Note ~~6. Capital~~7. Leases

~~Capital~~

The Company determines if an arrangement is a lease at inception of a contract. The Company leases ~~consisting~~equipment and real estate including office space, branch locations, and distribution centers under operating leases. Finance lease obligations consist primarily of the Company’s vehicle fleet. Most leases include one or more options to renew, with renewal terms that can extend the lease term from one year to five years or more. The exercise of lease renewal options is at the Company’s sole discretion. Certain leases include options to purchase the leased property. ROU assets represent the Company's right to use an underlying asset during the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the commencement date based on the net present value of fixed lease payments over the lease term. As most of the Company's operating leases do not provide an implicit interest rate, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Finance lease agreements generally include an interest rate that is used to determine the present value of future lease payments. Variable lease payment amounts that cannot be determined at the commencement of the lease such as increases in lease payments based on changes in index rates or usage, are not included in the ~~following~~ROU assets or lease liabilities and are expensed as incurred and recorded as variable lease expense. Leases with an initial term of 12 months or less are not recorded in the Consolidated Balance Sheets.

The components of lease expense were as follows (in millions):


		Three Months Ended				Six Months Ended
Lease Cost	Classification	July 2, 2023		July 3, 2022		July 2, 2023		July 3, 2022
Finance lease cost:
Amortization of right-of-use assets	Selling, general and administrative expenses	$	4.7	$	3.0	$	8.9	$	6.0
Interest on lease liabilities	Interest and other non-operating expenses, net	0.9		0.4		1.7		0.8
Operating lease cost	Cost of goods sold	2.4		1.5		4.1		3.0
Operating lease cost	Selling, general and administrative expenses	21.1		18.7		41.5		37.1
Short-term lease cost	Selling, general and administrative expenses	0.7		0.5		1.5		1.0
Variable lease cost	Selling, general and administrative expenses	0.2		0.4		0.6		0.6
Sublease income	Selling, general and administrative expenses	(0.2)		(0.3)		(0.4)		(0.6)
Total lease cost		$	29.8	$	24.2	$	57.9	$	47.9

Supplemental cash flow information related to leases was as follows (in millions):


	Three Months Ended				Six Months Ended
Other Information	July 2, 2023		July 3, 2022		July 2, 2023		July 3, 2022
Cash paid for amounts included in the measurements of lease liabilities:
Operating cash flows from finance leases	$	0.9	$	0.4	$	1.7	$	0.8
Operating cash flows from operating leases	$	22.0	$	20.1	$	44.2	$	39.4
Financing cash flows from finance leases	$	4.4	$	2.9	$	8.3	$	5.8
Right-of-use assets obtained in exchange for new lease liabilities:
Finance leases	$	15.3	$	5.2	$	24.0	$	7.1
Operating leases	$	22.9	$	11.3	$	72.7	$	37.3

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October 1, 2017 January 1, 2017
Capital lease obligations with rates ranging from 2.0% to 4.0% with monthly payments of approximately $0.5 million maturing through September 2022 $ 12.8
$ 11.0
Less: current maturities 5.1
4.3
Total capital leases, less current portion $ 7.7
$ 6.7
The aggregate future lease payments for operating and finance leases as of July 2, 2023 were as follows (in millions):


Maturity of Lease Liabilities	Operating Leases		Finance Leases
Fiscal year:
2023 (remainder)	$	38.3	$	11.1
2024	86.0		20.9
2025	73.4		17.8
2026	58.8		14.7
2027	46.7		10.9
2028	35.4		7.3
Thereafter	105.3		1.2
Total lease payments	443.9		83.9
Less: interest	70.8		9.4
Present value of lease liabilities	$	373.1	$	74.5

The weighted-average lease terms and discount rates were as follows:

Lease Term and Discount Rate

July 2, 2023

July 3, 2022

Weighted-average remaining lease term:

Finance leases

4.5 years

4.2 years

Operating leases

6.6 years

6.7 years

Weighted-average discount rate:

Finance leases

5.4

3.9

Operating leases

4.9

4.6

Note 7.8. Employee Benefit and Stock Incentive Plans

The Company sponsors a defined contribution benefit plan for substantially all of its employees. Company contributions to the plan are based on a percentage of employee wages. The Company’s contributions to the plan were ~~approximately $1.5~~$4.8 million and ~~$5.0~~$9.4 million for the three and ~~nine~~six months ended ~~October 1, 2017,~~July 2, 2023, and ~~$1.3~~$3.8 million and ~~$4.3~~$8.2 million for the three and ~~nine~~six months ended ~~October 2, 2016,~~July 3, 2022, respectively.

~~Prior to the adoption of the~~The Company’s Omnibus Equity Incentive Plan (the ~~“Omnibus Incentive~~“2016 Plan”), ~~as described below, the Company offered to key employees the ability to purchase common shares of the Company under a Stock Incentive Plan,~~ which commenced in May 2014 as approved by stockholders. Common stock options (“options”) were granted with the purchased shares at a predetermined number of options per purchased share. Prior to the public offering these shares were not transferrable except upon the employee’s death, repurchase at the option of the Company or with the Company’s consent. The Stock Incentive Plan provided for drag-along and tag-along rights if the stockholders sold more than 50.01% of their shares prior to a public offering. As of the date of IPO, 762,079 shares were purchased by employees and were outstanding under the Stock Incentive Plan; in addition, 20,911 shares were repurchased from certain terminated employees by the Company. The Company’s policy was to retain these repurchased shares as treasury shares and not to retire them.

~~The Company adopted the Omnibus Incentive Plan~~became effective on April 28, 2016, ~~in connection with~~provided for the ~~IPO. Upon adoption~~grant of ~~the Omnibus Incentive Plan, the Stock Incentive Plan terminated and no additional~~ awards were made thereunder. However, awards previously granted under the Stock Incentive Plan were unaffected by the termination of the Stock Incentive Plan. Awards under the Omnibus Incentive Plan may be made in the form of stock options ~~which~~that may be either incentive stock options or non-qualified stock options; stock purchase rights; restricted stock; restricted stock units (“RSUs”); performance shares; performance ~~units;~~stock units (“PSUs”); stock appreciation ~~rights (“SARs”);~~rights; dividend equivalents; deferred stock units (“DSUs”); ~~and~~or other stock-based awards. The Company also has outstanding stock-based awards under its stock incentive plan (“Stock Incentive Plan”), which commenced in May 2014 and terminated upon adoption of the 2016 Plan. However, awards previously granted under the Stock Incentive Plan were unaffected by the termination of the Stock Incentive Plan.

At the 2020 Annual Meeting of Stockholders of the Company on May 13, 2020 (the “Effective Date”), the Company’s stockholders approved the Company’s 2020 Omnibus Equity Incentive Plan (the “2020 Plan”), which replaced the 2016 Plan. The 2020 Plan reserves 2,155,280 shares of the Company’s common stock for issuance under the 2020 Plan, consisting of 1,600,000 new shares plus 555,280 shares that were previously authorized for issuance under the 2016 Plan and that, as of the Effective Date, were not subject to outstanding awards. No further grants of awards will be made under the 2016 Plan; however, outstanding awards granted under the 2016 Plan will remain outstanding and will continue to be administered in accordance with the terms of the 2016 Plan and the applicable award agreements. Any shares covered by an award, or any portion thereof, granted under the ~~Omnibus Incentive~~2020 Plan, 2016 Plan, or Stock Incentive Plan that terminates, is forfeited, is repurchased, expires, or lapses for any reason will again be available for the grant of awards. Additionally, any shares tendered or withheld to satisfy the grant or exercise price or tax withholding obligations pursuant to any award under the ~~Omnibus~~2020 Plan, 2016 Plan, or Stock Incentive Plan will again be available for issuance. The aggregate number of shares that may be issued under the 2020 Plan is 2,155,280 shares of which 1,916,425 remain available as of July 2, 2023.

~~During the nine months ended October 1, 2017, the Company granted 390,998 options, 18,880 DSUs and 46,898 RSUs; in addition, 51,285~~

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Stock options and ~~377~~ RSUs ~~were forfeited, and 13,731 DSUs and 3,084 RSUs were settled in common stock. The RSUs and options~~ granted to employees vest over a four-year period at ~~25 percent~~25% per year. ~~The DSUs granted to non-employee directors vest immediately. Options and RSUs~~Stock options expire ten years after the date of grant. ~~The compensation cost for~~PSUs granted to employees vest upon the achievement of the performance conditions, over a three-year period, measured by the growth of the Company’s pre-tax income plus amortization relative to a select peer group, subject to adjustment based upon the application of a return on invested capital modifier.

RSUs granted to non-employee directors vest at the earlier of the day preceding the next annual meeting of stockholders of the Company at which directors are elected or the first anniversary of the grant date, in each case, subject to the participant’s continued service as a director or other service provider (as applicable) from the grant date through such vesting date. Vested RSUs granted to non-employee directors settle into the Company’s common stock at the earlier to occur of the vesting date, termination of the director’s service on the Company’s Board of Directors, or until a change of control of the Company. Settlement may also be deferred at the director’s election until a specified date after the vesting date. DSUs granted to non-employee directors vest immediately but settlement is deferred until termination of the director’s service on the Company’s Board of Directors or until a change of control of the Company.

In February 2023, the Company’s Human Resources and Compensation Committee approved amendments to the applicable equity award agreements governing the terms of the stock options, RSUs, and PSUs granted under the 2020 Plan. Pursuant to such amendments, all unvested stock options and RSUs ~~is recognized~~granted to an associate after the effective date of the amendments under an applicable award agreement, as amended, will fully vest following the end of their employment, generally in four equal annual installments and expire in 10 years for stock options, if such associate’s combined age (minimum of 55 years of age) and completed years of employment with the Company (minimum of five years of service) equals 65 or more (the “Rule of 65”). The amendments did not alter any equity award agreements outstanding on ~~a straight-line basis over~~or prior to the ~~requisite~~effective date or the pro-rated vesting ~~period. The weighted-average grant-date fair value~~schedule with respect to PSUs, other than to change the definition of ~~options granted was $13.46 per option and 172,896 options have been exercised during~~retirement to reflect the ~~nine months ended October 1, 2017.~~Rule of 65.

The fair value of each stock option ~~award was~~is estimated on the date of grant using the Black-Scholes ~~options~~option pricing model. As of the start of fiscal year 2023, expected volatilities are based on the historical volatility of the Company’s common stock. Prior to fiscal year 2023, expected volatilities were based on the historical equity volatility of comparable publicly traded companies. The change in estimate was due to the length of time the Company’s common stock has been publicly traded now exceeding the expected term of the stock options. The expected term of stock options granted is derived from the output of the option valuation model and represents the period of time that stock options granted are expected to be outstanding. The risk-free rates utilized for periods throughout the contractual life of the stock options are based on the U.S. Treasury security yields at the time of grant. DSUs, RSUs, and ~~RSUs~~PSUs have grant date fair values equal to the fair market value of the underlying stock on the date of grant. Share-based compensation expense is recognized in the financial statements based upon fair value on the date of grant. The compensation cost for stock options and RSUs is recognized on a straight-line basis over the requisite vesting period. The Company ~~recognized share-based~~recognizes compensation expense for PSUs when it is probable that the performance conditions will be achieved. The Company reassesses the probability of ~~approximately $1.5 million~~vesting at each reporting period and ~~$4.5 million~~adjusts its compensation cost accordingly.

A summary of stock-based compensation activities during the six months ended July 2, 2023 was as follows (in thousands):


	Stock Options	RSUs	DSUs	PSUs
Outstanding as of January 1, 2023	971.9	205.3	52.0	52.2
Granted(a)	56.5	116.3	2.7	42.9
Exercised/Vested/Settled(a)(b)	(60.8)	(71.5)	—	(32.0)
Expired or forfeited	(5.1)	(5.7)	—	(0.3)
Outstanding as of July 2, 2023	962.5	244.4	54.7	62.8

______________

(a) PSUs granted includes 16.0 thousand PSUs granted and settled during the six months ended July 2, 2023 at greater than 100% of their original grant amount.

(b) Does not include 21.3 thousand stock options and 18.6 thousand RSUs granted to retirement eligible associates under the Rule of 65. While these shares immediately vested, they have not been settled.

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The weighted average grant date fair value of awards granted were as follows:


	July 2, 2023		July 3, 2022
Stock options	$	72.24	$	57.47
RSUs	$	148.31	$	176.45
DSUs	$	148.09	$	120.83
PSUs(a)	$	148.89	$	146.06

______________

(a) Includes PSUs granted and settled during the six months ended July 2, 2023 and July 3, 2022 at greater than 100% of their original grant amount.

A summary of stock-based compensation expenses recognized during the periods was as follows (in millions):


	Three Months Ended				Six Months Ended
	July 2, 2023		July 3, 2022		July 2, 2023		July 3, 2022
Stock options(a)	$	0.8	$	0.9	$	3.2	$	1.8
RSUs(a)	3.4		2.4		8.8		4.5
DSUs	0.2		0.5		0.3		0.6
PSUs	2.7		2.0		3.4		2.6
Total stock-based compensation	$	7.1	$	5.8	$	15.7	$	9.5

______________

(a) Stock-based compensation expense for the three and ~~nine~~six months ended ~~October 1, 2017, and $1.1 million and $4.1 million~~July 2, 2023 included accelerated expense related to retirement eligible associates under the Rule of 65. These amounts on a net expense basis for the ~~three and nine~~six months ended ~~October~~July 2, ~~2016, respectively. Total~~2023 included $1.4 million related to stock options and $2.5 million related to RSUs.

A summary of unrecognized ~~compensation cost from share-based compensation arrangements as of October 1, 2017 was approximately $12.5 million. Share-based~~stock-based compensation expense ~~is expected to be recognized over a weighted–average period~~was as follows:


	July 2, 2023			January 1, 2023
	Unrecognized Compensation (in millions)		Weighted Average Remaining Period	Unrecognized Compensation (in millions)		Weighted Average Remaining Period
Stock options	$	6.5	2.7 years	$	5.6	2.5 years
RSUs	$	29.4	2.8 years	$	21.7	2.7 years
DSUs	$	0.3	1.3 years	$	0.1	0.9 years
PSUs	$	6.0	1.9 years	$	3.3	1.7 years

Table of ~~approximately 2.63 years.~~Contents

Note 8.9. Long-Term Debt

Long-term debt was as follows (in millions):


	July 2, 2023		January 1, 2023
ABL facility	$	131.3	$	100.0
Term loans	251.5		252.8
Hybrid debt instruments	2.6		3.3
Total gross long-term debt	385.4		356.1
Less: unamortized debt issuance costs and discounts on debt	(4.9)		(5.5)
Total debt	$	380.5	$	350.6
Less: current portion	(4.1)		(4.0)
Total long-term debt	$	376.4	$	346.6

October 1, 2017 January 1, 2017
ABL facility $ 193.7
$ 91.0
Term loan facility 298.0
297.9
Unamortized debt issuance costs and discounts on debt (12.2 ) (13.4 )
Total debt $ 479.5
$ 375.5
Less: current portion 3.0
3.0
Total long-term debt $ 476.5
$ 372.5

ABL Facility

SiteOne Landscape Supply Holding, LLC (“Landscape Holding”) and SiteOne Landscape Supply, LLC (“~~Landscape,”~~Landscape” and together with Landscape Holding, the “Borrowers”), each an indirect wholly-owned subsidiary of the Company, ~~entered into an amended~~are parties to the credit agreement ~~during 2015 (such agreement, as~~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, ~~and~~ 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 ~~$325.0~~$600.0 million, subject to borrowing base availability. ~~The final maturity date of the ABL Facility is October 20, 2020.~~ The ABL Facility is secured by a first lien on the inventory and receivables of the Borrowers. The ABL Facility is guaranteed by SiteOne Landscape Supply Bidco, Inc. (“Bidco”), an indirect wholly-owned subsidiary of the Company, and each direct and indirect wholly-owned U.S. restricted subsidiary of Landscape. The availability under the ABL Facility was ~~$126.9~~$454.4 million and ~~$164.5~~$487.4 million as of ~~October 1, 2017~~July 2, 2023 and January 1, ~~2017,~~2023, respectively. Availability is determined using borrowing base calculations of eligible inventory and receivable balances less the current outstanding ABL Facility and letters of credit balances.

On ~~May 24, 2017,~~July 22, 2022, the Company, through its subsidiaries, entered into the ~~Omnibus~~Seventh Amendment to the ABL Credit Agreement (the ~~“Omnibus~~“Seventh Amendment”) ~~which amends, among other things,~~. The Seventh Amendment amended and restated the ABL Credit Agreement in order to, among other things, ~~update certain provisions relating~~(i) increase the aggregate principal amount of the commitments to ~~secured cash management~~$600.0 million, (ii) extend the final scheduled maturity of the revolving credit facility to July 22, 2027, (iii) establish an alternate rate of interest to the LIBOR rate, (iv) replace the administrative and ~~hedging obligations.~~collateral agent, and (v) make such other changes as agreed among the Borrowers and the lenders. Proceeds of the initial borrowings under the ABL Credit Agreement on the closing date of the Seventh Amendment were used, among other things, (i) to repay in full the loans outstanding under the ABL Credit Agreement immediately prior to the effectiveness of the Seventh Amendment, (ii) to pay fees and expenses related to the Seventh Amendment and the ABL Credit Agreement, and (iii) for working capital and other general corporate purposes.

