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What changed in SiteOne Landscape Supply, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of SiteOne Landscape Supply, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+395 added−396 removedSource: 10-K (2025-02-20) vs 10-K (2023-02-23)

Top changes in SiteOne Landscape Supply, Inc.'s 2024 10-K

395 paragraphs added · 396 removed · 310 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

74 edited+18 added−15 removed41 unchanged
Biggest changeOur ARGs include the following: ▪ Black Resource Inclusion and Diversity Group for Excellence – BR1DGE provides a network for Black associates to be connected and supported, and to process and discuss life experiences in a safe space. ▪ INSP1RE – INSP1RE fosters an inclusive culture with a focus on our extended Asian community – South Asia, South-East Asia, East Asia, Asian Pacific Islander, Asian American, and beyond, creating a platform for our teams to feel inspired, empowered, celebrated, and supported. 11 Table of Contents ▪ UN1DOS – UN1DOS aims to attract and retain engaged and diverse associates while enhancing SiteOne’s understanding of and relationships with Hispanic communities and customers. ▪ VETS1 – VETS1 fosters an environment of diverse and engaged associates while developing SiteOne’s understanding of and relationships with Veteran associates, customers, and communities. ▪ Women in the Green Growing – W1GG promotes an environment of diverse and engaged associates while advocating female growth within SiteOne and the green industry. • The creation of a Diversity & Inclusion Council during 2020 that consists of ARG leaders, select operational and functional leaders, our Executive Vice President of Human Resources, and our Chief Executive Officer.
Biggest changeOur ARGs include the following: • BR1DGE – BR1DGE provides a network for Black associates to be connected and supported. • INSP1RE – INSP1RE fosters an inclusive culture with a focus on our extended Asian community – South Asia, South-East Asia, East Asia, Asian Pacific Islander, Asian American, and beyond. • UN1DOS – UN1DOS attracts and retains engaged associates while enhancing SiteOne’s understanding of and relationships with Hispanic communities and customers. • VETS1 – VETS1 fosters an environment of engaged associates while developing SiteOne’s understanding of and relationships with veteran associates, customers, and communities. • W1GG – “Women in the Green Growing” promotes an environment of engaged associates while advocating female growth within SiteOne and the green industry. 12 Table of Contents Sustainability We also believe it is important to provide our stockholders with important information about our sustainability-related performance.
Our integrated branches utilize a single technology platform, allowing us to leverage our full operational scale for procurement, inventory management, financial support, data analytics, and performance reporting. Our outside sales force is organized by geographic area.
Our integrated branches utilize a single technology platform, allowing us to leverage our full operational scale for procurement, inventory management, delivery, financial support, data analytics, and performance reporting. Our outside sales force is organized by geographic area.
We offer certification programs that include instructor-led training, online learning, in-field work, and exit exams. We also facilitate leadership training to develop an understanding of leadership style, our values, and key coaching techniques. Engagemen t We administer associate engagement surveys to determine how we are doing in our mission to be the employer of choice in the green industry.
We offer certification programs that include instructor-led training, online learning, in-field work, and exit exams. We also facilitate leadership training to develop an understanding of leadership style, our values, and key coaching techniques. Engagement We administer associate engagement surveys to determine how we are doing in our mission to be the employer of choice in the green industry.
Through our expansive North American network, we offer a comprehensive selection of approximately 155,000 stock keeping units (“SKUs”) including irrigation supplies, fertilizer and control products (e.g., herbicides), hardscapes (including pavers, natural stone, and blocks), landscape accessories, nursery goods, outdoor lighting, and ice melt products to green industry professionals.
Through our expansive North American network, we offer a comprehensive selection of approximately 170,000 stock keeping units (“SKUs”) including irrigation supplies, fertilizer and control products (e.g., herbicides), hardscapes (including pavers, natural stone, and blocks), landscape accessories, nursery goods, outdoor lighting, and ice melt products to green industry professionals.
In addition, the SEC maintains a website that contains reports, proxy, and information statements, and other information regarding issuers, including us, that file electronically with the SEC at www.sec.gov. We are required to disclose any change to, or waiver from, our Business Code of Conduct and Ethics for our executive officers and members of our Board of Directors.
The SEC maintains a website that contains reports, proxy, and information statements, and other information regarding issuers, including us, that file electronically with the SEC at www.sec.gov. We are required to disclose any change to, or waiver from, our Business Code of Conduct and Ethics for our executive officers and members of our Board of Directors.
We intend to keep increasing our size and scale in customer, geographic, and product reach, which we believe will continue to benefit our supplier base. We will continue to work with new and existing suppliers to maintain the most comprehensive product offering for our customers at competitive prices and enhance our role as a critical player in the supply chain.
We intend to keep increasing our size and scale in customer, geographic, and product reach, which we believe will continue to benefit our supplier base. We will continue to work with new and existing suppliers to maintain the most comprehensive product offerings for our customers at competitive prices and enhance our role as a critical player in the supply chain.
Reward points may be utilized, for example, on credit on-account, trips and special events, gift cards to major retailers, and SiteOne University courses and educational events. Access is also provided to preferred rate business services and includes, for example, payroll and select human resource services, cell phone services, office supplies, and fuel rebates.
Reward points may be utilized, for example, for on-account credits, trips and special events, gift cards to major retailers, and SiteOne University courses and educational events. Access is also provided to preferred rate business services and includes, for example, payroll and select human resource services, cell phone services, office supplies, and fuel rebates.
We intend to continue pursuing strategic acquisitions to better serve our customers, grow our market share, and enhance our local market leadership positions by taking advantage of our scale, operational experience, and acquisition know-how. We currently have branches in approximately 50% of the 384 U.S.
We intend to continue pursuing strategic acquisitions to better serve our customers, grow our market share, and enhance our local market leadership positions by taking advantage of our scale, operational experience, and acquisition know-how. We currently have branches in approximately 50% of the 387 U.S.
Our suppliers benefit from access to our more than 290,000 customers, a single point of contact for improved production planning and efficiency, and our ability to bring new product launches quickly to market on a national scale.
Our suppliers benefit from access to our more than 430,000 customers, a single point of contact for improved production planning and efficiency, and our ability to bring new product launches quickly to market on a national scale.
In addition, our broad product portfolio, convenient branch locations, and nationwide fleet of over 2,200 delivery vehicles position us well to meet the needs of our customers and ensure timely delivery of products.
In addition, our broad product portfolio, convenient branch locations, and nationwide fleet of over 2,800 delivery vehicles position us well to meet the needs of our customers and ensure timely delivery of products.
Under the LESCO ® brand, we offer formulations of fertilizer (liquid and granular), combination products (pesticides on a fertilizer carrier), control products (liquid and granular pesticides), specialty chemicals, turf seed, application equipment (engine powered and walk behind or other non-engine powered), paint, maintenance products like engine oil, windshield washer fluid, ice melt, trimmer line, and soil tests.
Under the LESCO ® brand, we offer formulations of fertilizer (liquid and granular), combination products (pesticides on a fertilizer carrier), control products (liquid and granular pesticides), specialty chemicals, turf seed, application equipment (engine powered and walk behind or other non-engine powered), paint, maintenance products like engine oil, ice melt, trimmer line, and soil tests.
Our Industry Based on management’s estimates, we believe that our addressable market in North America for the wholesale distribution of landscape supplies represented approximately $25 billion in revenue in 2022.
Our Industry Based on management’s estimates, we believe that our addressable market in North America for the wholesale distribution of landscape supplies represented approximately $25 billion in revenue in 2024.
Outdoor Lighting Our outdoor lighting products include lighting fixtures (path, area, accent, up, down, well, hardscape, deck, underwater, bistro, and holiday), LED lamps, wire, transformers, and accessories. Proprietary Branded Products In addition to distributing branded products of third parties, we offer products under our proprietary brands.
Outdoor Lighting Our outdoor lighting products include lighting fixtures (path, area, accent, up, down, well, hardscape, deck, underwater, bistro, and holiday), LED lamps, wire, transformers, and accessories. 7 Table of Contents Proprietary Branded Products In addition to distributing branded products of third parties, we offer products under our proprietary brands.
LESCO ® products are sold through our branches and retail outlets such as The Home Depot, Lowe’s, and True Value. SiteOne Green Tech ® We offer pre-packaged landscape and irrigation management solutions that are designed to help customers manage and conserve water under the SiteOne Green Tech ® brand.
LESCO ® products are sold through our branches and retail outlets such as The Home Depot. SiteOne Green Tech ® We offer pre-packaged landscape and irrigation management solutions that are designed to help customers manage and conserve water under the SiteOne Green Tech ® brand.
We also use our website as a means of disclosing additional information, including for complying with our disclosure obligations under the SEC’s Regulation FD (“Fair Disclosure”).
We also use our website as a means of disclosing additional information, including for complying with our disclosure obligations under the SEC’s Regulation FD.
We believe that high-performing local leaders coupled with creative, adaptable, and engaged associates are critical to our success and to maintaining our competitive position, and we are committed to being the employer of choice in our industry. 6 Table of Contents Our Products and Services Our comprehensive portfolio of landscape products consists of approximately 155,000 SKUs from over 5,000 suppliers.
We believe that high-performing local leaders coupled with creative, adaptable, and engaged associates are critical to our success and to maintaining our competitive position, and we are committed to being the employer of choice in our industry. 6 Table of Contents Our Products and Services Our comprehensive portfolio of landscape products consists of approximately 170,000 SKUs from approximately 5,800 suppliers.
We also provide value-added consultative services to complement our product offerings and to help our customers operate and grow their businesses. Our consultative services include assistance with irrigation network design, commercial project planning, generation of sales leads, business operations, and product support services, as well as a series of technical and business management seminars that we call SiteOne University.
We also provide value-added consultative services to complement our product offerings and to help our customers operate and grow their businesses. Our consultative services include assistance with irrigation project take-offs, commercial project planning, generation of sales leads, business operations, and product support services, as well as a series of technical and business management seminars that we call SiteOne University.
We source our products from over 5,000 suppliers, including the major irrigation equipment manufacturers, turf and ornamental fertilizer/chemical companies, and a variety of suppliers who specialize in nursery goods, outdoor lighting, hardscapes, and other landscape products. We have a balanced mix of sales across product categories, construction sectors, and end markets.
We source our products from approximately 5,800 suppliers, including the major irrigation equipment manufacturers, turf and ornamental fertilizer/chemical companies, and a variety of suppliers who specialize in nursery goods, outdoor lighting, hardscapes, and other landscape products. We have a balanced mix of sales across product categories, construction sectors, and end markets.
In certain cases, we have entered into supply contracts with terms that exceed one year for the manufacture of our LESCO ® branded fertilizer, some nursery goods, and grass seed, which may require us to purchase products in the future. Competition The majority of our competition comes from other wholesale landscape supply distributors.
In certain cases, we enter into supply contracts with terms that exceed one year for the manufacture of our LESCO ® branded fertilizer, some nursery goods, grass seed, and hardscape products, which may require us to purchase products in the future. Competition The majority of our competition comes from other wholesale landscape supply distributors.
Distribution of our LESCO® proprietary branded products on a wholesale basis to retailers represented less than 1% of our 2022 Fiscal Year Net sales.
Distribution of our LESCO® proprietary branded products on a wholesale basis to retailers represented less than 1% of our 2024 Fiscal Year Net sales.
We typically do not maintain inventory for direct distribution, but rather use our existing supplier relationships, marketing expertise, and ordering and logistics infrastructure to serve this demand, requiring less working capital investment for these sales. Approximately 5% of our 2022 Fiscal Year Net sales were from direct distribution.
We typically do not maintain inventory for direct distribution, but rather use our existing supplier relationships, marketing expertise, and ordering and logistics infrastructure to serve this demand, requiring less working capital investment for these sales. Approximately 6% of our 2024 Fiscal Year Net sales were from direct distribution.
These sales benefit from increasing existing home sales, increasing home prices, and rising consumer spending. 4 Table of Contents Net Sales for the 2022 Fiscal Year Our History Our company was established after Deere & Company (“Deere”) entered the wholesale landscape distribution market through the acquisitions of McGinnis Farms and Century Rain Aid in 2001, United Green Mark in 2005, and LESCO Inc.
These sales benefit from increases in existing home sales and rising consumer spending. 4 Table of Contents Net Sales for the 2024 Fiscal Year Our History Our company was established after Deere & Company (“Deere”) entered the wholesale landscape distribution market through the acquisitions of McGinnis Farms and Century Rain Aid in 2001, United Green Mark in 2005, and LESCO Inc.
We continue to review our compensation and benefits program to ensure we offer a competitive total rewards package. Training and Development We believe the training provided through our development programs and our entrepreneurial, performance-based culture provide significant benefits to our associates. Targeted skills training is designed around an associate’s development and career interests.
We continue to evaluate our compensation and benefits program to ensure we offer a competitive total rewards package. Training and Development We believe the training provided through our development programs and our entrepreneurial, performance-based culture delivers significant benefits to our associates. Targeted skills training is designed around an associate’s development and career interests.
Branches Our branch network is the core of our operations and creates a valuable connection between our suppliers and our customers. Of our over 5,000 suppliers, few are set up to serve the shipping needs of our customers as their supply chains are typically focused on bulk quantity shipments.
Branches Our branch network is the core of our operations and creates a valuable connection between our suppliers and our customers. Of our approximately 5,800 suppliers, few are set up to serve the shipping needs of our customers as their supply chains are typically focused on bulk quantity shipments.
We periodically administer a company-wide associate engagement survey, the most recent of which occurred in November 2021, and we believe that we have good relations with our associates. Approximately 94% of our associates are employed on a full-time, year-round basis.
We periodically administer a company-wide associate engagement survey, the most recent of which occurred in November 2023, and we believe that we have good relations with our associates. Approximately 92% of our associates are employed on a full-time, year-round basis.
Suppliers We source our products from over 5,000 suppliers, including the major irrigation equipment manufacturers, turf and ornamental fertilizer/chemical companies, and a variety of suppliers who specialize in nursery goods, outdoor lighting, hardscapes, and other landscape products. Some of our largest suppliers include Hunter Industries, Rain Bird, Cresline, Oldcastle, Bayer, Turf Care Supply, NDS, Toro, Techo-Bloc, and Spears Manufacturing.
Suppliers We source our products from approximately 5,800 suppliers, including the major irrigation equipment manufacturers, turf and ornamental fertilizer/chemical companies, and a variety of suppliers who specialize in nursery goods, outdoor lighting, hardscapes, and other landscape products. Some of our largest suppliers include Hunter Industries, Rain Bird, Oldcastle, Cresline, NDS, Turf Care Supply, Envu, Toro, Spears Manufacturing, and Techo-Bloc.
Our Environmental, Social, and Governance (“ESG”) Report, Corporate Governance Guidelines, Board of Directors Communication Policy, Business Code of Conduct and Ethics, Financial Code of Ethics, and the Charters of the Audit Committee, the Human Resources and Compensation Committee, and the Nominating and Corporate Governance Committee of the Board of Directors are also available on the “Investor Relations” page of our website.
Our IMPACT Report, Corporate Governance Guidelines, Board of Directors Communication Policy, Business Code of Conduct and Ethics, Financial Code of Ethics, and the Charters of the Audit Committee, the Human Resources and Compensation Committee, and the Nominating and Corporate Governance Committee of the Board of Directors are also available on the “Investor Relations” page of our website.
Our customer base consists of more than 290,000 firms and individuals, with our top 10 customers collectively accounting for less than 4% of our 2022 Fiscal Year Net sales, with no single customer accounting for more than 2% of Net sales. Small customers, with annual purchases of up to $25,000, made up 22% of our 2022 Fiscal Year Net sales.
Our customer base consists of more than 430,000 firms and individuals, with our top 10 customers collectively accounting for less than 4% of our 2024 Fiscal Year Net sales, with no single customer accounting for more than 2% of Net sales. Small customers, with annual purchases of up to $25,000, made up 23% of our 2024 Fiscal Year Net sales.
The national sales team is organized around 10 different market verticals: facility management, golf, sports turf, international, lawn care operators, maintenance and development, pest control, retail, sod, and tree accounts. Each national account manager is responsible for a group of large accounts and coordinates our business with them both nationally and locally through our local sales representatives.
The national sales team is organized around nine different market verticals: facility management, golf, international, lawn care operators, maintenance and development, pest control, retail, sod, and tree service accounts. Each national account manager is responsible for a group of large accounts and coordinates our business with these customers both nationally and locally through our local sales representatives.
The core SiteOne Green Tech ® product lines include central irrigation control systems, solar assemblies, fertilizer injection systems, irrigation pumps, and hand-held remote control equipment. Pro-Trade ® In 2017, we launched a line of professional-grade landscape lighting fixtures, LED lamps, and transformers under our Pro-Trade ® brand.
The core SiteOne Green Tech ® product lines include central irrigation control systems, solar assemblies, fertilizer injection systems, irrigation pumps, and hand-held remote control equipment. Pro-Trade ® We offer a line of professional-grade landscape lighting fixtures, LED lamps, and transformers, as well as irrigation and landscape supplies, under our Pro-Trade ® brand.
In the United States, we are regulated under many environmental, health and safety laws, including the Comprehensive Environmental Response, Compensation and Liability Act, the Federal Environmental Pesticide Control Act, the Federal Insecticide, Fungicide and Rodenticide Act, the Clean Air Act, the Clean Water Act, and the Occupational Safety and Health Act, each as amended.
In the United States, we are regulated under many environmental, health and safety laws, including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act, the Federal Environmental Pesticide Control Act, the Federal Insecticide, Fungicide and Rodenticide Act, the Clean Air Act, the Clean Water Act, the Occupational Safety and Health Act, and the Consumer Product Safety Act, each as amended.
Sales of LESCO ® , SiteOne Green Tech ® and Pro-Trade ® together accounted for approximately 15% of our 2022 Fiscal Year Net sales, the large majority of which is attributable to LESCO ® . 7 Table of Contents LESCO ® LESCO ® is a premium brand and maintains strong brand awareness with golf and professional landscape contractors.
Sales of LESCO ® , SiteOne Green Tech ® , and Pro-Trade ® together accounted for approximately 14% of our 2024 Fiscal Year Net sales, the large majority of which is attributable to LESCO ® . LESCO ® LESCO ® is a premium brand and maintains strong brand awareness with golf and professional landscape contractors.
Purchases from our top 10 suppliers accounted for approximately 33% of total purchases for the 2022 Fiscal Year. We generally procure our products through purchase orders rather than under long-term contracts with firm commitments.
Purchases from our top 10 suppliers accounted for approximately 31% of total purchases for the 2024 Fiscal Year. 10 Table of Contents We generally procure our products through purchase orders rather than under long-term contracts with firm commitments.
Medium customers, with annual purchases from $25,000 up to $150,000, made up 31% of our 2022 Fiscal Year Net sales. Large customers, with annual purchases over $150,000, made up 47% of our 2022 Fiscal Year Net sales. Some of our largest customers include BrightView, Weed Man, The Home Depot, Davey Tree, and Yellowstone Landscape.
Medium customers, with annual purchases from $25,000 up to $150,000, made up 31% of our 2024 Fiscal Year Net sales. Large customers, with annual purchases over $150,000, made up 46% of our 2024 Fiscal Year Net sales. Some of our largest customers include BrightView, Weed Man, Aptive Environmental, Heartland, Yellowstone Landscape, The Home Depot, Sperber, and Davey Tree.
The recurring nature of landscape maintenance demand helps to provide stability in our financial performance across economic cycles. Fertilizer and control products are the primary products used in maintenance. The sale of products relating to new construction of homes, commercial buildings, and recreational spaces accounted for approximately 35% of our 2022 Fiscal Year Net sales.
