2
Disclaimer
Forward-Looking Statements
This presentation contains “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, but are not limited to, statements relating to our 2021 Adjusted EBITDA outlook. Some of the forward-looking statements can be identified by the use of terms such as “may,” “intend,” “might,” “will,” “should,” “could,” “would,” “expect,” “believe,” “estimate,” “anticipate,” “predict,” “project,” “potential,” or the negative of these terms, and similar expressions. You should be aware that these forward-looking statements are subject to risks and uncertainties that are beyond our control. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time that may cause our business not to develop as we expect, and it is not possible for us to predict all of them. Factors that may cause actual results to differ materially from those expressed or implied by the forward-looking statements include, but are not limited to, the following: the potential negative impact of the COVID-19 pandemic (which, among other things, may exacerbate each of the risk listed below); economic downturn or recession; cyclicality in residential and commercial construction markets; general economic and financial conditions; weather conditions, seasonality and availability of water to end-users; public perceptions that our products and services are not environmentally friendly; competitive industry pressures; product shortages and the loss of key suppliers; product price fluctuations; ability to pass along product cost increases; inventory management risks; ability to implement our business strategies and achieve our growth objectives; acquisition and integration risks; increased operating costs; risks associated with our large labor force (including work stoppages due to COVID-19); retention of key personnel; construction defect and product liability claims; impairment of goodwill; adverse credit and financial markets events and conditions (which have worsened and may continue to worse as a result of the COVID-19 pandemic); credit sale risks; performance of individual branches; environmental, health and safety laws and regulations; hazardous materials and related materials; laws and government regulations applicable to our business that could negatively impact demand for our products;
computer data processing systems; cybersecurity incidents (including the July 2020 ransomware attack); security of personal information about our customers; intellectual property and other proprietary rights; the possibility of securities litigation; unanticipated changes in our tax provisions; our substantial indebtedness and our ability to obtain financing in the future; increases in interest rates; risks related to our common stock; terrorism or the threat of terrorism; and other risks, as described in Item 1A, “Risk Factors,” and elsewhere in our Annual Report on Form 10-K for the fiscal year ended January 3, 2021, as updated by our subsequent filings under the Securities Exchange Act of 1934, as amended, including Forms 10-Q and 8-K.
Non-GAAP Financial Information
This release includes certain financial information, not prepared in accordance with U.S. GAAP. Because not all companies calculate non-GAAP financial information identically (or at all), the presentations herein may not be comparable to other similarly titled measures used by other companies. Further, these measures should not be considered substitutes for the information contained in the historical financial information of the Company prepared in accordance with U.S. GAAP that is set forth herein.
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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
4
Company and industry overview
■
Largest and only national wholesale
distributor of landscape supplies
■
$20 billion highly fragmented market
(1)■
More than five times the size of next
competitor and only ~13% market share
(1)■
Serving residential and commercial
landscape professionals
■
Complementary value-added services
and product support
■
Approximately 130,000 SKUs
■
Over 590 branches and three distribution
centers covering 45 U.S. states and six
Canadian provinces
(2)Balanced end markets (FY20)