The interest rate on outstanding balances under the ABL Facility ~~is LIBOR plus an applicable margin ranging~~ranged from ~~1.25%~~6.44059% to 2.00% or an alternate base rate for U.S. denominated borrowings plus an applicable margin ranging from 0.25% to 1.00%. The interest rates on outstanding balances range from 2.99% to 5.00% and 2.49% to 4.50%6.45249% as of ~~October 1, 2017~~July 2, 2023 and ranged from 5.68561% to 5.77336% as of January 1, ~~2017, respectively.~~2023. Additionally, the Borrowers paid a commitment fee of ~~0.250% and 0.375%~~0.25% on the unfunded amount as of ~~October 1, 2017~~July 2, 2023 and a commitment fee of 0.20% on the unfunded amount as of January 1, ~~2017, respectively.~~2023.

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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. Additionally, the ABL Facility is subject to various covenants, ~~requiring~~including incurrence covenants that require the Company to meet minimum financial ratios, and additional borrowings and other corporate transactions may be limited by failure to meet these financial ratios. Failure to meet any of these covenants could result in an event of default under these agreements. If an event of default occurs, the lenders could elect to declare all amounts outstanding under these agreements to be immediately due and payable, enforce their interest in collateral pledged under the agreement, or restrict the Borrowers’ ability to obtain additional borrowings under these agreements. The ABL Facility is secured by a first lien security interest over inventory and receivables and a second lien security interest over all other assets pledged as collateral.

The ABL Facility contains customary representations and warranties and customary affirmative and negative covenants. The negative covenants ~~consist of~~are limited to the following: financial condition, fundamental changes, dividends and distributions, acquisitions, dispositions of collateral, payments and modifications of restricted indebtedness, negative pledge clauses, changes in line of business, currency, commodity and other hedging transactions, transactions with affiliates, investments, ~~limitations on~~ indebtedness, and liens. The negative covenants are subject to ~~the~~ customary exceptions and also permit the payment of dividends and distributions, investments, permitted acquisitions, ~~and~~ payments or redemptions of ~~junior~~ indebtedness under the Second Amended and Restated Credit Agreement, asset sales and mergers, consolidations, and sales of all or substantially all assets involving subsidiaries upon satisfaction of a “payment condition.” The payment ~~condition.~~condition is deemed satisfied upon 30-day specified excess availability and specified availability exceeding agreed upon thresholds and, in certain cases, the absence of specified events of default or known events of default and pro forma compliance with a consolidated fixed charge coverage ratio of 1.00 to 1.00. As of ~~October 1, 2017,~~July 2, 2023, the Company iswas in compliance with ~~these~~all of the ABL Facility covenants.

Term ~~Loan Facility~~Loans

The Borrowers entered into ~~the Term Loan Facility~~a syndicated senior term loan facility dated April 29, 2016, ~~in the amount of $275.0 million,~~ which was amended on November 23, 2016, ~~and on~~ May 24, 2017, ~~(see~~December 12, 2017, and August 14, 2018. On March 23, 2021, the Borrowers entered into the Fifth Amendment to the Amended and Restated Credit Agreement (the “Fifth Amendment”), in order to, among other things, incur $325.0 million of term loans (the “New Term ~~Loan Facility Amendments below)~~Loans”) which were used in part to prepay all of the existing term loans outstanding immediately prior to effectiveness of the Fifth Amendment (the “Tranche E Term Loans”). On March 27, 2023, Landscape Holding, as representative for the Borrowers, entered into the First Amendment to the Second Amended and Restated Credit Agreement (the “Sixth Amendment”), to implement a forward-looking interest rate based on SOFR in lieu of LIBOR. The New Term ~~Loan Facility is~~Loans are guaranteed by Bidco and each direct and indirect wholly-owned U.S. restricted subsidiary of Landscape. The ~~Prior~~New Term ~~Loan Facility has~~Loans are secured by a second lien security interest over inventory and receivables and a first lien security interest over all other assets pledged as collateral. The New Term Loans mature on ~~Property and~~March 23, 2028.

~~equipment, Intangibles, and equity interests of Landscape, and a second lien on ABL Facility assets. The final maturity date~~Amendments of the Term ~~Loan Facility is April 29, 2022.~~Loans

~~Refinancing~~

On ~~April 29, 2016,~~March 27, 2023, the Company, ~~refinanced~~through its ~~then-existing term loan facility with~~subsidiary, Landscape Holding, entered into the Term Loan Facility. The proceeds under the Term Loan Facility were used to repay all $60.3 million of borrowings outstanding under the Prior Term Loan Facility, repay $29.9 million of borrowings outstanding under the ABL Facility, pay a special cash dividend of $176.0 million to existing holders of the Company’s common stock and Redeemable Convertible Preferred Stock (on an as-converted basis) as of April 29, 2016 and pay fees and expenses associated with the refinancing transaction.

~~Term Loan Facility Amendments~~

On November 23, 2016, the Company amended the Term Loan Facility (the “First Amendment”) to, among other things, (i) add an additional credit facility under the Term Loan Facility consisting of additional term loans (the “Tranche B Term Loans”) in an aggregate principal amount of $273.6 million and (ii) increase the aggregate principal amount of Tranche B Term Loans under the Term Loan Facility to $298.6 million pursuant to an increase supplement. Proceeds of the Tranche B Term Loans were used to, among other things, (i) repay in full the term loans outstanding under the Term Loan Facility immediately prior to effectiveness of the FirstSixth Amendment, ~~and pay fees and expenses associated with the transaction and (ii) repay $21.0 million of borrowings outstanding under the ABL Facility.~~

On May 24, 2017, the Company amended the Term Loan Facility (the “Second Amendment”) to, among other things, add an additional credit facility under the Term Loan Facility consisting of additional term loans (the “Tranche C Term Loans”) in an aggregate principal amount of $299.5 million. Proceeds of the Tranche C Term Loans were used to, among other things, repay in full the Tranche B Term Loans outstanding under the Term Loan Facility immediately prior to effectiveness ofwhich amends the Second ~~Amendment~~Amended and ~~pay fees and expenses associated with the transaction.~~

Restated Credit Agreement to implement a forward-looking interest rate based on SOFR in lieu of LIBOR. The ~~Tranche C~~New Term Loans bear interest, at Landscape Holding’s option, at either (i) an adjusted ~~LIBOR (minimum of 1.0%)~~Term SOFR rate plus an applicable margin ~~ranging from 3.25%~~equal to ~~3.50%~~2.00% (with a Term SOFR floor of 0.50% on initial term loans and 0.00% on all other term loans) or (ii) an alternative base rate plus an applicable margin ~~ranging from 2.25%~~equal to ~~2.50%~~1.00%. ~~Tranche C Term Loans will mature on April 29, 2022. The other terms~~Voluntary prepayments of the ~~Tranche C~~New Term Loans are ~~generally~~permitted at any time, in minimum principal amounts, without premium or penalty, subject to a 1.00% premium payable in connection with certain repricing transactions if the ~~same as~~transactions occurred within the ~~terms applicable to~~first 12 months after the ~~Tranche B~~date of the initial funding of the New Term Loans. The interest rate on the outstanding balance of the New Terms Loans was ~~4.74%~~7.21697% at ~~October 1, 2017.~~July 2, 2023. Refer to “Note 13. Subsequent Events” for information regarding amendments to the New Term Loans subsequent to July 2, 2023.

On March 23, 2021, the Company, through its subsidiaries, entered into the Fifth Amendment, by and among the Borrowers, JPMorgan Chase Bank, N.A. (the “New Agent”), as administrative agent and collateral agent, the several banks and other financial institutions party thereto, and certain other parties party thereto from time to time. 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, (i) incur $325.0 million of term loans, (ii) replace the Existing Agent as administrative and collateral agent with the New Agent, and (iii) make such other changes in the Second Amended and Restated Credit Agreement as agreed among the Borrowers and the lenders. Proceeds of the New Term Loans were used, among other things, (i) to repay in full the Tranche E Term Loans outstanding under the Existing Credit Agreement immediately prior to effectiveness of the Fifth Amendment, (ii) to pay fees and expenses related to the Fifth Amendment and the Second Amended and Restated Credit Agreement, and (iii) for working capital and other general corporate purposes.

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The ~~Term Loan Facility~~Second Amended and Restated Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants. The negative covenants ~~consist of~~are limited to the following: limitations on indebtedness, restricted payments, restrictive agreements, sales of assets and subsidiary stock, transactions with affiliates, liens, fundamental changes, amendments, and lines of business. The negative covenants are subject to exceptions customary for transactions of the ~~customary exceptions. As of October 1, 2017, the Company is in compliance with these covenants.~~type.

The New Term ~~Loan Facility is also~~Loans are payable in consecutive quarterly installments equal to 0.25% of the aggregate initial principal amount of the New Term Loans until the maturity date. In addition, the New Term Loans are subject to annual mandatory prepayments in an amount equal to 50% of excess cash flow, as defined in the Second Amended and Restated Credit Agreement for the applicable fiscal year if 50% of excess cash flow exceeds $15.0 million and the secured leverage ratio is ~~equal to or~~ greater than 3.00 to 1.00. There are also mandatory prepayments with the proceeds of certain asset sales and from the issuance of debt not permitted to be incurred under the Second Amended and Restated Credit Agreement. As of July 2, 2023, the Company was in compliance with all of the Second Amended and Restated Credit Agreement covenants.

Interest Expense

During the three and ~~nine~~six months ended ~~October 1, 2017,~~July 2, 2023, the Company incurred total interest expense of ~~$6.2~~$7.3 million and ~~$19.0~~$14.2 million, ~~respectively. Of this total, $5.4~~respectively, of which $6.3 million and ~~$16.4~~$12.2 million related to interest on the ABL Facility and the ~~Term Loan Facility~~term loans for the three and ~~nine~~six months ended ~~October 1, 2017,~~July 2, 2023, respectively. ~~The debt~~Debt issuance costs and discounts are amortized as interest expense over the life of the debt. As a result of the amendments of the Term Loan Facility, unamortized debt issuance costs and discounts in the amount of $0.0 million and $0.1 million, were written off to expense for the three and nine months October 1, 2017, respectively, and new debt issuance costs of $0.0 million and $1.0 million, were capitalized for the three and nine months October 1, 2017, respectively. Amortization expense related to debt issuance costs and discounts ~~were $0.7~~was $0.2 million and ~~$2.2~~$0.5 million for the three and ~~nine~~six months ended ~~October 1, 2017,~~July 2, 2023, respectively. The remaining ~~$0.1~~$0.8 million and ~~$0.3~~$1.5 million of interest ~~incurred for three and nine months ended October 1, 2017, respectively,~~expense is primarily related to interest attributable to ~~capital leases.~~finance leases, partially offset by interest income for the three and six months ended July 2, 2023, respectively.

During the three and ~~nine~~six months ended ~~October 2, 2016~~July 3, 2022, the Company incurred total interest expense of ~~$6.3~~$4.6 million and ~~$15.4~~$8.9 million, ~~respectively. Of this total, $5.6~~respectively, of which $3.9 million and ~~$12.2~~$7.5 million related to interest on the ABL Facility and ~~Term Loan Facility~~the term loans for the three and ~~nine~~six months ended~~October 2, 2016,~~ July 3, 2022, respectively. ~~The debt~~Debt issuance costs and discounts are amortized as interest expense over the life of the debt. As a result of the refinancing of the Term Loan Facility, unamortized debt issuance costs and discounts in the amount of $0.0 million and $1.2 million, were written off to expense for the three and nine months October 2, 2016, respectively, and new discounts and debt issuance costs of $0.0 million and $6.3 million, were capitalized for the three and nine months October 2, 2016, respectively. Amortization expense related to debt issuance costs and discounts ~~were $0.6~~was $0.3 million and ~~$3.0~~$0.6 million for the three and ~~nine~~

six months ended ~~October 2, 2016,~~July 3, 2022, respectively. The remaining ~~$0.1~~$0.4 million and ~~$0.2~~$0.8 million of interest ~~incurred for the three and nine months ended October 2, 2016, respectively,~~expense primarily related to interest attributable to ~~capital leases.~~finance leases for the three and six months ended July 3, 2022, respectively.

Hybrid Debt Instruments

During the first quarter of 2021, the Company 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 its Consolidated Balance Sheets since the interest rate swap arrangements executed on March 23, 2021 were determined to be hybrid debt instruments containing embedded at-market swap derivatives. As of July 2, 2023, approximately $1.5 million was classified as Long-term debt, current portion and approximately $1.1 million was classified as Long-term debt, less current portion on the Company’s Consolidated Balance Sheets. Refer to “Note 4. Fair Value Measurement and Interest Rate Swaps” for additional information regarding interest rate swaps and hybrid debt instruments.

Note 9.10. Income Taxes

The Company’s effective tax rate was approximately ~~36.8%~~23.8% for the ~~nine~~six months ended ~~October 1, 2017~~July 2, 2023 and ~~41.2%~~approximately 22.2% for the ~~nine~~six months ended ~~October 2, 2016, respectively.~~July 3, 2022. The ~~decrease~~increase in the effective rate was due primarily to ~~(i) the adoption of ASU 2016-09~~a decrease in the ~~first quarter of 2017, which resulted in the recognition~~amount of excess tax benefits from stock-based compensation recognized as a component of Income tax expense in the Company’s Consolidated Statements of ~~Operations, and (ii) a reduction in nondeductible transaction costs incurred during~~Operations. The Company recognized excess tax benefits of $1.9 million for the ~~nine~~six months ended ~~October 1, 2017 as compared to~~July 2, 2023, and $7.4 million for the ~~nine~~six months ended ~~October 2, 2016.~~July 3, 2022. The Company’s effective tax rate differs from its statutory rate based on a variety of factors, including overall profitability, the geographical mix of income taxes, and the related tax rates in the jurisdictions in which it operates.

~~In accordance with the provisions of ASC Topic 740 Income Taxes, the~~

The Company provides a valuation allowance against deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The assessment considers all available positive and negative evidence and is measured quarterly. The Company maintains a valuation allowance against certain state deferred tax assets where sufficient negative evidence exists to require a valuation allowance. During the ~~nine~~six months ended ~~October 1, 2017~~July 2, 2023 and ~~October 2, 2016, respectively,~~July 3, 2022, the Company recorded no material increases or decreases to the valuation allowance against deferred tax assets.

~~Note 10. Related Party Transactions~~

~~In December 2013, CD&R Landscapes Holdings, L.P. (the “CD&R Investor”), an affiliate~~

Table of Clayton Dubilier & Rice, LLC (“CD&R”), acquired a majority stake in the Company (the “CD&R Acquisition”). Prior to the CD&R Acquisition, Deere & Company (“Deere”) was the sole owner of the Company. Following consummation of the secondary offering on July 26, 2017 (as described in Note 1), CD&R and Deere no longer have an ownership interest in the Company. Transactions with customers and entities that were under the common ownership of CD&R and Deere through July 26, 2017 are considered related-party transactions and are discussed below.Contents

In connection with the CD&R Acquisition, the Company entered into consulting agreements (the “Consulting Agreements”) with each of CD&R and Deere. CD&R and Deere each provided consulting services under the Consulting Agreements at an annual fee of $1.3 million plus expense reimbursement and $0.7 million plus expense reimbursement, respectively, for a 10-year term or earlier termination if CD&R’s or Deere’s ownership, respectively, of the Company was reduced below 10%. On May 17, 2016, the Company entered into termination agreements with CD&R and Deere pursuant to which the Company paid CD&R and Deere an aggregate fee of approximately $7.5 million to terminate the Consulting Agreements in connection with the IPO. See “Note 12. Redeemable Convertible Preferred Stock” for a discussion of dividends paid to the CD&R investor.

The Company offers a financing plan to its customers through John Deere Financial, a wholly-owned subsidiary of Deere. The Company paid John Deere Financial fees related to the financing offered of approximately $0.3 million from January 2, 2017 through July 26, 2017 and $0.4 million for the nine months ended October 2, 2016, respectively.

TruGreen is a customer under common ownership of CD&R and therefore became a related party at the time of the CD&R Acquisition. As provided above, TurGreen is no longer a related party as a result of the consummation of the secondary offering on July 26, 2017. Net sales included in the Company’s Consolidated Statement of Operations with TruGreen were $0.4 million from July 3, 2017 through July 26, 2017 and $4.3 million from January 2, 2017 through July 26, 2017, and $1.1 million and $3.2 million for the three and nine months ended October 2, 2016, respectively. Accounts receivable included in the Company’s consolidated balance sheets were $0.4 million at January 1, 2017.

Note 11. Commitments and Contingencies

Environmental liability: As part of the sale by LESCO, Inc. of its manufacturing assets in 2005, the Company retained the environmental liability associated with those assets. Remediation activities can vary substantially in duration and cost and it is difficult to develop precise estimates of future site remediation costs. The Company ~~estimated~~recorded in ~~accrued~~Other long-term liabilities the undiscounted cost estimate of future remediation efforts ~~to be approximately $4.0~~of $3.9 million and ~~$4.0~~$3.9 million as of ~~October 1, 2017~~July 2, 2023 and January 1, ~~2017,~~2023, respectively. As part of the CD&R Acquisition, Deere & Company agreed to pay the first $2.5 million of the liability and ~~cap~~ the Company’s exposure tois capped at $2.4 million. The Company has recorded an indemnification asset in Other ~~Assets~~assets against the liability as a result of these actions of ~~approximately $1.6~~$1.5 million and ~~$1.6~~$1.5 million as of ~~October 1, 2017~~July 2, 2023 and January 1, ~~2017,~~2023, respectively.

