Press release·02/21/2025 09:24:54

SiteOne Landscape Supply Navigates Challenging Market Conditions in 2024

SiteOne Landscape Supply, the largest wholesale distributor of landscape supplies in the United States, faced ongoing economic headwinds in 2024. Despite these challenges, the company maintained its strong market position and continued to execute its growth strategy through strategic acquisitions.

Financial Performance Overview

In the 2024 fiscal year, SiteOne reported net sales of $4.54 billion, a 6% increase from the prior year. This growth was primarily driven by contributions from acquisitions, which added $286 million in net sales. However, the company’s organic daily sales, which exclude the impact of acquisitions, declined by 1% due to commodity price deflation, particularly in PVC pipe and grass seed.

Gross profit increased 5% to $1.56 billion, but gross margin decreased by 30 basis points to 34.4%. This decline was mainly attributed to lower price realization, partially offset by the positive impact of higher-margin acquisitions. Selling, general, and administrative (SG&A) expenses increased 10% to $1.39 billion, primarily due to the impact of acquisitions with higher operating costs and impairment charges related to the consolidation or closure of certain branches.

Net income attributable to SiteOne decreased 29% to $123.6 million, primarily due to the negative impact of commodity product deflation and lower price realization. The company’s effective tax rate remained relatively stable at 22.4% for the 2024 fiscal year.

Navigating Market Challenges

The 2024 fiscal year presented ongoing economic challenges, including weakness in the repair and upgrade end market, commodity price deflation, and reduced consumer spending on outdoor living. Despite these headwinds, SiteOne remained focused on its strategic initiatives to drive growth and improve profitability.

The company’s balanced end market mix, broad product portfolio, geographic coverage, and commercial and operational initiatives provided multiple opportunities for growth and resilience in softer market conditions. SiteOne also maintained a strong financial position, with a flexible balance sheet and ample liquidity to navigate the evolving market environment.

Organic Growth and Acquisitions

While organic daily sales declined by 1% in the 2024 fiscal year, SiteOne continued to execute its growth strategy through strategic acquisitions. The company completed seven acquisitions during the year, investing $138 million to expand its product offerings and geographic reach.

Notable acquisitions included Custom Stone, a wholesale distributor of hardscape products in Texas; OakStreet, a wholesale nursery distributor in Texas; and Devil Mountain, a leading wholesale nursery distributor in California. These acquisitions allowed SiteOne to further strengthen its market position and better serve its customers.

Outlook and Initiatives

Looking ahead, the company expects the rate of commodity price deflation to moderate in the 2025 fiscal year, as declines in PVC pipe and grass seed are anticipated to be offset by modest price increases across other product categories. SiteOne remains confident in the long-term growth opportunities in the landscape supply industry, driven by favorable population trends, housing demand, and continued interest in outdoor living.

To capitalize on these opportunities, the company is focused on several key initiatives:

1. Category Management: Implementing organic growth strategies, assortment planning, private label expansion, and supplier management to drive profitability.

2. Supply Chain Optimization: Expanding the distribution network, implementing new inventory planning and stocking systems, and optimizing inbound freight and local fleet utilization to improve efficiency.

3. Sales Force Initiatives: Optimizing commercial sales strategies, enhancing customer analytics and lead generation, and improving the skills and performance of the sales team.

4. Marketing and Digital Transformation: Enhancing customer engagement through data-driven marketing, product marketing, and the continued development of the company’s e-commerce platform and mobile capabilities.

5. Operational Excellence: Implementing best practices in branch operations, including safety, merchandising, stocking, customer engagement, and the automation of branch systems.

By executing these strategic initiatives, SiteOne aims to drive organic growth, gain market share, and deliver margin expansion, positioning the company for long-term success.

Liquidity and Capital Resources

SiteOne maintains a strong financial position, with $107.1 million in cash and cash equivalents and $581.2 million in borrowing capacity under its asset-based lending (ABL) facility as of the end of the 2024 fiscal year. The company’s working capital increased to $908.8 million, up from $827.0 million in the prior year, primarily due to higher cash, receivables, and inventory from acquisitions.

During the 2024 fiscal year, SiteOne invested $40.5 million in capital expenditures, representing 0.9% of net sales. The company expects capital expenditures to be in the range of 0.8% to 1.4% of net sales for the 2025 fiscal year.

In October 2022, the company’s Board of Directors approved a $400 million share repurchase authorization, which the company has been actively utilizing. During the 2024 fiscal year, SiteOne repurchased 223,421 shares of its common stock at an average price of $134.26 per share.

Debt Financing and Amendments

SiteOne’s debt structure consists of a term loan facility and an asset-based lending (ABL) facility. In July 2024, the company amended and restated its term loan facility, providing for an aggregate principal amount of approximately $392.7 million in Tranche B Term Loans, which mature in March 2030.

The ABL Facility, which has a maturity date of July 2027, provides up to $600 million in borrowing capacity, subject to borrowing base availability. As of the end of the 2024 fiscal year, there was no outstanding balance under the ABL Facility.

SiteOne also utilizes interest rate swap contracts to reduce its exposure to fluctuations in variable interest rates on its term loans. The company has amended its interest rate swap agreements to implement a forward-looking interest rate based on SOFR in place of LIBOR.

Conclusion

Despite the challenging market conditions in the 2024 fiscal year, SiteOne Landscape Supply demonstrated its resilience and continued to execute its growth strategy. The company’s balanced business model, strategic initiatives, and strong financial position position it well to navigate the evolving market environment and capitalize on the long-term growth opportunities in the landscape supply industry.