(1) As of year end 2020. Source: Management estimates, Company data, independent 3rdparty support
5
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 integrate high value-added acquisitions
■
Entrepreneurial local area teams supported by world-class
functional support
✓
Drive commercial and operational performance
■
Category management
■
Supply chain
■
Salesforce performance
■
Operational excellence
■
Marketing and Digital
Value creation levers
6
Track record of performance and growth
■McGinnis Farms (’01) ■Century RainAid(’01) ■UGM (’05) ■LESCO (’07) ■Eljay(‘14) ■Diamond Head (‘14) ■Stockyard (‘14) ■BISCO (‘14) ■Shemin(‘15) ■AMC (‘15) ■Green Resource (‘15) ■Tieco(‘15) ■Hydro-Scape ■Blue Max ■Bissett ■Glen Allen ■Loma Vista ■East Haven ■Aspen Valley ■Stone Forest ■Angelo's ■AB Supply ■Evergreen Partners
■South Coast Supply
■Marshall Stone
■Harmony Gardens
Building the Foundation
■Pete Rose
■Atlantic Irrigation
■Village Nurseries
■Terrazzo & Stone
■Landscaper’s Choice
■Auto-Rain
■All American Stone
■Landscape Express
■Kirkwood
■Stone Center
■CentralPro
■C&C Sand and Stone
■All Around
Source: Company data
2015
2016
2017
2018
Initial Public
Offering
1,452 1,648 1,862 2,112 2,358 29.6% 32.0% FY 2015 31.3% FY 2016 FY 2017 32.1% FY 2018Net Sales Gross Margin % Adj. EBITDA Adj. EBITDA Margin %
Sales $ +86% GM % +370 bps
Performance & Growth
Brand
(in Millions)
Net Sales
Adjusted EBITDA
’15-’20 Growth
32.8%
FY 2019
■Cutting Edge
■All Pro Horticulture
■Landscape Depot
■Fisher’s Depot
■Stone & Soil Depot
■Voss Materials ■Trendset Concrete Products ■Design Outdoor ■Dirt Doctors ■Daniel Stone
2019
Acquisitions
2020
■Wittkopf ■Empire Supplies■The Garden Dept
■Big Rock ■Alliance Stone ■Modern Builders ■BURNCO Landscape Centres ■Hedberg Supply ■Alpine Materials
■Dirt and Rock
■Stone Center of VA FY 2020 33.3% 107 134 157 176 201 7.3% 8.4% FY 2015 8.1% FY 2016 FY 2017 8.3% FY 2018 Adj. EBITDA $ +144% Adj. EBITDA % +230 bps (in Millions) ’15-’20 Growth 8.5% FY 2019 FY 2020 9.6% 260 2,705
2021
■Lucky Landscape■Arizona Stone & Solstice
■Timberwall
■Melrose Irrigation Supply
7
# of markets
(1)Full Product
Line Offering
Missing either
Hardscapes or
Nursery
Missing both
Hardscapes
and Nursery
No
Presence
Significant room to grow across product lines
Source: Management estimates; U.S. Census Bureau
~85
~50
~50
~45
SiteOne offers all
product lines in only
~21%
of our target
markets today…
8
Second Quarter 2021 highlights
✓
Net sales increased 33% to $1.1 billion
✓
Organic Daily Sales increased by 22%
✓
Gross profit increased 36% to $388.2 million; gross margin increased 80 basis points to 35.8%
✓
SG&A as a percentage of Net sales decreased by 60 basis points to 20.8%
✓
Net income increased 56% to $123.5 million
✓
Adjusted EBITDA increased 44% to $190.6 million
✓
Adjusted EBITDA margin increased 140 basis points to 17.6%
✓
Net leverage ratio decreased to 0.7x from 2.2x
✓
Acquired Timberwall Landscape & Masonry Products, Melrose Irrigation Supply, and Rock & Block
Hardscape Supply
Source: Company data
9
79.1
123.5
132.1
190.6
Net sales
Gross profit
& margin
Net income
Adjusted
EBITDA
Review of Second Quarter 2021 financial results
Source: Company filings
Summary financials
Financial highlights
($ in millions)
817.7
1,083.9
Q2’20 Q2’21286.1
388.2
35.0% Q2’21 Q2’20 35.8%■ Net sales increased 33% YoY to $1.1 billion
– Organic Daily Sales increased by 22%
– Acquired sales growth was $90.4 million, contributing 11% to
the overall growth rate
■ Gross profit increased 36% to $388.2 million
– Gross margin increased 80 bps to 35.8%
– Reflects supply chain execution, more favorable pricing and
customer mix
■ Net income increased 56% to $123.5 million
– Improvement driven by higher Net sales, gross margin
improvement, and SG&A leverage
■ Adjusted EBITDA increased 44% to $190.6 million
10
Balance sheet & cash flow highlights
Working capital
$623.8
Cash provided
by operating
activities
$137.7
Net debt
1$257.2
Second Quarter 2021
Balance sheet & cash flow highlights (compared to prior-year period)
($ in millions)
1 Net debt is calculated as long-term debt plus finance leases, net of cash and cash equivalents 2 Leverage ratio defined as net debt (including finance leases) to trailing twelve months Adjusted EBITDA Source: Company filings