Letters of credit: As of ~~October 1, 2017~~July 2, 2023 and January 1, ~~2017,~~2023, outstanding letters of credit were ~~$4.5~~$14.3 million and ~~$2.9~~$11.5 million, respectively. There were no amounts drawn on the letters of credit for either period presented.

Note 12. ~~Redeemable Convertible Preferred Stock~~

~~The CD&R Equity Investment~~

In connection with the CD&R Acquisition, the Company issued Redeemable Convertible Preferred Stock to the CD&R Investor. On the day prior to the closing of the IPO, all of the then-outstanding Redeemable Convertible Preferred Stock converted into shares of common stock, resulting in the issuance by the Company of an additional 25,303,164 shares of common stock.

The initial issuance of Redeemable Convertible Preferred Stock did not include a beneficial conversion feature (“BCF”) because the conversion price used to set the conversion ratio at the time of issuance was greater than the initial common stock price. The Redeemable Convertible Preferred Stock was entitled to a 12% fixed, cumulative dividend payable quarterly in cash or in-kind. Dividends, to the extent paid-in-kind in the form of Redeemable Convertible Preferred Stock, contained the same conversion price as the original issuance and in certain cases did include a BCF as of the dividend payment date. Since the Redeemable Convertible Preferred Stock did not have a fixed or determinable redemption date and was freely convertible at any time, the Company immediately amortized any BCF recognized through retained earnings. As disclosed in Note 1, on May 2, 2016, the Company paid a one-time special cash dividend to all existing stockholders as of April 29, 2016. CD&R Investor received $112.4 million in accordance with its right to participate in all distributions to common stock on an as-converted basis, as provided by its right as a preferred stockholder. The Redeemable Convertible Preferred Stock converted to common stock in accordance with its terms on May 16, 2016. During the nine months ended October 2, 2016, the Company paid the cumulative dividends in cash; and accordingly, no BCF was recognized.

~~Note 13.~~ Earnings (Loss) Per Share

~~Basic~~The Company computes basic earnings (loss) per ~~common~~ share ~~is computed~~(“EPS”) by dividing ~~net~~Net income (loss) attributable to common shares by the weighted average number of common shares outstanding for the period. The Redeemable Convertible Preferred Stock had the right to participate in all distributions declared and paid on the Company’s common stock on an as-converted basis, and was therefore considered a participating security. The Company ~~calculates~~includes vested RSUs, DSUs, and PSUs that have not been settled in common shares in the basic ~~earnings (loss) per share using the “two-class” method, and for the period ended October 2, 2016 did not allocate the loss available to~~weighted average number of common stockholders to the Redeemable Convertible Preferred Stock as those holders did not have a contractual obligation to share in net losses. In periods with income available to common stockholders, the Company would reduce income available to common stockholders to reflect the hypothetical distribution of undistributed earnings to the Redeemable Convertible Preferred Stock in accordance with its contractual rights. The Company reduced income available to common stockholders and increased loss available to common stockholders to reflect the cumulative dividend on the Company’s Redeemable Convertible Preferred Stock whether or not declared or paid during the period. See Note 12 for a detailed description of the terms of the Redeemable Convertible Preferred Stock.

shares calculation. The Company’s computation of diluted EPS reflects the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common stock, which include in-the-money outstanding stock options and RSUs. PSUs are excluded from the calculation of dilutive potential common shares until the performance conditions have been achieved on the basis of the assumption that the end of the reporting period was the end of the contingency period, if such shares issuable are dilutive. Using the treasury stock method, the effect of dilutive securities includes the additional shares of common stock that would have been outstanding based on the assumption that these potentially dilutive securities had been issued. The treasury stock method assumes proceeds from the exercise price of stock options and the unamortized compensation expense of RSUs and stock options are used to repurchase common shares at the average market price during the period, thus reducing the dilutive effect. RSUs and stock options with assumed proceeds per unit above the Company’s average share price for the periods presented are excluded from the diluted EPS calculation because the effect is anti-dilutive.

The following table sets forth the computation of the weighted average number of diluted common shares outstanding for the three and six months ended July 2, 2023 and July 3, 2022:


	Three Months Ended		Six Months Ended
	July 2, 2023	July 3, 2022	July 2, 2023	July 3, 2022
Shares used in the computation of basic earnings per share	45,093,712	45,034,633	45,069,781	44,985,199
Effect of dilutive securities:
Stock options	522,323	635,974	523,413	723,948
RSUs and PSUs	57,512	96,983	59,823	96,908
DSUs	9,429	11,583	8,516	7,999
Shares used in the computation of diluted earnings per share	45,682,976	45,779,173	45,661,533	45,814,054

The diluted earnings ~~(loss)~~ per common share ~~includes~~calculation for the three months ended July 2, 2023 and July 3, 2022 excluded the effect of 238,178 and 269,177 potential shares of common stock, ~~if dilutive. For the three and nine months ended October 1, 2017 and October 2, 2016,~~respectively, because the assumed exercises of a portion of the Company’s employee stock options and RSUs ~~DSUs~~were anti-dilutive. In addition, the diluted earnings per common share calculation for the six months ended July 2, 2023 and July 3, 2022 excluded the ~~assumed conversion~~anti-dilutive effect of ~~all of the Redeemable Convertible Preferred Stock were anti-dilutive~~233,704 and ~~therefore, the following~~246,083 potential shares of common stock, ~~were not included in the diluted earnings (loss) per common share calculation:~~respectively.

For the three months ended For the nine months ended
October 1, 2017 October 2, 2016 October 1, 2017 October 2, 2016
Weighted average potential common shares excluded because anti-dilutive
Redeemable Convertible Preferred stock —
—
—
12,270,493
Employee stock options, RSUs and DSUs 18,548
11,988
6,632
3,137,951

~~Certain~~Table of the Company’s employee stock options, RSUs and DSUs were dilutive and resulted in additional potential common shares included in the Company’s calculation of diluted earnings per common share of 1,593,523 and 1,533,647 for the three and nine months ended October 1, 2017, respectively, and 1,445,141 and 0 for the three and nine months ended October 2, 2016, respectively.Contents

Note ~~14.~~13. Subsequent Events

On ~~October 17, 2017,~~July 3, 2023, the Company acquired the assets and assumed the liabilities of ~~Harmony Gardens, Inc.~~Hickory Hill Farm & Garden, LLC (“~~Harmony Gardens”~~Hickory Hill”). With ~~two locations~~one location in ~~the metro Denver and Fort Collins, Colorado areas, Harmony Gardens~~Eatonton, Georgia, Hickory Hill is a ~~leading~~ wholesale distributor of irrigation, nursery, ~~distributor in~~and landscape supplies to landscape professionals.

On July 12, 2023, the ~~state.~~Company, through its subsidiary, Landscape Holding, entered into the Increase Supplement (the “Increase Supplement”) by and between Landscape Holding, as borrower representative, and JPMorgan Chase Bank, N.A., as increasing lender (the “Increasing Lender”), to the Second Amended and Restated Credit Agreement. The ~~acquisition~~Increase Supplement provides for an additional $120.0 million of ~~Harmony Gardens is~~New Term Loans and makes such other changes to the Second Amended and Restated Credit Agreement as agreed between Landscape Holding and the Increasing Lender. Proceeds of the term loans borrowed pursuant to the Increase Supplement were used, among other things, to (i) repay certain loans outstanding under the ABL Facility and (ii) pay fees and expenses related to the Increase Supplement. After giving effect to the borrowing pursuant to the Increase Supplement, the aggregate principal amount of the New Term Loans outstanding under the Credit Agreement on July 12, 2023 was $371.5 million. The maturity date of the New Term Loans of March 23, 2028 did not ~~material and not expected to have~~change as a ~~significant impact on~~result of the ~~Company’s consolidated financial statements.~~Increase Supplement.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following information should be read in conjunction with the unaudited consolidated financial statements and related notes included in this ~~report.~~Quarterly Report on Form 10-Q. The following discussion may contain forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include those factors discussed below and elsewhere in this report, particularly in ~~“Forward-Looking Statements”~~“Special Note Regarding Forward-Looking Statements and Information” included herein and the section entitled “Risk Factors” ~~included~~ in the Annual Report on Form 10-K for the fiscal year ended January 1, ~~2017.~~

2023.

Overview

SiteOne Landscape Supply, Inc. (collectively with all of its subsidiaries referred to in this Quarterly Report on Form 10-Q as “SiteOne,” the “Company,” “we,” ~~“us”~~“us,” and “our”) indirectly owns 100% of the membership interest in SiteOne Landscape Supply Holding, LLC (“Landscape Holding”). Landscape Holding is the parent and sole owner of SiteOne Landscape Supply, LLC (“Landscape”).

We are the largest and only national full product line wholesale distributor of landscape supplies in the United States and have a growing presence in Canada. 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. WeAs of July 2, 2023, we had over 650 branch locations in 45 U.S. states and six Canadian provinces. Through our expansive North American network, we offer a comprehensive selection of more than 155,000 SKUs, including irrigation supplies, fertilizer and control products (~~e.g.~~(e.g., herbicides), ~~irrigation supplies, landscape accessories, nursery goods,~~ hardscapes (including pavers, natural stone, and blocks), landscape accessories, nursery goods, outdoor lighting, and ~~outdoor lighting.~~ice melt products to green industry professionals. We also provide value-added consultative services to complement our product ~~offering~~offerings and to help our customers operate and grow their businesses.

~~Initial Public Offering~~Business Environment and Trends

~~On May 17, 2016,~~Economic headwinds, which have resulted in declining prices and reduced demand, continued to be a challenge during the three and six months ended July 2, 2023. While weather conditions improved during the second quarter in certain of our key markets and helped drive volume growth for the three months ended July 2, 2023, particularly in our agronomic product lines, Organic Daily Sales growth was 2% for the first half of 2023 compared to 12% for the same period of 2022. We expect the current macroeconomic trends of higher interest rates, tightening financial markets, moderating price inflation, and deflation in select commodity products such as fertilizer, grass seed, and PVC pipe will continue to put pressure on Net sales growth for the remainder of 2023. Price contribution, which we ~~completed~~estimate was a benefit of approximately 1% and 3% to our Organic Daily Sales growth for the ~~IPO at a price~~three and six months ended July 2, 2023, respectively, is expected to decline in the public of $21.00 per share. In connection with the IPO, the CD&R Investor and Deere together sold an aggregate of 10,000,000 shares of common stock. The underwriters also exercised their option to purchase an additional 1,500,000 shares of common stock from the CD&R Investor and Deere, at the public offering price less the underwriting discounts and commissions. The CD&R Investor and Deere received allsecond half of the ~~net proceeds~~year. For the three and ~~bore all commissions~~six months ended July 2, 2023, we achieved Net sales growth of 11% and ~~discounts~~8%, respectively, primarily due to contributions from ~~the sale of our common stock. We did not receive any proceeds~~acquisitions, while Organic Daily Sales increased 4% and 2%, respectively, primarily from the IPO. On the day prior to the closing of the IPO, all of our then-outstanding Redeemable Convertible Preferred Stock converted into shares of common stock, resulting in the issuance by us of an additional 25,303,164 shares of our common stock. The conversion of Redeemable Convertible Preferred Stock was accounted for from the date of conversion and was not retroactively adjusted in our financial statements.

~~Secondary Public Offerings~~

~~On November 29, 2016, we registered on behalf of certain stockholders the offering and sale of 9,000,000 shares of common stock,~~price inflation as well as ~~1,350,000 shares of common stock sold~~resilient end market demand in the second quarter. Gross margin decreased 170 basis points and 70 basis points for the three and six months ended July 2, 2023, respectively, primarily due to the underwriters pursuant to an option to purchase additional shares. On December 6, 2016, the selling stockholders completed this offering of 10,350,000 shares of common stock at a price of $33.00 per share. We did not receive anyabsence of the ~~proceeds from~~large price realization benefit that was achieved in the ~~aggregate 10,350,000 shares~~same periods of ~~common stock sold~~2022, partially offset by acquisitions with higher gross margins and lower freight costs. Selling, general and administrative expenses (“SG&A”) increased 18% and 22%, respectively, for the ~~selling stockholders.~~three and six months ended July 2, 2023, primarily due to the impact of acquisitions, cost inflation, and higher operating expenses supporting our sales growth. Net income decreased 12% and 31%, respectively, for the three and six months ended July 2, 2023, primarily due to higher SG&A and lower gross margins, partially offset by Net sales growth.

~~On April 25, 2017, we registered~~Looking forward, the trend over the last three years of consumers spending more time at home and investing in their outdoor living spaces is expected to continue, although at lower levels. Sharp increases in home values, lack of affordable new homes, and higher mortgage interest rates have resulted in homeowners staying in their homes longer and upgrading their properties. The long-term outlook for the landscape supply industry remains strong driven by favorable population trends, housing demand, and increased interest in outdoor living. We are confident in the long-term growth opportunities of the landscape supply industry and our continued success providing our customers, suppliers, and shareholders exceptional value. We are the only national full product line wholesale distributor of landscape supplies in the United States. We are the industry leader and have a robust acquisition pipeline and a flexible business model. We remain committed to our strategic and operational initiatives and will continue to focus on ~~behalf of certain stockholders the offering~~driving growth organically and ~~sale of 10,000,000 shares of common stock,~~through acquisitions as well as ~~1,500,000 shares~~margin expansion by leveraging our scale, resources, and capabilities. We are operational in four distribution center facilities across the United States that have expanded our supply chain capacity in 2023. Our West distribution center operations transitioned from Colton, California (179,000 square feet) to Goodyear, Arizona (392,000 square feet) in April 2023. We operate three other distribution centers that are located in Hutchins, Texas (338,000 square feet), Palmetto, Georgia (335,000 square feet), and Carlisle, Pennsylvania (201,000 square feet).

Table of ~~common stock sold~~Contents

As we continue to navigate through the ~~underwriters pursuant~~current uncertainty presented by market and economic conditions, we believe that we are prepared to ~~an option~~meet the challenges ahead due to ~~purchase additional shares. On May 1, 2017,~~our balanced business, strong financial condition, dedicated and experienced teams, and focused business strategy. We are closely monitoring the ~~selling stockholders completed~~impact of moderating prices and demand weakness resulting from the ~~offering of 11,500,000 shares of common stock at a price of $47.50 per share. We did not receive any~~challenging market conditions described above as well as the potential effects of the ~~proceeds from~~war in Ukraine on our business and the ~~aggregate 11,500,000 shares~~related uncertainties and risks. These conditions are beyond our control, and we cannot estimate with certainty the full extent of ~~common stock sold by~~their impact on our business, results of operations, cash flows, and/or financial condition. To mitigate the ~~selling stockholders.~~

~~On July 20, 2017,~~effects of these conditions, we ~~registered~~may take actions that alter our business operations if required or that we determine are in the best interests of our associates, customers, suppliers, and shareholders. The forward-looking statements in this Business Environment and Trends section are subject to significant risks and uncertainties. See Part I, Item 1A. - “Risk Factors”, in our Annual Report on ~~behalf~~Form 10-K for the fiscal year ended January 1, 2023 for a discussion of ~~certain stockholders~~ the ~~offering~~various risks that could have a material adverse effect on our reputation, business, financial position, results of operations, and sale from time to time of 5,437,502 shares of common stock. On July 26, 2017, the selling stockholders completed a secondary offering of all such shares at a price to the underwriter of $51.63 per share. We did not receive any proceeds from the aggregate 5,437,502 shares of common stock sold by the selling stockholders.

cash flows.

Presentation

Our financial statements included in this report have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). We use a 52/53 week fiscal year with the fiscal year ending on the Sunday

nearest to December 31 in each year. ~~Our~~The fiscal years ending December 31, 2023 and January 1, 2023 both include 52 weeks. Additionally, our fiscal quarters end on the Sunday nearest to March 31, June 30, and September 30, respectively. The three months ended July 2, 2023 and July 3, 2022 both included 13 weeks. The six months ended July 2, 2023 and July 3, 2022 both included 26 weeks.

We manage our business as a single reportable segment. Within our organizational framework, the same operational resources support multiple geographic regions and performance is evaluated at a consolidated level. We also evaluate performance based on discrete financial information on a regional basis. Since all of our regions have similar operations and share similar economic characteristics, we aggregate regions into a single operating and reportable segment. These similarities include (i) long-term financial performance, (ii) the nature of products and services, (iii) the types of customers we sell to, and (iv) the distribution methods utilized. Further, all of our product categories have similar supply chain processes and classes of customers.

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. We generate ~~net~~Net sales primarily through the sale of landscape supplies, including irrigation ~~systems,~~supplies, fertilizer and control products, hardscapes, landscape accessories, nursery goods, ~~hardscapes~~outdoor lighting, and ~~outdoor lighting~~ice melt products to our customers who are primarily landscape contractors serving the residential and commercial construction sectors. Our ~~net~~Net sales include billings for freight and handling charges, and commissions on the sale of control products that we sell as an agent. Net sales are presented net of any discounts, returns, customer rebates, and sales or other revenue-based ~~tax.~~taxes.