The sale of products relating to maintenance of existing residential, commercial, and recreational properties accounted for approximately 35% of our 2024 Fiscal Year Net sales. The recurring nature of landscape maintenance demand helps to provide stability in our financial performance across economic cycles. Fertilizer and control products are the primary products used in maintenance.
Among wholesale distributors, we primarily compete against a small number of regional distributors and many small, local, privately-owned distributors. Some of our competitors carry several product categories, while others mainly focus on one product category such as irrigation, fertilizer/control, nursery goods, or hardscapes. We are the only national wholesale distributor to carry a full product line of landscape supplies.
Among wholesale distributors, we primarily compete against a small number of regional distributors and many small, local, privately-owned distributors. Some of our competitors carry several product categories, while others mainly focus on one product category such as irrigation, fertilizer and control products, nursery goods, or hardscapes.
These federal, state, provincial, and local laws and regulations include laws relating to consumer protection, wage and hour, deceptive trade practices, permitting and licensing, state contractor laws, workers’ safety, tax, healthcare reforms, collective bargaining and other labor matters, environmental, cybersecurity, and employee benefits.
These federal, state, provincial, and local laws and regulations include, but are not limited to, laws relating to consumer protection, wage and hour, deceptive trade practices, international trade, anti-bribery and anti-corruption, permitting and licensing, state contractor laws, workers’ safety, tax, healthcare reforms, collective bargaining and other labor matters, environmental, data privacy, cybersecurity, and employee benefits.
The support we offer to our associates is an important part of our vision to be a great place to work and the employer of choice in the green industry. As of January 1, 2023, we employed approximately 7,000 associates, none of whom were affiliated with labor unions.
The support we offer to our associates is an important part of our vision to be a great place to work and the employer of choice in the green industry. As of December 29, 2024, we employed approximately 8,300 associates, none of whom were affiliated with labor unions.
The information contained on our website is not incorporated herein by reference. Copies of these documents (without exhibits, when applicable) are also available free of charge upon request to us at 300 Colonial Center Parkway, Suite 600, Roswell, Georgia 30076, Attention: Investor Relations or by telephone at (404) 277-7000.
Copies of these documents (without exhibits, when applicable) are also available free of charge upon request to us at 300 Colonial Center Parkway, Suite 600, Roswell, Georgia 30076, Attention: Investor Relations or by telephone at (404) 277-7000.
We could also incur significant investigation and clean-up costs for contamination at any currently or formerly owned or operated facilities, including LESCO’s manufacturing and blending facilities. Refer to “ Note 10 . Commitments and Contingencies” to our audited consolidated financial statements for additional information.
We could also incur significant investigation and clean-up costs for contamination at any currently or formerly owned or operated facilities, including LESCO’s manufacturing and blending facilities. Refer to “ Note 10 .
The majority of our branches carry multiple product categories, but do not carry all. Branches that carry our full product lines combine our regular branch facilities with large 8-to-15 acre yards suitable for nursery goods and hardscape products. Yards are well-equipped to manage truckload-purchased landscape, nursery, and hardscape products and can maintain a diverse variety of greenhouse and nursery plants.
Branches that carry our full product lines combine our regular branch facilities with large 5-to-30 acre yards suitable for nursery goods and hardscape products. Yards are well-equipped to manage truckload-purchased landscape, nursery, and hardscape products and can maintain a diverse variety of greenhouse and nursery plants.
We have built a vibrant and entrepreneurial culture that rewards performance at the area and branch levels. We promote ongoing, open, and honest communication with our associates, including periodic engagement surveys, to ensure mutual trust, engagement, and performance improvement.
Our size and scale enable us to offer structured training and career path opportunities for our associates. We have built a vibrant and entrepreneurial culture that rewards performance at the area and branch levels. We promote ongoing, open, and honest communication with our associates, including periodic engagement surveys, to ensure mutual trust, engagement, and performance improvement.
We support our over 630 branches and 41 areas with regional management and company-wide support functions by providing: management of business performance, development and execution of local strategies, sharing of best practices, execution and integration of acquisitions, finance and accounting expertise (including credit/collections, payables, and other shared services), category management and procurement, supply chain (e.g., planners and buyers), pricing strategies, marketing, and information technology.
We support our area teams with regional and divisional management as well as company-wide support functions by providing: management of business performance, development and execution of local strategies, sharing of best practices, execution and integration of acquisitions, finance and accounting expertise (including financial planning and analysis, credit/collections, payables, and other shared services), category management and procurement, supply chain (including planners and buyers), pricing strategies, marketing, and information technology.
For the 2022 Fiscal Year, Partners Program participants accounted for approximately 52% of our Net sales. 8 Table of Contents Operational Structure Our operational philosophy is to create local area teams and branch networks specifically designed to best meet our customers’ needs at the local market level, while supporting these teams with the resources of a large company delivered through regional and divisional management, including company-wide support functions.
Operational Structure Our operational philosophy is to create local area teams and branch networks specifically designed to best meet our customers’ needs at the local market level, while supporting these teams with the resources of a large company delivered through regional and divisional management, including company-wide support functions.
This distribution channel primarily handles bulk nursery, agronomic, landscape, and hardscape products. Customers Our 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.
Customers Our 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.
We derived approximately 61% of our 2022 Fiscal Year Net sales from the residential construction sector, 31% from the commercial (including institutional) construction sector, and 8% from the recreational and other construction sector. By end market, we derived approximately 36% of our 2022 Fiscal Year Net sales from maintenance of existing residential, commercial, and recreational properties.
We derived approximately 61% of our 2024 Fiscal Year Net sales from the residential construction sector, 31% from the commercial (including institutional) construction sector, and 8% from the recreational and other construction sector.
Direct distribution is preferred for contractors with large projects, typically designed by professional landscape architects. Contractors work hand-in-hand with our outside sales and inside sales teams, including project planning support with material take-offs, product sourcing, and bid preparation. Using our large supplier network, our associates arrange convenient direct shipments to jobs, coordinated and staged according to each phase of construction.
Direct distribution is preferred for contractors with large projects, typically designed by professional landscape architects. Contractors work hand-in-hand with our outside sales and inside sales teams, including project planning support with material take-offs, product sourcing, and bid preparation.
At the local market level, we organize our over 630 branches and approximately 620 outside sales representatives into 41 designated “areas” that each typically serve a defined geography, a large MSA, or a combination of MSAs in close proximity. Area Managers are responsible for organization and talent planning, branch operations, sales strategy, and product delivery strategy.
At the local market level, we organize our over 690 branches and approximately 630 outside sales representatives into 37 designated “areas” that each typically serve a defined geography, a large MSA, or a combination of MSAs in close proximity.
As of January 1, 2023, we had over 630 branch locations in 45 U.S. states and six Canadian provinces.
As of December 29, 2024, we had over 690 branch locations in 45 U.S. states and six Canadian provinces.
In contrast, many of our customers often require comparatively small quantities of products from numerous suppliers to complete a typical project, making it difficult to source directly from those suppliers. Our branch network provides significant value to our suppliers by maintaining local availability of core and complementary products in quantities our customers need.
In contrast, many of our customers often require comparatively small quantities of products from numerous suppliers to complete a typical project, making it difficult to source directly from those suppliers.
Our SiteOne University program provides customers with access to substantive training and informational seminars that directly support the growth of their businesses. The program includes technical training, licensing, certifications, and business management seminars. In addition, our product category experts provide technical knowledge on the features and benefits of our products as well as installation techniques.
Our SiteOne University program provides customers with access to training and informational seminars that directly support the growth of their businesses. The program includes technical training, licensing, certifications, and business management seminars.
We believe our top nine largest competitors include Heritage Landscape Supply Group (a subsidiary of SRS Distribution), Ewing, Horizon Distributors (a subsidiary of Pool Corporation), Harrell’s, BWI, Target Specialty Products, Howard Fertilizer and Chemical, Central Turf and Irrigation Supply, and BFG Supply.
We are the only national wholesale distributor to carry a full product line of landscape supplies. We believe our top nine largest competitors include Heritage Landscape Supply Group (a subsidiary of The Home Depot), Ewing, Harrell’s, Horizon Distributors (a subsidiary of Pool Corporation), Target Specialty Products, BWI, Outdoor Living Supply, Central Turf and Irrigation Supply, and Howard Fertilizer and Chemical.
Other services provided by our project services teams include specifications assistance and irrigation project take-offs. Partners Program We offer a loyalty rewards program, our Partners Program, which had approximately 25,000 enrolled customers as of January 1, 2023 and provides business and personal rewards, access to business services at preferred rates, and technical training and support.
Partners Program We offer a loyalty rewards program, our Partners Program, which had approximately 52,000 enrolled customers as of December 29, 2024 and provides business and personal rewards, access to business services at preferred rates, and technical training and support.
We primarily lease 5,000 to 15,000 square foot facilities in both freestanding and multi-tenant buildings with secured outside storage yards averaging from 10,000 to 20,000 square feet. 9 Table of Contents Direct Distribution Our direct distribution business provides point-to-point logistics for bulk quantities of landscape products between suppliers and customers, providing customers with sourcing and logistics support services for inventory management and delivery, and in many cases, these services are more economical than the producers might otherwise provide.
Direct Distribution Our direct distribution business provides point-to-point logistics for bulk quantities of landscape products between suppliers and customers, providing customers with sourcing and logistics support services for inventory management and delivery, and in many cases, these services are more economical than the producers might otherwise provide.
Area Managers are supported by Area Business Managers and Area Sales Managers who are responsible for executing the local market and operating strategies as well as key initiatives to grow sales and profitability.
Area Managers are responsible for the organization and talent planning, branch operations, sales and product delivery strategy, and financial performance of their respective areas. Area Managers are assisted by Area Business Managers and Area Sales Managers who are responsible for executing the local market and operating strategies as well as key initiatives to grow sales and profitability.
In the 2022 Fiscal Year, we announced the launch of SiteOne CARES, a grant assistance program designed to help our associates cope with unexpected financial challenges arising from personal hardships.
The parental leave benefit provides time away from work within the first year of the birth or adoption of a child with 100% of base pay. In the 2022 Fiscal Year, we launched SiteOne CARES, a grant assistance program designed to help our associates cope with unexpected financial challenges arising from personal hardships.
In the 2022 Fiscal Year, we also created a new bonus program for our hourly associates and approximately 2,750 associates received the bonus with payments totaling approximately $2.2 million. This program makes all of our previously ineligible associates eligible to receive a bonus.
In the 2024 Fiscal Year, approximately 3,300 associates received the bonus with payments totaling approximately $2.7 million. With the implementation of the program in 2022, all of our previously ineligible associates prior to program inception became eligible and continue to be eligible to receive a bonus.
These products primarily include irrigation, hardscapes, landscape accessories, nursery, and outdoor lighting. Approximately 29% of our 2022 Fiscal Year Net sales were derived from sales of products for the repair and upgrade of existing landscapes.
Approximately 30% of our 2024 Fiscal Year Net sales were derived from sales of products for the repair and upgrade of existing landscapes.
In addition, we cannot predict the effect of possible future environmental, health, or safety laws on our operations.
Commitments and Contingencies” to our audited consolidated financial statements for additional information. 13 Table of Contents In addition, we cannot predict the effect of possible future environmental, health, or safety laws on our operations.
Benefits We offer a competitive benefits package with the goal of enabling our associates to get the most out of work and life. Among our benefits, we offer a paid military leave benefit that provides additional resources to our full-time associates as they continue to serve our country.
Among our benefits, we offer a paid military leave benefit that provides additional resources to our full-time associates as they continue to serve our country. We also offer a paid parental leave benefit for our full-time associates to help parents during the early days of parenthood.
Changes in, or new interpretations of, existing laws, regulations or enforcement policies, the discovery of previously unknown contamination, or the imposition of other environmental liabilities or obligations in the future, including obligations with respect to any potential health hazards of our products, may lead to additional compliance or other costs. 13 Table of Contents Available Information We make available free of charge on the “Investor Relations” page of our website, www.siteone.com, our filed and furnished reports on Forms 10-K, 10-Q, and 8-K, and all amendments thereto, as soon as reasonably practicable after the reports are filed with or furnished to the Securities and Exchange Commission (the “SEC”).
Available Information We make available free of charge on the “Investor Relations” page of our website, www.siteone.com, our filed and furnished reports on Forms 10-K, 10-Q, and 8-K, and all amendments thereto, as soon as reasonably practicable after the reports are filed with or furnished to the Securities and Exchange Commission (the “SEC”).
This includes not only an upward path for associates, but exposure to parallel roles across the organization. 12 Table of Contents Service Marks, Trademarks and Trade Names We hold various trademark registrations, including SiteOne ® , LESCO ® , SiteOne Green Tech ® , and Pro-Trade ® , which we consider important to our marketing activities.
Service Marks, Trademarks, and Trade Names We hold various trademark registrations, including SiteOne ® , LESCO ® , SiteOne Green Tech ® , Pro-Trade ® , and Solstice ® , which we consider important to our marketing activities.
The principal competitive factors in our business include, but are not limited to, location, availability of materials and supplies, technical product knowledge and expertise, advisory or other service capabilities, delivery capabilities, pricing of products, and availability of credit. 10 Table of Contents Human Capital Management At SiteOne, we believe our associates are our greatest asset and the safety, health, and wellness of our associates and their families is a top priority.
We believe regional or local competitors comprise approximately 82% of the landscape supply industry based on 2024 Net sales. The principal competitive factors in our business include, but are not limited to, location, availability of materials and supplies, technical product knowledge and expertise, advisory or other service capabilities, delivery capabilities, pricing of products, and availability of credit.
Be the Employer of Choice We believe our associates are the key drivers of our success, and we aim to recruit, train, promote, and retain the most talented and success-driven personnel in the industry. Our size and scale enable us to offer structured training and career path opportunities for our associates.
We remain focused on delivering additional enhancements of our digital offering and believe we will continue to benefit from these and other operational initiatives. Be the Employer of Choice We believe our associates are the key drivers of our success, and we aim to recruit, train, promote, and retain the most talented and success-driven personnel in the industry.
Project Services We partner with our customers by providing consultative services to help them save time, money, and effort in bidding for new projects and for new landscape installations. Our regionally based project services teams specialize in quoting, estimating, and completing sales for customers who compete in the commercial construction sector.
Our regionally based project services teams specialize in quoting, estimating, and completing sales for customers who compete in the commercial construction sector. Other services provided by our project services teams include assistance with specifications and irrigation project take-offs.
Safety The first element of our SiteOne DNA is “Always Safe,” which means that we take personal responsibility for our own safety and for the safety of others. Our leadership team is focused on creating a culture of safety and evaluating ways to improve our operations that reduce the most common forms of on-the-job injuries.
Our leadership team is focused on creating a culture of safety and evaluating ways to improve our operations that reduce the most common forms of on-the-job injuries. Our safety initiatives include: • Our Environmental, Health, and Safety team, which further enhances our safety efforts by establishing and monitoring safe work practices to prevent customer and associate injuries.
Additionally, we have continued to advance our digital initiative, to include the enhancement of our website and business-to-business (“B2B”) e-Commerce platform. Although we are still primarily in the early stages of these initiatives, they have already enhanced our customer service, contributed to improvement in our profitability, and we believe we will continue to benefit from these and other operational improvements.
Additionally, we have continued to advance our digital initiative, to include the enhancement of our website and business-to-business (“B2B”) e-Commerce platform. The enhancements have increased connectivity with our customers and have resulted in better customer service as well as contributed to improvement in our profitability.
Our Safety Champions are high potential, well-respected associates who help demonstrate and influence our culture of safety. Our goal is a robust culture of safety with all associates committed to working safely, every task, every day, 100% of the time.
Our goal is a robust culture of safety with all associates committed to working safely, every task, every day, 100% of the time. 11 Table of Contents Benefits We offer a competitive benefits package with the goal of enabling our associates to get the most out of work and life.
Our associate count currently includes approximately 430 seasonal associates, who are temporarily employed due to the weather-dependent nature of our business. An associate is anyone employed by the Company. COVID-19 Response During the ongoing recovery from the COVID-19 pandemic, our primary objective is to ensure the safety of our associates, customers, and suppliers.
Our associate count currently includes approximately 460 seasonal associates, who are temporarily employed due to the weather-dependent nature of our business. An associate is anyone employed by the Company. Safety The first element of our SiteOne DNA is “Always Safe,” which means that we take personal responsibility for our own safety and for the safety of others.
We do not derive separate revenue for these services, but we believe they are an important differentiator in establishing our value proposition to our customers.
Services We offer a variety of complementary, value-added services to support the sale of our products. We believe these services are an important differentiator in establishing our value proposition to our customers.
Our safety initiatives include: • Our Environmental, Health, and Safety team, which further enhances our safety efforts by establishing and monitoring safe work practices to prevent customer and associate injuries. As a result, we invest in safety equipment and practices at all branches with the goal of eliminating workplace injuries. • A designated Safety Champion in each of our branches.
As a result, we invest in safety equipment and practices at all branches with the goal of eliminating workplace injuries. • A designated Safety Champion in each of our branches. Our Safety Champions are high potential, well-respected associates who help demonstrate and influence our culture of safety.
We made an initial contribution of $75,000 to the SiteOne Cares fund and have also committed to matching 100% of every associate contribution until an initial goal of an additional $25,000 is met.
We made an initial contribution of $75,000 to the SiteOne Cares fund and matched 100% of every associate contribution up to the first $25,000 of associate donations. As of December 29, 2024, we reached over $170,000 in associate donations since inception and have assisted 54 associates in need.
Our diversity and inclusion efforts focus on creating a work environment that is respectful and supportive of each of our associates and which places the team first.
We focus on creating a work environment that is respectful and supportive of each of our associates and which places the team first. We have several Associate Resource Groups (“ARGs”), which are voluntary, associate-led groups open to all SiteOne associates. ARGs support business objectives, foster an inclusive culture, and offer an avenue of development for associates.
During the 2022 Fiscal Year, we introduced 27 new products and plan to continue expanding our Pro-Trade ® offering in the 2023 Fiscal Year. Services We offer a variety of complementary, value-added services to support the sale of our products.
The Pro-Trade ® line of products is sold exclusively through our branches and website. During the 2024 Fiscal Year, we added synthetic turf, turf accessories, garden hoses, torches, irrigation testers, and clamp meters to the Pro-Trade ® offering. We plan to continue expanding our Pro-Trade ® line of products in the 2025 Fiscal Year.
Removed
The Pro-Trade ® line of products is sold exclusively through our branches and website, and has expanded to include irrigation products (swing pipe and drip), long handle tools, PVC cutters, snow shovels, safety gloves, a wheelbarrow, wire connectors, landscape staples, glues and solvents, and a centrifugal pump.
Added
By end market, we derived approximately 35% of our 2024 Fiscal Year Net sales from the sale of products relating to new construction of homes, commercial buildings and facilities, and recreational spaces. These products primarily include irrigation, hardscapes, landscape accessories, nursery, and outdoor lighting.
Removed
We believe regional or local competitors comprise approximately 84% of the landscape supply industry based on 2022 Net sales.
Added
Portfolio We offer a line of premium plant varieties under our Portfolio brand. The Portfolio line of products is sold exclusively through our branches and website, and currently includes products specialized for the market, exclusive to the brand, or are improvements to the current plant standards in the industry.
Removed
During the peak of the COVID-19 pandemic, we created two new sick leave policies – quarantine pay, which allows associates who quarantine in compliance with CDC or local guidelines to stay home with pay, and a paid time off (“PTO”) donation program, which allows associates to donate PTO to other associates whose family members are impacted by COVID-19.
