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Oct 01, 2023
SiteOne Q3 2023 Earnings Report
SiteOne's Q3 2023 performance reflected net sales growth despite market headwinds and commodity price deflation.
Key Takeaways
SiteOne Landscape Supply reported a 4% increase in net sales to $1.15 billion for Q3 2023, driven by acquisitions. However, organic daily sales decreased by 2% due to commodity price deflation. Gross margin contracted by 130 basis points to 33.9%, and adjusted EBITDA decreased by 12% to $119.8 million.
Net sales increased by 4% to $1.15 billion compared to the prior-year period.
Organic Daily Sales decreased 2% due to lower prices for commodity products.
Gross margin contracted 130 basis points to 33.9% due to lower prices.
Adjusted EBITDA decreased 12% to $119.8 million, with adjusted EBITDA margin contracting 180 basis points to 10.5%.
Forward Guidance
The company expects negative Organic Daily Sales growth in the fourth quarter due to price deflation offsetting positive sales volume growth. Gross margin and Adjusted EBITDA margin are expected to be lower than the prior year, with acquisitions having a dilutive effect on Adjusted EBITDA. The company now expects Adjusted EBITDA to be in the range of $400 million to $410 million.
Positive Outlook
- Achieving consistent sales volume growth despite softer end markets.
- Expect price deflation to moderate in 2024.
- Expect the year-over-year variance to improve from the third quarter of this year.
Challenges Ahead
- Experiencing slightly more commodity price deflation than previously forecasted.
- Expect Organic Daily Sales growth to be negative in the fourth quarter.
- Expect gross margin and Adjusted EBITDA margin in the fourth quarter to be lower than the prior year.
- Acquisitions completed in the third quarter are expected to have a dilutive effect on Adjusted EBITDA during the fourth quarter.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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