Non-GAAP Organic Sales. In managing our business, we consider all growth, including the opening of new greenfield branches, to be organic growth unless it results from an acquisition. When we refer to Organic Sales growth, we include increases in growth from newly-opened greenfield branches and decreases in growth from closing existing branches but exclude increases in growth from acquired branches until they have been under our ownership for at least four full fiscal quarters at the start of the fiscal reporting period.

Non-GAAP Selling Days. Selling Days are defined as business days, excluding Saturdays, Sundays, and holidays, that our branches are open during the year. Depending upon the location and the season, our branches may be open on Saturdays and Sundays; however, for consistency, those days have been excluded from the calculation of Selling Days.

Non-GAAP Organic Daily Sales. We define Organic Daily Sales as Organic Sales divided by the number of Selling Days in the relevant reporting period. We believe Organic Sales growth and Organic Daily Sales growth are useful measures for evaluating our performance as we may choose to open or close branches in any given market depending upon the needs of our customers or our strategic growth opportunities. Refer to “Results of Operations – Quarterly Results of Operations Data” for a reconciliation of Organic Daily Sales to Net sales.

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Cost of goods sold. Our ~~cost~~Cost of goods sold includes all inventory costs, such as the purchase price paid to suppliers, net of any ~~rebates received,~~volume-based incentives, as well as inbound freight and handling, and other costs associated with inventory. Our ~~cost~~Cost of goods sold excludes the cost to deliver the products to our customers through our branches, which is included in ~~selling,~~Selling, general and administrative expenses. Cost of goods sold is recognized primarily using the first-in, first-out method of accounting for the inventory sold.

Gross profit and gross margin. We believe that ~~gross~~Gross profit and gross margin are useful for evaluating our operating performance. We define ~~gross~~Gross profit as ~~net~~Net sales less ~~cost~~Cost of goods ~~sold, exclusive of depreciation.~~sold. We define gross margin as ~~gross~~Gross profit divided by ~~net~~Net sales.

Selling, general and administrative expenses (operating expenses). Our operating expenses are primarily comprised of ~~selling,~~Selling, general and administrative costs, which include personnel expenses (salaries, wages, employee benefits, payroll taxes, ~~stock~~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. 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~~Net income (loss) plus the sum of income tax (benefit)~~, depreciation and amortization and~~ expense, interest expense, net of interest ~~income.~~income, and depreciation and amortization. Adjusted EBITDA represents EBITDA as further adjusted for items such as stock-based compensation expense, ~~related party advisory fees,~~(gain) loss ~~(gain)~~ on sale of assets and termination of finance leases not in the ordinary course of business, financing fees, as well as other ~~non-cash items~~fees and expenses related to acquisitions, and other non-recurring (income) loss. ~~See~~Refer to “Results of ~~Operations-Quarterly~~Operations – Quarterly Results of Operations Data” for more information ~~about~~regarding how we calculate EBITDA and Adjusted EBITDA and the limitations of those metrics.

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.

Weather Conditions and Seasonality

In a typical year, our operating results are impacted by seasonality. ~~Historically, our net~~Our Net sales and ~~net~~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~~Net sales have been significantly lower in the first and fourth quarters due to lower landscaping, irrigation, and turf maintenance activities in these quarters, and historically, we have ~~historically~~ incurred net losses in these quarters. Seasonal variations in operating results may also be significantly impacted by inclement weather conditions, such as snow and ice storms, wet weather, and hurricanes, which not only impact the demand for certain products like fertilizer and ice melt, but also may delay construction projects where our products are used.

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. The landscape ~~distribution~~supply industry has historically grown in line with rates of growth in residential housing and commercial building. The industry is also affected by trends in home prices, mortgage interest rates, home sales, and consumer spending. As general economic conditions improve or deteriorate, consumption of these products and services also tends to fluctuate. The landscape ~~distribution~~supply industry also includes a significant amount of ~~landscape~~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.

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. Examples of current trends we believe are important to our business include ~~a heightened~~an ongoing interest in professional landscape services inspired by the popularity of home and garden television shows, magazines, and ~~magazines;~~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;~~products, and the social focus on eco-friendly products that promote water conservation, energy efficiency, and the adoption of “green” standards.

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Acquisitions

In addition to our organic growth, we continue to grow our business through acquisitions in an effort to better service our existing customers and to ~~attain~~attract new customers. These acquisitions have allowed us to further broaden our product lines and extend our geographic reach and leadership positions in local markets. In accordance with GAAP, the results of the acquisitions ~~we have completed~~ are reflected in our financial statements from the date of acquisition forward. WeAdditionally, we incur transaction costs in connection with identifying and completing acquisitions ~~and~~as well as ongoing ~~integration~~ costs as we integrate acquired companies and seek to achieve synergies. WeAs of July 2, 2023, we completed the following acquisitions ~~during~~since the ~~nine months ended October 1, 2017 and October 2, 2016:~~start of the 2022 fiscal year:

•In ~~September 2017,~~May 2023, we acquired the assets and assumed the liabilities of ~~Marshall Stone,~~Link Inc. ~~and Davis Supply, LLC (collectively, “Marshall Stone”~~, doing business as Link Outdoor Lighting Distributors (“Link”). With ~~two~~four locations in ~~Greensboro, North Carolina~~Altamonte Springs and ~~Roanoke, Virginia, Marshall Stone~~Naples, Florida, Nashville, Tennessee, and Houston, Texas, Link is a ~~market leader in the distribution~~wholesale distributor of ~~natural stone and hardscape materials~~landscape lighting products to landscape professionals.

•In ~~August 2017,~~May 2023, we acquired the assets and assumed the liabilities of ~~Bondaze Enterprises,~~Adams Wholesale Supply, Inc.~~, a California corporation doing business as South Coast Supply~~ (“~~South Coast~~Adams Wholesale Supply”). With ~~two~~three locations in ~~Orange County, California, South Coast~~the San Antonio, Houston, and Dallas, Texas markets, Adams Wholesale Supply is a ~~market leader in the distribution~~wholesale distributor of ~~hardscape, natural stone~~landscape supplies and ~~related~~agronomic products to landscape professionals.

•In ~~May 2017,~~March 2023, we acquired the assets and assumed the liabilities of ~~Evergreen Partners~~Triangle Landscape Supplies, Inc., Triangle Landscape Supplies of ~~Raleigh, LLC, Evergreen Partners of Myrtle Beach,~~J.C., LLC, and ~~Evergreen Logistics, LLC~~Triangle Landscape Supplies of Apex, Inc. (collectively, ~~“Evergreen”~~“Triangle”). With ~~two~~four locations in ~~Raleigh,~~the Raleigh-Durham, North Carolina ~~and Myrtle Beach, South Carolina, Evergreen~~market, Triangle is a ~~market leader in the distribution~~wholesale distributor of ~~nursery~~hardscapes and landscape supplies to landscape professionals.

•In March ~~2017,~~2023, we acquired the assets and assumed the liabilities of ~~Angelo’s Supplies, Inc. and Angelo’s Wholesale Supplies, Inc. (collectively, “Angelo’s”~~J&J Materials Corp. (“J&J Materials”) ~~with two~~. With five locations in ~~Wixom~~Rhode Island and ~~Farmington Hills, Michigan, both suburbs of Detroit. Angelo’s~~Southeastern Massachusetts, J&J Materials is a ~~hardscape and~~wholesale distributor of hardscapes to landscape ~~supply distributor, and has been a market leader since 1984.~~professionals.

•In ~~March 2017,~~December 2022, we acquired all of the outstanding stock of ~~American Builders Supply,~~Whittlesey Landscape Supplies and Recycling, Inc. ~~and MasonryClub, Inc. and subsidiary (collectively, “AB Supply”~~(“Whittlesey”) ~~with 10~~. With seven locations in the greater ~~Los Angeles, California area and two locations in Las Vegas, Nevada. AB Supply~~Austin, Texas market, Whittlesey is a ~~market leader~~producer and wholesale distributor of bulk landscape supplies and hardscapes to landscape professionals.

•In December 2022, we acquired the assets and assumed the liabilities of Telluride Natural Stone, Inc. (“Telluride Natural Stone”). With one location in ~~the distribution~~Phoenix, Arizona, Telluride Natural Stone is a wholesale distributor of hardscape products and landscape supplies to landscape professionals.

•In October 2022, we acquired the assets and assumed the liabilities of Madison Block & Stone, LLC (“Madison Block & Stone”). With one location in Madison, Wisconsin, Madison Block & Stone is a wholesale distributor of natural stone, pavers, bulk materials, and ~~related~~landscape supplies to landscape professionals.

•In August 2022, we acquired the assets and assumed the liabilities of Kaknes Landscape Supply, Inc. (“Kaknes”). With one location in Naperville, Illinois, Kaknes is a wholesale distributor of nursery products to landscape professionals.

•In ~~February 2017,~~August 2022, we acquired the assets and assumed the liabilities of Stone ~~Forest Materials,~~Plus, LLC (“Stone ~~Forest”~~Plus”) ~~with one location~~. With three locations in ~~Kennesaw, Georgia.~~Northeast Florida, Stone ~~Forest~~Plus is a ~~market leader in the distribution~~wholesale distributor of ~~hardscape products~~landscape supplies and hardscapes to landscape professionals.

•In ~~January 2017,~~August 2022, we acquired the assets and assumed the liabilities of ~~Aspen Valley Landscape Supply, Inc.~~JimStone Co. of Louisiana, LLC (“~~Aspen Valley”~~Jim Stone”) ~~with~~. With three ~~locations. Headquartered~~locations in ~~Homer Glen, Illinois, Aspen Valley~~Southern Louisiana, Jim Stone is a ~~market leader in the distribution~~wholesale distributor of natural stone and other hardscapes ~~and~~to landscape ~~supplies in the Chicago Metropolitan Area.~~professionals.

•In ~~September 2016,~~August 2022, we acquired the assets and assumed the liabilities of ~~Glen Allen Nursery & Garden Center,~~Linzel Distributing Inc. (“~~Glen Allen”~~Linzel”). With one location in ~~Richmond, VA, Glen Allen~~Hamilton, Ontario, Canada, Linzel is a ~~leader in the distribution~~wholesale distributor of ~~nursery products~~outdoor lighting and landscape supplies to landscape professionals.

•In August ~~2016,~~2022, we acquired the assets and assumed the liabilities of ~~Bissett Nursery Corp. and acquired all of the outstanding stock of Bissett Equipment Corp. (collectively, “Bissett”~~Cape Cod Stone & Masonry Supply, Inc. (“Cape Cod Stone”). ~~Headquartered~~With one location in ~~Holtsville, NY, Bissett~~Orleans, Massachusetts, Cape Cod Stone is a ~~leader in the distribution~~wholesale distributor of ~~nursery,~~ hardscapes ~~landscape supplies as well as equipment sales, rental and repairs~~ to landscape ~~professionals with three locations serving customers throughout the New York City metropolitan area.~~professionals.

•In ~~April 2016,~~July 2022, we acquired the assets and assumed the liabilities of ~~Blue Max Materials, Inc., Blue Max Materials of Charleston, Inc., Blue Max Materials of Columbia,~~River Valley Horticultural Products, Inc. and ~~Blue Max Materials~~River Valley Equipment Rental and Sales, LLC (collectively, “River Valley”). With one location in Little Rock, Arkansas, River Valley is a wholesale distributor of the Grand Strand, Inc., which together comprise Blue Max Materials. Blue Max Materials includes five locations serving both North and South Carolina. The acquisition creates a leading position for SiteOne in the North and South Carolinanursery products, hardscapes, and landscape ~~accessories markets.~~supplies to landscape professionals.

•In ~~January 2016,~~July 2022, we acquired all of the outstanding stock of ~~Hydro-Scape Products,~~A&A Stepping Stone Manufacturing, Inc. (“~~Hydro-Scape”~~A&A Stepping Stone”),. With four locations in Sacramento, California, A&A Stepping Stone is a ~~leading provider~~wholesale distributor of hardscapes and landscape supplies to landscape professionals.

•In June 2022, we acquired the assets and assumed the liabilities of Prescott Dirt, LLC (“Prescott Dirt”). With two locations in Prescott and Prescott Valley, Arizona, Prescott Dirt is a wholesale distributor of landscape supplies to landscape professionals.

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•In June 2022, we acquired the assets and assumed the liabilities of Yard Works, LLC (“Yard Works”). With 13 locations in Central Virginia, Yard Works is a wholesale distributor of bulk landscape supplies to landscape professionals.

•In June 2022, we acquired the assets and assumed the liabilities of Across the Pond, Inc. (“Across the Pond”). 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 Buffalo, New York, Preferred Seed is a wholesale distributor of seed and agronomic products ~~(irrigation, lighting, maintenance, outdoor living~~to landscape professionals.

•In April 2022, we acquired the assets and ~~hardscapes) with 17~~assumed the liabilities of RTSB Enterprises, Inc., doing business as Bellstone Masonry Supply (“Bellstone”). With one location in Fort Worth, Texas, Bellstone is a wholesale distributor of hardscapes and landscape supplies to landscape professionals.

•In March 2022, we acquired all of the outstanding stock of J K Enterprise, Inc., Culpeper Recycling Hauling LLC, Culpeper Recycling Transport LLC, Gateway Home & Garden Center, LLC, JK Enterprise Landscape Supply, Limited Liability Company, Madera Farm Transport, LLC, Saunders LS, LLC, and Tilden Farm Nursery, LLC, and also acquired the assets of Metro Landscape Supply, Limited and Culpeper Recycling, LLC (collectively, “JK Enterprise”). With six locations ~~serving customers throughout Southern California.~~

in Northern Virginia and one location in Maryland, JK Enterprise is a wholesale distributor of bulk and bagged mulches and soil, hardscapes, and nursery products to landscape professionals.

Volume-Based Pricing

We generally procure our products through purchase orders rather than under long-term contracts with firm commitments. We work to develop strong relationships with a select ~~group of~~ suppliers that we target based on a number of factors, including brand and market recognition, price, quality, product support, service levels, delivery terms, and ~~their~~ strategic positioning. We ~~generally~~typically have annual supplier agreements, and while they ~~typically~~generally do not provide for specific product pricing, many include volume-based financial incentives that we earn by meeting or exceeding ~~target~~ purchase ~~volumes.~~volume targets. Our ability to earn these volume-based incentives is an important factor in our financial results. In ~~limited~~certain cases, we have entered into supply contracts with terms that exceed one year for the manufacture of our LESCO® branded fertilizer, ~~and~~ some nursery ~~stock~~goods, and grass seed, which may require us to purchase products in the future.

Strategic Initiatives

We ~~have undertaken significant operational~~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. We are ~~increasingly~~ 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 ~~systems~~system functionalities and ~~evaluating ways to further improve the freight and logistics processes~~new transportation management systems in an effort to reduce costs as well as improve our reliability and level of service. In addition, we continue to enhance our website and B2B e-Commerce platform. We also work closely with our local branches to improve sales, delivery, and branch productivity. 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 our updated 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.

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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. In addition to affecting our ~~net~~Net sales, fluctuations in prices of supplies tend to result in changes in our reported inventories, trade receivables, and trade payables, even when our sales volumes and our rate of turnover of these working capital items remain relatively constant. Our ~~business is characterized by a relatively high level of reported working capital, the effects of which can be compounded by changes in prices. Our~~ working capital needs are exposed to these price fluctuations, as well as to fluctuations

in our cost for transportation and distribution. We ~~might~~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.

Results of Operations

In the following discussion of our results of operations, we make comparisons between the three and ~~nine~~six months ended~~October 1, 2017~~July 2, 2023 and ~~October 2, 2016.~~July 3, 2022 (in millions, except percentages).