Added
There are currently over 150 unique items in the line, in various sizes, including shrubs, trees, perennials, annuals, and bulbs with plans to continue expanding our Portfolio offerings in the 2025 Fiscal Year. Solstice ® In 2024, we launched a line of premium imported natural stone under our Solstice ® brand.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisk Factor Summary The following is a summary of the principal risks that could adversely affect our business, operations, and financial results: Risks Related to Our Business and Our Industry • Cyclicality in our business could result in lower Net sales and reduced cash flows and profitability. • Our business is affected by general business, financial market, and economic conditions. • Seasonality affects the demand for our products and services and our results of operations and cash flows. • Our operations are substantially dependent on weather and climate conditions. • The prices and costs of the products we purchase may be subject to large and significant price fluctuations. • Market variables and other events outside of our control could cause our Cost of goods sold and operating costs to grow more rapidly than Net sales. • Inflation and increases in operating costs could adversely impact our business. • The COVID-19 pandemic or other public health emergencies have, and may in the future, adversely affect our business and the business of our customers and suppliers. • Public perceptions that the products we use and the services we deliver are not environmentally friendly or safe or that our practices are not sustainable may result in significant costs and adversely impact the demand for our products or services. • Increased competitive pressures could reduce our market share. • We may face supply chain delays or interruptions, product shortages, or the loss of key suppliers or fail to develop relationships with qualified suppliers. • We are subject to inventory management risks. • We may not successfully implement our business strategies, including achieving our growth objectives. • We may be unable to successfully acquire and integrate other businesses or increased competition for those businesses may result in less favorable acquisition terms. • We face risks associated with our labor force and our customers’ labor force. • We may not be able to attract or retain key executives. • We are exposed to construction defect and product liability claims as well as other legal proceedings. • An impairment of goodwill and/or other intangible assets could reduce Net income. • We may face adverse credit and financial market events and conditions. • We may be inefficient or ineffective in capital allocation. • We may fail to collect monies owed by our credit sale customers. • The operating results of individual branches may vary. • Compliance with, or liabilities under, environmental, health and safety laws and regulations, including laws and regulations pertaining to the use and application of fertilizers, herbicides, insecticides, and fungicides, could result in significant costs. • Our business exposes us to risks associated with hazardous materials and related activities, not all of which are covered by insurance. • Laws and government regulations applicable to our business could increase our legal and regulatory expenses, and impact our business. • We could experience operational interruptions, incur substantial additional costs, become subject to legal or regulatory proceedings or suffer damage to our reputation in the event of a cybersecurity incident. • A large-scale malfunction or failure in our information technology systems could disrupt our business, create potential liabilities for us, or limit our ability to effectively monitor, operate, and control our operations. • We may fail to protect the security of personal information about our customers. • We may not be able to adequately protect our intellectual property and other proprietary rights that are material to our business. 15 Table of Contents • We may be subject to unanticipated changes in our tax provisions. • We may face acts or threats of terrorism, public health emergencies, violence, or unfavorable or uncertain political conditions.
Biggest changeRisk Factor Summary The following is a summary of the principal risks that could adversely affect our business, operations, and financial results: Risks Related to Our Business and Our Industry • Cyclicality in our business could result in lower Net sales and reduced cash flows and profitability. • Our business is affected by general business, financial market, and economic conditions. • Our operations are substantially dependent on weather and climate conditions. • Seasonality affects the demand for our products and services and our results of operations and cash flows. • The prices and costs of the products we purchase may be subject to large and significant price fluctuations. • Market variables and other events outside of our control could cause our Cost of goods sold and operating costs to grow more rapidly than Net sales. • Inflation and increases in operating costs have adversely impacted, and may in the future continue to adversely impact, our business. • Compliance with, or liabilities under, environmental, health and safety laws and regulations, including laws and regulations pertaining to the use and application of our products and climate change legislation, could result in significant costs. • Our business exposes us to risks associated with hazardous materials and related activities, not all of which are covered by insurance. • Laws and government regulations applicable to our business could increase our legal and regulatory expenses, and impact our business. • Public perceptions that the products we use and the services we deliver are not environmentally friendly or safe or that our practices are not sustainable may result in significant costs and adversely impact the demand for our products or services. • Increased competitive pressures could reduce our market share. • We may face supply chain delays or interruptions, product shortages, or the loss of key suppliers or fail to develop relationships with qualified suppliers. • We are subject to inventory management risks. • We may not successfully implement our business strategies, including achieving our growth objectives. • We may be unable to successfully acquire and integrate other businesses or increased competition for those businesses may result in less favorable acquisition terms. • We face risks associated with our labor force and our customers’ labor force. • We may not be able to attract or retain key executives. • We are exposed to construction defect and product liability claims as well as other legal proceedings. • An impairment of goodwill and/or other intangible assets could reduce Net income. • We may face adverse credit and financial market events and conditions. • We may be inefficient or ineffective in capital allocation. • We may fail to collect monies owed by our credit sale customers. • The operating results of individual branches may vary. • We could experience operational interruptions, incur substantial additional costs, become subject to legal or regulatory proceedings or suffer damage to our reputation in the event of a cybersecurity incident. • A large-scale malfunction or failure in our information technology systems could disrupt our business, create potential liabilities for us, or limit our ability to effectively monitor, operate, and control our operations. • We may fail to protect the security of personal information about our customers. • We may not be able to adequately protect our intellectual property and other proprietary rights that are material to our business. • We may be subject to unanticipated changes in our tax provisions. 15 Table of Contents • We may face acts or threats of terrorism, public health emergencies, violence, or unfavorable or uncertain political conditions.
Inefficient or ineffective allocation of capital could adversely affect our operating results and/or stockholder value. We strive to allocate capital in a manner that enhances stockholder value, lowers our cost of capital, or demonstrates our commitment to return excess capital to stockholders, while maintaining our ability to invest in strategic acquisition opportunities.
Inefficient or ineffective allocation of capital could adversely affect our operating results and/or stockholder value. We strive to allocate capital in a manner that enhances stockholder value, lowers our cost of capital, and demonstrates our commitment to return excess capital to stockholders, while maintaining our ability to invest in strategic acquisition opportunities.
If any of our customers are unable to repay credit that we have extended in a timely manner, or at all, our working capital, financial condition, operating results, and cash flows would be adversely affected. Further, our collections efforts with respect to non-paying or slow-paying customers could negatively impact our customer relations going forward.
If any of our customers are unable to repay the credit that we have extended in a timely manner, or at all, our working capital, financial condition, operating results, and cash flows would be adversely affected. Further, our collections efforts with respect to non-paying or slow-paying customers could negatively impact our customer relations going forward.
Therefore, if we do not properly allocate our capital, including with respect to returning value to our stockholders through this share repurchase authorization, we may fail to produce optimal financial results and experience a reduction in stockholder value. 24 Table of Contents The majority of our Net sales are derived from credit sales, which are made primarily to customers whose ability to pay is dependent, in part, upon the economic strength of the geographic areas in which they operate, and the failure to collect monies owed from customers could adversely affect our working capital and financial condition.
Therefore, if we do not properly allocate our capital, including with respect to returning value to our stockholders through this share repurchase authorization, we may fail to produce optimal financial results and experience a reduction in stockholder value. 25 Table of Contents The majority of our Net sales are derived from credit sales, which are made primarily to customers whose ability to pay is dependent, in part, upon the economic strength of the geographic areas in which they operate, and the failure to collect monies owed from customers could adversely affect our working capital and financial condition.
Acts of terrorism or war, public health emergencies, political or civil unrest and uncertainty, pandemics, and other catastrophes may disrupt commerce and undermine consumer confidence, which could negatively affect our sales by causing consumer spending to decline.
Acts of terrorism or war, public health emergencies, political or civil unrest and uncertainty, public health emergencies, and other catastrophes may disrupt commerce and undermine consumer confidence, which could negatively affect our sales by causing consumer spending to decline.
While we believe that we currently hold a favorable view from stakeholders related to our ESG practices, there can be no assurance that we will be able to meet the future expectations of our stakeholders, which are evolving rapidly.
While we believe that we currently hold a favorable view from stakeholders related to our practices, there can be no assurance that we will be able to meet the future expectations of our stakeholders, which are evolving rapidly.
The execution of our business strategy and our financial performance will continue to depend in significant part on our executive management team and other key management personnel, and our executive management team’s ability to execute the operational initiatives that they are undertaking.
The execution of our business strategy and our financial performance will continue to depend in significant part on our executive management team and other key management personnel, and our executive management team’s ability to execute the initiatives that they are undertaking.
Because our business includes the managing, handling, storing, selling and transporting, and disposing of certain hazardous materials, such as fertilizers, herbicides, pesticides, fungicides, and rodenticides, we are exposed to environmental, health, safety, and other risks.
Because our business includes managing, handling, storing, selling and transporting, and disposing of certain hazardous materials, such as fertilizers, herbicides, pesticides, fungicides, and rodenticides, we are exposed to environmental, health, safety, and other risks.
As a result, we may suffer from reputational damage and our business or financial condition could be adversely affected. 19 Table of Contents Our industry and the markets in which we operate are highly competitive and fragmented, and increased competitive pressures could reduce our share of the markets we serve and adversely affect our business, financial position, results of operations, and cash flows.
As a result, we may suffer from reputational damage and our business or financial condition could be adversely affected. 20 Table of Contents Our industry and the markets in which we operate are highly competitive and fragmented, and increased competitive pressures could reduce our share of the markets we serve and adversely affect our business, financial position, results of operations, and cash flows.
In October 2022, our Board of Directors approved a share repurchase authorization for up to $400.0 million of the Company’s common stock. The Company intends to purchase shares under the repurchase authorization from time to time on the open market at the discretion of management, subject to strategic considerations, market conditions, and other factors.
In October 2022, our Board of Directors approved a share repurchase authorization for up to $400.0 million of the Company’s common stock. The Company has, and intends to continue to, purchase shares under the repurchase authorization from time to time on the open market at the discretion of management, subject to strategic considerations, market conditions, and other factors.
The loss of, or a substantial decrease in the availability of, products from our suppliers or the loss of key supplier arrangements could adversely impact our financial condition, operating results, and cash flows, as well as our ability to benefit from ongoing supply chain initiatives. 20 Table of Contents Our ability to continue to identify and develop relationships with qualified suppliers who can comply with our Supplier Code of Conduct and satisfy our high standards for quality and our need to be supplied with products in a timely and efficient manner is a significant challenge.
The loss of, or a substantial decrease in the availability of, products from our suppliers or the loss of key supplier arrangements could adversely impact our financial condition, operating results, and cash flows, as well as our ability to benefit from ongoing supply chain initiatives. 21 Table of Contents Our ability to continue to identify and develop relationships with qualified suppliers who can comply with our Supplier Code of Conduct and satisfy our high standards for quality and our need to be supplied with products in a timely and efficient manner is a challenge.
In addition, we may incur certain costs as we pursue our growth, operational, and management initiatives, and we may not meet anticipated implementation timetables or stay within budgeted costs. As these initiatives are undertaken, we may not fully achieve our expected efficiency improvements or growth rates, or these initiatives could adversely impact our customer retention, supplier relationships, or operations.
In addition, we may incur certain costs as we pursue our initiatives, and we may not meet anticipated implementation timetables or stay within budgeted costs. As these initiatives are undertaken, we may not fully achieve our expected efficiency improvements or growth rates, or these initiatives could adversely impact our customer retention, supplier relationships, or operations.
If any such strikes or other work stoppages occur, or if other associates become represented by a union, we could experience a disruption of our operations and higher labor costs. 22 Table of Contents In addition, certain of our suppliers have unionized work forces and certain of our products are transported by unionized truckers.
If any such strikes or other work stoppages occur, or if other associates become represented by a union, we could experience a disruption of our operations and higher labor costs. 23 Table of Contents In addition, certain of our suppliers have unionized work forces and certain of our products are transported by unionized truckers.
Additionally, defending against lawsuits and proceedings may involve significant expense and diversion of management’s attention and resources from other matters regardless of the ultimate outcome. 23 Table of Contents An impairment of goodwill and/or other intangible assets could reduce Net income. Acquisitions frequently result in the recording of goodwill and other intangible assets.
Additionally, defending against lawsuits and proceedings may involve significant expense and diversion of management’s attention and resources from other matters regardless of the ultimate outcome. 24 Table of Contents An impairment of goodwill and/or other intangible assets could reduce Net income. Acquisitions frequently result in the recording of goodwill and other intangible assets.
For example, our amended and restated certificate of incorporation and amended and restated by-laws collectively: • authorize the issuance of “blank check” preferred stock that could be issued by our Board of Directors to thwart a takeover attempt; • provide for a classified board of directors, which divides our Board of Directors into three classes, with members of each class serving staggered three-year terms, which prevents stockholders from electing an entirely new board of directors at an annual meeting; • limit the ability of stockholders to remove directors; • provide that vacancies on our Board of Directors, including vacancies resulting from an enlargement of our Board of Directors, may be filled only by a majority vote of directors then in office; • prohibit stockholders from calling special meetings of stockholders; • prohibit stockholder action by written consent, thereby requiring all actions to be taken at a meeting of the stockholders; and • establish advance notice requirements for nominations of candidates for election as directors or to bring other business before an annual meeting of our stockholders.
For example, our Charter and By-laws, collectively: • authorize the issuance of “blank check” preferred stock that could be issued by our Board of Directors to thwart a takeover attempt; • provide for a classified board of directors, which divides our Board of Directors into three classes, with members of each class serving staggered three-year terms, which prevents stockholders from electing an entirely new board of directors at an annual meeting; • limit the ability of stockholders to remove directors; • provide that vacancies on our Board of Directors, including vacancies resulting from an enlargement of our Board of Directors, may be filled only by a majority vote of directors then in office; • prohibit stockholders from calling special meetings of stockholders; • prohibit stockholder action by written consent, thereby requiring all actions to be taken at a meeting of the stockholders; and • establish advance notice requirements for nominations of candidates for election as directors or to bring other business before an annual meeting of our stockholders.
Among the factors that could affect our stock price are: • industry or general market conditions; • domestic and international economic and political factors unrelated to our performance; • changes in our customers’ or their end-users’ preferences; • new regulatory pronouncements and changes in regulatory guidelines; • lawsuits, enforcement actions, and other claims by third parties or governmental authorities; 31 Table of Contents • actual or anticipated fluctuations in our quarterly operating results; • changes in securities analysts’ estimates of our financial performance; • action by institutional stockholders or other large stockholders, including future sales; • comments by public figures or other third parties, including blogs, articles, message boards, and social and other media; • failure to meet any guidance given by us or any change in any guidance given by us, or changes by us in our guidance practices; • announcements by us of significant impairment charges; • speculation in the press or investment community; • investor perception of us and our industry; • changes in market valuations or earnings of similar companies; • announcements by us or our competitors of significant contracts, acquisitions, dispositions, or strategic partnerships; • novel and unforeseen trading strategies adopted by retail investors or other market participants; • war, civil unrest, terrorist acts, and epidemic disease, including the ongoing conflict between Russia and Ukraine; • any future repurchases or sales of our common stock or other securities; and • additions or departures of key personnel.
Among the factors that could affect our stock price are: • industry or general market conditions; • domestic and international economic and political factors unrelated to our performance; • changes in our customers’ or their end-users’ preferences; • new regulatory pronouncements and changes in regulatory guidelines; • lawsuits, enforcement actions, and other claims by third parties or governmental authorities; • actual or anticipated fluctuations in our quarterly operating results; • changes in securities analysts’ estimates of our financial performance; • action by institutional stockholders or other large stockholders, including future sales; • comments by public figures or other third parties, including blogs, articles, message boards, and social and other media; • failure to meet any guidance given by us or any change in any guidance given by us, or changes by us in our guidance practices; • announcements by us of significant impairment charges; • speculation in the press or investment community; • investor perception of us and our industry; • changes in market valuations or earnings of similar companies; • announcements by us or our competitors of significant contracts, acquisitions, dispositions, or strategic partnerships; • novel and unforeseen trading strategies adopted by retail investors or other market participants; • war, civil unrest, terrorist acts, and epidemic disease, including the ongoing conflict between Russia and Ukraine, the conflict in the Gaza Strip, and other unrest in the Middle East; • any future repurchases or sales of our common stock or other securities; and • additions or departures of key personnel.
Typically, our Net sales and Net income have been higher in the second and third quarters of each fiscal year due to favorable weather and longer daylight conditions during these quarters. Our Net sales and Net income are typically significantly lower in the first and fourth quarters due to lower landscaping, irrigation, and turf maintenance activities in these quarters.
Typically, our Net sales and Net income are higher in the second and third quarters of each fiscal year due to favorable weather and longer daylight conditions during these quarters. Our Net sales and Net income are typically significantly lower in the first and fourth quarters due to lower landscaping, irrigation, and turf maintenance activities in these quarters.
Also, our business strategies may change from time to time in light of our ability to implement our business initiatives, competitive pressures, economic uncertainties or developments, or other factors. 21 Table of Contents We may be unable to successfully acquire and integrate other businesses.
Also, our business strategies may change from time to time in light of our ability to implement our business initiatives, competitive pressures, economic uncertainties or developments, or other factors. 22 Table of Contents We may be unable to successfully acquire and integrate other businesses.
The majority of our Net sales in our 2022 Fiscal Year were derived from the extension of credit to our customers whose ability to pay is dependent, in part, upon the economic strength of the areas where they operate.
The majority of our Net sales in our 2024 Fiscal Year were derived from the extension of credit to our customers whose ability to pay is dependent, in part, upon the economic strength of the areas where they operate.
We cannot predict the outcome or the severity of the effect of the EPA’s continuing evaluations. 25 Table of Contents The use of certain herbicide and pesticide products is also regulated by various federal, state, provincial, and local environmental and public health agencies. We may be unable to prevent violations of these or other regulations from occurring.
We cannot predict the outcome or the severity of the effect of the EPA’s continuing evaluations. The use of certain herbicide and pesticide products is also regulated by various federal, state, provincial, and local environmental and public health agencies. We may be unable to prevent violations of these or other regulations from occurring.
Market disruptions, such as those experienced in 2008 and 2020, as well as our significant indebtedness levels, may increase our cost of borrowing or adversely affect our ability to refinance our obligations as they become due.
Market disruptions, such as those experienced in 2020, as well as our significant indebtedness levels, may increase our cost of borrowing or adversely affect our ability to refinance our obligations as they become due.
The market price of our common stock may be volatile. The stock market in general and our common stock in particular have recently experienced significant volatility and the market price of our common stock may continue to fluctuate significantly.
The stock market in general and our common stock in particular have recently experienced significant volatility and the market price of our common stock may continue to fluctuate significantly.
Our business, financial condition, results of operations, and cash flows could be adversely affected if any of the foregoing factors were to occur. Risks associated with our labor force and our customers’ labor force could have a significant adverse effect on our business. We have an employee base of approximately 7,000 associates.
Our business, financial condition, results of operations, and cash flows could be adversely affected if any of the foregoing factors were to occur. Risks associated with our labor force and our customers’ labor force could have a significant adverse effect on our business. We have an employee base of approximately 8,300 associates.
Litigation may be necessary to enforce our intellectual property rights and protect our proprietary information, or to defend against claims by third parties that our products, services, or activities infringe their intellectual property rights. We may be subject to unanticipated changes in our tax provisions, including further changes to applicable U.S. tax laws.
