SiteOne Landscape Supply reported higher third-quarter profit and adjusted EBITDA despite a slight decline in organic daily sales, as stronger gross margins and acquisitions lifted revenue. The landscape products distributor said hot, dry weather delayed fall-season demand in key markets, adding to continued softness in underlying demand.
The company also completed an acquisition during the quarter and, after quarter-end, its board expanded the share-repurchase authorization by $500 million.
Key details
-
Revenue rose 3% to $1.291 billion from $1.258 billion a year earlier. Organic daily sales fell 1%, as lower sales volumes outweighed the benefit of higher prices. Acquisitions added $39.7 million, or 3%, to revenue growth.
-
Gross profit increased 5% to $458.5 million. Gross margin widened 80 basis points to 35.5%, with SiteOne citing stronger price realization—including fuel surcharges—and benefits from commercial initiatives.
-
Operating costs rose. Selling, general and administrative expenses increased to $368.7 million from $357.4 million. Those expenses grew to 28.6% of sales, up 20 basis points, reflecting higher fuel and health-care costs and the effect of lower sales volume. Cost-control and operational initiatives partly offset the increase.
-
Net income attributable to SiteOne grew 8% to $63.9 million, compared with $59.1 million a year earlier. The company attributed the increase to improved gross margin, partly offset by lower volume and higher expenses.
-
Adjusted EBITDA rose 8% to $138.3 million from $127.5 million, while its margin expanded 60 basis points to 10.7%.
-
Operating cash flow was $125.6 million, down $3 million from the year-earlier quarter.
-
SiteOne repurchased $62.2 million of its shares during the quarter. After quarter-end, the board increased the repurchase authorization by $500 million. The expanded authorization brings the total available for repurchases to about $538.3 million, including roughly $38.3 million that remained under the prior authorization.
-
The company acquired Patterson Nursery Sales during the quarter. SiteOne did not provide purchase-price or other transaction terms in the earnings announcement. Its chief executive said the company has an active pipeline of potential acquisitions.
-
Net debt was $522.6 million at Sept. 27, compared with $422.5 million a year earlier. Net debt to adjusted EBITDA for the trailing 12 months was 1.2 times, up from 1.0 times. SiteOne reported $88.4 million in cash and $478 million of available borrowing capacity under its asset-based lending facility.
What changes for investors
The quarter showed a contrast between weaker underlying sales volume and improved profitability: acquisitions and pricing helped lift revenue, while gross-margin gains supported higher earnings and adjusted EBITDA. The larger repurchase authorization gives SiteOne more capacity to buy back shares, though it is an authorization rather than a commitment to spend the full amount.