Siteone landscape supply announces second quarter 2016 earnings
Roswell, ga.--(business wire)--siteone landscape supply, inc. (the “company” or “siteone”) (nyse:site) announced earnings for its second quarter ended july 3, 2016 of the fiscal year ending january 1, 2017. “during the second quarter we completed a successful initial public offering as well as a recapitalization which provides us with an attractive long-term capital structure to support our growth strategy,” said doug black, siteone’s chief executive officer. “we are pleased with the execution of those significant transactions, along with our growth in net sales and adjusted ebitda and our margin expansion despite the balancing effect of the unusually strong first quarter on our organic sales. furthermore, we continued to execute our acquisition strategy with the addition of blue max materials in april and bissett in august, which provide us with leading positions in their respective markets. we are confident in our ability to achieve strong performance and growth for the full year 2016 given the continued strength in residential and commercial construction markets, further progress with our commercial and operational initiatives, and a robust pipeline of acquisitions.” second quarter 2016 results net sales for the second quarter of 2016 increased to $513.4 million, or 7%, compared to $481.5 million for the prior-year period. organic sales growth declined 2% for the second quarter. second quarter organic sales were negatively impacted by the pull forward benefit experienced in the first quarter and the unfavorable april and may weather partially offset by improving sales growth in june. our recent acquisitions continue to perform well and contributed good sales growth in the quarter. gross profit increased to $168.5 million, or 14%, compared to $147.5 million for the prior-year period. gross margin expanded to 32.8% for the second quarter 2016, which was a 220 basis point increase compared to 30.6% in the second quarter 2015. gross margin expansion was driven primarily by ongoing improvements in pricing and category management. selling, general and administrative expenses (“sg&a”) in the second quarter increased to $118.0 million from $91.3 million in the same period last year, reflecting the impact from acquisitions, transaction expenses related to our ipo and debt recapitalization, and investments in personnel to support our sales growth and strategic initiatives. sg&a as a percent of net sales increased to 23.0% from 19.0% in the prior year period. debt recapitalization and ipo related costs were $12.4 million on a pre-tax basis of which $11.2 million, or 2.2% of net sales, were charged to sg&a. reported net income for the second quarter was $26.9 million, compared to $33.2 million during the same period from the prior year. the decrease in net income for the second quarter was primarily attributable to our debt recapitalization and ipo related costs of $7.4 million on an after-tax basis, and higher interest expense principally from the new long-term debt. adjusted ebitda increased by 12% to $74.9 million for the second quarter, compared to $66.6 million for the prior-year period reflecting strong gross margin improvement in the base business and good contribution from acquisitions. net cash provided by operating activities for the six months ended july 3, 2016 was $12.2 million versus $12.6 million in the prior-year period. net debt, calculated as long-term debt plus capital leases, net of cash and cash equivalents on our balance sheet as of july 3, 2016, was $397.3 million. net debt to adjusted ebitda for the last twelve months was 3.2 times. outlook for 2016, we continue to expect adjusted ebitda to be in the range of $132 million to $140 million. reconciliation for the forward-looking full-year 2016 adjusted ebitda outlook is not being provided, as the company does not currently have sufficient data to accurately estimate the variables and individual adjustments for such reconciliation. conference call information siteone management will host a conference call today, august 17, 2016, at 8 a.m. eastern time, to discuss the company’s financial results. the conference call may be accessed by dialing (877) 705-6003 (domestic) or (201) 493-6725 (international). a telephonic replay will be available approximately two hours after the call by dialing (877) 870-5176, or for international callers, (858) 384-5517. the passcode for the live call and the replay is 13642450. the replay will be available until 11:59 p.m. (et) on august 31, 2016. interested investors and other parties can listen to a webcast of the live conference call by logging onto the investor relations section of the company's website at http://investors.siteone.com. the online replay will be available for 30 days on the same website immediately following the call. a slide presentation highlighting the company’s results and key performance indicators will also be available on the investor relations section of the company’s website. to learn more about siteone, please visit the company's website at http://investors.siteone.com. about siteone landscape supply, inc. siteone landscape supply, inc. is the largest and only national wholesale distributor of landscape supplies in the united states and has a growing presence in canada. its customers are primarily residential and commercial landscape professionals who specialize in the design, installation and maintenance of lawns, gardens, golf courses and other outdoor spaces. forward-looking statements this release 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 2016 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: cyclicality in residential and commercial construction markets; general economic and financial conditions; weather conditions, seasonality and availability of water to end-users; laws and government regulations applicable to our business that could negatively impact demand for our products; 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; inventory management risks; ability to implement our business strategies and achieve our growth objectives; acquisition and integration risks; increased operating costs; and other risks, as indicated in our final prospectus filed pursuant to rule 424(b)(4) under the securities act of 1933, as amended, filed with the u.s. securities and exchange commission on may 12, 2016 (registration no. 333-206444). 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. we present adjusted ebitda in order to evaluate the operating performance and efficiency of our business. adjusted ebitda represents ebitda as further adjusted for items permitted under the covenants of our credit facilities. ebitda represents our net income plus the sum of interest expense, net of interest income and excluding amortization of debt discount, income tax expense, depreciation, and amortization. adjusted ebitda is further adjusted for stock-based compensation expense, related party advisory fees, loss on sale of assets and other non-cash items, other non-recurring (income) and loss. adjusted ebitda does not include pre-acquisition acquired adjusted ebitda. adjusted ebitda is not a measure of our liquidity or financial performance under gaap and should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance with gaap, or as an alternative to cash flow from operating activities as a measure of our liquidity. the use of adjusted ebitda instead of net income has limitations as an analytical tool. because not all companies use identical calculations, our presentation of adjusted ebitda may not be comparable to other similarly titled measures of other companies, limiting its usefulness as a comparative measure. net debt is defined as long-term debt plus capital leases, net of cash and cash-equivalents on our balance sheet. siteone landscape supply, inc.condensed consolidated balance sheets (unaudited)(in millions, except share and per share data) common stock, par value $0.01; 1,000,000,000 shares authorized; 39,563,150and 14,259,998 shares issued, and 39,542,239 and 14,250,111 sharesoutstanding at july 3, 2016 and january 3, 2016 , respectively1 __________ siteone landscape supply, inc.condensed consolidated statements of operations (unaudited)(in millions, except share and per share data) __________ siteone landscape supply, inc.condensed consolidated statements of cash flows (unaudited)(in millions) (in millions) twelve monthsended __________