Litigation may be necessary to enforce our intellectual property rights and protect our proprietary information, or to defend against claims by third parties that our products, services, or activities infringe their intellectual property rights. 28 Table of Contents We may be subject to unanticipated changes in our tax provisions, including further changes to applicable U.S. tax laws.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is, to the fullest extent permitted by law, the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed to us or our stockholders by any of our directors, officers, other employees, agents, or stockholders, (iii) any action asserting a claim arising out of or under the General Corporation Law of the State of Delaware (the “DGCL”), or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware (including, without limitation, any action asserting a claim arising out of or pursuant to our amended and restated certificate of incorporation or our amended and restated by-laws), or (iv) any action asserting a claim that is governed by the internal affairs doctrine.
In addition, our Charter provides that the Court of Chancery of the State of Delaware is, to the fullest extent permitted by law, the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed to us or our stockholders by any of our directors, officers, other employees, agents, or stockholders, (iii) any action asserting a claim arising out of or under the General Corporation Law of the State of Delaware (the “DGCL”), or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware (including, without limitation, any action asserting a claim arising out of or pursuant to our Charter or By-laws), or (iv) any action asserting a claim that is governed by the internal affairs doctrine.
In connection with the COVID-19 pandemic, and the related increase in work-from-home arrangements, there has been a spike in cybersecurity attacks as work-from-home measures have led businesses to increase reliance on virtual environments and communications systems, which have been subject to increasing third-party vulnerabilities and security risks.
In connection with the increase in work-from-home arrangements, there has been a spike in cybersecurity attacks as work-from-home measures have led businesses to increase reliance on virtual environments and communications systems, which have been subject to increasing third-party vulnerabilities and security risks.
In addition, changes in, or new interpretations of, existing laws, regulations, or enforcement policies as a result of the current presidential administration or otherwise, the discovery of previously unknown contamination, or the imposition of other environmental liabilities or obligations in the future, including obligations with respect to any potential health hazards of our products, may lead to additional compliance or other costs that could have a material adverse effect on our business, financial position, results of operations, and cash flows.
In addition, changes in, or new interpretations of, existing laws, regulations, or enforcement policies, the discovery of previously unknown contamination, or the imposition of other environmental liabilities or obligations in the future, including obligations with respect to any potential health hazards of our products, may lead to additional compliance or other costs that could have a material adverse effect on our business, financial position, results of operations, and cash flows.
Restrictive immigration policies, trends in labor migration, and increases in our customers’ personnel costs or the inability of our customers to hire sufficient personnel, which may be amplified in tight labor market conditions, could adversely impact our business, financial position, results of operations, and cash flows. We depend on a limited number of key personnel.
Changes in immigration laws and regulations, trends in labor migration, and increases in our customers’ personnel costs or the inability of our customers to hire sufficient personnel, which may be amplified in tight labor market conditions, could adversely impact our business, financial position, results of operations, and cash flows. We depend on a limited number of key personnel.
Because of our current indebtedness: • our ability to engage in acquisitions without raising additional equity or obtaining additional debt financing is limited; • our ability to obtain additional financing for working capital, capital expenditures, acquisitions, debt service requirements, or general corporate purposes, and our ability to satisfy our obligations with respect to our indebtedness may be impaired in the future; • a large portion of our cash flow from operations must be dedicated to the payment of principal and interest on our indebtedness, thereby reducing the funds available to us for other purposes; • although we enter into interest rate hedging transactions periodically, we are exposed to the risk of increased interest rates because borrowings under the Credit Facilities and certain floating rate operating and finance leases are at variable rates of interest; • it may be more difficult for us to satisfy our obligations to our creditors, resulting in possible defaults on, and acceleration of, such indebtedness; • we may be more vulnerable to general adverse economic and industry conditions; • we may be at a competitive disadvantage compared to our competitors with proportionately less indebtedness or with comparable indebtedness on more favorable terms and, as a result, they may be better positioned to withstand economic downturns; • our ability to refinance indebtedness may be limited or the associated costs may increase; • our flexibility to adjust to changing market conditions and ability to withstand competitive pressures could be limited; and • we may be prevented from carrying out capital spending and restructurings that are necessary or important to our growth strategy and efforts to improve operating margins of our businesses. 29 Table of Contents Increases in interest rates would increase the cost of servicing our indebtedness and could reduce our profitability.
Because of our current indebtedness: • our ability to engage in acquisitions without raising additional equity or obtaining additional debt financing is limited; • our ability to obtain additional financing for working capital, capital expenditures, acquisitions, debt service requirements, or general corporate purposes, and our ability to satisfy our obligations with respect to our indebtedness may be impaired in the future; • a large portion of our cash flow from operations must be dedicated to the payment of principal and interest on our indebtedness, thereby reducing the funds available to us for other purposes; • although we enter into interest rate hedging transactions periodically, we are exposed to the risk of increased interest rates because borrowings under the Credit Facilities and certain floating rate operating and finance leases are at variable rates of interest; • it may be more difficult for us to satisfy our obligations to our creditors, resulting in possible defaults on, and acceleration of, such indebtedness; • we may be more vulnerable to general adverse economic and industry conditions; • we may be at a competitive disadvantage compared to our competitors with proportionately less indebtedness or with comparable indebtedness on more favorable terms and, as a result, they may be better positioned to withstand economic downturns; • our ability to refinance indebtedness may be limited or the associated costs may increase; • our flexibility to adjust to changing market conditions and ability to withstand competitive pressures could be limited; and • we may be prevented from carrying out capital spending and restructurings that are necessary or important to our growth strategy and efforts to improve operating margins of our businesses. 29 Table of Contents Although the Credit Facilities contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and additional indebtedness incurred in compliance with these restrictions may be significant.
Such water shortages may also make irrigation or the maintenance of turf uneconomical. Governments may implement limitations on water usage, such as those enacted in California, that make effective irrigation or turf maintenance unsustainable, which could negatively impact the demand for our products.
Governments may implement limitations on water usage, such as those enacted in California, that make effective irrigation or turf maintenance unsustainable, which could negatively impact the demand for our products.
Market variables, such as inflation of product costs, labor and fuel rates, and freight and energy costs, as well as other events outside of our control, such as supply shortages, geopolitical conflicts, trade disputes, or health matters like the COVID-19 pandemic, could adversely impact the management of our Cost of goods sold and operating costs in a manner that would prevent us from leveraging our Net sales growth into higher Net income.
Market variables, such as inflation of product costs, labor and fuel rates, and freight and energy costs, as well as other events outside of our control, such as supply shortages, geopolitical conflicts, trade disputes, or public health emergencies, could adversely impact the management of our Cost of goods sold and operating costs in a manner that would prevent us from leveraging our Net sales growth into higher Net income.
Our suppliers’ ability to provide us with products can also be adversely affected in the event they become financially unstable, fail to comply with applicable laws, encounter supply disruptions, shipping interruptions, trade restrictions, tariffs or increased costs, or face other factors beyond our control, including, for example, as a result of the conflict between Russia and Ukraine or the COVID-19 pandemic.
Our suppliers’ ability to provide us with products can also be adversely affected in the event they become financially unstable, fail to comply with applicable laws, encounter supply disruptions, shipping interruptions, trade restrictions, tariffs or increased costs, or face other factors beyond our control, including, for example, as a result of the conflict between Russia and Ukraine, the conflict in the Gaza Strip, and other unrest in the Middle East.
Risks Related to Our Indebtedness • We have outstanding indebtedness and may incur substantial additional indebtedness, which could adversely affect our financial health and our ability to obtain financing in the future, react to changes in our business, or satisfy our obligations. • Increases in interest rates. • The agreements and instruments governing our indebtedness contain restrictions and limitations that could significantly impact our ability to operate our business. • Our ability to generate the significant amount of cash needed to pay interest and principal on our indebtedness and our ability to refinance all or a portion of our indebtedness or obtain additional financing depends on many factors beyond our control.
Risks Related to Our Indebtedness • We have outstanding indebtedness and may incur substantial additional indebtedness, which could adversely affect our financial health and our ability to obtain financing in the future, react to changes in our business, or satisfy our obligations. • Significant or prolonged periods of higher interest rates would increase the costs of servicing our indebtedness and could reduce our profitability. • The agreements and instruments governing our indebtedness contain restrictions and limitations that could significantly impact our ability to operate our business. • Our ability to generate the significant amount of cash needed to pay interest and principal on our indebtedness and our ability to refinance all or a portion of our indebtedness or obtain additional financing depends on many factors beyond our control.
The choice of forum provision in our amended and restated certificate of incorporation may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or any of our directors, officers, other employees, agents, or stockholders, which may discourage lawsuits with respect to such claims.
The choice of forum provision in our Charter may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or any of our directors, officers, other employees, agents, or stockholders, which may discourage lawsuits with respect to such claims.
If the residential construction sector does continue to soften, the timing and extent of any such reduction in homebuilding activity and the resulting impact on demand for landscape supplies are uncertain. Our Net sales also depend, in significant part, on commercial construction, which is cyclical in nature and subject to downturns, which can be severe.
If the softening of this sector continues to persist, the timing and extent of any such reduction in homebuilding activity and the resulting impact on demand for landscape supplies are uncertain. Our Net sales also depend, in significant part, on commercial construction, which is cyclical in nature and subject to downturns, which can be severe.
To the extent such costs increase as a result of inflation or otherwise, we may be prevented, in whole or in part, from passing these cost increases through to our existing and prospective customers, and the rates we pay to our suppliers may increase, any of which could have a material adverse impact on our business, financial position, results of operations, and cash flows The COVID-19 pandemic or other public health emergencies have, and may in the future, adversely affect our business and the business of our customers and suppliers.
To the extent such costs increase as a result of inflation or otherwise, we may be prevented, in whole or in part, from passing these cost increases through to our existing and prospective customers, and the rates we pay to our suppliers may increase, any of which could have a material adverse impact on our business, financial position, results of operations, and cash flows.
For example, the ongoing conflict between Russia and Ukraine, as well as the international response related thereto (e.g., sanctions, export controls, etc.), has and may continue to create economic instability, including, among other things, inflationary pressures causing increases in fuel and other energy costs.
For example, the ongoing conflict between Russia and Ukraine, the conflict in the Gaza Strip, and other unrest in the Middle East, as well as the international responses related thereto (e.g., sanctions, export controls, etc.), has created and may continue to create, economic instability, including, among other things, inflationary pressures causing increases in fuel and other energy costs.
Our third amended and restated certificate of incorporation, or amended and restated certificate of corporation, and third amended and restated by-laws, or amended and restated by-laws, include a number of provisions that may discourage, delay, or prevent a change in our management or control over us that stockholders may consider favorable.
Our fourth amended and restated certificate of incorporation (“Charter”) and third amended and restated by-laws (“By-laws”) include a number of provisions that may discourage, delay, or prevent a change in control over us that stockholders may consider favorable.
As of January 1, 2023, goodwill represented approximately 16% of our total assets. Goodwill is currently not amortized for financial reporting purposes and is subject to impairment testing at least annually using a fair-value based approach. The identification and measurement of goodwill impairment involves the estimation of the fair value of our reporting units.
As of December 29, 2024, goodwill represented approximately 17% of our total assets. Goodwill is currently not amortized for financial reporting purposes and is subject to impairment testing at least annually using a fair-value based approach. The identification and measurement of goodwill impairment involves the estimation of the fair value of our reporting units.
By becoming a stockholder in our company, you will be deemed to have notice of and have consented to the provisions of our amended and restated certificate of incorporation related to choice of forum.
By becoming a stockholder in our company, you will be deemed to have notice of and have consented to the provisions of our Charter related to choice of forum.
For example, in the 2022 Fiscal Year, our supply chains have been and may continue to be negatively impacted by the COVID-19 pandemic, especially with respect to freight and labor availability. When shortages occur, our suppliers often allocate products among distributors.
For example, in the 2022 Fiscal Year, our supply chains were negatively impacted by the COVID-19 pandemic, especially with respect to freight and labor availability. Although our supply chains have since stabilized, when shortages occur, our suppliers often allocate products among distributors.
Additionally, to the extent that Holdings needs funds, and its subsidiaries are restricted from making such distributions under applicable law or regulation or under the terms of our financing arrangements, or are otherwise unable to provide such funds, it could materially adversely affect our business, financial condition, results of operations, and cash flows.
Additionally, to the extent that Holdings needs funds, and its subsidiaries are restricted from providing funding or capital under applicable law or regulation or under the terms of our Credit Facilities, or are otherwise unable to provide such funds, it could materially adversely affect our business, financial condition, results of operations, and cash flows.
The final maturity date of the New Term Loans is March 23, 2028. We may be unable to refinance any of our indebtedness or obtain additional financing, particularly because of our high levels of indebtedness.
The final maturity date of the Tranche B Term Loans is March 22, 2030. We may be unable to refinance any of our indebtedness or obtain additional financing, particularly because of our high levels of indebtedness.
Also, an act of terrorism or war, or the threat thereof, political or civil unrest or uncertainty, pandemics (such as the COVID-19 pandemic), and other catastrophes, could negatively affect our business by interfering with our ability to obtain products from our suppliers or distribute products to our customers.
Also, an act of terrorism or war, or the threat thereof, political or civil unrest or uncertainty, public health emergencies, and other catastrophes, could negatively affect our business by interfering with our ability to obtain products from our suppliers or distribute products to our customers.
Compliance with, or liabilities under, environmental, health and safety laws and regulations, including laws and regulations pertaining to the use and application of fertilizers, herbicides, insecticides, and fungicides, could result in significant costs that adversely impact our reputation, business, financial position, results of operations, and cash flows.
Compliance with, or liabilities under, environmental, health and safety laws and regulations, including laws and regulations pertaining to the use and application of our products as well as climate change legislation, could result in significant costs that adversely impact our reputation, business, financial position, results of operations, and cash flows.
The impact of increases in interest rates could be more significant for us than it would be for some other companies because of our current indebtedness.
The impact of significant or prolonged periods of higher interest rates could be more significant for us than it would be for some other companies because of our current indebtedness.
In addition, if we were to fail to comply with any applicable law or regulation, we could be subject to substantial fines or damages, be involved in litigation, suffer losses to our reputation, or suffer the loss of licenses, or incur penalties that may affect how our business is operated, which, in turn, could have a material adverse impact on our business, financial position, results of operations, and cash flows. 26 Table of Contents In the event of a cybersecurity incident, we could experience operational interruptions, incur substantial additional costs, become subject to legal or regulatory proceedings, or suffer damage to our reputation.
In addition, if we were to fail to comply with any applicable law or regulation, we could be subject to substantial fines or damages, be involved in litigation, suffer losses to our reputation, or suffer the loss of licenses, or incur penalties that may affect how our business is operated, which, in turn, could have a material adverse impact on our business, financial position, results of operations, and cash flows.
Inflation and increases in operating costs have adversely affected, and could in the future, adversely impact our business, financial position, results of operations, and cash flows.
Inflation and increases in operating costs have adversely impacted, and may in the future continue to adversely impact, our business, financial position, results of operations, and cash flows.
As of January 1, 2023, an increase of one percentage point in interest rates would result in an increase of approximately $1.1 million in projected interest payments for the 2023 Fiscal Year based on the amounts outstanding under the ABL Facility and the New Term Loans that were not covered by our interest rate swap contracts.
As of December 29, 2024, an increase of one percentage point in interest rates would result in an increase of approximately $4.0 million in projected interest payments for the 2025 Fiscal Year based on the amounts outstanding under the ABL Facility and the Tranche B Term Loans that were not covered by our interest rate swap contracts.
Our indebtedness under the Credit Facilities bears interest at variable rates, and as a result, increases in interest rates could increase the cost of servicing our indebtedness and could materially reduce our profitability and cash flows.
Our indebtedness under the Credit Facilities bears interest at variable rates, and as a result, significant or prolonged periods of higher interest rates would increase the cost of servicing our indebtedness and could materially reduce our profitability and cash flows.
In addition, acquired businesses may not perform in accordance with expectations, and our business judgments concerning the value, strengths, and weaknesses of acquired businesses may not prove to be correct. We may also be unable to achieve expected improvements or achievements in businesses that we acquire.
In addition, acquired businesses may not perform in accordance with expectations, and our business judgments concerning the value, strengths, and weaknesses of acquired businesses may not prove to be correct. We may also be unable to achieve expected improvements or achievements in businesses that we acquire. Further, systems integration challenges can delay synergy realization and result in margin dilution.
There may also be technical corrections or superseding legislation proposed with respect to tax laws, the risk of which may be elevated due to the current presidential administration, and the effect and timing cannot be predicted and may be adverse to us or our business, financial position, results of operations, and cash flows.
There may also be technical corrections or superseding legislation proposed with respect to tax laws, the risk of which is uncertain in light of the 2024 election results, and the effect and timing cannot be predicted and may be adverse to us or our business, financial position, results of operations, and cash flows.
Such disruptions may result from weather-related events, natural disasters, international trade disputes or trade policy changes or restrictions, tariffs or import-related taxes, third-party strikes, lock-outs, work stoppages or slowdowns, shortages of supply chain labor and truck drivers, shipping capacity constraints, military conflicts, acts of terrorism, public health issues (including pandemics or quarantines (such as the COVID-19 pandemic) and related shut-downs, re-openings, or other actions by the government), civil unrest, or other factors beyond our control.
Such disruptions may result from weather-related events, natural disasters, international trade disputes or trade policy changes or restrictions, tariffs or import-related taxes, third-party strikes, lock-outs, work stoppages or slowdowns, shortages of supply chain labor and truck drivers, shipping capacity constraints, military conflicts, acts of terrorism, public health emergencies, civil unrest, or other factors beyond our control.
For example, many of our contracts with suppliers include prices for commodities such as grass seed and chemicals used in fertilizer that are not fixed or tied to an index, which allows our suppliers to change the prices of their products as the input prices fluctuate. Conversely, we may experience lower Net sales in a deflationary environment.
For example, certain of our contracts with suppliers include prices for commodities such as grass seed and chemicals used in fertilizer that are not fixed or tied to an index, which allows our suppliers to change the prices of their products as the input prices fluctuate.
If we are unable to refinance our indebtedness or access additional credit, or if short-term or long-term borrowing costs dramatically increase, our ability to finance current operations and meet our short-term and long-term obligations could be adversely affected.
If we are unable to refinance our indebtedness or access additional credit, or if short-term or long-term borrowing costs dramatically increase, our ability to finance current operations and meet our short-term and long-term obligations could be adversely affected. Risks Related to Our Common Stock The market price of our common stock may be volatile.
Our various business strategies and initiatives, including our growth, operational, and management initiatives, are subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond our control.
Our various business strategies and initiatives, including our category management, supply chain, sales force, marketing, digital and operational initiatives, are subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond our control.
Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition.
Alternatively, if a court were to find the choice of forum provision contained in our Charter to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition. 32 Table of Contents Item 1B. Unresolved Staff Comments Not applicable.
We may not be able to fully implement our business strategies or realize, in whole or in part within the expected time frames, the anticipated benefits of our various growth, or other initiatives, such as our transportation and customer relationship management systems.
We may not be able to fully implement our business strategies or realize, in whole or in part within the expected time frames, the anticipated benefits of our various growth objectives.
Previously, downturns in the commercial construction market have typically lasted about two to three years, resulting in market declines of approximately 20% to 40%, while the “Great Recession” downturn in the commercial construction market lasted over four years, resulting in a market decline of approximately 60%.
Previously, downturns in the commercial construction market have typically lasted about two to three years, resulting in market declines of approximately 20% to 40%.
We cannot predict the duration of the current market conditions, including the impacts that, among others, inflation and rising interest rates may have or the timing or strength of any future recovery of commercial construction activity in our markets. 16 Table of Contents We also rely, in part, on repair and upgrade of existing landscapes.