■ Working capital increased to $623.8 million, compared to $583.8
million
– Reflects strong sales growth and additions from new acquisitions
■ Cash provided by operating activities of $137.7 million, compared
to $184.7 million
– Higher inventory and receivables supporting increased sales
■ Net debt $257.2 million, compared to $476.5 million
– Reduction reflects proceeds from August 2020 equity offering and
solid operating cash flow
■ Net debt / Adjusted EBITDA of 0.7x, compared to 2.2x
– Leverage decrease attributable to reduced net debt and improved
profitability
11 2014 – 2015 2016 2017 2018 2019 2020 2021 YTD Total ▪ Eljay ▪ Diamond Head ▪ Stockyard ▪ BISCO ▪ Shemin ▪ AMC ▪ Green Resource ▪ Tieco ▪ Hydro-Scape ▪ Blue Max ▪ Bissett ▪ Glen Allen ▪ Loma Vista ▪ East Haven ▪ Aspen Valley ▪ Stone Forest ▪ Angelo's ▪ AB Supply ▪ Evergreen Partners ▪ South Coast Supply ▪ Marshall Stone ▪ Harmony Gardens ▪ Pete Rose ▪ Atlantic Irrigation ▪ Village Nurseries
▪ Terrazzo & Stone
▪ Landscaper’s Choice ▪ Auto-Rain ▪ All American Stone ▪ Landscape Express ▪ Kirkwood ▪ Stone Center ▪ CentralPro
▪ C&C Sand & Stone ▪ All Around ▪ Cutting Edge ▪ All Pro Horticulture ▪ Landscape Depot Supply ▪ Fisher’s Landscape Depot
▪ Stone & Soil Depot ▪ Voss Materials ▪ Trendset Concrete Products ▪ Design Outdoor ▪ Dirt Doctors ▪ Daniel Stone ▪ Wittkopf Landscape Supplies ▪ Empire Supplies ▪ The Garden Dept. ▪ Big Rock ▪ Alliance Stone ▪ Modern Builders ▪ BURNCO Landscape Centres ▪ Hedberg Supply ▪ Alpine Materials
▪ Dirt and Rock
▪ Stone Center of Virginia ▪ Lucky Landscape ▪ Arizona Stone ▪ Timberwall ▪ Melrose Irrigation Supply
▪ Rock & Block
# Acquisitions 8 6 8 13 10 11 5 61
Annualized
net sales(1) ~$270M ~$150M ~$130M ~$230M ~$100M ~$190M ~$90M ~$1,160M
# branches
added 68 29 26 78 21 30 19 271
Proven track record of successful acquisitions
Source: Company data
12
M&A continues to add significant value
Source: Company data
Timberwall Landscape & Masonry Products
✓
Closed on April 30, 2021
✓
Extends our leading hardscapes
and landscape supplies platform in
the greater Minneapolis market
✓
Cross-sell opportunities
✓
Purchasing synergies
SiteOne existing
13
M&A continues to add significant value
Source: Company data
Melrose Irrigation Supply
✓
Closed on April 30, 2021
✓
Expands our market-leading
irrigation presence across South
Florida with 6 locations
✓
Cross-sell opportunities
✓
Purchasing synergies
14
M&A continues to add significant value
Source: Company data
Rock & Block Hardscape Supply
✓
Closed on May 7, 2021
✓
Expands our leading hardscapes
platform with 2 locations in
Southern California
✓
Cross-sell opportunities
✓
Purchasing synergies
SiteOne existing
15
✓
SiteOne is the leading industry consolidator
✓
Significant sourcing advantage with 80+ associates scouting
new growth opportunities
✓
Our pipeline is deep and expanding
✓
M&A team in place to execute our acquisition strategy
✓
Acquisitions are expected to be accretive and present significant profit
growth potential
Robust pipeline provides significant growth opportunity
13%
(1) As of year end 2020. Management Estimates
~$20bn market
(1)16
2021 outlook
✓
Market trends remain positive; sustaining growth against tougher comparisons
✓
Key commercial and operational initiatives are expected to support market
share gains and gross margin expansion
✓
Healthy M&A activity with robust pipeline
✓
Raising 2021 Adjusted EBITDA expectation to $335 million to $365 million,
representing year-over-year growth of 29-40%, compared to prior range of $300
million to $320 million
17
Proven management
team
Compelling and
sustainable
growth strategy
Uniquely
attractive industry
Clear market leader
Appendix
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Non-GAAP reconciliations
A B C DAdjusted EBITDA Reconciliation
Represents stock-based compensation expense recorded during the period.
Represents any gain or loss associated with the sale of assets and termination of finance leases not in the ordinary course of business.
Represents fees associated with our debt refinancing and debt amendments.
