September 2016 - SiteOne Landscape Supply€¦ · 3 Company and Industry Overview Largest and only national wholesale distributor of landscape supplies Approximately four times the
Post on 23-Jun-2020
0 Views
Preview:
Transcript
September 2016
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 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 presentation 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 (loss) plus the sum of interest
expense, net of interest income and excluding amortization of debt discount, income tax expense (benefit), depreciation, and amortization. Adjusted
EBITDA is further adjusted for stock-based compensation expense, related party advisory fees, loss (gain) on sale of assets and other non-cash
items, other non-recurring (income) and loss. Adjusted EBITDA does not include pre-acquisition 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 and capital leases is defined as long-term debt and capital lease obligations less cash and cash-equivalents.
3
Company and Industry Overview
■ Largest and only national wholesale
distributor of landscape supplies
■ Approximately four times the size of
next competitor and only 10% market
share(1)
■ Large $16 billion highly fragmented
market
■ Serving residential and commercial
landscape professionals
■ Complementary value-added services
and product support
■ Approximately 100,000 SKUs
■ 468 stores in 45 states and five
provinces
Maintenance45%
New Construction
37%
Repair & Upgrade
18%
Balanced end markets (FY15)
(1) Source: Management estimates, Company data
4
SiteOne Plays a Critical Role in the Professional Landscape Supply Value Chain
Thousands
of suppliers
Hundreds of
thousands
of customers
Large: ~28% of revenue
■ >$200K in avg. annual
purchases
Medium: ~54% of revenue
■ $10K – 200K in avg.
annual purchases
Source: Management estimates
Coast-to-coast
national network
Extensive
sales &
marketing
Rapid
product
launches
Fewer and larger
shipments
Broadest
product
offering
Superior
technical
expertise
Customer
loyalty
program
Trade credit,
sales leads
and training
SiteOne provides: SiteOne provides:
Critical business partner Small: ~17% of revenue
■ <$10K in avg. annual
purchases
One-stop shop
5
We are the Only National One-stop Shop Provider of Landscape Supplies
Irrigation
Fertilizer
& Other
Control
Products Nursery
Landscape
Accessories Hardscapes
Outdoor
Lighting
% of 2015
Sales1 31% 24% 12% 16% 8% 5% 4%
Key Products
Key Suppliers
Market
Position2
(1) Excludes Retail & Other (<1% of sales)
(2) Source: Management estimates, Company data; Wholesale outlets only
#1 #1 #1 #1 #1 #1 #1
6
Growth is enhanced by sustainable industry trends
Outdoor living Water and energy efficiency
■ Desire to increase usable living space, driving
demand for:
– Concrete pavers
– Bricks and stones
– Trellises and pergolas
– Outdoor lighting
■ Restaurants, coffee shops, bars adding and
enhancing outdoor areas
■ Drought driving demand for water-efficient
products
– Precision irrigation
■ Regulation driving increased drainage
requirements
■ Demand for “smart” water systems driven by:
– Conservation regulations
– Water conservation awareness
– Green movement
■ LED lighting fixtures save energy and reduce costs Source: Freedonia
7
Accelerating performance and growth led by recent transformation
Deere strategy Right-sizing SiteOne Transformation
2001
Acquired McGinnis Farms
& Century RainAid
2007
Acquired
LESCO
■ Deere combined irrigation, nursery
and agronomic product lines under
a single distributor as John Deere
Landscapes
■ Created a national footprint
2015
Acquired ■ Shemin
■ AMC
■ Green Resource
■ Tieco
2014
New Management
Acquired: ■ Eljay
■ Diamond Head
■ Stockyard
■ BISCO
2013 (Q4)
CD&R acquired
60% of JDL
Strategy & Brand
Development
2005
Acquired UGM
■ CD&R acquired ~60% of JDL
■ New leadership
■ Strategy & brand development
■ Commercial & operational initiatives
■ Acceleration of small / mid size acquisitions
Source: Company data
2016
Acquired ■ Hydro-Scape
■ Blue Max
■ Bissett
■ New brand
■ Execution
■ Performance and growth
8
SiteOne is poised for long-term growth and margin enhancement
Current Strategy
Leverage strengths of both large and local company
Superior value propositions to our customers
Fully exploit our scale
Develop and execute local market strategies
Close and integrate high value-added acquisitions
Entrepreneurial local area teams supported by world-class leadership
and functional support
Early innings of operational and commercial excellence
Pricing
Category management
Supply chain
Salesforce performance
Marketing
9
Net sales1 Gross profit1
Adjusted EBITDA1, 2 Adjusted EBITDA less CapEx 3
1 Financial results exclude the impact of a variable interest entity (VIE) reported in the consolidated results for 2011 and 2012 (if VIE is included: net sales were $1,015M and $1,062M, gross profit was $304M
and $317M, and Pre-acquisition Adjusted EBITDA was $36M and $51M for 2011 and 2012, respectively)
2 Represents pre-acquisition Adjusted EBITDA
3 CapEx was $2M and $5M in 2011 and 2012, respectively
Our financial performance is accelerating
Denotes performance since new management
1,5491,452
1,1771,0781,027982
0
1,200
1,600
400
800
TTM
(7/3/2016)
2015 2014 2013 2012 2011
($ in
mill