Current market conditions, including the impacts that, among others, inflation and higher interest rates for prolonged periods may continue to have on the timing or strength of the recovery of commercial construction activity in our markets cannot be predicted. We also rely, in part, on repair and upgrade of existing landscapes.
Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of our common stock if the provisions are viewed as discouraging takeover attempts in the future.
Even in the absence of a takeover attempt, the existence of these provisions may limit the price that investors might be willing to pay in the future for shares of our common stock and/or adversely affect the prevailing market price of our common stock if the provisions are viewed as discouraging takeover attempts in the future.
In addition, the operating results of an individual branch may differ from that of another branch for a variety of reasons, including market size, management practices, competitive landscape, regulatory requirements, and local economic conditions. As a result, certain of our branches may experience higher or lower levels of growth and profitability than other branches.
In addition, the operating results of an individual branch may differ from that of another branch for a variety of reasons, including market size, management practices, competitive landscape, regulatory requirements, and local economic conditions.
We have filed our tax returns in prior years based upon certain filing positions we believe are appropriate. If the Internal Revenue Service or state taxing authorities disagree with these filing positions, we may owe additional taxes. 28 Table of Contents Acts or threats of terrorism, public health emergencies, violence, or unfavorable or uncertain political conditions could harm our business.
If the Internal Revenue Service or state taxing authorities disagree with these filing positions, we may owe additional taxes. Acts or threats of terrorism, public health emergencies, violence, or unfavorable or uncertain political conditions could harm our business.
In particular, droughts could cause shortages in the water supply, which may have an adverse effect on our business. For instance, our supply of plants could decrease, or prices could rise, due to such water shortages, and customer demand for certain types of plants may change in ways in which we are unable to predict.
For instance, our supply of plants could decrease, or prices could rise, due to such water shortages, and customer demand for certain types of plants may change in ways in which we are unable to predict. Such water shortages may also make irrigation or the maintenance of turf uneconomical.
Risks Related to Our Common Stock • Holdings is a holding company with no operations of its own, and it depends on its subsidiaries for cash to fund all of its operations and expenses, including to make future dividend payments, if any. • The market price of our common stock may be volatile. • Anti-takeover provisions in our third amended and restated certificate of incorporation and third amended and restated by-laws could discourage, delay, or prevent a change of control of our company and may affect the trading price of our common stock. • Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.
Risks Related to Our Common Stock • The market price of our common stock may be volatile. • Holdings is a holding company with no operations of its own, and it depends on its subsidiaries for cash to fund all of its operations and expenses, including to make future dividend payments, if any. • Our organizational documents contain certain provisions that may discourage, delay, or prevent a change of control of our Company and may limit our stockholders’ ability to obtain favorable judicial forum for certain disputes.
High unemployment levels, high mortgage delinquency and foreclosure rates, lower home prices, limited availability of mortgage and home improvement financing, and significantly lower housing turnover, may restrict consumer spending, particularly on discretionary items such as landscape projects, and adversely affect consumer confidence levels and result in reduced spending on repair and upgrade activities.
High unemployment levels, high mortgage delinquency and foreclosure rates, lower home prices, limited availability of mortgage and home improvement financing, and significantly lower housing turnover, may restrict consumer spending, particularly on discretionary items such as landscape projects, and adversely affect consumer confidence levels and result in reduced spending on repair and upgrade activities. 16 Table of Contents Our business is affected by general business, financial market, and economic conditions, which could adversely affect our financial position, results of operations, and cash flows.
Our business is affected by general business, financial market and economic conditions, which could adversely affect our financial position, results of operations, and cash flows. Our business and results of operations are significantly affected by general business, financial market, and economic conditions.
Our business and results of operations are significantly affected by general business, financial market, and economic conditions.
In addition, our business and operating results could be impacted to a greater degree than we previously experienced to the extent that unfavorable weather conditions are exacerbated by global climate change or otherwise. 17 Table of Contents The prices and costs of the products we purchase may be subject to large and significant price fluctuations.
In addition, our business and operating results could be impacted to a greater degree than we previously experienced to the extent that unfavorable weather conditions are exacerbated by global climate change or otherwise. Seasonality affects the demand for our products and services and our results of operations and cash flows.
Accordingly, results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year. Our operations are substantially dependent on weather and climate conditions. We supply landscape, irrigation, and turf maintenance products, the demand for each of which is affected by weather conditions, including, without limitation, potential impacts, if any, from climate change.
Our operations are substantially dependent on weather and climate conditions. We supply landscape, irrigation, and turf maintenance products, the demand for each of which is affected by weather conditions, including, without limitation, potential impacts, if any, from climate change. In particular, droughts could cause shortages in the water supply, which may have an adverse effect on our business.
Changes or modifications to our information technology systems could cause disruptions to our operations or cause challenges with respect to our compliance with laws, regulations, or other applicable standards. 27 Table of Contents A significant or large-scale malfunction or interruption of our systems or the systems of third-party vendors could adversely affect our ability to manage and keep our operations running efficiently and damage our reputation.
A significant or large-scale malfunction or interruption of our systems or the systems of third-party vendors could adversely affect our ability to manage and keep our operations running efficiently and damage our reputation.
In addition, Delaware law may impose requirements that may restrict our ability to pay dividends to holders of our common stock. We do not currently expect to declare or pay dividends on our common stock for the foreseeable future.
We do not currently expect to declare or pay dividends on our common stock for the foreseeable future.
In addition, companies across many industries are facing increasing interest from stakeholders related to their environmental, social, and governance (“ESG”) practices. Investor advocacy groups, certain institutional investors, investment funds and other influential investors are also increasingly focused on ESG practices and in recent years have placed increasing importance on the implications and social cost of their investments.
Investor advocacy groups, certain institutional investors, investment funds and other influential investors are also increasingly focused on these practices and have placed increasing importance on the implications and social cost of their investments.
Inconsistent implementation of corporate strategy and policies at the local level could materially and adversely affect our overall profitability, prospects, business, results of operations, financial condition, and cash flows.
These actions may not achieve their intended benefits and could result in reduced sales, unexpected costs, and disruption to our operations and customer relationships. Inconsistent implementation of corporate strategy and policies at the local level could materially and adversely affect our overall profitability, prospects, business, results of operations, financial condition, and cash flows.
As of January 1, 2023, we had $356.1 million of total long-term consolidated indebtedness outstanding and $58.7 million of finance lease obligations excluding interest.
As of December 29, 2024, we had $393.3 million of total long-term consolidated indebtedness outstanding and $130.6 million of finance lease obligations excluding interest.
Changes in environmental and climate change laws or regulations, including laws relating to greenhouse gas emissions, could lead to new or additional investment in product designs that could increase our environmental compliance expenditures. Such changes in climate change laws or regulations could further subject us to additional costs and restrictions, including increased energy and raw material costs.
Such changes in climate change laws or regulations could further subject us to additional costs and restrictions, including additional investment in product designs and increased energy and raw material costs, as well as increased risk of litigation concerning our disclosures related thereto.
Our business is exposed to these fluctuations, as well as to fluctuations in our costs for transportation and distribution. Changes in prices for the products that we purchase affect our Net sales and Cost of goods sold, as well as our working capital requirements, levels of debt, and financing costs.
Changes in prices for the products that we purchase, including, for example, as a result of changes to trade agreements or policies that result in increased tariffs on goods imported into the United States, affect our Net sales and Cost of goods sold, as well as our working capital requirements, levels of debt, and financing costs.
We rely on our computer and data processing systems, and a large-scale malfunction or failure in our information technology systems could disrupt our business, create potential liabilities for us, or limit our ability to effectively monitor, operate, and control our operations and adversely impact our reputation, business, financial position, results of operations, and cash flows.
We carry cybersecurity insurance to help mitigate the financial exposure and related notification procedures in the event of intentional intrusion, including the July 2020 ransomware attack; however, there can be no assurance that our insurance will adequately protect against potential losses that could adversely affect our business. 27 Table of Contents We rely on our computer and data processing systems, and a large-scale malfunction or failure in our information technology systems could disrupt our business, create potential liabilities for us, or limit our ability to effectively monitor, operate, and control our operations and adversely impact our reputation, business, financial position, results of operations, and cash flows.
Because of the uncertainty of weather volatility related to climate change and any resulting unfavorable weather conditions, we cannot predict its impact on our financial condition, results of operations, or cash flows. Our business exposes us to risks associated with hazardous materials and related activities, not all of which are covered by insurance.
We cannot predict how managing our climate change-related reporting obligations, as well as the consumer and retail impacts of climate change, could have a material adverse effect on our financial condition, results of operations, or cash flows. 19 Table of Contents Our business exposes us to risks associated with hazardous materials and related activities, not all of which are covered by insurance.
From time to time, we may be involved in government inquiries and investigations, as well as tort proceedings, including toxic tort and product liability actions, and employment and other litigation. We cannot predict with certainty the outcomes of these legal proceedings and other contingencies, including environmental investigation, remediation, and other proceedings commenced by government authorities.
Due to the highly regulated nature of certain of our products, from time to time, we may be involved in government inquiries and investigations, as well as tort proceedings, including toxic tort and product liability actions, and employment and other litigation.
Significant additional government regulations, including the Employee Free Choice Act, the Paycheck Fairness Act, and the Arbitration Fairness Act, could materially affect our business, financial condition, and results of operations.
Significant additional government regulations, including the Employee Free Choice Act, the Paycheck Fairness Act, and the Arbitration Fairness Act, could materially affect our business, financial condition, and results of operations. Changes in immigration laws and policies could also affect labor market conditions and workforce availability in our operating regions, potentially increasing competition for workers and related labor costs.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs of January 1, 2023, we operated 636 branches in the following locations: State /Province Number of Locations State /Province Number of Locations California 75 Kansas 5 Florida 67 Louisiana 5 Texas 46 Nevada 5 Virginia 38 Oklahoma 5 North Carolina 36 New Hampshire 4 Massachusetts 28 Oregon 4 New York 26 Kentucky 3 Georgia 22 Nebraska 3 Michigan 20 Utah 3 New Jersey 19 Arkansas 2 South Carolina 17 Delaware 2 Arizona 16 Iowa 2 Ohio 16 Hawaii 1 Illinois 15 Maine 1 Missouri 15 Mississippi 1 Connecticut 13 New Mexico 1 Washington 13 North Dakota 1 Maryland 11 Rhode Island 1 Tennessee 11 South Dakota 1 Pennsylvania 10 Alberta 9 Indiana 9 British Columbia 7 Minnesota 9 Ontario 7 Colorado 8 Saskatchewan 3 Alabama 7 Manitoba 1 Wisconsin 6 Québec 1 Idaho 5 34 Table of Contents
Biggest changeAs of December 29, 2024, we operated 694 branches in the following locations: State /Province Number of Locations State /Province Number of Locations California 79 Idaho 5 Florida 71 Louisiana 5 Texas 64 Nevada 5 North Carolina 39 New Hampshire 5 Virginia 37 Oklahoma 5 Arizona 29 Oregon 4 Massachusetts 29 Arkansas 3 Georgia 24 Kentucky 3 New York 21 Nebraska 3 Colorado 20 Rhode Island 3 Michigan 19 Utah 3 New Jersey 19 Delaware 2 South Carolina 18 Iowa 2 Ohio 16 Hawaii 1 Illinois 15 Maine 1 Connecticut 14 Mississippi 1 Maryland 13 New Mexico 1 Missouri 13 North Dakota 1 Tennessee 13 South Dakota 1 Washington 13 Pennsylvania 10 Alberta 8 Alabama 9 Ontario 8 Indiana 9 British Columbia 6 Minnesota 9 Manitoba 1 Kansas 6 Québec 1 Wisconsin 6 Saskatchewan 1 35 Table of Contents
Item 2. Properties Our corporate headquarters is located on leased premises at 300 Colonial Center Parkway, Suite 600, Roswell, Georgia 30076. Our corporate headquarters is approximately 55,000 square feet and the lease will expire in April 2026. We own and lease a variety of facilities in 45 U.S. states and six Canadian provinces for our branch operations, offices, and storage.
Item 2. Properties Our corporate headquarters is located on leased premises at 300 Colonial Center Parkway, Suite 600, Roswell, Georgia 30076. Our corporate headquarters is approximately 55,000 square feet and the lease will expire in 2037. We own and lease a variety of facilities in 45 U.S. states and six Canadian provinces for our branch operations, offices, and storage.
We primarily lease 5,000 to 15,000 square foot facilities in both freestanding and multi-tenant buildings with secured outside storage yards averaging from 10,000 to 20,000 square feet. As of January 1, 2023, we leased four distribution center facilities across the United States.
We primarily lease 5,000 to 15,000 square foot facilities in both freestanding and multi-tenant buildings with secured outside storage yards averaging from 10,000 to 20,000 square feet. As of December 29, 2024, we leased four distribution center facilities across the United States.
The Carlisle, Pennsylvania distribution center is approximately 201,000 square feet and the Colton, California distribution center is approximately 179,000 square feet, both of which commenced operations in the first quarter of 2018. The significant majority of our facilities are subject to operating leases, and we own 16 properties.
The Carlisle, Pennsylvania distribution center is approximately 201,000 square feet and commenced operations in the first quarter of 2018. The significant majority of our facilities are subject to operating leases, and we own 19 properties.
The Hutchins, Texas distribution center is approximately 338,000 square feet and the Palmetto, Georgia distribution center is approximately 335,000 square feet, both of which commenced operations in the fourth quarter of 2021.
Our West distribution center operations transitioned from Colton, California (approximately 179,000 square feet) to Goodyear, Arizona, which is approximately 392,000 square feet in April 2023. The Hutchins, Texas distribution center is approximately 338,000 square feet and the Palmetto, Georgia distribution center is approximately 335,000 square feet, both of which commenced operations in the fourth quarter of 2021.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAt this time, we do not expect any of these proceedings to have a material effect on our reputation, business, financial position, results of operations, and cash flows. However, we can give no assurance that the results of any such proceedings will not materially affect our reputation, business, financial position, results of operations, and cash flows. Item 4.
Biggest changeHowever, we can give no assurance that the results of any such proceedings will not materially affect our reputation, business, financial position, results of operations, and cash flows. Item 4. Mine Safety Disclosures Not applicable. 36 Table of Contents PART II
Item 3. Legal Proceedings We are not currently involved in any material litigation or arbitration. We anticipate that we will be subject to litigation and arbitration from time to time in the ordinary course of business.
Item 3. Legal Proceedings We are not currently involved in any material litigation or arbitration. We are subject to litigation and arbitration from time to time in the ordinary course of business. At this time, we do not expect any of these proceedings to have a material effect on our reputation, business, financial position, results of operations, and cash flows.
Removed
Mine Safety Disclosures Not applicable. 35 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeFiscal Year Ended Company / Index December 31, 2017 December 30, 2018 December 29, 2019 January 3, 2021 January 2, 2022 January 1, 2023 SiteOne Landscape Supply, Inc. $ 100.00 $ 72.48 $ 117.94 $ 206.82 $ 315.88 $ 152.96 NYSE Composite $ 100.00 $ 90.37 $ 114.49 $ 122.26 $ 147.54 $ 133.75 S&P 400 MidCap $ 100.00 $ 88.01 $ 112.15 $ 127.54 $ 159.12 $ 138.34 Dow Jones US Industrial Suppliers Index $ 100.00 $ 97.10 $ 129.01 $ 163.14 $ 217.97 $ 189.21 Recent Sales of Unregistered Securities None. 37 Table of Contents Purchases of Equity Securities by Issuer and Affiliates Purchasers The following table provides information about the purchases of our common stock made during the three months ended January 1, 2023: Periods Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) (a) October 3, 2022 to November 6, 2022 — $ — — $ — November 7, 2022 to December 4, 2022 30,723 $ 120.43 30,723 $ 396.3 December 5, 2022 to January 1, 2023 180,387 $ 118.06 180,387 $ 375.0 Total 211,110 $ 118.40 211,110 $ 375.0 ______________ (a) In October 2022, our Board of Directors approved a share repurchase authorization for up to $400.0 million of our common stock.
Biggest changeFiscal Year Ended Company / Index December 29, 2019 January 3, 2021 January 2, 2022 January 1, 2023 December 31, 2023 December 29, 2024 SiteOne Landscape Supply, Inc. $ 100.00 $ 175.36 $ 267.83 $ 129.69 $ 179.64 $ 147.81 NYSE Composite $ 100.00 $ 106.79 $ 128.87 $ 116.81 $ 132.90 $ 154.99 S&P 400 MidCap $ 100.00 $ 113.73 $ 141.88 $ 123.35 $ 143.63 $ 164.48 Dow Jones US Industrial Suppliers Index $ 100.00 $ 126.46 $ 168.96 $ 146.67 $ 217.61 $ 248.51 Recent Sales of Unregistered Securities None. 38 Table of Contents Purchases of Equity Securities by Issuer and Affiliates Purchasers The following table provides information about the purchases of our common stock made during the three months ended December 29, 2024: Periods Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) (a) September 30, 2024 - November 3, 2024 — $ — — $ 342.0 November 4, 2024 - December 1, 2024 — $ — — $ 342.0 December 2, 2024 - December 29, 2024 223,421 $ 134.26 223,421 $ 312.0 Total 223,421 $ 134.26 223,421 $ 312.0 ______________ (a) In October 2022, our Board of Directors approved a share repurchase authorization for up to $400.0 million of our common stock.
Dividends We do not expect to declare or pay dividends on our common stock for the foreseeable future. Instead, we intend to retain future earnings, if any, to service our debt, finance the growth and development of our business, fund share repurchases, and for working capital and general corporate purposes.
Dividends We do not expect to declare or pay dividends on our common stock for the foreseeable future. Instead, we intend to retain future earnings, if any, to service our debt, finance the growth and development of our business, fund acquisitions and share repurchases, and for working capital and general corporate purposes.
All values assume a $100 initial investment at the closing price of our common stock on the NYSE and in each index on the last trading day of fiscal year 2017. The data for the NYSE Composite Index, Standard & Poor’s MidCap 400 Index, and Dow Jones US Industrial Supplier Index assumes all dividends were reinvested on the date paid.
All values assume a $100 initial investment at the closing price of our common stock on the NYSE and in each index on the last trading day of fiscal year 2019. The data for the NYSE Composite Index, Standard & Poor’s MidCap 400 Index, and Dow Jones US Industrial Supplier Index assumes all dividends were reinvested on the date paid.
The share repurchase authorization, which was announced on November 2, 2022, does not have an expiration date and may be amended, suspended, or terminated by our Board of Directors at any time. Item 6. [Reserved] 38 Table of Contents
The share repurchase authorization, which was announced on November 2, 2022, does not have an expiration date and may be amended, suspended, or terminated by our Board of Directors at any time. Item 6. [Reserved] 39 Table of Contents
“Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” in this Annual Report on Form 10-K, which information will be set forth in SiteOne’s Proxy Statement for the 2023 Annual Meeting of Stockholders. 36 Table of Contents Stock Performance Graph This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act), or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act of 1933, as amended, or the Exchange Act.
“Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” in this Annual Report on Form 10-K, which information will be set forth in SiteOne’s Proxy Statement for the 2025 Annual Meeting of Stockholders. 37 Table of Contents Stock Performance Graph This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act), or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act of 1933, as amended, or the Exchange Act.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Common Stock Shares of our common stock trade on the NYSE under the symbol “SITE”. As of February 17, 2023, there was one registered holder of our common stock (this excludes stockholders whose shares are held of record by brokers, banks, or other nominees).
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Common Stock Shares of our common stock trade on the NYSE under the symbol “SITE”. As of February 14, 2025, there were three registered holders of our common stock (this excludes stockholders whose shares are held of record by brokers, banks, or other nominees).