(In millions)
Consolidated Statements of Operations
																		Consolidated Statements of Operations
	Three Months Ended								Nine Months Ended									Three Months Ended								Six Months Ended
	October 1, 2017				October 2, 2016				October 1, 2017				October 2, 2016					July 2, 2023				July 3, 2022				July 2, 2023				July 3, 2022
Net sales	$	502.4	100.0	%	$	444.5	100.0	%	$	1,446.0	100.0	%	$	1,286.5	100.0	%	Net sales	$	1,353.7	100.0	%	$	1,216.6	100.0	%	$	2,191.1	100.0	%	$	2,021.9	100.0	%
Cost of goods sold	342.1		68.1	%	306.1		68.9	%	982.4		67.9	%	882.5		68.6	%	Cost of goods sold	864.3		63.8	%	755.5		62.1	%	1,414.6		64.6	%	1,291.6		63.9	%
Gross profit	160.3		31.9	%	138.4		31.1	%	463.6		32.1	%	404.0		31.4	%	Gross profit	489.4		36.2	%	461.1		37.9	%	776.5		35.4	%	730.3		36.1	%
Selling, general and administrative expenses	128.1		25.5	%	107.7		24.2	%	368.4		25.5	%	330.3		25.7	%	Selling, general and administrative expenses	320.6		23.7	%	272.7		22.4	%	612.0		27.9	%	503.2		24.9	%
Other income	1.6		0.3	%	1.2		0.3	%	3.8		0.3	%	3.3		0.3	%	Other income	2.5		0.2	%	1.7		0.1	%	6.5		0.3	%	4.2		0.2	%
Operating income	33.8		6.7	%	31.9		7.2	%	99.0		6.8	%	77.0		6.0	%	Operating income	171.3		12.7	%	190.1		15.6	%	171.0		7.8	%	231.3		11.4	%
Interest and other non-operating expenses, net	6.2		1.2	%	6.3		1.4	%	19.0		1.3	%	15.4		1.2	%	Interest and other non-operating expenses, net	7.3		0.5	%	4.6		0.4	%	14.2		0.6	%	8.9		0.4	%
Income tax expense	10.7		2.1	%	10.7		2.4	%	29.4		2.0	%	25.4		2.0	%	Income tax expense	40.0		3.0	%	44.8		3.7	%	37.3		1.7	%	49.4		2.4	%
Net income	$	16.9	3.4	%	$	14.9	3.4	%	$	50.6	3.5	%	$	36.2	2.8	%	Net income	$	124.0	9.2	%	$	140.7	11.6	%	$	119.5	5.5	%	$	173.0	8.6	%

Net sales

Net sales increased ~~13%~~11% to ~~$502.4~~$1,353.7 million for the three months ended ~~October 1, 2017~~July 2, 2023 compared to ~~$444.5~~$1,216.6 million for the three months ended ~~October 2, 2016,~~July 3, 2022, and increased ~~12%~~8% to ~~$1,446.0~~$2,191.1 million for the ~~nine~~six months ended ~~October 1, 2017~~July 2, 2023 compared ~~with $1,286.5~~to $2,021.9 million for the ~~nine~~six months ended ~~October 2, 2016.~~July 3, 2022. These increases were primarily due to contributions from acquisitions. Organic Daily Sales increased 5%4% in the ~~third~~second quarter of ~~2017~~2023 due primarily to solid demand in our end markets and 5%2% for the ~~nine~~six months ended ~~October 1, 2017.~~July 2, 2023 as a result of price inflation, compared to the prior year periods. Based upon year-over-year price increases in our highest selling SKUs, we estimate price inflation contributed approximately 1% and 3% to our Organic Daily Sales growth for the three and six months ended July 2, 2023, respectively. Organic Daily Sales for landscaping products (irrigation supplies, hardscapes, landscape accessories, nursery ~~irrigation,~~goods, and outdoor ~~lighting, hardscapes and landscapes accessories~~lighting) grew 7%5% in the ~~third~~second quarter of ~~2017~~2023 and ~~7% for the nine months ended October 1, 2017 as the Company continued to benefit from strength~~4% in the ~~residential and commercial construction and repair and remodel end markets.~~first half of 2023 due primarily to price inflation resulting from rising product costs. Organic Daily Sales for agronomic products (fertilizer, control products, ice melt, equipment, and other products) increased 2% in the ~~third~~second quarter of ~~2017~~2023 due to higher volume resulting from the late start to the spring selling season, partially offset by lower prices for fertilizer and 2%seed products. Organic Daily Sales for agronomic products decreased 3% for the ~~nine months ended October 1, 2017.~~first half of 2023 due primarily to lower prices as increased volume in the second quarter of 2023 was largely offset by reduced volume in the first quarter of 2023. Acquisitions contributed ~~$34.1~~$86.1 million, or ~~8%, to third quarter growth of 2017 and $104.3 million, or 8%~~7%, to the Net sales growth infor the ~~nine~~second quarter of 2023, and $142.6 million, or 7%, to the Net sales growth for the six months ended ~~October 1, 2017.~~July 2, 2023.

~~Costs~~Cost of goods sold

Cost of goods sold increased ~~12%~~14% to ~~$342.1~~$864.3 million for the three months ended ~~October 1, 2017~~July 2, 2023 compared to ~~$306.1~~$755.5 million for the three months ended ~~October 2, 2016,~~July 3, 2022, and increased ~~11%~~10% to ~~$982.4~~$1,414.6 million for the ~~nine~~six months ended ~~October 1, 2017~~July 2, 2023 compared to ~~$882.5~~$1,291.6 million for the ~~nine~~six months ended ~~October 2, 2016.~~July 3, 2022. The increase in Cost of goods sold for the ~~third quarter of 2017~~three and ~~the first nine~~six months ~~of 2017~~ended July 2, 2023 was primarily ~~driven by Net sales growth, including~~attributable to acquisitions ~~partially offset by lower material costs including manufacturer incentives.~~and product cost inflation.

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Gross profit and gross margin

Gross profit increased ~~16%~~6% to ~~$160.3~~$489.4 million for the three months ended ~~October 1, 2017~~July 2, 2023 compared to ~~$138.4~~$461.1 million for the three months ended ~~October 2, 2016,~~July 3, 2022, and increased ~~15%~~6% to ~~$463.6~~$776.5 million for the ~~nine~~six months ended ~~October 1, 2017~~July 2, 2023 compared to ~~$404.0~~$730.3 million for the ~~nine~~six months ended ~~October 2, 2016.~~July 3, 2022. Gross profit growth for the ~~third quarter of 2017~~three and six months ended July 2, 2023 was driven by ~~the increase in~~ Net sales growth, including acquisitions. Gross margin ~~increased 80~~decreased 170 basis points to ~~31.9% for~~36.2% in the ~~third~~second quarter of ~~2017~~2023 as compared to ~~31.1% for~~37.9% in the ~~same period~~second quarter of ~~2016 primarily driven by our category management initiatives. For the nine months~~

~~ended October 1, 2017, gross margin increased~~2022 and decreased 70 basis points to ~~32.1% as~~35.4% for the six months ended July 2, 2023 compared to ~~31.4%~~36.1% for the ~~nine~~six months ended ~~October 2, 2016. Our category management initiatives drove~~July 3, 2022. The decrease in gross margin primarily reflects the ~~majority~~absence of the ~~increase.~~large price realization benefit in the first half of 2022, partially offset by lower freight costs and contributions from acquisitions with higher gross margins.

Selling, general and administrative expenses ~~(operating expenses)~~

~~Operating expenses~~SG&A increased ~~19%~~18% to ~~$128.1~~$320.6 million for the three months ended ~~October 1, 2017 from $107.7~~July 2, 2023 compared to $272.7 million for the three months ended ~~October 2, 2016,~~July 3, 2022, and increased ~~12%~~22% to ~~$368.4~~$612.0 million for the ~~nine~~six months ended ~~October 1, 2017~~July 2, 2023 compared to ~~$330.3~~$503.2 million for the ~~nine~~six months ended October 2, 2016. The increase in both the third quarter and the first nine months of 2017 primarily reflected additional staff and operating expenses to support our growth both organically and through acquisitions. Operating expenses expressedJuly 3, 2022. SG&A as a percentage of Net sales increased 130 basis points to ~~25.5%~~23.7% for the three months ended ~~October 1, 2017~~July 2, 2023 compared to ~~24.2%~~22.4% for the three months ended ~~October 2, 2016,~~July 3, 2022, and ~~decreased~~increased 300 basis points to ~~25.5%~~27.9% for the ~~nine~~six months ended ~~October 1, 2017~~July 2, 2023 compared to ~~25.7%~~24.9% for the ~~nine~~six months ended ~~October 2, 2016. The increase in operating expenses as a percentage of sales for the last quarter reflected~~July 3, 2022. These increases were primarily due to the impact of acquisitions, cost inflation, and ~~increases in labor and other~~higher operating expenses ~~focused on building~~supporting our ~~capabilities to accelerate organic~~sales growth. The reduction in operating expenses expressed as a percentage of sales for the last nine months was primarily driven by the $11.2 million of costs incurred in the second quarter of 2016 related to the IPO and Refinancing. Depreciation and amortization expense increased ~~$1.1~~$7.9 million to ~~$10.8~~$31.0 million for the three months ended ~~October 1, 2017~~July 2, 2023, compared to ~~$9.7~~$23.1 million for the three months ended ~~October 2, 2016,~~July 3, 2022, and increased ~~$4.0~~$17.0 million to ~~$31.4~~$61.8 million for the ~~nine~~six months ended ~~October 1, 2017~~July 2, 2023 compared to ~~$27.4~~$44.8 million for the ~~nine~~six months ended ~~October 2, 2016.~~July 3, 2022. The increase in depreciation and amortization ~~in both~~for the ~~third quarter~~three and ~~the first nine~~six months ~~of 2017~~ended July 2, 2023 was primarily ~~caused by~~attributable to our acquisitions.

Interest and other non-operating expenses, net

Interest and other non-operating expenses, ~~decreased $0.1~~net increased $2.7 million to ~~$6.2~~$7.3 million for the three months ended ~~October 1, 2017 from $6.3~~July 2, 2023 compared to $4.6 million for three months ended July 3, 2022, and increased $5.3 million to $14.2 million for the six months ended July 2, 2023 compared to $8.9 million for the six months ended July 3, 2022. The increase in interest expense was primarily due to increased borrowings and a higher average interest rate during the three and six months ended July 2, 2023 compared to the same periods of 2022.

Income tax expense

Income tax expense was $40.0 million for the three months ended ~~October~~July 2, ~~2016, and increased $3.6 million to $19.0 million for the nine months ended October 1, 2017~~2023 compared to $15.4 million for the nine months ended October 2, 2016. The decrease in interest expense for the third quarter reflected lower interest rates on our Term Loan resulting from our Term Loan Facility Amendments. The increase in interest expense for the last nine months primarily reflected higher debt levels following our Refinancing which occurred in April 29, 2016.

~~Income tax (benefit) expense~~

~~Income tax expense was $10.7~~$44.8 million for the three months ended ~~October 1, 2017 as compared to $10.7 million~~July 3, 2022. The effective tax rate was 24.4% for the three months ended ~~October~~July 2, ~~2016. For the nine months ended October 1, 2017, income tax expense was $29.4 million as~~2023 compared to ~~$25.4 million for the nine months ended October 2, 2016. The effective tax rate was 38.8%~~24.2% for the three months ended October 1, 2017 as compared to 41.8% for the three months ended October 2, 2016. For the nine months ended October 1, 2017, the effective tax rate was 36.8% as compared to 41.2% for the nine months ended October 2, 2016.July 3, 2022. The ~~decrease~~increase in the effective rate was due primarily to ~~(i) the adoption of ASU 2016-09~~a decrease in the ~~first quarter of 2017, which resulted in the recognition~~amount of excess tax benefits from stock-based compensation recognized as a component of Income tax expense in the ~~Company’s~~ Consolidated Statements of ~~Operations, and (ii) a reduction in nondeductible transaction costs incurred during~~Operations. Excess tax benefits of $1.1 million were recognized for the ~~nine~~three months ended ~~October 1, 2017 as~~July 2, 2023 compared to ~~the nine months ended October 2, 2016.~~

~~Net income (loss)~~

~~Net income increased $2.0 million to $16.9~~$2.4 million for the three months ended ~~October 1, 2017~~July 3, 2022.

Income tax expense was $37.3 million for the six months ended July 2, 2023 compared to ~~$14.9~~$49.4 million for the six months ended July 3, 2022. The effective tax rate was 23.8% for the six months ended July 2, 2023 compared to 22.2% for the six months ended July 3, 2022. The increase in the effective 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 $1.9 million were recognized for the six months ended July 2, 2023 compared to $7.4 million for the six months ended July 3, 2022.

Net income

Net income decreased $16.7 million to $124.0 million for the three months ended ~~October~~July 2, ~~2016, and increased $14.4 million~~2023 compared to ~~$50.6~~$140.7 million for the ~~nine~~three months ended ~~October 1, 2017 compared~~July 3, 2022, and decreased $53.5 million to ~~$36.2~~$119.5 million for the ~~nine~~six months ended ~~October~~July 2, ~~2016.~~2023 compared to $173.0 million for the six months ended July 3, 2022. The ~~increase~~decline in Net income for the ~~third quarter~~three and six months ended July 2, 2023 was primarily ~~attributable~~due to ~~our sales growth~~higher SG&A and decreased gross margin, ~~improvement.~~partially offset by an increase in Net sales.

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Quarterly Results of Operations Data

The following tables set forth certain financial data for each of the most recent eight fiscal quarters including our ~~net~~unaudited Net sales, ~~cost~~Cost of goods sold, ~~gross~~Gross profit, ~~selling,~~Selling, general and administrative expenses, ~~net~~Net income (loss), and Adjusted EBITDA data (including a reconciliation of Adjusted EBITDA to ~~net~~Net income (loss)) ~~for each of the most recent eight quarters in fiscal years 2017, 2016 and 2015.~~. We have prepared the quarterly data on a basis that is consistent with the financial statements included in this ~~report.~~Quarterly Report on Form 10-Q. In the opinion of management, the financial information reflects all necessary adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of ~~the~~this data. This information is not a complete set of financial statements and should be read in conjunction with our financial statements and related notes included in this ~~report.~~Quarterly Report on Form 10-Q. The results of historical periods are not necessarily indicative of the results of operations for a full year or any future period.


(In millions, except per share information and percentages)
	2023				2022								2021
	Qtr 2		Qtr 1		Qtr 4		Qtr 3		Qtr 2		Qtr 1		Qtr 4		Qtr 3
Net sales	$	1,353.7	$	837.4	$	890.0	$	1,102.6	$	1,216.6	$	805.3	$	805.2	$	936.4
Cost of goods sold	864.3		550.3		587.4		714.0		755.5		536.1		522.8		595.9
Gross profit	489.4		287.1		302.6		388.6		461.1		269.2		282.4		340.5
Selling, general and administrative expenses	320.6		291.4		304.6		289.2		272.7		230.5		247.2		235.3
Other (income) expense, net	(2.5)		(4.0)		(2.0)		(2.4)		(1.7)		(2.5)		(0.1)		1.8
Operating income (loss)	171.3		(0.3)		—		101.8		190.1		41.2		35.3		103.4
Interest and other non-operating expenses, net	7.3		6.9		5.5		5.6		4.6		4.3		5.1		4.3
Income tax (benefit) expense	40.0		(2.7)		(4.6)		22.9		44.8		4.6		2.7		19.1
Net income (loss)	$	124.0	$	(4.5)	$	(0.9)	$	73.3	$	140.7	$	32.3	$	27.5	$	80.0
Net income (loss) per common share:
Basic	$	2.75	$	(0.10)	$	(0.02)	$	1.63	$	3.12	$	0.72	$	0.61	$	1.79
Diluted	$	2.71	$	(0.10)	$	(0.02)	$	1.60	$	3.07	$	0.70	$	0.60	$	1.74
Adjusted EBITDA(a)	$	211.2	$	39.8	$	38.9	$	135.6	$	222.0	$	67.8	$	61.8	$	128.2

(In millions)
2017 2016 2015
Qtr 3 Qtr 2 Qtr 1 Qtr 4 Qtr 3 Qtr 2 Qtr 1 Qtr 4

Net sales $ 502.4
$ 608.6
$ 335.0
$ 361.8
$ 444.5
$ 513.4
$ 328.5
$ 339.8
Cost of goods sold 342.1
406.2
234.1
250.0
306.1
344.9
231.5
235.2
Gross profit 160.3
202.4
100.9
111.8
138.4
168.5
97.0
104.6
Selling, general and administrative expenses 128.1
126.6
113.7
116.2
107.7
118.0
104.6
110.7
Other income 1.6
1.3
0.9
1.4
1.2
1.0
1.2
1.2
Operating income (loss) 33.8
77.1
(11.9 ) (3.0 ) 31.9
51.5
(6.4 ) (4.9 )
Interest and other non-operating expenses 6.2
6.6
6.2
6.7
6.3
6.5
2.6
3.7
Income tax (benefit) expense 10.7
26.3
(7.6 ) (4.1 ) 10.7
18.1
(3.4 ) (2.7 )
Net income (loss) $ 16.9
$ 44.2
$ (10.5 ) $ (5.6 ) $ 14.9
$ 26.9
$ (5.6 ) $ (5.9 )
Adjusted EBITDA⁽¹⁾
$ 48.4
$ 92.3
$ 1.2
$ 11.2
$ 43.7
$ 74.9
$ 4.5
$ 11.9
Net sales as a percentage of annual net sales 22.0 % 27.0 % 31.1 % 19.9 % 23.4 %
Gross profit as a percentage of annual gross profit 21.7 % 26.8 % 32.7 % 18.8 % 24.4 %
Adjusted EBITDA as a percentage of annual Adjusted EBITDA 8.3 % 32.5 % 55.8 % 3.4 % 11.2 %


Net sales as a percentage of annual Net sales	22.2	%	27.5	%	30.3	%	20.0	%	23.2	%	26.9	%
Gross profit as a percentage of annual Gross profit	21.3	%	27.3	%	32.4	%	19.0	%	23.3	%	28.1	%
Adjusted EBITDA as a percentage of annual Adjusted EBITDA	8.4	%	29.2	%	47.8	%	14.6	%	14.9	%	30.9	%

~~(1)~~

In addition to our net income (loss) determined in accordance with GAAP, we present Adjusted EBITDA in this report to evaluate the operating performance and efficiency of the Company’s business. EBITDA represents our Net income (loss) plus the sum of Income tax (benefit), Depreciation and amortization and Interest expense, net of interest income. Adjusted EBITDA is further adjusted for stock-based compensation expense, related party advisory fees, loss (gain) on sale of assets, other non-cash items, other non-recurring (income) and loss. We believe that Adjusted EBITDA is an important supplemental measure of operating performance because:

(a) In addition to our Net income (loss) determined in accordance with GAAP, we present Adjusted EBITDA in this Quarterly Report on Form 10-Q to evaluate 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. Adjusted EBITDA represents EBITDA as further adjusted for 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. 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;

~~we believe~~ •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;

~~we believe~~ •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 ~~(gain) loss~~(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.