Represents professional fees, retention and severance payments, and performance bonuses related to historical acquisitions. Although we have incurred professional fees, retention and severance payments, and performance bonuses related to acquisitions in several historical periods and expect to incur such fees and payments for any future acquisitions, we cannot predict the timing or amount of any such fees or payments.
Adjusted EBITDA excludes any earnings or loss of acquisitions prior to their respective acquisition dates for all periods presented.
($ in millions) 2021 2020 2019
Q2’21 Q1’21 Q4’20 Q3’20 Q2’20 Q1’20 Q4’19 Q3‘19
Net income (loss) $123.5 $7.4 $11.5 $48.2 $79.1 $(17.5) $2.5 $34.6
Income tax (benefit) expense 36.8 (2.5) 1.6 13.8 25.6 (13.5) (5.6) 9.7
Interest expense, net 4.3 5.5 9.1 6.6 7.6 7.7 7.5 8.2
Depreciation and amortization 20.3 19.4 18.2 16.3 16.4 16.3 14.8 14.6
EBITDA $184.0 $29.8 $40.4 $84.9 $128.7 $(7.0) $19.2 $67.1
Stock-based compensation 4.6 3.1 2.7 2.6 2.8 2.5 2.0 2.5
(Gain) loss on sale of assets (0.2) 0.1 (0.2) (0.4) 0.1 0.1 0.1 0.1
Financing fees -- 0.7 -- -- -- -- --
--Acquisitions & other 1.3 0.8 1.0 0.7 0.5 0.8 0.9 0.8
20 ($ in millions) 2020 2019 2018 2017 2016 2015
Net income $121.3 $77.7 $73.9 $54.6 $30.6 $28.9
Income tax expense 27.5 13.8 1.3 18.0 21.3 19.5
Interest expense, net 31.0 33.4 32.1 25.2 22.1 11.4
Depreciation & amortization 67.2 59.5 52.3 43.1 37.0 31.2
EBITDA 247.0 $184.4 $159.6 $140.9 $111.0 $91.0
Stock-based compensation 10.6 11.7 7.9 5.9 5.3 3.0
(Gain) Loss on sale of assets (0.4) 0.3 (0.4) 0.6 -- 0.4
Advisory fees -- -- -- -- 8.5 2.0
Financing fees -- -- 0.8 1.7 4.6 5.5
Acquisitions, rebranding & other 3.0 4.7 8.1 8.1 4.9 4.6
Adjusted EBITDA $260.2 $201.1 $176.0 $157.2 $134.3 $106.5
Non-GAAP reconciliations
Represents stock-based compensation expense recorded during the period.
Represents any gain or loss associated with the sale of assets not in the ordinary course of business.
Represents fees paid to CD&R and Deere for consulting services. In connection with the IPO, we entered into termination agreements with CD&R and Deere pursuant to which the parties agreed to terminate the related consulting agreements.
Represents fees associated with our debt refinancing and debt amendments, as well as fees incurred in connection with our initial public offering and secondary offerings.
Represents (i) expenses related to our rebranding to the name SiteOne, (ii) professional fees, retention and severance payments, and
performance bonuses primarily related to historical acquisitions. Although we have incurred professional fees, retention and severance payments, and performance bonuses related to acquisitions in several historical periods and expect to incur such fees and payments for any future
acquisitions, we cannot predict the timing or amount of any such fees or payments.
Adjusted EBITDA excludes any earnings or loss of acquisitions prior to their respective acquisition dates for all periods presented. A B C D A B C D E E F F
21
Non-GAAP reconciliations
2021 2020
($ in millions) FY’21 Q4’21 Q3’21 Q2’21 Q1’21 FY’20 Q4’20 Q3’20 Q2’20 Q1’20
Reported Net Sales -- -- -- $1,083.9 $650.2 $2,704.5 $675.1 $751.9 $817.7 $459.8
Organic Sales -- -- -- $975.0 $613.3 $2,629.3 $641.0 $732.7 $799.2 $456.4
Acquisition contribution -- -- -- $108.9 $36.9 $75.2 $34.1 $19.2 $18.5 $3.4
Selling Days 253 61 63 64 65 256 65 63 64 64
Organic Daily Sales -- -- -- $15.2 $9.4 $10.3 $9.9 $11.6 $12.5 $7.1
B
B
2021 Organic Daily Sales Reconciliation
A
Represents Net sales from acquired branches that have not been under our ownership for at least four full fiscal quarters at the start of the 2021 fiscal year. Includes Net sales from branches acquired in 2020 and 2021.
A