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest change(In millions except per share information and percentages, unaudited) 2022 Fiscal Year 2021 Fiscal Year Year Qtr 4 Qtr 3 Qtr 2 Qtr 1 Year Qtr 4 Qtr 3 Qtr 2 Qtr 1 Net sales $ 4,014.5 $ 890.0 $ 1,102.6 $ 1,216.6 $ 805.3 $ 3,475.7 $ 805.2 $ 936.4 $ 1,083.9 $ 650.2 Cost of goods sold 2,593.0 587.4 714.0 755.5 536.1 2,263.1 522.8 595.9 695.7 448.7 Gross profit 1,421.5 302.6 388.6 461.1 269.2 1,212.6 282.4 340.5 388.2 201.5 Selling, general and administrative expenses 1,097.0 304.6 289.2 272.7 230.5 900.6 247.2 235.3 225.8 192.3 Other (income) expense, net (8.6) (2.0) (2.4) (1.7) (2.5) (1.7) (0.1) 1.8 (2.2) (1.2) Operating income 333.1 — 101.8 190.1 41.2 313.7 35.3 103.4 164.6 10.4 Interest and other non-operating expenses, net 20.0 5.5 5.6 4.6 4.3 19.2 5.1 4.3 4.3 5.5 Income tax (benefit) expense 67.7 (4.6) 22.9 44.8 4.6 56.1 2.7 19.1 36.8 (2.5) Net income (loss) $ 245.4 $ (0.9) $ 73.3 $ 140.7 $ 32.3 $ 238.4 $ 27.5 $ 80.0 $ 123.5 $ 7.4 Net income (loss) per common share: Basic $ 5.45 $ (0.02) $ 1.63 $ 3.12 $ 0.72 $ 5.35 $ 0.61 $ 1.79 $ 2.77 $ 0.17 Diluted $ 5.36 $ (0.02) $ 1.60 $ 3.07 $ 0.70 $ 5.20 $ 0.60 $ 1.74 $ 2.70 $ 0.16 Adjusted EBITDA (a) $ 464.3 $ 38.9 $ 135.6 $ 222.0 $ 67.8 $ 415.1 $ 61.8 $ 128.2 $ 190.6 $ 34.5 Net sales as a percentage of annual Net sales 100.0 % 22.2 % 27.5 % 30.3 % 20.0 % 100.0 % 23.2 % 26.9 % 31.2 % 18.7 % Gross profit as a percentage of annual Gross profit 100.0 % 21.3 % 27.3 % 32.4 % 19.0 % 100.0 % 23.3 % 28.1 % 32.0 % 16.6 % Adjusted EBITDA as a percentage of annual Adjusted EBITDA 100.0 % 8.4 % 29.2 % 47.8 % 14.6 % 100.0 % 14.9 % 30.9 % 45.9 % 8.3 % _____________________________________ (a) In addition to our Net income (loss) determined in accordance with GAAP, we present Adjusted EBITDA in this Annual Report on Form 10-K to evaluate the operating performance and efficiency of our business.
Biggest change(In millions except per share information and percentages, unaudited) 2024 Fiscal Year 2023 Fiscal Year Year Qtr 4 Qtr 3 Qtr 2 Qtr 1 Year Qtr 4 Qtr 3 Qtr 2 Qtr 1 Net sales $ 4,540.6 $ 1,013.1 $ 1,208.8 $ 1,413.9 $ 904.8 $ 4,301.2 $ 965.0 $ 1,145.1 $ 1,353.7 $ 837.4 Cost of goods sold 2,980.5 675.5 797.8 903.6 603.6 2,810.0 638.4 757.0 864.3 550.3 Gross profit 1,560.1 337.6 411.0 510.3 301.2 1,491.2 326.6 388.1 489.4 287.1 Selling, general and administrative expenses 1,385.1 364.5 349.1 343.8 327.7 1,256.6 332.8 311.8 320.6 291.4 Other income, net (17.3) (2.0) (8.0) (3.1) (4.2) (15.7) (4.3) (4.9) (2.5) (4.0) Operating income (loss) 192.3 (24.9) 69.9 169.6 (22.3) 250.3 (1.9) 81.2 171.3 (0.3) Interest and other non-operating expenses, net 31.9 6.7 9.5 9.0 6.7 27.1 6.5 6.4 7.3 6.9 Income tax expense (benefit) 36.0 (10.1) 15.8 40.0 (9.7) 49.8 (5.0) 17.5 40.0 (2.7) Net income (loss) $ 124.4 $ (21.5) $ 44.6 $ 120.6 $ (19.3) $ 173.4 $ (3.4) $ 57.3 $ 124.0 $ (4.5) Less: Net income attributable to non-controlling interest 0.8 0.2 0.2 0.4 — — — — — — Net income (loss) attributable to SiteOne $ 123.6 $ (21.7) $ 44.4 $ 120.2 $ (19.3) $ 173.4 $ (3.4) $ 57.3 $ 124.0 $ (4.5) Net income (loss) per common share: Basic $ 2.73 $ (0.48) $ 0.98 $ 2.66 $ (0.43) $ 3.84 $ (0.08) $ 1.27 $ 2.75 $ (0.10) Diluted $ 2.71 $ (0.48) $ 0.97 $ 2.63 $ (0.43) $ 3.80 $ (0.08) $ 1.25 $ 2.71 $ (0.10) Adjusted EBITDA (a) $ 378.2 $ 31.8 $ 114.8 $ 210.5 $ 21.1 $ 410.7 $ 39.9 $ 119.8 $ 211.2 $ 39.8 Net sales as a percentage of annual Net sales 100.0 % 22.3 % 26.6 % 31.2 % 19.9 % 100.0 % 22.4 % 26.6 % 31.5 % 19.5 % Gross profit as a percentage of annual Gross profit 100.0 % 21.7 % 26.3 % 32.7 % 19.3 % 100.0 % 21.9 % 26.0 % 32.8 % 19.3 % Adjusted EBITDA as a percentage of annual Adjusted EBITDA 100.0 % 8.4 % 30.3 % 55.7 % 5.6 % 100.0 % 9.7 % 29.2 % 51.4 % 9.7 % _____________________________________ (a) In addition to our Net income (loss) determined in accordance with GAAP, we present Adjusted EBITDA in this Annual Report on Form 10-K to evaluate the operating performance and efficiency of our business.
Loans under the ABL Credit Agreement bear interest, at Landscape Holding’s option, at either (i) an adjusted term SOFR rate equal to term SOFR plus 0.10% (subject to a floor of 0.00%) plus an applicable margin of 1.25% or 1.50% or (ii) an alternate base rate plus an applicable margin of 0.25% or 0.50%, in each case depending on average daily excess availability under the ABL Credit Agreement, and in each case subject to a 0.125% reduction when the Consolidated First Lien Leverage Ratio (as defined in the ABL Credit Agreement) is less than 1.50:1.00.
Loans under the ABL Credit Agreement bear interest, at Landscape Holding’s option, at either (i) an adjusted term SOFR rate equal to term SOFR plus 0.10% (subject to a floor of 0.00%) plus an applicable margin of 1.25% or 1.50% or (ii) an alternate base rate plus an applicable margin of 0.25% or 0.50%, in each case depending on the average daily excess availability under the ABL Credit Agreement, and in each case subject to a 0.125% reduction when the Consolidated First Lien Leverage Ratio (as defined in the ABL Credit Agreement) is less than 1.50:1.00.
If it becomes probable that the forecasted transaction will not occur, the hedge relationship will be de-designated and amounts accumulated in AOCI will be reclassified to Interest and other non-operating expenses, net in the current period.
If it becomes probable that the forecasted transaction will not occur, the hedge relationship will be de-designated and the amounts accumulated in AOCI will be reclassified to Interest and other non-operating expenses, net in the current period.
As a result, actual results may differ from the assumptions and judgments used to determine the fair values of the assets acquired, which could result in impairment losses in the future. Changes in business conditions may also require future adjustments to the useful lives of assets acquired.
As a result, actual results may differ from the assumptions and judgments used to determine the fair values of the assets acquired, which could result in impairment losses in the future. Changes in business conditions may also require future adjustments to the useful lives of the assets acquired.
If we determine that the useful lives of assets acquired are shorter than we had originally estimated, the rate of amortization would be accelerated over the assets’ new, shorter useful lives.
If we determine that the useful lives of the assets acquired are shorter than we had originally estimated, the rate of amortization would be accelerated over the assets’ new, shorter useful lives.
We believe that Adjusted EBITDA is an important supplemental measure of operating performance because: • Adjusted EBITDA is used to test compliance with certain covenants under our long-term debt agreements; • Adjusted EBITDA is frequently used by securities analysts, investors, and other interested parties in their evaluation of companies, many of which present an Adjusted EBITDA measure when reporting their results; 47 Table of Contents • Adjusted EBITDA is helpful in highlighting operating trends because it excludes the results of decisions that are outside the control of operating management and that can differ significantly from company to company depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate, age and book depreciation of facilities, and capital investments; • we consider (gains) losses on the acquisition, disposal, and impairment of assets as resulting from investing decisions rather than ongoing operations; and • other significant non-recurring items, while periodically affecting our results, may vary significantly from period to period and have a disproportionate effect in a given period, which affects comparability of our results.
We believe that Adjusted EBITDA is an important supplemental measure of operating performance because: • Adjusted EBITDA is used to test compliance with certain covenants under our long-term debt agreements; 48 Table of Contents • Adjusted EBITDA is frequently used by securities analysts, investors, and other interested parties in their evaluation of companies, many of which present an Adjusted EBITDA measure when reporting their results; • Adjusted EBITDA is helpful in highlighting operating trends because it excludes the results of decisions that are outside the control of operating management and that can differ significantly from company to company depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate, age and book depreciation of facilities, and capital investments; • we consider (gains) losses on the acquisition, disposal, and impairment of assets as resulting from investing decisions rather than ongoing operations; and • other significant non-recurring items, while periodically affecting our results, may vary significantly from period to period and have a disproportionate effect in a given period, which affects comparability of our results.
Industry and Key Economic Conditions Our business depends on demand from customers for landscape products and services. The landscape supply industry includes a significant amount of landscape products, such as irrigation systems, outdoor lighting, lawn care supplies, nursery goods, and landscape accessories, for use in the construction of newly built homes, commercial buildings, and recreational spaces.
Industry and Key Economic Conditions Our business depends on demand from customers for landscape products and services. The landscape supply industry includes a significant amount of landscape products, such as irrigation systems, outdoor lighting, lawn care supplies, nursery goods, and landscape accessories, for use in the construction of newly built homes, commercial buildings and facilities, and recreational spaces.
Longer-term projects or significant investments in acquisitions may be financed through borrowings under our credit facilities or other forms of financing and will depend on then-existing conditions. On October 20, 2022, our Board of Directors approved a share repurchase authorization for up to $400.0 million of our common stock.
Longer-term projects or significant investments in acquisitions may be financed through borrowings under our credit facilities or other forms of financing and will depend on then-existing conditions. In October 2022, our Board of Directors approved a share repurchase authorization for up to $400.0 million of our common stock.
We typically have annual supplier agreements, and while they generally do not provide for specific product pricing, many include volume-based financial incentives that we earn by meeting or exceeding purchase volume targets. Our ability to earn these volume-based incentives is an important factor in our financial results.
We typically have annual supplier agreements, and while they generally do not provide specific product pricing, many include volume-based financial incentives that we earn by meeting or exceeding purchase volume targets. Our ability to earn these volume-based incentives is an important factor in our financial results.
Factors that could cause or contribute to these differences include those factors discussed below and elsewhere in this Annual Report on Form 10-K, particularly in “Special Note Regarding Forward-Looking Statements and Information” and “Risk Factors” included elsewhere in this Annual Report on Form 10-K. Overview SiteOne Landscape Supply, Inc.
Factors that could cause or contribute to these differences include those factors discussed below and elsewhere in this Annual Report on Form 10-K, particularly in “Special Note Regarding Forward-Looking Statements and Information” and “Risk Factors”. Overview SiteOne Landscape Supply, Inc.
Strategic Initiatives We continue to undertake operational initiatives, utilizing our scale to improve our profitability, enhance supply chain efficiency, strengthen our pricing and category management capabilities, streamline and refine our marketing process, and invest in more sophisticated information technology systems and data analytics.
Strategic Initiatives We continue to undertake initiatives, utilizing our scale to improve our profitability, enhance supply chain efficiency, strengthen our pricing and category management capabilities, streamline and refine our marketing process, and invest in more sophisticated information technology systems and data analytics.
Significant estimates and assumptions inherent in the valuations reflect a consideration of other marketplace participants and include the amount and timing of future cash flows (including expected growth rates and profitability), a brand’s relative market position, and the appropriate discount rate applied to the cash flows.
Estimates and assumptions inherent in the valuations reflect a consideration of other marketplace participants and include the amount and timing of future cash flows (including expected growth rates and profitability), a brand’s relative market position, and the appropriate discount rate applied to the cash flows.
The Fifth Amendment amends and restates the Amended and Restated Credit Agreement, dated as of April 29, 2016, among the Borrowers, the lenders from time to time party thereto and UBS AG, Stamford Branch (the “Existing Agent”) as administrative agent and collateral agent (as amended prior to March 23, 2021, the “Existing Credit Agreement” and, as so amended and restated pursuant to the Fifth Amendment, the “Second Amended and Restated Credit Agreement”) in order to, among other things, incur $325.0 million of term loans (the “New Term Loans”).
The Fifth Amendment amended and restated the Amended and Restated Credit Agreement, dated as of April 29, 2016, among the Borrowers, the lenders from time to time party thereto and UBS AG, Stamford Branch (the “Existing Agent”) as administrative agent and collateral agent (as amended prior to March 23, 2021, the “Existing Credit Agreement” and, as so amended and restated pursuant to the Fifth Amendment, the “Second Amended and Restated Credit Agreement”) in order to, among other things, incur $325.0 million of term loans (the “New Term Loans”).
During the first quarter of 2021, we amended and restructured certain of our interest rate swap contracts using a strategy commonly referred to as a “blend and extend”.
During the first quarter of 2021, we amended and restructured certain of our interest rate swap contracts using a strategy referred to as a “blend and extend”.
Through our expansive North American network, we offer a comprehensive selection of approximately 155,000 SKUs, including irrigation supplies, fertilizer and control products (e.g., herbicides), hardscapes (including pavers, natural stone, and blocks), landscape accessories, nursery goods, outdoor lighting, and ice melt products to green industry professionals.
Through our expansive North American network, we offer a comprehensive selection of approximately 170,000 SKUs, including irrigation supplies, fertilizer and control products (e.g., herbicides), hardscapes (including pavers, natural stone, and blocks), landscape accessories, nursery goods, outdoor lighting, and ice melt products to green industry professionals.
Refer to “Results of Operations – Quarterly Results of Operations Data” for more information regarding how we calculate EBITDA and Adjusted EBITDA and the limitations of those metrics. 41 Table of Contents Key Factors Affecting Our Operating Results In addition to the metrics described above, a number of other important factors may affect our results of operations in any given period.
Refer to “Results of Operations – Quarterly Results of Operations Data” for more information regarding how we calculate EBITDA and Adjusted EBITDA and the limitations of those metrics. 42 Table of Contents Key Factors Affecting Our Operating Results In addition to the metrics described above, a number of other important factors may affect our results of operations in any given period.
The landscape supply industry also includes a significant amount of agronomic products such as fertilizer, herbicides, and ice melt for use in maintaining existing landscapes or facilities. The use of these products is also tied to general economic activity, but levels of sales are not as closely correlated to construction markets.
The landscape supply industry also includes a significant number of agronomic products such as fertilizer, herbicides, and ice melt for use in maintaining existing landscapes or facilities. The use of these products is also tied to general economic activity, but levels of sales are not as closely correlated to construction markets.
(b) Represents any gain or loss associated with the sale of assets and termination of finance leases not in the ordinary course of business. (c) Represents fees associated with our debt refinancing and debt amendments. (d) Represents professional fees, retention and severance payments, and performance bonuses related to historical acquisitions.
(b) Represents any gain or loss associated with the sale of assets and termination of finance leases not in the ordinary course of business. (c) Represents fees associated with our debt refinancing and debt amendments. (d) Represents professional fees and settlement of litigation, performance bonuses, and retention and severance payments related to historical acquisitions.
Nature of Business and Significant Accounting Policies” to our audited consolidated financial statements included in this Annual Report on Form 10-K, for a description of accounting pronouncements that have been issued but not yet adopted. 57 Table of Contents
Nature of Business and Significant Accounting Policies” to our audited consolidated financial statements included in this Annual Report on Form 10-K, for a description of accounting pronouncements that have been issued but not yet adopted. 59 Table of Contents
In accordance with GAAP, the results of the acquisitions are reflected in our financial statements from the date of acquisition forward. Additionally, we incur transaction costs in connection with identifying and completing acquisitions as well as ongoing costs as we integrate acquired companies and seek to achieve synergies.
In accordance with GAAP, the results of the acquisitions are reflected in our financial statements from the date of acquisition forward. Additionally, we incur transaction costs in connection with identifying and completing acquisitions as well as ongoing costs as we integrate acquired businesses and seek to achieve synergies.
Leases” in the notes to the consolidated financial statements for additional information regarding our lease arrangements. 50 Table of Contents Our purchase obligations include various commitments with vendors to purchase goods and services, primarily inventory.
Leases” in the notes to the consolidated financial statements for additional information regarding our lease arrangements. 51 Table of Contents Our purchase obligations include various commitments with vendors to purchase goods and services, primarily inventory.
(b) 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 2022 Fiscal Year.
(b) 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 2024 Fiscal Year.
Examples of current trends we believe are important to our business include an ongoing interest in professional landscape services inspired by the popularity of home and garden television shows, magazines, and social media, the increasingly popular concept of “outdoor living,” which has been a key driver of sales growth for our hardscapes and outdoor lighting products, and the social focus on eco-friendly products that promote water conservation, energy efficiency, and the adoption of “green” standards.
Examples of current trends we believe are important to our business include an ongoing interest in professional landscape services inspired by the popularity of home and garden television shows, magazines, and social media, the increasingly popular “outdoor living” trend, which has been a key driver of sales growth for our hardscapes and outdoor lighting products, and the social focus on eco-friendly products that promote water conservation, energy efficiency, and the adoption of “green” standards.
As we continue to navigate through the current uncertainty presented by short-term market conditions, we believe that we are well prepared to meet the challenges ahead due to our balanced business, strong financial condition, dedicated and experienced teams, and focused business strategy.
As we continue to navigate through the current uncertainty presented by market and economic conditions, we believe that we are prepared to meet the challenges ahead due to our well-balanced business, strong financial condition, dedicated and experienced teams, and focused business strategy.
If an event of default occurs, the lenders could elect to declare all amounts outstanding under the New Term Loans to be immediately due and payable and enforce their interest in collateral pledged under the agreement.
If an event of default occurs, the lenders could elect to declare all amounts outstanding under the Tranche B Term Loans to be immediately due and payable and enforce their interest in collateral pledged under the agreement.
We have not recorded any material net adjustments or such changes to our inventory reserves during the 2022 Fiscal Year or the 2021 Fiscal Year. Acquisitions Summary: From time to time, we enter into strategic acquisitions in an effort to better service existing customers and to attract new customers.
We have not recorded any material net adjustments or such changes to our inventory reserves during the 2024 Fiscal Year or the 2023 Fiscal Year. Acquisitions Summary: From time to time, we enter into strategic acquisitions in an effort to better service existing customers and to attract new customers.