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Adjusted EBITDA is not a measure of our liquidity or financial performance under GAAP and should not be considered as an alternative to ~~net~~Net income, operating income, or any other performance measures derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a measure of our liquidity. The use of Adjusted EBITDA instead of ~~net~~Net income has limitations as an analytical tool. 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~~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.

Management compensates for these limitations by relying primarily on ~~our~~the GAAP results and by using Adjusted EBITDA only as a supplement to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone. 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.

The following table presents a reconciliation of Adjusted EBITDA to Net income ~~(loss)~~(in millions):



		2023				2022								2021
		Qtr 2		Qtr 1		Qtr 4		Qtr 3		Qtr 2		Qtr 1		Qtr 4		Qtr 3
Reported Net income (loss)		$	124.0	$	(4.5)	$	(0.9)	$	73.3	$	140.7	$	32.3	$	27.5	$	80.0
	Income tax (benefit) expense	40.0		(2.7)		(4.6)		22.9		44.8		4.6		2.7		19.1
	Interest expense, net	7.3		6.9		5.5		5.6		4.6		4.3		5.1		4.3
	Depreciation and amortization	31.0		30.8		31.6		27.4		23.1		21.7		22.3		21.0
EBITDA		202.3		30.5		31.6		129.2		213.2		62.9		57.6		124.4
	Stock-based compensation(a)	7.1		8.6		4.3		4.5		5.8		3.7		3.1		3.5
	(Gain) loss on sale of assets(b)	0.2		(0.4)		0.2		(0.7)		(0.2)		(0.1)		0.2		(0.2)
	Financing fees(c)	0.1		—		—		0.1		0.2		—		—		—
	Acquisitions and other adjustments(d)	1.5		1.1		2.8		2.5		3.0		1.3		0.9		0.5
Adjusted EBITDA(e)		$	211.2	$	39.8	$	38.9	$	135.6	$	222.0	$	67.8	$	61.8	$	128.2

(a) Represents stock-based compensation expense recorded during the period.

(b) Represents any gain or loss associated with the sale of assets and termination of finance leases not in the ordinary course of business.

(d) Represents professional fees, retention and severance payments, and performance bonuses related to historical acquisitions. Although we have incurred professional fees, retention and severance payments, and performance bonuses related to acquisitions in several historical periods and expect to incur such fees and payments for any future acquisitions, we cannot predict the timing or amount of any such fees or payments.

(e) Adjusted EBITDA excludes any earnings or loss of acquisitions prior to their respective acquisition dates for all periods presented.

(In millions)
2017 2016 2015
Qtr 3 Qtr 2 Qtr 1 Qtr 4 Qtr 3 Qtr 2 Qtr 1 Qtr 4
Net income (loss) $ 16.9
$ 44.2
$ (10.5 ) $ (5.6 ) $ 14.9
$ 26.9
$ (5.6 ) $ (5.9 )
Income tax (benefit) expense 10.7
26.3
(7.6 ) (4.1 ) 10.7
18.1
(3.4 ) (2.7 )
Interest expense, net 6.2
6.6
6.2
6.7
6.3
6.5
2.6
3.7
Depreciation and amortization 11.1
10.8
9.8
9.6
9.7
9.1
8.6
8.7
EBITDA 44.9
87.9
(2.1 ) 6.6
41.6
60.6
2.2
3.8

Stock-based compensation^(a)
1.5
1.6
1.4
1.3
1.1
2.2
0.7
0.7

(Gain) loss on sale of assets^(b)
—
0.1
0.1
0.1
—
—
(0.1 ) 0.2

Advisory fees^(c)
—
—
—
—
—
8.0
0.5
0.5

Financing fees^(d)
0.4
1.1
—
1.1
0.4
3.1
—
3.5

Rebranding, acquisitions and other adjustments^(e)
1.6
1.6
1.8
2.1
0.6
1.0
1.2
3.2
Adjusted EBITDA^(f)
$ 48.4
$ 92.3
$ 1.2
$ 11.2
$ 43.7
$ 74.9
$ 4.5
$ 11.9

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~~(a)~~	~~Represents stock-based compensation expense recorded during the period.~~


~~(b)~~	~~Represents any gain or loss associated with the sale or write-down of assets not in the ordinary course of business.~~


~~(c)~~	Represents fees paid to CD&R and Deere for consulting services. In connection with the IPO, we entered into termination agreements with CD&R and Deere pursuant to which the parties agreed to terminate the Consulting Agreements.


~~(d)~~	~~Represents fees associated with our debt refinancing and debt amendments, as well as fees incurred in connection with our IPO and secondary offerings.~~

~~(e)~~

Represents (i) expenses related to our rebranding to the name SiteOne and (ii) professional fees, retention and severance payments, and performance bonuses related to historical acquisitions. Although we have incurred professional fees, retention and severance payments, and performance bonuses related to acquisitions in several historical periods and expect to incur such fees and payments for any future acquisitions, we cannot predict the timing or amount of any such fees or payments.


~~(f)~~	~~Adjusted EBITDA excludes any earnings or loss of acquisitions prior to their respective acquisition dates for all periods presented.~~

The following table presents a reconciliation of Organic Daily Sales to Net ~~sales:~~sales (in millions, except Selling Days):


																2023				2022
(In millions, except Selling Days)
		2017						2016								Qtr 2		Qtr 1		Qtr 2		Qtr 1
		Qtr 3		Qtr 2		Qtr 1		Qtr 3		Qtr 2		Qtr 1
Net sales		$	502.4	$	608.6	$	335.0	$	444.5	$	513.4	$	328.5
Reported Net sales														Reported Net sales		$	1,353.7	$	837.4	$	1,216.6	$	805.3
	Organic Sales	457.4		548.1		318.5		433.6		506.6		328.5			Organic Sales(a)	1,252.4		777.6		1,201.4		802.0
	Acquisition contribution^(a)	45.0		60.5		16.5		10.9		6.8		—			Acquisition contribution(b)	101.3		59.8		15.2		3.3
Selling Days	Selling Days	63		64		64		63		64		65		Selling Days		64		64		64		65
Organic Daily Sales	Organic Daily Sales	$	7.3	$	8.6	$	5.0	$	6.9	$	7.9	$	5.1	Organic Daily Sales		$	19.6	$	12.2	$	18.8	$	12.3


~~(a)~~	~~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 2017 fiscal year.~~

(a) Organic Sales equal Net sales less Net sales from branches acquired in 2023 and 2022.

(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 2023 Fiscal Year. Includes Net sales from branches acquired in 2023 and 2022.

Liquidity and Capital Resources

~~Our ongoing~~We assess our liquidity ~~needs are expected to be funded by~~in terms of our cash and cash equivalents on hand ~~net~~and the ability to generate cash ~~provided by~~to fund our operating and investing activities, repurchase shares, and ~~as required,~~service our debt, taking into consideration available borrowings ~~under~~and the ~~ABL Facility.~~seasonal nature of our business. We expect that cash and cash equivalents on hand, cash provided from operations, and available capacity under the ABL Facility will provide sufficient funds to operate our business, make ~~expected~~ capital expenditures, complete acquisitions and share repurchases, and meet all of our liquidity requirements for the ~~following~~next 12 months, including payment of interest and principal on our debt. 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 intend 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 share repurchase authorization does not have an expiration date and may be amended, suspended, or terminated by our Board of Directors at any time. During the three and six months ended July 2, 2023, we did not repurchase shares under the share repurchase program. As of July 2, 2023, the dollar value of shares that may yet be purchased under the share repurchase authorization was $375.0 million.

Our borrowing base capacity under the ABL Facility was ~~$126.9~~$454.4 million as of ~~October 1, 2017,~~July 2, 2023, after giving effect to ~~approximately $193.7~~$131.3 million of revolving credit loans under the ABL Facility ~~an increase~~and outstanding letters of ~~$102.7~~credit of $14.3 million. Our borrowing base capacity under the ABL Facility was $487.4 million ~~from $91.0~~as of January 1, 2023, after giving effect to $100.0 million of revolving credit loans asunder the ABL Facility and outstanding letters of ~~January 1, 2017.~~credit of $11.5 million. As of ~~October 1, 2017,~~July 2, 2023, we had total cash and cash equivalents of ~~$24.1~~$69.6 million, total gross long-term debt of ~~$479.5~~$385.4 million, and ~~capital leases~~total finance lease obligations (excluding interest) of ~~$12.8~~$74.5 million.

Working capital was ~~$428.7~~$903.1 million as of ~~October 1, 2017,~~July 2, 2023, an increase of ~~$124.2~~$143.6 million as compared to ~~$304.5~~$759.5 million as of January 1, ~~2017.~~2023. The ~~increase~~change in working capital iswas primarily attributable to the seasonality of our ~~business~~business.

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The following table summarizes current and ~~growth~~long-term material cash requirements related to our long-term debt as of July 2, 2023 (in millions):


	Total		Next 12 Months		Beyond 12 Months
Long-term debt, including current maturities	$	385.4	$	4.1	$	381.3
Interest on long-term debt	$	109.0	$	18.2	$	90.8

Our gross long-term debt balance increased $29.3 million since January 1, 2023. This increase was primarily attributable to funding the seasonal increase in ~~inventory from acquisitions~~our working capital and ~~higher stocking levels.~~our acquisition investments. We have current maturities on our long-term debt of $4.1 million, which includes $2.6 million related to the term loan facility and $1.5 million related to the hybrid debt instruments. The projected interest payments on our debt only pertain to obligations and agreements outstanding as of July 2, 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 July 2, 2023. Certain of these projected interest payments may differ in the future based on changes in floating interest rates or other factors and events, including our entry into amendments of the term loans and the ABL Facility. The interest on long-term debt balance increased $11.1 million since January 1, 2023, primarily due to the increase in borrowings under the ABL Facility and rising interest rates. Refer to “Note 9. Long-Term Debt” in the notes to the consolidated financial statements for further information regarding our debt instruments.

Cash Flow Summary

Information about our cash flows, by category, is presented in our statements of cash flows and is summarized ~~below:~~below (in millions):


(In millions)
	Nine Months Ended							Six Months Ended
	October 1, 2017			October 2, 2016
Net cash (used in) provided by:
Net cash provided by (used in):							Net cash provided by (used in):	July 2, 2023		July 3, 2022
Operating activities	$	(14.6	)	$	9.2		Operating activities	$	101.2	$	(23.6)
Investing activities	$	(76.9	)	$	(62.5	)	Investing activities	$	(74.9)	$	(144.7)
Financing activities	$	99.1		$	59.0		Financing activities	$	14.0	$	164.9

Cash flow provided by (used in) operating activities

Net cash provided by operating activities

for the six months ended July 2, 2023 was $101.2 million compared to Net cash used in operating activities ~~for the nine months ended October 1, 2017 was $14.6 million compared to cash provided~~ of ~~$9.2~~$23.6 million for the ~~nine~~six months ended ~~October 2, 2016. Net~~July 3, 2022. The increase in cash ~~from~~provided by operating activities ~~during the first nine months of 2017~~ was ~~lower than the first nine months of 2016~~ primarily due to ~~the increase~~improved working capital management reflecting our progress in ~~net working capital.~~

reducing inventory levels that we increased in prior periods in response to supply chain uncertainty.

Cash flow used in investing activities

Net cash used in investing activities was ~~$76.9~~$74.9 million for the ~~nine~~six months ended ~~October 1, 2017~~July 2, 2023 compared to ~~$62.5~~$144.7 million for the ~~nine~~six months ended ~~October 2, 2016.~~July 3, 2022. The ~~increase~~decrease reflects ~~greater investment~~lower acquisition investments in ~~acquisitions during~~ the first ~~nine~~

six months of ~~2017~~2023 compared to the same period of ~~2016.~~2022. Capital expenditures were ~~$10.3~~$16.3 million for the first ~~nine~~six months of ~~2017, up from $6.2~~2023 compared to $16.6 million for the ~~first nine months~~same period of ~~2016~~2022 due to ~~increased investments~~decreased investment in ~~information technology and store equipment.~~material handling equipment used in our branches.

Cash flow provided by financing activities

Net cash provided by financing activities was ~~$99.1~~$14.0 million for the ~~nine~~six months ended ~~October 1, 2017~~July 2, 2023 compared to ~~cash provided of $59.0~~$164.9 million for the ~~nine~~six months ended ~~October 2, 2016.~~July 3, 2022. The ~~increase~~decrease primarily reflects ~~borrowings under~~higher repayments on the ABL Facility ~~to fund~~as a result of lower investments in working capital and ~~acquisitions.~~acquisitions during the first six months of 2023 compared to the same period of 2022.

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External Financing

Term ~~Loan Facility~~Loans

Landscape Holding and Landscape, as borrowers (collectively, the ~~“Term Loan Borrower”~~“Borrowers”) ~~are parties~~, entered into the Fifth Amendment to the Amended and Restated ~~Term Loan~~ Credit Agreement, the (“Fifth Amendment”), dated as of March 23, 2021, with JPMorgan Chase Bank, N.A. (the ~~“Amended and Restated Term Loan Credit Agreement”~~“New Agent”) ~~dated April 29, 2016, as amended on November 23, 2016 (providing for a senior secured term loan facility)~~, ~~with UBS AG, Stamford Branch~~ as administrative agent and collateral agent, the several banks and ~~the~~ other financial institutions party thereto, and certain other parties party thereto from time to time. 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.~~

~~Landscape Holding~~thereto, and ~~Landscape are~~UBS AG, Stamford Branch (the “Existing Agent”) as administrative agent and collateral agent (as amended prior to March 23, 2021, the ~~borrowers under~~“Existing Credit Agreement” and, as so amended and restated pursuant to the ~~Term Loan Facility. The Term Loan Facility provides for a senior secured term loan credit facility in~~Fifth Amendment, the ~~amount of $275.0 million, as modified by the Refinancing described below.~~

~~The final maturity date of the Term Loan Facility is April 29, 2022. In addition, the~~“Second Amended and Restated Credit Agreement”) in order to, among other things, incur $325.0 million of term loans (the “New Term ~~Loan~~Loans”). The New Term Loans mature on March 23, 2028.

On March 27, 2023, Landscape Holding, as representative for the Borrowers, entered into the First Amendment to the Second Amended and Restated Credit Agreement ~~provides the right for individual lenders~~(the “Sixth Amendment”) to ~~extend the maturity date~~implement a forward-looking interest rate based on SOFR in lieu of ~~their loans upon the request of the Term Loan Borrower and without the consent of any other lender.~~LIBOR.

Subject to certain conditions, without the consent of the then existing lenders (but subject to the receipt of commitments), the New Term ~~Loan Facility~~Loans may be ~~expanded~~increased (or a new term loan facility, revolving credit facility, or letter of credit facility added) by up to (i) ~~$100.0~~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 ~~that~~such additional amount and any use of proceeds thereof to exceed ~~3.50~~4.00 to 1.00.

The New Term ~~Loan Facility is~~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 ~~Term Loan Facility.~~Second Amended and Restated Credit Agreement. If an event of default occurs, the lenders could elect to declare all amounts outstanding under the New Term ~~Loan Facility~~Loans to be immediately due and payable and enforce their interest in collateral pledged under the agreement.

~~Refinancing~~Amendments of the Term Loans

On April 29, 2016, we refinanced our then-existing term loan facility, or the “Prior Term Loan Facility,” with the Term Loan Facility. We refer to this refinancing transaction as the “Refinancing.” We used borrowings under the Term Loan Facility to repay all $60.3 million of borrowings outstanding under the Prior Term Loan Facility, repay $29.9 million of borrowings outstanding under the ABL Facility, pay a special cash dividend of $176.0 million, or the “Special Cash Dividend,” to holders of our common stock and Preferred Stock as of April 29, 2016 and pay fees and expenses associated with the Refinancing.

~~Term Loan Facility Amendments~~

On November 23, 2016, we amended the Term Loan Facility (the “First Amendment”) to, among other things, (i) add an additional credit facility under the Term Loan Facility consisting of additional term loans (the “Tranche B Term Loans”) in an aggregate principal amount of $273.6 million and (ii) increase the aggregate principal amount of Tranche B Term Loans under the Term Loan Facility to $298.6 million pursuant to an increase supplement. Proceeds of the Tranche B Term Loans were used to, among other things, (i) repay in full the term loans outstanding under the Term Loan Facility immediately prior to effectiveness of the FirstMarch 27, 2023, Landscape Holding entered into Sixth Amendment, ~~and pay fees and expenses associated with the transaction and (ii) repay $21.0 million of borrowings outstanding under the ABL Facility.~~

On May 24, 2017, we amended the Term Loan Facility (the “Second Amendment”) to, among other things, add an additional credit facility under the Term Loan Facility consisting of additional term loans (the “Tranche C Term Loans”) in an aggregate principal amount of $299.5 million. Proceeds of the Tranche C Term Loans were used to, among other things, repay in full the Tranche B Term Loans outstanding under the Term Loan Facility immediately prior to effectiveness ofwhich amends the Second ~~Amendment~~Amended and ~~pay fees and expenses associated with the transaction.~~

Restated Credit Agreement to implement a forward-looking interest rate based on SOFR in lieu of LIBOR. The ~~Tranche C~~New Term Loans bear interest, at Landscape Holding’s option, at either (i) an adjusted ~~LIBOR (minimum of 1.0%)~~Term SOFR rate plus an applicable margin equal to 2.00% (with a Term SOFR floor of ~~3.25% or 3.50%~~0.50% on initial term loans and 0.00% on all other term loans) or (ii) an alternative base rate plus an applicable margin ~~ranging from 2.25%~~equal to ~~2.50%~~1.00%. ~~Tranche C Term Loans will mature on April 29, 2022. The other terms~~Voluntary prepayments of the ~~Tranche C~~New Term Loans are ~~generally~~permitted at any time, in minimum principal amounts, without premium or penalty, subject to a 1.00% premium payable in connection with certain repricing transactions if the ~~same~~transactions occurred within the first 12 months after the date of the initial funding of the New Term Loans. The interest rate on the outstanding balance of the New Terms Loans was 7.21697% as of July 2, 2023.

