GAAP reconciliations 2022 Organic Daily Sales Reconciliation 2022 2021 ($ in millions) FY’22 Q4’22 Q3’22 Q2’22 Q1’22 FY’21 Q4’21 Q3’21 Q2’21 Q1’21 Reported Net Sales -- -- $1,102.6 $1,216.6 $805.3 $3,475.7 $805.2 $936.4 $1,083.9 $650.2 A Organic Sales -- -- $1,017.8 $1,145.5 $760.1 $3,386.4 $772
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