In certain cases, we have entered into supply contracts with terms that exceed one year for the manufacture of our LESCO ® branded fertilizer, some nursery goods, and grass seed, which may require us to purchase products in the future.
In certain cases, we enter into supply contracts with terms that exceed one year for the manufacture of our LESCO ® branded fertilizer, some nursery goods, grass seed, and hardscapes, which may require us to purchase products in the future.
Popular Consumer Trends Preferences in housing, lifestyle, and environmental awareness can also impact the overall level of demand and mix for the products we offer.
Popular Consumer Trends Preferences in housing, lifestyle, and environmental awareness can also have an impact on the overall level of demand and mix for the products we offer.
The Second Amended and Restated Credit Agreement and the ABL Credit Agreement restrict the ability of our subsidiaries to pay dividends, make loans, or otherwise transfer assets to us.
The agreements governing the Second Amended and Restated Credit Agreement and the ABL Facility restrict the ability of our subsidiaries to pay dividends, make loans, or otherwise transfer assets to us.
Includes Net sales from branches acquired in 2022 and 2021. 49 Table of Contents Liquidity and Capital Resources We assess our liquidity in terms of our cash and cash equivalents on hand and the ability to generate cash to fund our operating and investing activities, repurchase shares, and service our debt, taking into consideration available borrowings and the seasonal nature of our business.
Includes Net sales from branches acquired in 2024 and 2023. 50 Table of Contents Liquidity and Capital Resources We assess our liquidity in terms of our cash and cash equivalents on hand and the ability to generate cash to fund our operating and investing activities, repurchase shares, and service our debt, taking into consideration available borrowings and the seasonal nature of our business.
Adjusted EBITDA represents EBITDA as further adjusted for items such as stock-based compensation expense, (gain) loss on sale of assets and termination of finance leases not in the ordinary course of business, other non-cash items, financing fees, other fees and expenses related to acquisitions, and other non-recurring (income) loss.
Adjusted EBITDA represents EBITDA as further adjusted for items such as stock-based compensation expense, (gain) loss on sale of assets and termination of finance leases not in the ordinary course of business, financing fees, as well as other fees and expenses related to acquisitions, and other non-recurring (income) loss. Adjusted EBITDA includes Adjusted EBITDA attributable to non-controlling interest.
In addition to the metrics discussed above, we believe that Adjusted EBITDA is useful for evaluating the operating performance and efficiency of our business. EBITDA represents our Net income (loss) plus the sum of income tax (benefit) expense, interest expense, net of interest income, and depreciation and amortization.
Operating expenses also include depreciation and amortization. Non-GAAP Adjusted EBITDA . In addition to the metrics discussed above, we believe that Adjusted EBITDA is useful for evaluating the operating performance and efficiency of our business. EBITDA represents consolidated Net income (loss) plus the sum of income tax expense (benefit), interest expense, net of interest income, and depreciation and amortization.
Further, all of our product categories have similar supply chain processes and classes of customers. 40 Table of Contents Key Business and Performance Metrics We focus on a variety of indicators and key operating and financial metrics to monitor the financial condition and performance of our business. These metrics include: Net sales .
In addition, our product categories have similar supply chain processes and classes of customers. 41 Table of Contents Key Business and Performance Metrics We focus on a variety of indicators and key operating and financial metrics to monitor the financial condition and performance of our business. These metrics include: Net sales .
The projected interest payments on our debt only pertain to obligations and agreements outstanding as of January 1, 2023 and expected payments for agent administration fees. The projected interest payments are calculated for future periods through maturity dates of our long-term debt using interest rates in effect as of January 1, 2023.
The projected interest payments on our debt only pertain to obligations and agreements outstanding as of December 29, 2024 and expected payments for agent administration fees. The projected interest payments are calculated for future periods through maturity dates of our long-term debt using interest rates in effect as of December 29, 2024.
There are also other supplier and service arrangements with vendors totaling $49.7 million, of which $26.8 million of payments are expected to be made in the 2023 Fiscal Year. These purchase obligations are generally cancelable, but we have no intent to cancel and incur a penalty for not meeting the minimum required purchases.
There are also other supplier and service arrangements with vendors totaling $87.6 million, of which $46.7 million of payments are expected to be made in the 2025 Fiscal Year. These purchase obligations are generally cancelable, but we have no intent to cancel and incur a penalty for not meeting the minimum required purchases.
The assumptions used to estimate fair value consider historical trends, macroeconomic conditions, and projections consistent with our operating strategy. Changes in these estimates could have a significant effect on whether or not an impairment charge is recorded and the magnitude of such a charge. Adverse market or economic events could result in impairment charges in future periods.
The assumptions used to estimate fair value consider historical trends, macroeconomic conditions, and projections consistent with our operating strategy. Changes in these estimates could have a significant effect on whether or not an impairment charge is recorded and the magnitude of such a charge.
The New Term Loans mature on March 23, 2028. 51 Table of Contents Subject to certain conditions, without the consent of the then existing lenders (but subject to the receipt of commitments), the New Term Loans may be increased (or a new term loan facility, revolving credit facility, or letter of credit facility added) by up to (i) the greater of (a) $275.0 million and (b) 100% of Consolidated EBITDA (as defined in the Second Amended and Restated Credit Agreement) for the trailing 12-month period plus (ii) an additional amount that will not cause the net secured leverage ratio after giving effect to the incurrence of such additional amount and any use of proceeds thereof to exceed 4.00 to 1.00.
Subject to certain conditions, without the consent of the then existing lenders (but subject to the receipt of commitments), the Tranche B Term Loans may be increased (or a new term loan facility, revolving credit facility, or letter of credit facility added) by up to (i) the greater of (a) $392.0 million and (b) 100% of Consolidated EBITDA (as defined in the Second Amendment) for the trailing 12-month period plus (ii) an additional amount that will not cause the net secured leverage ratio after giving effect to the incurrence of such additional amount and any use of proceeds thereof to exceed 4.00 to 1.00.
Capital expenditures have averaged $26.1 million annually from the 2020 Fiscal Year to the 2022 Fiscal Year representing an average of 0.8% of Net sales over this time period. We expect capital expenditures to be in a range of 0.7% to 1.2% as a percentage of Net sales for the 2023 Fiscal Year.
Capital expenditures have averaged $33.2 million annually from the 2022 Fiscal Year to the 2024 Fiscal Year representing an average of 0.8% of Net sales over this time period. We expect capital expenditures to be in a range of 0.8% to 1.4% as a percentage of Net sales for the 2025 Fiscal Year.
Our inventories are generally not susceptible to technological obsolescence. Judgments and Uncertainties: Significant judgment is required to estimate the net realizable value of our inventory as it requires assumptions and projections to be made based off the historical recovery rates for our slower moving inventory. We monitor our inventory levels by branch and record provisions for excess inventories.
Judgments and Uncertainties: Judgment is required to estimate the net realizable value of our inventory as it requires assumptions and projections to be made based on the historical recovery rates for our slower moving inventory. We monitor our inventory levels by branch and record provisions for excess inventories.
Changes in key assumptions resulting in a 10% revision of the estimated fair values of finite-lived intangible assets acquired during the 2022 Fiscal Year would impact amortization of acquisition intangible assets by $11.1 million over a weighted-average amortization period of 17.9 years primarily on an accelerated basis.
Changes in key assumptions resulting in a 10% revision of the estimated fair values of the finite-lived intangible assets acquired during the 2024 Fiscal Year would impact amortization of acquisition intangible assets by approximately $4.0 million over a weighted-average amortization period of 17.7 years primarily on an accelerated basis.
Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations” and “Liquidity and Capital Resources” in our Annual Report on Form 10-K for the fiscal year ended January 2, 2022 filed with the SEC on February 24, 2022, which discussion is incorporated herein by reference.
Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations” and “Liquidity and Capital Resources” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on February 22, 2024, which discussion is incorporated herein by reference.
No material adjustments to the valuation of such assets, impairment loss, or accelerated amortization of intangible assets due to revised useful lives was recorded in the 2022 Fiscal Year or the 2021 Fiscal Year.
No material adjustment to the valuation of such assets, impairment loss, or accelerated amortization of intangible assets due to revised useful lives was recorded in the 2024 Fiscal Year or the 2023 Fiscal Year.
The New Term Loans bear interest, at Landscape Holding’s option, at either (i) an adjusted LIBOR rate plus an applicable margin equal to 2.00% (with a LIBOR floor of 0.50%) or (ii) an alternative base rate plus an applicable margin equal to 1.00%.
The Tranche B Term Loans bear interest, at Landscape Holding’s option, at either (i) an adjusted Term SOFR rate plus an applicable margin equal to 1.75% (with a Term SOFR floor of 0.50%) or (ii) an alternative base rate plus an applicable margin equal to 0.75%.
We are focusing on our procurement and supply chain management initiatives to better serve our customers and reduce sourcing costs. We are also implementing new inventory planning and stocking system functionalities and new transportation management systems in an effort to reduce costs as well as improve our reliability and level of service.
We remain focused on our procurement and supply chain management initiatives to better serve our customers and reduce sourcing costs. We continue to implement new inventory planning, stocking, and transportation management system functionalities in an effort to reduce costs as well as improve our reliability and level of service.
The New Term Loans are subject to mandatory prepayment provisions, covenants, and events of default. Failure to comply with these covenants and other provisions could result in an event of default under the Second Amended and Restated Credit Agreement.
The Tranche B Term Loans are subject to mandatory prepayment provisions, covenants, and events of default. Failure to comply with these covenants and other provisions could result in an event of default under the Second Amendment.
In this case, we would still be obligated to pay the variable interest payments underlying the debt agreements. Additionally, failure of the swap counterparties would not eliminate our obligation to continue to make payments under the existing swap agreements if it continues to be in a net pay position.
In this case, we would still be obligated to pay the variable interest payments underlying the debt agreements. Additionally, failure of the swap counterparties would not eliminate our obligation to continue to make payments under the existing swap agreements if they were in a net pay position. For additional information, refer to “ Note 1 .
The discussion of our financial condition is presented for the 2022 Fiscal Year, which ended on January 1, 2023 and included 52 weeks and 252 Selling Days, and the 2021 Fiscal Year, which ended on January 2, 2022 and included 52 weeks and 253 Selling Days. “Selling Days” are defined below within the “Key Business and Performance Metrics” section.
The discussion of our financial condition is presented for the 2024 Fiscal Year, which ended on December 29, 2024, and the 2023 Fiscal Year, which ended on December 31, 2023, both of which included 52 weeks and 252 Selling Days. “Selling Days” are defined below within the “Key Business and Performance Metrics” section.
The increase in the effective tax rate was due primarily to a decrease in the amount of excess tax benefits from stock-based compensation recognized as a component of Income tax expense in the Consolidated Statements of Operations. Excess tax benefits of $10.4 million were recognized for the 2022 Fiscal Year as compared to $20.2 million for the 2021 Fiscal Year.
The effective tax rate was 22.4% for the 2024 Fiscal Year as compared to 22.3% for the 2023 Fiscal Year. The increase in the effective tax rate was due primarily to a decrease in the amount of excess tax benefits from stock-based compensation recognized as a component of Income tax expense in the Consolidated Statements of Operations.
Long-Term Debt” in the notes to the consolidated financial statements. 54 Table of Contents Critical Accounting Estimates In order to prepare our financial statements in accordance with GAAP, we make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes.
Nature of Business and Significant Accounting Policies” and “ Note 8 . Long-Term Debt” in the notes to the consolidated financial statements. Critical Accounting Estimates In order to prepare our financial statements in accordance with GAAP, we make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes.
The largest purchase obligations include contracts with various farmers that run through the 2025 Fiscal Year and obligate us to make payments for certain nursery products and grass seeds for approximately $125.0 million, which includes expected payments of $77.9 million for the 2023 Fiscal Year.
The largest purchase obligations include contracts with various farmers that run through the 2027 Fiscal Year and obligate us to make payments for grass seeds for approximately $52.9 million, which includes expected payments of $37.6 million for the 2025 Fiscal Year.
The increase in Net income was primarily due to sales growth and gross margin improvement. 46 Table of Contents Quarterly Results of Operations Data The following tables set forth certain financial data for each of the most recent eight fiscal quarters including our unaudited Net sales, Cost of goods sold, Gross profit, Selling, general and administrative expenses, Net income (loss), and Adjusted EBITDA data (including a reconciliation of Adjusted EBITDA to Net income (loss)).
The decrease in Net income was primarily due to the negative impact of commodity product deflation and lower price realization. 47 Table of Contents Quarterly Results of Operations Data The following table sets forth certain financial data for each of the most recent eight fiscal quarters including our unaudited Net sales, Cost of goods sold, Gross profit, Selling, general and administrative expenses, Net income (loss), and Adjusted EBITDA data (including a reconciliation of Adjusted EBITDA to Net income (loss)).
For the discussion of the financial condition and results of operations for the year ended January 2, 2022 compared to the year ended January 3, 2021, refer to “Part II – Item 7.
For the discussion of the financial condition and results of operations for the year ended December 31, 2023 compared to the year ended January 1, 2023, refer to “Part II – Item 7.
Our Cost of goods sold includes all inventory costs, such as the purchase price paid to suppliers, net of any volume-based incentives, as well as inbound freight and handling, and other costs associated with inventory.
Our Cost of goods sold includes all inventory costs, such as the purchase price paid to suppliers, net of any volume-based incentives and discounts, as well as inbound freight and handling, and other costs associated with inventory. Cost of goods sold also includes salaries, wages, employee benefits, payroll taxes, bonuses, depreciation, and amortization related to inventory production activities.
Inventory Valuation Summary: Product inventories represent our largest asset and are recorded at the lower of actual cost or estimated net realizable value. Our goal is to manage our inventory so that we minimize out of stock positions. To do this, we maintain an adequate inventory of approximately 155,000 SKUs and manage inventory at each branch based on sales history.
Inventory Valuation Summary: Product inventories represent our largest asset and are recorded at the lower of actual cost or estimated net realizable value. Our goal is to manage our inventory effectively so that we minimize out of stock positions.
As a result of the determination that the Interest rate swap arrangements executed on March 23, 2021 are hybrid debt instruments containing embedded at-market swap derivatives, we reclassified $5.9 million from Accrued liabilities and Other long-term liabilities to long-term debt with $1.5 million classified as Long-term debt, current portion and $4.4 million classified as Long-term debt, less current portion on our Consolidated Balance Sheets.
We reclassified $5.9 million from Accrued liabilities and Other long-term liabilities to long-term debt with $1.5 million classified as Long-term debt, current portion and $4.4 million classified as Long-term debt, less current portion on our Consolidated Balance Sheets for the interest rate swap arrangements executed during the first quarter of 2021 that were determined to be hybrid debt instruments.
If during the measurement period (a period not to exceed 12 months from the acquisition date) we receive additional information that existed as of the acquisition date but at the time of the original allocation described above was unknown to us, we make the appropriate adjustments to the purchase price allocation in the reporting period the amounts are determined. 55 Table of Contents Judgments and Uncertainties: Significant judgment is required to estimate the fair value of intangible assets and in assigning their respective useful lives.
If during the measurement period (a period not to exceed 12 months from the acquisition date) we receive additional information that existed as of the acquisition date but at the time of the original allocation described above was unknown to us, we make the appropriate adjustments to the purchase price allocation in the reporting period the amounts are determined.
As of January 1, 2023, we had over 630 branch locations in 45 U.S. states and six Canadian provinces.
As of December 29, 2024, we had over 690 branch locations in 45 U.S. states and six Canadian provinces.
Our working capital needs are exposed to these price fluctuations, as well as to fluctuations in our cost for transportation and distribution. We may not always be able to reflect these increases in our pricing. The strategic initiatives described above are designed to reduce our exposure to these fluctuations and maintain and improve our efficiency.
Our working capital needs are exposed to these price fluctuations, as well as to fluctuations in our cost for transportation and distribution. We may not always be able to reflect these changes in our pricing.
Further, our subsidiaries are permitted under the terms of the Second Amended and Restated Credit Agreement and the ABL Credit Agreement and other indebtedness to incur additional indebtedness that may restrict or prohibit the making of distributions, the payment of dividends, or the making of loans to us.
Further, our subsidiaries are permitted under the terms of the Second Amended and Restated Credit Agreement and the ABL Facility and other indebtedness to incur additional indebtedness that may restrict or prohibit the making of distributions, the payment of dividends, or the making of loans to us. 55 Table of Contents Interest Rate Swaps We are subject to interest rate risk with regard to existing and future issuances of debt.
For example, this measure: • does not reflect changes in, or cash requirements for, our working capital needs; • does not reflect our interest expense, or the cash requirements necessary to service interest or principal payments, on our debt; • does not reflect our Income tax (benefit) expense or the cash requirements to pay our income taxes; • does not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; and • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and does not reflect any cash requirements for such replacements.
For example, this measure: • does not reflect changes in, or cash requirements for, our working capital needs; • does not reflect our interest expense, net, or the cash requirements necessary to service interest or principal payments, on our debt; • does not reflect our Income tax expense (benefit) or the cash requirements to pay our income taxes; • does not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; • does not reflect the recognition of the step-up basis in inventory from acquisitions (i.e., the adjustment to record inventory from historic cost to fair value at acquisition) as the adjustment does not reflect the ongoing expense associated with sale of our products as part of our underlying business; and • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and does not reflect any cash requirements for such replacements.
Sensitivity of Estimates to Change: We completed 16 acquisitions during the 2022 Fiscal Year for an aggregate purchase price of $248.7 million and the preliminary valuations of assets acquired included customer relationship intangible assets of $95.8 million and trademarks and other intangible assets of $15.4 million.
Sensitivity of Estimates to Change: We completed seven acquisitions during the 2024 Fiscal Year for an aggregate purchase price of $138.0 million and the preliminary valuations of the assets acquired included customer relationship intangible assets of $34.0 million and trademarks and other intangible assets of $6.3 million.
Cash Flow Summary Information about our cash flows, by category, is presented in our statements of cash flows and is summarized below (in millions): For the year Net cash provided by (used in): January 3, 2022 to January 1, 2023 January 4, 2021 to January 2, 2022 Operating activities $ 217.2 $ 210.8 Investing activities $ (284.4) $ (182.0) Financing activities $ 43.4 $ (30.4) Cash flow provided by operating activities Net cash provided by operating activities for the 2022 Fiscal Year was $217.2 million compared to $210.8 million for the 2021 Fiscal Year.
Cash Flow Summary Information about our cash flows, by category, is presented in our statements of cash flows and is summarized below (in millions): For the year Net cash provided by (used in): January 1, 2024 to December 29, 2024 January 2, 2023 to December 31, 2023 Operating activities $ 283.4 $ 297.5 Investing activities $ (177.1) $ (226.0) Financing activities $ (80.9) $ (18.3) Cash flow provided by operating activities Net cash provided by operating activities for the 2024 Fiscal Year was $283.4 million compared to $297.5 million for the 2023 Fiscal Year.
With one location in the greater Houston, Texas market, Lucky Landscape Supply is a distributor of nursery products to landscape professionals. We expect the execution of synergistic acquisitions to continue to be an integral part of our growth strategy, and we intend to continue expanding our product line, geographic reach, market share, and operational capabilities through future acquisitions.
With five locations in Rhode Island and Southeastern Massachusetts, J&J Materials is a wholesale distributor of hardscapes to landscape professionals. We expect the execution of synergistic acquisitions to continue to be an integral part of our growth strategy, and we intend to continue expanding our product line, geographic reach, market share, and operational capabilities through future acquisitions.
While we have taken, and will continue to take, measures to mitigate the effects of these conditions, we cannot estimate with certainty the full extent of their impact on our business, results of operations, cash flows and/or financial condition.