On March 23, 2021, the ~~terms applicable~~Borrowers entered into the Fifth Amendment in order to, among other things, (i) incur $325.0 million of term loans, (ii) replace the Existing Agent as administrative and collateral agent with the New Agent, and (iii) make such other changes in the Second Amended and Restated Credit Agreement as agreed among the Borrowers and the lenders. Proceeds of the New Term Loans were used to, among other things, (i) to repay in full the term loans outstanding under the Existing Credit Agreement immediately prior to effectiveness of the Fifth Amendment (the “Tranche E Term Loans”), (ii) to pay fees and expenses related to the ~~Tranche B~~Fifth Amendment and the Second Amended and Restated Credit Agreement, and (iii) for working capital and other general corporate purposes.

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The Second Amended and Restated Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants. 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.

Subsequent Event

On July 12, 2023, Landscape Holding, entered into the Increase Supplement (the “Increase Supplement”) by and between Landscape Holding, as borrower representative, and JPMorgan Chase Bank, N.A., as increasing lender (the “Increasing Lender”), to the Second Amended and Restated Credit Agreement. The Increase Supplement provides for an additional $120.0 million of New Term ~~Loans.~~

Loans and makes such other changes to the Second Amended and Restated Credit Agreement as agreed between Landscape Holding and the Increasing Lender. Proceeds of the term loans borrowed pursuant to the Increase Supplement were used, among other things, to (i) repay certain loans outstanding under the ABL Facility and (ii) pay fees and expenses related to the Increase Supplement. After giving effect to the borrowing pursuant to the Increase Supplement, the aggregate principal amount of the New Term Loans outstanding under the Credit Agreement on July 12, 2023 was $371.5 million. The maturity date of the New Term Loans of March 23, 2028 did not change as a result of the Increase Supplement.

ABL Facility

Landscape Holding and Landscape (collectively, the “ABL Borrowers”) are ~~borrowers under~~parties to the ~~ABL Facility~~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 ~~$325.0~~$600.0 million, subject to borrowing base ~~availability.~~availability, with a maturity date of July 22, 2027. The ABL Facility is secured by a first lien on the inventory and receivables of ~~Landscape Holding and Landscape.~~the ABL Borrowers. The ABL Facility is guaranteed by SiteOne Landscape Supply Bidco, Inc. (“Bidco”), an indirect wholly-owned subsidiary of the Company, and each direct and indirect wholly-owned U.S. restricted subsidiary of Landscape. Availability ~~under the ABL Facility~~ is determined using borrowing base calculations of eligible inventory and receivable balances less the current outstanding ABL Facility and letters of credit balances.

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On July 22, 2022, the ABL Borrowers, entered into the Seventh Amendment to the ABL Credit Agreement (the “Seventh Amendment”). The Seventh Amendment amended and restated the ABL Credit Agreement in order to, among other things, (i) increase the aggregate principal amount of the commitments to $600.0 million, (ii) extend the final scheduled maturity of the revolving credit facility to July 22, 2027, (iii) establish an alternate rate of interest to the LIBOR rate, (iv) replace the administrative and collateral agent, and (v) make such other changes as agreed among the ABL Borrowers and the lenders. Proceeds of the initial borrowings under the ABL Credit Agreement on the closing date of the Seventh Amendment were used, among other things, (i) to repay in full the loans outstanding under the ABL Credit Agreement immediately prior to the effectiveness of the Seventh Amendment, (ii) to pay fees and expenses related to the Seventh Amendment and the ABL Credit Agreement, and (iii) for working capital and other general corporate purposes.

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. 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 ~~is LIBOR plus an applicable margin ranging~~ranged from ~~1.25%~~6.44059% to ~~2.00% or an alternate base rate for U.S. dollar-denominated borrowings plus an applicable margin ranging~~6.45249% as of July 2, 2023 and ranged from ~~0.25%~~5.68561% to ~~1.00%. The interest rates on outstanding balances at October~~5.77336% as of January 1, ~~2017 range from 2.99% to 5.00%.~~2023. Additionally, the ~~borrowers~~ABL Borrowers paid a ~~0.25% and 0.375%~~ commitment fee of 0.25% on the unfunded amount as of ~~October 1, 2017~~July 2, 2023 and a commitment fee of 0.20% on the unfunded amount as of January 1, ~~2017, respectively. As of October 1, 2017, the outstanding balance on the ABL Facility was $193.7 million. The ABL Facility matures on October 20, 2020.~~2023.

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. Additionally, the ABL Facility is subject to various covenants, ~~requiring~~including incurrence covenants that require the Company to meet minimum financial ratios, and additional borrowings and other corporate transactions may be limited by failure to meet these financial ratios. Failure to meet any of these covenants could result in an event of default under these agreements. If an event of default occurs, the lenders could elect to declare all amounts outstanding under these agreements to be immediately due and payable, enforce their interest in collateral pledged under the agreement, or restrict the ABL Borrowers’ ability to obtain additional borrowings under these agreements. The ABL Facility is ~~also~~secured by a first lien security interest over inventory and receivables and a second lien security interest over all other assets pledged as collateral.

The ABL Facility contains customary representations and warranties and customary affirmative and negative covenants. The negative covenants are limited to the following: financial condition, fundamental changes, dividends and distributions, acquisitions, dispositions of collateral, payments and modifications of restricted indebtedness, negative pledge clauses, changes in line of business, currency, commodity and other hedging transactions, transactions with affiliates, investments, indebtedness, and liens. The negative covenants are subject to ~~other covenants~~customary exceptions and also permit the payment of dividends and distributions, investments, permitted acquisitions, payments or redemptions of indebtedness under the Second Amended and Restated Credit Agreement, asset sales and mergers, consolidations, and sales of all or substantially all assets involving subsidiaries upon satisfaction of a “payment condition.” The payment condition is deemed satisfied upon 30-day specified excess availability and specified availability exceeding agreed upon thresholds and, in certain cases, the absence of specified events of ~~default.~~ default or known events of default and pro forma compliance with a consolidated fixed charge coverage ratio of 1.00 to 1.00.

Subject to certain conditions and subject to the receipt of commitments, the ABL Facility may be increased (or a new term loan facility added) by up to (i) the greater of (a) $450.0 million and (b) 100% of Consolidated EBITDA (as defined in the ABL Credit Agreement) for the period of the most recent four consecutive fiscal quarters ending prior to the date of such determination plus (ii) an additional amount that will not cause the Consolidated First Lien Leverage Ratio after giving effect to the incurrence of such additional amount and any use of proceeds thereof to exceed 5.00 to 1.00.

There are no financial covenants included in the ABL Credit Agreement, other than a springing minimum consolidated fixed charge coverage ratio of at least 1.00 to 1.00, which is tested only when specified availability is less than ~~7.5%~~10.0% of the lesser of (x) the then applicable borrowing base and (y) the then aggregate effective commitments under the ABL Facility, and continuing until such time as specified availability has been in excess of such threshold for a period of 3020 consecutive calendar days.

Failure to comply with the covenants and other provisions included in the ABL Credit Agreement could result in an event of default under the ABL Facility. If an event of default occurs, the lenders could elect to declare all amounts outstanding under the ABL Facility to be immediately due and payable, enforce their interest in collateral pledged under the agreement, or restrict the ~~borrowers’~~ABL Borrowers’ ability to obtain additional borrowings thereunder.

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Limitations on Distributions and Dividends by Subsidiaries

The ability of our subsidiaries to make distributions and dividends to us depends on their operating results, cash requirements, financial condition, and general business conditions, as well as restrictions under the laws of our subsidiaries’ jurisdictions.

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. 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.

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 ~~our unsecured syndicated senior Term Loan Facility. In July 2017, we entered into two forward-starting~~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.

On March 31, 2023, we amended the terms of our interest rate swaps to implement a forward-looking interest rate based on SOFR in place of LIBOR. Since the interest rate swaps were affected by reference rate reform, we applied the expedients and exceptions provided in Topic 848 to preserve the past presentation of our derivatives without de-designating the existing hedging relationships. All interest rate swap amendments were executed with the existing counterparties and did not change the notional amounts, maturity dates, or other critical terms of the hedging relationships. The interest rate swaps will continue to be net settled on a quarterly basis with the counterparties for the difference between the fixed rates and the variable rates based upon three-month Term ~~Loan Facility. The~~SOFR (subject to a floor) as applied to the notional amounts of each interest rate swap.

During the first quarter of 2021, we amended and restructured certain of our interest rate swap contracts ~~become effective~~using a strategy commonly referred to as a “blend and extend”. In a blend and extend arrangement, the liability position of the existing interest rate swap arrangement is blended into the amended or new interest rate swap arrangement and the term to maturity of the hedged position is extended. 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 ~~March 11, 2019~~our Consolidated Balance Sheets since the interest rate swap arrangements executed during the first quarter of 2021 were determined to be hybrid debt instruments containing embedded at-market swap derivatives. As of July 2, 2023, approximately $1.5 million was classified as Long-term debt, current portion and ~~terminate~~approximately $1.1 million was classified as Long-term debt, less current portion on ~~June 11, 2021.~~our Consolidated Balance Sheets.

We ~~will~~ 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. We have designated these swaps as cash flow hedges and ~~will~~ record the changes in the estimated fair value of the swaps to Accumulated other comprehensive ~~income(loss)~~income (loss) (“AOCI”) on our Consolidated Balance Sheets. 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. To the extent the interest rate swaps are determined to be ineffective, we ~~will~~ recognize the changes in the estimated fair value of the swaps in earnings.

Failure of the swap counterparties to make payments would result in the loss of any potential benefit to us under the swap agreements. 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~~they were in a net pay position.

~~Limitations on Distributions~~For additional information, refer to “Note 1. Nature of Business and ~~Dividends by Subsidiaries~~Significant Accounting Polices”, “Note 4. Fair Value Measurement and Interest Rate Swaps”, and “Note 9. Long-Term Debt” in the notes to the consolidated financial statements.

The ability of our subsidiaries to make distributions and dividends to us depends on their operating results, cash requirements and financial condition and general business conditions, as well as restrictions under the laws of our subsidiaries’ jurisdictions.

The agreements governing the Term Loan Facility and the ABL Facility (collectively, the “Credit Facilities”) restrict the ability of our subsidiaries to pay dividends, make loans or otherwise transfer assets to us. Further, our subsidiaries are permitted under the terms of the Credit Facilities 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.

~~Contractual Obligations and Commitments~~

The following table summarizes material changes to our contractual obligations as of October 1, 2017, resulting from the changes in our long term debt. The changes during the three months ended October 1, 2017 were primarily the result of the refinancing of the Prior Term Loan Facility and increased borrowing under the ABL Facility.

(In millions)
Payments Due by Period
Less than
More than
Total
1 Year
1-3 Years
3-5 Years
5 Years

Long term debt, including current maturities⁽¹⁾
$ 491.7
$ 3.0
$ 5.2
$ 483.5
$ —
Interest on long term debt⁽²⁾
86.9
19.6
43.2
24.1
—

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~~(1)~~	For additional information see “Note 8. Long-Term Debt” in the notes to the consolidated financial statements. In addition, the table excludes the debt issuance costs and debt discounts of $12.2 million.

~~(2)~~

Interest payments on debt are calculated for future periods using interest rates in effect as of October 1, 2017. Certain of these projected interest payments may differ in the future based on changes in floating interest rates or other factors and events. The projected interest payments only pertain to obligations and agreements outstanding as of October 1, 2017. See “Note 8. Long-Term Debt” in the notes to the consolidated financial statements for further information regarding our debt instruments.

Critical Accounting Estimates

~~There were no material changes in our critical~~The accounting estimates ~~since~~we believe to be most sensitive due to their significance to the ~~filing~~financial statements and the possibility that future events may be significantly different from our expectations are: inventory valuation, acquisitions, and goodwill. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended January 1, ~~2017.~~2023 for additional detail and discussion of these critical accounting estimates. There have been no material changes to our critical accounting estimates as described in our most recent Annual Report.

Recently Issued and Adopted Accounting Pronouncements

~~See “Note 1.~~Refer to “Note 1. Nature of Business and Significant Accounting Policies” in the notes to the consolidated financial statements.

Accounting Pronouncements Issued But Not Yet Adopted

~~See “Note 1.~~Refer to “Note 1. Nature of Business and Significant Accounting Policies” in the notes to the consolidated financial statements.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes from the information provided onin our Annual Report on Form 10-K for the fiscal year ended January 1, ~~2017.~~2023.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our ~~chief executive officer~~Chief Executive Officer and ~~chief financial officer,~~Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the ~~Securities~~ Exchange ~~Act of 1934, as amended (the “Exchange Act”))~~Act), as of the end of the period covered by this report. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

~~Based on that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures~~ as of the end of the period covered by this Quarterly Report on Form ~~10-Q~~10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were designed at a reasonable assurance level and were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the ~~Securities and Exchange Commission~~ rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our ~~chief executive officer~~Chief Executive Officer and ~~chief financial officer,~~Chief Financial Officer, as appropriate, to allow timely decisions regarding required ~~disclosure. Additionally, based~~disclosure as of the end of the period covered by this Quarterly Report on ~~the most recent evaluation, we have concluded that~~Form 10-Q.

Changes in Internal Control over Financial Reporting

There were no significant ~~change~~changes in our ~~disclosure controls and procedures occurred~~internal control over financial reporting during the last fiscal quarter that ~~has~~have materially affected, or isare reasonably likely to materially affect, our ~~disclosure controls and procedures.~~internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are not currently involved in any material litigation or arbitration. We anticipate that ~~similar to the rest of the landscape supply industry,~~ we will be 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, or 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~~or cash flows.

Item 1A. Risk Factors

~~There have been no material changes~~The significant factors known to ~~the risk factors~~us that could materially adversely affect our business, financial condition, or operating results are disclosed in our Annual Report on Form 10-K for the fiscal year ended January 1, ~~2017.~~2023.

Item 5. Other Information

During the three months ended July 2, 2023, none of our directors or executive officers adopted, modified, or terminated any contract, instruction, or written plan for the purchase or sale of our common stock that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement”.

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Item 6. Exhibits.


Exhibit Number		Description

~~Exhibit~~ ~~Number~~ 10.1†		~~Description~~ Summary of Non-Employee Director Compensation, as amended and restated on May 11, 2023.

10.2		Increase Supplement, dated as of July 12, 2023, by and between SiteOne Landscape Supply Holding, LLC and JPMorgan Chase Bank, N.A., as increasing lender, is incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed July 12, 2023.
~~31.1#~~
31.1		Certification of Chief Executive Officer Pursuant to Exchange Act Rule 13a - 14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~31.2#~~31.2		Certification of Chief Financial Officer Pursuant to Exchange Act Rule 13a - 14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~32.1#~~32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~32.2#~~32.2		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~101.INS#~~101		The following unaudited financial information from this Quarterly Report on Form 10-Q for the quarter ended July 2, 2023 is formatted in Inline XBRL ~~Instance Document~~(Inline Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements.

~~101.SCH#~~104		Cover Page Interactive Data File (formatted in Inline XBRL ~~Taxonomy Extension Schema~~

~~101.CAL#~~	~~XBRL Taxonomy Extension Calculation Linkbase~~

~~101.DEF#~~	~~XBRL Taxonomy Extension Definition Linkbase~~

~~101.LAB#~~	~~XBRL Taxonomy Extension Label Linkbase~~

~~101.PRE#~~	~~XBRL Extension Presentation Linkbase~~
	with applicable taxonomy extension information contained in Exhibit 101).

______________

~~# Filed herewith.~~† Denotes management contract or compensatory plan or arrangement.

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~~SIGNATURES~~SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


				SITEONE LANDSCAPE SUPPLY, INC.


Date:			August 2, 2023	~~SITEONE LANDSCAPE SUPPLY, INC.~~
By:
~~Date:~~	~~November 8, 2017~~	~~By:~~	/s/ John T. Guthrie
					John T. Guthrie
					Executive Vice President, Chief Financial Officer and Assistant Secretary
					(Principal Financial and Principal Accounting Officer)



Delaware			46-4056061
(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification No.)