ion
s)
472429
311290260243
30
24
500
400
300
200
100
0
33
21
27
TTM
(7/3/2016)
30.4%
2015
29.6%
2014
26.4%
2013
27.0%
2012
25.3%
2011
24.8%
% margin Gross profit
125
107
7468
42
25
15
10
5
0
150
120
90
60
30
0
6.3%
2013
6.3%
2012
4.1%
2011
2.5%
TTM
(7/3/2016)
8.1%
2015
7.3%
2014
% margin Adjusted EBITDA
113
96
7064
37
234
0
120
100
80
60
40
20
0
12
8
TTM
(7/3/2016)
7.3%
2015
6.6%
2014
5.9%
2013
6.0%
2012
3.6%
2011
2.4%
% margin Adjusted EBITDA - CapEx
Net Sales
TTM period
($ in
mill
ion
s)
($ in
mill
ion
s)
($ in
mill
ion
s)
10
Second Quarter 2016 and Recent Highlights
Successfully completed IPO in May
Net Sales increased by 7% year-over-year to $513.4 million
Gross Margin increased by 220 basis points to 32.8%
Net income of $26.9 million includes $7.4 million of IPO and debt recapitalization costs
Adjusted EBITDA increased by 12% to $74.9 million
Completed two strategic acquisitions: Blue Max Materials and Bissett
11
Second Quarter 2016 Financial Details
Financial Highlights
■ Net sales increased 7% year-over-year to $513.4
million
– Impact from strong pull-forward in Q1 2016
■ Gross profit increased 14% to $168.5 million
– Gross margin improved 220 basis points to 32.8%
– We continue to execute our operational and
commercial initiatives
■ Net income of $26.9 million
– Includes $7.4 million on an after-tax basis of IPO
and debt recapitalization costs
■ Adjusted EBITDA increased 12% to $74.9
million, reflecting our strong gross margin
improvements and contribution from
acquisitions
Net Sales ($M)
Gross Profits ($M)
Adj. EBITDA ($M)
Net Income ($M)
$513.4 $481.5
Q2 - 2016 Q2 - 2015
$168.5 $147.5
Q2 - 2016 Q2 - 2015
$26.9$33.2
Q2 - 2016 Q2 - 2015
$74.9$66.6
Q2 - 2015 Q2 - 2016
12
Balance Sheet & Cash Flow Highlights
■ New capital structure put in place to support
growth including acquisitions
– New $275M 6-year term loan on April 29, 2016
– ABL facility upsized to $325M (5-year maturity) in
October 2015
» $176M in available capacity at the end of Q2 2016
» Seasonal swings funded by ABL facility
■ Excess cash flow used for investments and to
pay down debt
– No dividends for the foreseeable future
■ Target net debt / Adjusted EBITDA leverage of
2.0x – 3.0x
– Leverage ratio of 3.2x (2)
(1) Net debt is calculated as long-term debt plus capital leases, net of cash and cash equivalents on our balance sheet
(2) Leverage ratio = net debt (including capital leases) to trailing twelve months Adjusted EBITDA
For the three months ended July 3, 2016:
Net Debt(1) $397.3 million
Cash from Operating
Activities $2.2 million
Acquisition Spend $10.5 million
Capital Expenditures $2.5 million
Financial Highlights
13
Acquisitions are a Key Part of our Value Creation Strategy
■ Strengthens our business
Geographic footprint
Product expansion
Market consolidation
Talent / capabilities
■ Significant synergies
Purchasing scale
Overhead leverage
Cross-selling
Branch network optimization
Commercial & operating best practices
Growth, margin
& cash flow
improvement
Strategic
acquisitions
14
Year Target Location Strategic Rationale
2014
■ 9 locations in Western Canada ■ #1 irrigation platform in Western Canada
■ 3 locations in HI ■ #1 irrigation platform in Hawaii
■ 1 location in TN ■ #1 nursery position in Memphis metro
■ 5 locations in the Northeast ■ #1 irrigation position in Boston metro
2015
■ 30 locations in 18 major
metropolitan markets
■ Led to #1 nursery position in the Northeast, Southeast, Midwest
and Texas regions
■ 9 location in TX & OK ■ Led to #1 irrigation position in Texas
■ 5 locations in NC ■ Led to #1 position in fertilizer & control products in the Carolinas
■ 6 locations in AL & FL ■ Led to #1 irrigation position in Alabama & the Florida panhandle
2016
■ 17 locations in CA ■ Led to #1 irrigation position in Southern California
■ 5 locations in NC & SC ■ #1 hardscapes position in the Carolinas
■ 3 locations in NY ■ Led to #1 nursery position in Long Island & NYC
Robust Track Record of Acquisitions
15
Recent Acquisitions – Continued Execution
Bissett
Closed in the third quarter of fiscal 2016
Leads to #1 nursery position in Long Island & NYC markets
Allows for full product line offering to local customers
Purchasing and fixed cost synergies
Cross-sell SiteOne breadth of products
Strong position in equipment and hardscapes
Existing SiteOne
Bissett
New York, NY
16
Robust Pipeline of Opportunities Provides Accelerated Growth
A SiteOne is the only current industry consolidator
E Acquisitions are highly accretive and present significant profit growth potential
C Our pipeline is deep and rapidly expanding
B Significant sourcing advantage with 60+ associates scouting
D M&A team in place to execute larger pipeline
~10%
~90% Opportunity
17
2016 Outlook
Underlying market trends remain positive
On track to achieve commercial and operational improvement targets
Forecasting strong sales and profit growth for the full year
Anticipate closing additional acquisitions in the second half of the year
Adjusted EBITDA expectation of $132 million to $140 million
18
Investment Highlights
Proven management
team
Compelling and
sustainable
growth strategy
Uniquely
attractive industry Clear market leader
Value-creating
acquisitions
Operational and
commercial
excellence
top related