These conditions are beyond our control, and we cannot estimate with certainty the full extent of their impact on our business, results of operations, cash flows, and/or financial condition.
During the 2022 Fiscal Year, we repurchased 211,110 shares of our common stock at an average price per share of $118.40. As of January 1, 2023, the dollar value of shares that may yet be purchased under the share repurchase authorization was $375.0 million.
During the 2024 Fiscal Year, we repurchased 366,443 shares of our common stock at an average price per share of $140.97. As of December 29, 2024, the dollar value of shares that may yet be purchased under the share repurchase authorization was $312.0 million.
The ABL Facility is subject to mandatory prepayments if the outstanding loans and letters of credit exceed either the aggregate revolving commitments or the current borrowing base, in an amount equal to such excess.
The commitment fees on unfunded amounts was 0.25% as of December 29, 2024 and December 31, 2023. 54 Table of Contents The ABL Facility is subject to mandatory prepayments if the outstanding loans and letters of credit exceed either the aggregate revolving commitments or the current borrowing base, in an amount equal to such excess.
To the extent a reporting unit’s carrying amount exceeds its fair value, the reporting unit’s goodwill is deemed impaired, and an impairment charge is recognized based on the excess of a reporting unit’s carrying amount over its fair value. 56 Table of Contents Judgments and Uncertainties: Significant judgment is required to determine whether impairment indicators exist and to estimate the fair value of our reporting units.
To the extent a reporting unit’s carrying amount exceeds its fair value, the reporting unit’s goodwill is deemed impaired, and an impairment charge is recognized based on the excess of a reporting unit’s carrying amount over its fair value.
Our borrowing base capacity under the ABL Facility was $487.4 million as of January 1, 2023, after giving effect to $100.0 million of revolving credit loans under the ABL Facility and outstanding letters of credit of $11.5 million.
Our borrowing base capacity under the ABL Facility was $578.2 million as of December 31, 2023, after giving effect to $7.5 million of revolving credit loans under the ABL Facility and outstanding letters of credit of $14.3 million.
We believe we will continue to benefit from the following initiatives, among others: • Category management initiatives, including the implementation of organic growth strategies, the development of our private label product strategy, the expansion of product lines, and the reorganization of brands and products by preferred suppliers. • Supply chain initiatives, including the implementation of new inventory planning and stocking systems and functionalities, the installation of new distribution centers, local hubs in large markets, and local fleet utilization and cost improvements. • Sales force performance initiatives, including the implementation of new compensation plans, the restructuring of our sales force, formal sales and product training for our sales force and sales force management, and the implementation of a comprehensive CRM. • Marketing initiatives, including product marketing, customer strategy and analytics, Hispanic customer engagement, implementation of our digital marketing strategy, and the relaunch of our Partners Program. • Digital initiatives, including increasing customer demand and adoption of our website and B2B e-Commerce platform SiteOne.com, which provides the convenience of an online sales channel, enhanced account management functionality, and industry specific productivity tools for our customers. • Operational excellence initiatives, including the implementation of best practices in branch operations which encompasses safety, merchandising, stocking and assortment, customer engagement, delivery, labor management, as well as the additional automation and enhancement of branch systems, including the rollout of barcoding. 44 Table of Contents Working Capital Our business is characterized by a relatively high level of reported working capital, the effects of which can be compounded by changes in prices.
We believe we will continue to benefit from the following initiatives, among others: • Category management initiatives, including the implementation of organic growth strategies, assortment planning, private label expansion, line of business training, and supplier management. • Supply chain initiatives, including the implementation of new inventory planning and stocking system functionalities, the continued expansion of our distribution network footprint and capabilities, local hubs in large markets, inbound freight optimization, and local fleet utilization and cost improvements. • Sales force initiatives, including optimizing our commercial sales strategies, leads, and opportunities, while improving the skills and performance of the team. • Marketing initiatives, including customer analytics and lifecycle marketing, product marketing, Hispanic customer engagement, optimization of our digital marketing strategy, and a continued focus on our Partners Program. • Digital initiatives, including increasing customer demand as well as adoption of our website, mobile application, and overall B2B e-Commerce platform, SiteOne.com, which provides the convenience of an online sales channel, enhanced account management functionality, and industry specific productivity tools for our customers. • Operational excellence initiatives, including the implementation of best practices in branch operations which encompasses safety, merchandising, stocking and assortment, customer engagement, delivery, labor management, as well as the additional automation and enhancement of branch systems, including the rollout of improved associate mobile capabilities.
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 their usefulness as a comparative measure. 48 Table of Contents The following table presents a reconciliation of Adjusted EBITDA to Net income (in millions, unaudited): 2022 Fiscal Year 2021 Fiscal Year Year Qtr 4 Qtr 3 Qtr 2 Qtr 1 Year Qtr 4 Qtr 3 Qtr 2 Qtr 1 Reported Net income (loss) $ 245.4 $ (0.9) $ 73.3 $ 140.7 $ 32.3 $ 238.4 $ 27.5 $ 80.0 $ 123.5 $ 7.4 Income tax (benefit) expense 67.7 (4.6) 22.9 44.8 4.6 56.1 2.7 19.1 36.8 (2.5) Interest expense, net 20.0 5.5 5.6 4.6 4.3 19.2 5.1 4.3 4.3 5.5 Depreciation & amortization 103.8 31.6 27.4 23.1 21.7 83.0 22.3 21.0 20.3 19.4 EBITDA 436.9 31.6 129.2 213.2 62.9 396.7 57.6 124.4 184.9 29.8 Stock-based compensation (a) 18.3 4.3 4.5 5.8 3.7 14.3 3.1 3.5 4.6 3.1 (Gain) loss on sale of assets (b) (0.8) 0.2 (0.7) (0.2) (0.1) (0.1) 0.2 (0.2) (0.2) 0.1 Financing fees (c) 0.3 — 0.1 0.2 — 0.7 — — — 0.7 Acquisitions and other adjustments (d) 9.6 2.8 2.5 3.0 1.3 3.5 0.9 0.5 1.3 0.8 Adjusted EBITDA (e) $ 464.3 $ 38.9 $ 135.6 $ 222.0 $ 67.8 $ 415.1 $ 61.8 $ 128.2 $ 190.6 $ 34.5 _____________________________________ (a) Represents stock-based compensation expense recorded during the period.
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 their usefulness as a comparative measure. 49 Table of Contents The following table presents a reconciliation of Adjusted EBITDA to Net income (loss) (in millions, unaudited): 2024 Fiscal Year 2023 Fiscal Year Year Qtr 4 Qtr 3 Qtr 2 Qtr 1 Year Qtr 4 Qtr 3 Qtr 2 Qtr 1 Reported Net income (loss) $ 124.4 $ (21.5) $ 44.6 $ 120.6 $ (19.3) $ 173.4 $ (3.4) $ 57.3 $ 124.0 $ (4.5) Income tax expense (benefit) 36.0 (10.1) 15.8 40.0 (9.7) 49.8 (5.0) 17.5 40.0 (2.7) Interest expense, net 31.9 6.7 9.5 9.0 6.7 27.1 6.5 6.4 7.3 6.9 Depreciation & amortization 139.0 35.6 35.9 34.6 32.9 127.7 34.6 31.3 31.0 30.8 EBITDA 331.3 10.7 105.8 204.2 10.6 378.0 32.7 112.5 202.3 30.5 Stock-based compensation (a) 25.0 5.5 5.2 3.8 10.5 25.7 5.0 5.0 7.1 8.6 (Gain) loss on sale of assets (b) 0.5 1.5 0.3 (0.3) (1.0) (0.5) (0.1) (0.2) 0.2 (0.4) Financing fees (c) 0.5 — 0.5 — — 0.5 — 0.4 0.1 — Acquisitions and other adjustments (d) 20.9 14.1 3.0 2.8 1.0 7.0 2.3 2.1 1.5 1.1 Adjusted EBITDA (e) $ 378.2 $ 31.8 $ 114.8 $ 210.5 $ 21.1 $ 410.7 $ 39.9 $ 119.8 $ 211.2 $ 39.8 _____________________________________ (a) Represents stock-based compensation expense recorded during the period.
Accordingly, we typically engage third-party valuation specialists, who work under the direction of management, for the more significant acquired tangible and intangible assets.
Judgments and Uncertainties: Judgment is required to estimate the fair value of intangible assets and in assigning their respective useful lives. Accordingly, we typically engage third-party valuation specialists, who work under the direction of management, for the more significant acquired tangible and intangible assets.
This increase was primarily attributable to our acquisition investments and funding the increase in our working capital. We have current maturities on our long-term debt of $4.0 million, which includes $2.5 million related to the term loan facility and $1.5 million related to the hybrid debt instruments.
This increase was primarily attributable to borrowings under the term loans, partially offset by repayment of the ABL Facility. We have current maturities on our long-term debt of $4.3 million, which includes $3.9 million related to the term loan facility and $0.4 million related to the hybrid debt instruments.
The negative covenants limit the ability of Landscape Holding and Landscape to: • incur additional indebtedness; • pay dividends, redeem stock, or make other distributions; • repurchase, prepay, or redeem subordinated indebtedness; • make investments; • create restrictions on the ability of Landscape Holding’s restricted subsidiaries to pay dividends or make other intercompany transfers; • create liens; • transfer or sell assets; • make negative pledges; • consolidate, merge, sell, or otherwise dispose of all or substantially all of Landscape Holding’s assets; • change lines of business; and • enter into certain transactions with affiliates. 52 Table of Contents ABL Facility Landscape Holding and Landscape (collectively, the “ABL Borrowers”) are parties to the credit agreement dated December 23, 2013 (as amended by the First Amendment to the Credit Agreement, dated June 13, 2014, the Second Amendment to the Credit Agreement, dated January 26, 2015, the Third Amendment to the Credit Agreement, dated February 13, 2015, the Fourth Amendment to the Credit Agreement, dated October 20, 2015, the Omnibus Amendment to the Credit Agreement, dated May 24, 2017, the Sixth Amendment to the Credit Agreement, dated February 1, 2019, and the Seventh Amendment to the Credit Agreement, dated July 22, 2022, the “ABL Credit Agreement”) providing for an asset-based credit facility (the “ABL Facility”) of up to $600.0 million, subject to borrowing base availability, with a maturity date of July 22, 2027.
ABL Facility Landscape Holding and Landscape (collectively, the “ABL Borrowers”) are parties to the credit agreement dated December 23, 2013 (as amended by the First Amendment to the Credit Agreement, dated June 13, 2014, the Second Amendment to the Credit Agreement, dated January 26, 2015, the Third Amendment to the Credit Agreement, dated February 13, 2015, the Fourth Amendment to the Credit Agreement, dated October 20, 2015, the Omnibus Amendment to the Credit Agreement, dated May 24, 2017, the Sixth Amendment to the Credit Agreement, dated February 1, 2019, and the Seventh Amendment to the Credit Agreement, dated July 22, 2022, the “ABL Credit Agreement”) providing for an asset-based credit facility (the “ABL Facility”) of up to $600.0 million, subject to borrowing base availability, with a maturity date of July 22, 2027.
Sensitivity of Estimates to Change: During the third quarter of the 2022 Fiscal Year, we performed our annual quantitative assessment of goodwill. No goodwill impairment charge was recorded as a result of the testing and the estimated fair value of each of our reporting units substantially exceeded its carrying value.
No goodwill impairment charge was recorded as a result of the testing and the estimated fair value of each of our reporting units significantly exceeded its carrying value.
Our operating expenses are primarily comprised of Selling, general and administrative costs, which include personnel expenses (salaries, wages, employee benefits, payroll taxes, stock-based compensation, and bonuses), rent, fuel, vehicle maintenance costs, insurance, utilities, repairs and maintenance, and professional fees. Operating expenses also include depreciation and amortization. Non-GAAP Adjusted EBITDA .
Our operating expenses are primarily comprised of Selling, general and administrative costs, which include compensation expenses (salaries, wages, employee benefits, payroll taxes, stock-based compensation, and bonuses), rent and facility related expenses, fleet and delivery related expenses including fuel costs, information technology, marketing, insurance, and repairs and maintenance expenses, as well as credit card processing and professional fees.
Our fiscal quarters end on the Sunday nearest to March 31, June 30, and September 30, respectively.
Our fiscal year is a 52- or 53-week period ending on the Sunday nearest to December 31 in each year. Our fiscal quarters end on the Sunday nearest to March 31, June 30, and September 30, respectively.
With one location in Huntsville, Alabama, Across the Pond is a wholesale distributor of hardscapes and bulk landscape supplies to landscape professionals. • In April 2022, we acquired the assets and assumed the liabilities of Preferred Seed Company, Inc. (“Preferred Seed”).
With one location in New Braunfels, Texas, Eggemeyer is a wholesale distributor of bulk landscape supplies to landscape professionals. • In December 2023, we acquired the assets and assumed the liabilities of Newsom Seed, Inc. (“Newsom Seed”).
Additionally, undrawn commitments under the ABL Credit Agreement bear a commitment fee of 0.20% or 0.25%, depending on the average daily undrawn portion of the commitments under the ABL Credit Agreement. The interest rate on outstanding balances under the ABL Facility ranged from 5.69% to 5.77% as of January 1, 2023.
Additionally, undrawn commitments under the ABL Credit Agreement bear a commitment fee of 0.20% or 0.25%, depending on the average daily undrawn portion of the commitments under the ABL Credit Agreement. There was no outstanding balance under the ABL Facility as of December 29, 2024.
We recognize any differences between the variable interest rate payments and the fixed interest rate settlements from the swap counterparties as an adjustment to interest expense over the life of the swaps.
As of December 29, 2024, approximately $0.4 million was classified as Long-term debt, current portion on our Consolidated Balance Sheets. We recognize any differences between the variable interest rate payments and the fixed interest rate settlements from the swap counterparties as an adjustment to interest expense over the life of the swaps.
Interest Rate Swaps We are subject to interest rate risk with regard to existing and future issuances of debt. We utilize interest rate swap contracts to reduce our exposure to fluctuations in variable interest rates for future interest payments on existing debt.
We utilize interest rate swap contracts to reduce our exposure to fluctuations in variable interest rates for future interest payments on existing debt. We are party to interest rate swap contracts to convert the variable interest rate to a fixed interest rate on portions of the borrowings under the term loans.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeActual interest payments may differ in the future based on additional changes in floating interest rates or other factors and events, including our entry into amendments of the ABL Facility and the New Term Loans . Credit Risk We have a credit policy in place and monitor exposure to credit risk on an ongoing basis.
Biggest changeActual interest payments may differ in the future based on additional changes in floating interest rates or other factors and events, including our entry into amendments of the ABL Facility and the Tranche B Term Loans, as well as new interest rate swap contracts .
We are also exposed to fluctuations in fuel costs as we deliver a substantial portion of the products we sell by truck. We seek to minimize the effects of inflation and changing prices through economies of purchasing and inventory management, resulting in cost reductions and productivity improvements as well as price increases to maintain gross margins.
We are also exposed to fluctuations in fuel costs as we deliver a substantial portion of the products we sell by truck. We seek to minimize the effects of inflation and changing prices through economies of purchasing and inventory management, resulting in cost reductions and productivity improvements as well as price adjustments to maintain gross margins.
Transactions involving derivative financial instruments are with counterparties with which we have a signed netting agreement and which have appropriate credit ratings. We do not expect any counterparty to fail to meet its obligations. 58 Table of Contents
Transactions involving derivative financial instruments are with counterparties with which we have a signed netting agreement and which have appropriate credit ratings. We do not expect any counterparty to fail to meet its obligations. 60 Table of Contents
Interest rate swaps are entered into with the objective of converting variable to fixed rate debt, thereby reducing volatility in borrowing costs. • Loans under the ABL Facility bear interest, at Landscape Holding’s option, at either (i) an adjusted term SOFR rate equal to term SOFR plus 0.10% (subject to a floor of 0.00%) plus an applicable margin of 1.25% or 1.50% or (ii) an alternate base rate plus an applicable margin of 0.25% or 0.50%, in each case depending on average daily excess availability under the ABL Facility, and in each case subject to a 0.125% reduction when the Consolidated First Lien Leverage Ratio (as defined in the ABL Credit Agreement) is less than 1.50:1.00. • The New Term Loans bear interest, at Landscape Holding’s option, at either (i) an adjusted LIBOR rate plus an applicable margin equal to 2.00% (with a LIBOR floor of 0.50%) or (ii) an alternative base rate plus an applicable margin equal to 1.00%.
Interest rate swaps are entered into with the objective of converting variable to fixed rate debt, thereby reducing volatility in borrowing costs. • Loans under the ABL Credit Agreement bear interest, at Landscape Holding’s option, at either (i) an adjusted term SOFR rate equal to term SOFR plus 0.10% (subject to a floor of 0.00%) plus an applicable margin of 1.25% or 1.50% or (ii) an alternate base rate plus an applicable margin of 0.25% or 0.50%, in each case depending on the average daily excess availability under the ABL Credit Agreement, and in each case subject to a 0.125% reduction when the Consolidated First Lien Leverage Ratio (as defined in the ABL Credit Agreement) is less than 1.50:1.00. • The Tranche B Term Loans bear interest, at Landscape Holding’s option, at either (i) an adjusted Term SOFR rate plus an applicable margin equal to 1.75% (with a Term SOFR floor of 0.50%) or (ii) an alternative base rate plus an applicable margin equal to 0.75%.
Bad debt reserves, which we use as a proxy for our bad debt exposure, were approximately 5% of gross receivables as of January 1, 2023. Investments, if any, are only in liquid securities and only with counterparties with appropriate credit ratings.
Bad debt reserves, which we use as a proxy for our bad debt exposure, were approximately 5% of gross receivables as of December 29, 2024. Investments, if any, are only in liquid securities and only with counterparties with appropriate credit ratings.
We perform credit evaluations on all customers requesting credit above a specified exposure level. In the normal course of business, we provide credit to our customers, perform ongoing credit evaluations of these customers, and maintain reserves for potential credit losses.
Credit Risk We have a credit policy in place and monitor exposure to credit risk on an ongoing basis. We perform credit evaluations on all customers requesting credit above a specified exposure level. In the normal course of business, we provide credit to our customers, perform ongoing credit evaluations of these customers, and maintain reserves for potential credit losses.
We performed a sensitivity analysis and determined that an increase of one percentage point in interest rates on our variable-rate debt outstanding at January 1, 2023 would increase our projected interest payments by approximately $1.1 million for the 2023 Fiscal Year.
We performed a sensitivity analysis and determined that an increase of one percentage point in interest rates on our variable-rate debt outstanding at December 29, 2024 would increase our projected interest payments by approximately $4.0 million for the 2025 Fiscal Year.
The portions of our outstanding balances under the ABL Facility and the New Term Loans that were not covered by interest rate swap contracts are subject to variable interest rates.
The portions of our outstanding balance under the Tranche B Term Loans that are not covered by interest rate swap contracts and outstanding balances under the ABL Credit Agreement are subject to variable interest rates.
We are aware of the potentially unfavorable effects inflationary pressures may create through higher asset replacement costs and related depreciation, higher interest rates, and higher material costs. Commodity Risk Our operating performance may be affected by price fluctuations in commodity-based products like grass seeds, fertilizers, and PVC products that we purchase and sell.
Inflationary pressures may also cause potentially unfavorable effects through higher labor costs as well as asset replacement costs and related depreciation, higher interest rates, and higher material costs. Commodity Risk Our operating performance may be affected by price fluctuations in commodity-based products like PVC pipe and grass seed that we purchase and sell.

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