~~Mansell Overlook, 300 Colonial Center Parkway, Suite 600, Roswell, Georgia 30076~~



Title of each class						Shares Outstanding as of July 28, 2023
Common Stock, $0.01 par value per share						45,058,416


Assets	October 1, 2017			January 1, 2017			Assets	July 2, 2023		January 1, 2023
Current assets:							Current assets:
Cash and cash equivalents	$	24.1		$	16.3		Cash and cash equivalents	$	69.6	$	29.1
Accounts receivable, net of allowance for doubtful accounts of $5.1 and $4.3, respectively	247.3			169.0
Accounts receivable, net of allowance for doubtful accounts of $22.2 and $21.7, respectively							Accounts receivable, net of allowance for doubtful accounts of $22.2 and $21.7, respectively	569.6		455.5
Inventory, net	374.6			289.6			Inventory, net	865.4		767.7
Income tax receivable	2.7			1.6			Income tax receivable	—		10.9
Prepaid expenses and other current assets	33.1			13.5			Prepaid expenses and other current assets	81.4		56.1
Total current assets	681.8			490.0			Total current assets	1,586.0		1,319.3

Property and equipment, net (Note 4)	77.8			69.8
Goodwill (Note 5)	105.8			70.8
Intangible assets, net (Note 5)	109.6			103.3
Property and equipment, net (Note 5)							Property and equipment, net (Note 5)	201.8		188.8
Operating lease right-of-use assets, net (Note 7)							Operating lease right-of-use assets, net (Note 7)	364.0		321.6
Goodwill (Note 6)							Goodwill (Note 6)	433.9		411.9
Intangible assets, net (Note 6)							Intangible assets, net (Note 6)	274.2		276.0
Deferred tax assets							Deferred tax assets	3.8		3.7
Other assets	10.0			8.7			Other assets	8.8		12.6
Total assets	$	985.0		$	742.6		Total assets	$	2,872.5	$	2,533.9

Liabilities and Equity
Liabilities and Stockholders' Equity							Liabilities and Stockholders' Equity
Current liabilities:							Current liabilities:
Accounts payable	$	170.1		$	108.3		Accounts payable	$	382.3	$	279.7
Current portion of capital leases (Note 6)	5.1			4.3
Current portion of finance leases (Note 7)							Current portion of finance leases (Note 7)	18.4		14.8
Current portion of operating leases (Note 7)							Current portion of operating leases (Note 7)	73.4		70.1
Accrued compensation	33.7			36.7			Accrued compensation	57.9		81.2
Long term debt, current portion (Note 8)	3.0			3.0
Long-term debt, current portion (Note 9)							Long-term debt, current portion (Note 9)	4.1		4.0
Income tax payable	3.8			—			Income tax payable	24.8		—
Accrued liabilities	37.4			33.2			Accrued liabilities	122.0		110.0
Total current liabilities	253.1			185.5			Total current liabilities	682.9		559.8

Other long-term liabilities	17.0			9.1			Other long-term liabilities	14.8		12.8
Capital leases, less current portion (Note 6)	7.7			6.7
Finance leases, less current portion (Note 7)							Finance leases, less current portion (Note 7)	56.1		43.9
Operating leases, less current portion (Note 7)							Operating leases, less current portion (Note 7)	299.7		260.1
Deferred tax liabilities	25.0			20.0			Deferred tax liabilities	7.6		7.8
Long-term debt, less current portion (Note 8)	476.5			372.5
Long-term debt, less current portion (Note 9)							Long-term debt, less current portion (Note 9)	376.4		346.6
Total liabilities	779.3			593.8			Total liabilities	1,437.5		1,231.0

Commitments and contingencies (Note 11)
Commitments and contingencies (Note 11)							Commitments and contingencies (Note 11)

Stockholders' equity (Note 1):
Common stock, par value $0.01; 1,000,000,000 shares authorized; 39,787,243 and 39,597,532 shares issued, and 39,766,332 and 39,576,621 shares outstanding at October 1, 2017 and January 1, 2017, respectively	0.4			0.4
Stockholders' equity:							Stockholders' equity:
Common stock, par value $0.01; 1,000,000,000 shares authorized; 45,273,918 and 45,148,312 shares issued, and 45,041,897 and 44,916,291 shares outstanding at July 2, 2023 and January 1, 2023, respectively							Common stock, par value $0.01; 1,000,000,000 shares authorized; 45,273,918 and 45,148,312 shares issued, and 45,041,897 and 44,916,291 shares outstanding at July 2, 2023 and January 1, 2023, respectively	0.5		0.5
Additional paid-in capital	225.2			219.3			Additional paid-in capital	589.3		577.1
Accumulated deficit	(19.2		)	(69.7		)
Accumulated other comprehensive loss	(0.7		)	(1.2		)
Total equity	205.7			148.8
Total liabilities and equity	$	985.0		$	742.6
Retained earnings							Retained earnings	862.4		742.9
Accumulated other comprehensive income							Accumulated other comprehensive income	8.1		7.7
Treasury stock, at cost, 232,021 and 232,021 shares at July 2, 2023 and January 1, 2023, respectively							Treasury stock, at cost, 232,021 and 232,021 shares at July 2, 2023 and January 1, 2023, respectively	(25.3)		(25.3)
Total stockholders' equity							Total stockholders' equity	1,435.0		1,302.9
Total liabilities and stockholders' equity							Total liabilities and stockholders' equity	$	2,872.5	$	2,533.9



	Nine Months Ended
	October 1, 2017			October 2, 2016
Cash Flows from Operating Activities:
Net income	$	50.6		$	36.2
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation	12.9			10.3
Stock-based compensation	4.5			3.4
Amortization of software and intangible assets	18.8			17.1
Amortization of debt related costs	2.2			1.8
Loss on extinguishment of debt	0.1			1.2
Loss on sale of equipment	0.2			—
Other	(0.1		)	(0.6		)
Changes in operating assets and liabilities, net of the effects of acquisitions:
Receivables	(73.5		)	(76.8		)
Inventory	(69.4		)	(21.9		)
Income tax receivable	(1.1		)	4.3
Prepaid expenses and other assets	(19.0		)	(12.3		)
Accounts payable	54.6			38.9
Income tax payable	3.5			—
Accrued expenses and other liabilities	1.1			7.6
Net Cash (Used In) Provided By Operating Activities	$	(14.6	)	$	9.2

Cash Flows from Investing Activities:
Purchases of property and equipment	(10.3		)	(6.2		)
Acquisitions, net of cash acquired	(66.9		)	(56.6		)
Proceeds from the sale of property and equipment	0.3			0.3
Net Cash Used In Investing Activities	$	(76.9	)	$	(62.5	)

Cash Flows from Financing Activities:
Equity proceeds from common stock	1.3			—
Purchase of treasury stock	—			(0.2		)
Special cash dividend	—			(176.0		)
Other dividends paid	—			(13.0		)
Borrowings under term loan	299.5			272.3
Repayments under term loan	(299.4		)	(62.1		)
Borrowings on asset-based credit facility	319.6			322.6
Repayments on asset-based credit facility	(216.9		)	(275.8		)
Debt issuance costs paid	(1.0		)	(3.5		)
Payments on capital lease obligations	(3.9		)	(3.1		)
Other financing activities	(0.1		)	(2.2		)
Net Cash Provided By Financing Activities	$	99.1		$	59.0

Effect of exchange rate on cash	0.2			0.1


						Six Months Ended
Net Change In Cash	7.8		5.8
						July 2, 2023		July 3, 2022
Cash Flows from Operating Activities:					Cash Flows from Operating Activities:
Net income					Net income	$	119.5	$	173.0
Adjustments to reconcile Net income to net cash provided by (used in) operating activities:					Adjustments to reconcile Net income to net cash provided by (used in) operating activities:
Amortization of finance lease right-of-use assets and depreciation					Amortization of finance lease right-of-use assets and depreciation	31.0		21.1
Stock-based compensation					Stock-based compensation	15.7		9.5
Amortization of software and intangible assets					Amortization of software and intangible assets	30.8		23.7
Amortization of debt related costs					Amortization of debt related costs	0.5		0.6

Gain on sale of equipment					Gain on sale of equipment	(0.2)		(0.3)

Other					Other	(2.5)		0.6
Changes in operating assets and liabilities, net of the effects of acquisitions:					Changes in operating assets and liabilities, net of the effects of acquisitions:
Receivables					Receivables	(111.2)		(122.5)
Inventory					Inventory	(84.8)		(215.2)
Income tax receivable					Income tax receivable	10.9		3.3
Prepaid expenses and other assets					Prepaid expenses and other assets	(16.7)		(9.1)
Accounts payable					Accounts payable	98.5		80.8
Income tax payable					Income tax payable	24.8		34.6
Accrued expenses and other liabilities					Accrued expenses and other liabilities	(15.1)		(23.7)
Net Cash Provided By (Used In) Operating Activities					Net Cash Provided By (Used In) Operating Activities	$	101.2	$	(23.6)

Cash Flows from Investing Activities:					Cash Flows from Investing Activities:
Purchases of property and equipment					Purchases of property and equipment	(16.3)		(16.6)
Purchases of intangible assets					Purchases of intangible assets	(1.1)		(7.2)
Acquisitions, net of cash acquired					Acquisitions, net of cash acquired	(58.6)		(122.0)
Proceeds from the sale of property and equipment					Proceeds from the sale of property and equipment	1.1		1.1
Net Cash Used In Investing Activities					Net Cash Used In Investing Activities	$	(74.9)	$	(144.7)

Cash Flows from Financing Activities:					Cash Flows from Financing Activities:
Equity proceeds from common stock					Equity proceeds from common stock	2.1		2.3
Repurchases of common stock					Repurchases of common stock	(0.6)		—

Repayments under term loan					Repayments under term loan	(1.3)		(1.3)
Borrowings on asset-based credit facility					Borrowings on asset-based credit facility	302.8		319.8
Repayments on asset-based credit facility					Repayments on asset-based credit facility	(271.5)		(133.8)

Payments on finance lease obligations					Payments on finance lease obligations	(8.3)		(5.8)
Payments of acquisition related contingent obligations					Payments of acquisition related contingent obligations	(2.7)		(8.9)
Other financing activities					Other financing activities	(6.5)		(7.4)
Net Cash Provided By Financing Activities					Net Cash Provided By Financing Activities	$	14.0	$	164.9

Effect of exchange rate on cash					Effect of exchange rate on cash	0.2		(0.2)
Net change in cash					Net change in cash	40.5		(3.6)

Cash and cash equivalents:					Cash and cash equivalents:
Beginning	16.3		20.1		Beginning	29.1		53.7
Ending	$	24.1	$	25.9	Ending	$	69.6	$	50.1

Supplemental Disclosures of Cash Flow Information:					Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for interest	18.3		12.6		Cash paid during the year for interest	$	13.9	$	6.8
Cash paid during the year for income taxes	27.5		20.8		Cash paid during the year for income taxes	$	2.2	$	13.7

Supplemental Disclosures of Noncash Investing and Financing Information:
Acquisition of property and equipment through capital leases	5.7		2.8



x☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934




TABLE OF CONTENTS

Part I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheets			35
Consolidated Statements of Operations			46
Consolidated Statements of Comprehensive Income			57
Consolidated Statements of Equity			8
Consolidated Statements of Cash Flows			69
Notes to Consolidated Financial Statements			810
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			2429
Item 3. Quantitative and Qualitative Disclosures About Market Risk			3845
Item 4. Controls and Procedures			3845

Part II. OTHER INFORMATION
Item 1. Legal Proceedings			3946
Item 1A. Risk Factors			3946
Item 5. Other Information			46
Item 6. Exhibits			4047
~~Signatures~~Signature			4148


	Common Stock Shares	Common Stock Amount		Additional Paid-in-Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total Equity
Balance at January 1, 2023	44,916.3	$	0.5	$	577.1	$	742.9	$	7.7	$	(25.3)	$	1,302.9
Net loss	—	—		—		(4.5)		—		—		(4.5)
Other comprehensive loss	—	—		—		—		(1.7)		—		(1.7)
Issuance of common shares under stock-based compensation plan	62.9	—		(2.6)		—		—		—		(2.6)
Stock-based compensation	—	—		8.6		—		—		—		8.6

Balance at April 2, 2023	44,979.2	$	0.5	$	583.1	$	738.4	$	6.0	$	(25.3)	$	1,302.7
Net income	—	—		—		124.0		—		—		124.0
Other comprehensive income	—	—		—		—		2.1		—		2.1
Issuance of common shares under stock-based compensation plan	62.7	—		(0.9)		—		—		—		(0.9)
Stock-based compensation	—	—		7.1		—		—		—		7.1

Balance at July 2, 2023	45,041.9	$	0.5	$	589.3	$	862.4	$	8.1	$	(25.3)	$	1,435.0


Note 1. Nature of Business and Significant Accounting Policies			11
Note 2. Revenue from Contracts with Customers			13
Note 3. Acquisitions			13
Note 4. Fair Value Measurement and Interest Rate Swaps			15
Note 5. Property and Equipment, Net			18
Note 6. Goodwill and Intangible Assets, Net			18
Note 7. Leases			20
Note 8. Employee Benefit and Stock Incentive Plans			21
Note 9. Long-Term Debt			24
Note 10. Income Taxes			26
Note 11. Commitments and Contingencies			27
Note 12. Earnings (Loss) Per Share			27
Note 13. Subsequent Events			28


	Derivative Assets
	July 2, 2023			January 1, 2023
Derivatives designated as hedging instruments	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value

Interest rate contracts	Prepaid expenses and other current assets	$	9.9	Prepaid expenses and other current assets	$	8.6
	Other assets	5.1		Other assets	7.7
Total derivative assets		$	15.0		$	16.3



								Fair Value of Hedge Liabilities
Derivatives accounted for as hedges	Inception Date	Notional Amount		Fixed Interest Rate		Type of Hedge	Balance Sheet Classification	October 1, 2017		January 1, 2017
Forward-starting interest rate swap 1	June 30, 2017	$	58.0	2.1345	%	Cash flow	Other long-term liabilities	$	0.1	$	—
Forward-starting interest rate swap 2	June 30, 2017	$	116.0	2.1510	%	Cash flow	Other long-term liabilities	$	0.1	$	—



		Three Months Ended
		Gain (Loss) Reclassified from AOCI into Income				Gain (Loss) Recognized in Income
Derivatives not designated as hedging instruments	Location of Gain (Loss)	July 2, 2023		July 3, 2022		July 2, 2023		July 3, 2022
Interest rate contracts	Interest and other non-operating expenses, net	$	—	$	(0.8)	$	—	$	—


	July 2, 2023		January 1, 2023
Land	$	13.2	$	13.2
Buildings and leasehold improvements:
Buildings	8.1		8.1
Leasehold improvements	49.9		46.2
Branch equipment	114.2		114.7
Office furniture and fixtures and vehicles:
Office furniture and fixtures	29.1		28.2
Vehicles	46.6		43.2
Finance lease right-of-use assets	123.7		103.1
Mineral rights	2.2		—
Tooling	0.1		0.1
Construction in progress	15.0		7.7
Total property and equipment, gross	402.1		364.5
Less: accumulated depreciation and amortization	200.3		175.7
Property and equipment, net	$	201.8	$	188.8


	January 1, 2023		January 3, 2022
	to July 2, 2023		to January 1, 2023
Beginning balance	$	411.9	$	311.1
Goodwill acquired during the period(a)	22.8		101.8
Goodwill adjusted during the period	(0.8)		(1.0)
Ending balance	$	433.9	$	411.9



	January 2, 2017
	to October 1, 2017
Beginning balance	$	70.8
Goodwill acquired	35.1
Goodwill adjusted	(0.1		)
Ending balance	$	105.8


		July 2, 2023						January 1, 2023
	Weighted Average Remaining Useful Life	Amount		Accumulated Amortization		Net		Amount		Accumulated Amortization		Net
Customer relationships	17.1 years	$	518.2	$	267.7	$	250.5	$	490.5	$	241.2	$	249.3
Trademarks and other	3.6 years	46.1		22.4		23.7		47.9		21.2		26.7
Total intangibles		$	564.3	$	290.1	$	274.2	$	538.4	$	262.4	$	276.0



		October 1, 2017						January 1, 2017
	Weighted Average Remaining Useful Life (in Years)	Amount		Accumulated Amortization		Net		Amount		Accumulated Amortization		Net
Customer relationships	17.5	$	170.2	$	64.3	$	105.9	$	147.7	$	47.5	$	100.2
Trademarks, trade names and other	4.6	6.5		2.8		3.7		5.0		1.9		3.1
Total intangibles		$	176.7	$	67.1	$	109.6	$	152.7	$	49.4	$	103.3


Fiscal year ending:
2023 (remainder)	$	29.5
2024	48.7
2025	40.3
2026	33.0
2027	25.7
Thereafter	97.0
Total future amortization	$	274.2



Fiscal year ending:
2017 (remainder)	$	5.8
2018	20.5
2019	16.5
2020	13.5
2021	11.1
Thereafter	42.2
Total future amortization	$	109.6



	October 1, 2017		January 1, 2017
Capital lease obligations with rates ranging from 2.0% to 4.0% with monthly payments of approximately $0.5 million maturing through September 2022	$	12.8	$	11.0
Less: current maturities	5.1		4.3
Total capital leases, less current portion	$	7.7	$	6.7



	For the three months ended		For the nine months ended
	October 1, 2017	October 2, 2016	October 1, 2017	October 2, 2016
Weighted average potential common shares excluded because anti-dilutive
Redeemable Convertible Preferred stock	—	—	—	12,270,493
Employee stock options, RSUs and DSUs	18,548	11,988	6,632	3,137,951



(In millions)
	Payments Due by Period
			Less than						More than
	Total		1 Year		1-3 Years		3-5 Years		5 Years

Long term debt, including current maturities⁽¹⁾	$	491.7	$	3.0	$	5.2	$	483.5	$	—
Interest on long term debt⁽²⁾	86.9		19.6		43.2		24.1		—