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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________

FORM 10-Q
__________________________
☒
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended October 1, 2017March 31, 2024
or
☐
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the Transition Period From __________ to ___________


Commission file number: 001-37760


siteone4ctaga01.jpgSiteOne_logo_w_tag_2C.jpg

SiteOne Landscape Supply, Inc.


(Exact name of registrant as specified in its charter)
__________________________
Delaware46-4056061
Delaware46-4056061
(State or other jurisdiction of

incorporation or organization)
(IRS Employer

Identification No.)
Mansell Overlook, 300 Colonial Center Parkway, Suite 600, Roswell, Georgia 30076

300 Colonial Center Parkway, Suite 600, Roswell, Georgia 30076
(Address of principal executive offices) (Zip Code)
 
(470) 277-7000
(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per shareSITENew York Stock Exchange


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
 

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Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”company” and “emerging"emerging growth company”company" in Rule 12b-2 of the Exchange Act (Check One): 

Act.
Large accelerated filer☐☒Accelerated filer☐
Non-accelerated filer☒ (Do not check if a smaller reporting company)☐Smaller reporting company☐
Emerging growth company☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B)13(a) of the SecuritiesExchange Act.  ☐


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒
 
As
Title of each classShares Outstanding as of April 26, 2024
Common Stock, $0.01 par value per share45,212,090

Table of November 6, 2017, 39,767,890 shares of the registrant’s common stock, $0.01 par value, were outstanding.

Contents

TABLE OF CONTENTS
Consolidated Balance Sheets
34
Consolidated Statements of Operations
45
Consolidated Statements of Comprehensive IncomeLoss
56
Consolidated Statements of Equity
7
Consolidated Statements of Cash Flows
68
Notes to Consolidated Financial Statements
89
2427
3843
3843
3944
3944
44
4045
4146



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Special Note Regarding Forward-Looking Statements and Information
This Quarterly Report on Form 10-Q, includesother periodic reports filed by us under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and other written or oral statements made from time to time by our management contain forward-looking statements and cautionary statements. Somewithin the meaning of the forward-looking statements can be identified by the usePrivate Securities Litigation Reform Act of terms1995. Terms such as “may,” “intend,” “might,” “will,” “should,” “could,” “would,” “expect,” “believe,” “estimate,” “anticipate,” “predict,” “project,” “potential,” or the negative of these terms, and similar expressions. You should be aware that theseexpressions often signify forward-looking statements. Forward-looking statements are subject to risks and uncertainties that are beyond our control.control, and because they also relate to the future, they are likewise subject to inherent uncertainties and other factors that may cause actual results to differ materially from the views, beliefs, and projections expressed in such statements. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time that may cause our business not to develop as we expect, and it is not possible for us to predict all of them. Factors that may cause actual results to differ materially from those expressed or implied by the forward-looking statements include, but are not limited to, the following:

•cyclicality in residential and commercial construction markets;
•general business, financial market, and economic conditions;
•seasonality of our business and financialits impact on demand for our products;
•weather and climate conditions;
weather conditions, seasonality•prices for the products we purchase may fluctuate;
•market variables, including inflation and availability of water to end-users;elevated interest rates for prolonged periods;
•increases in operating costs;
•public perceptions that our products and services are not environmentally friendly or that our practices are not sustainable;
•climate, environmental, health and safety laws and regulations;
•hazardous materials and related materials;
•laws and government regulations applicable to our business that could negatively impact demand for our products;
public perceptions that our products and services are not environmentally friendly;
•competitive industry pressures;pressures, including competition for our talent base;
•supply chain disruptions, product or labor shortages, and the loss of key suppliers;
product price fluctuations;
•inventory management risks;
•ability to implement our business strategies and achieve our growth objectives;
•acquisition and integration risks;risks, including increased competition for acquisitions;
increased operating costs;
•risks associated with our large labor force;force and our customers’ labor force and labor market disruptions;
•retention of key personnel;
•construction defect and product liability claims;
•impairment of goodwill;
•adverse credit and financial markets events and conditions;
•inefficient or ineffective allocation of capital;
•credit sale risks;
retention of key personnel;
•performance of individual branches;
environmental, health and safety laws and regulations;•cybersecurity incidents involving our systems or third-party systems;
hazardous materials and related materials;•failure or malfunctions in our information technology systems;
construction defect and product liability claims;
computer data processing systems;
•security of personal information about our customers;
•intellectual property and other proprietary rights;
requirements of being a public company;•unanticipated changes in our tax provisions;
•threats from terrorism, violence, uncertain political conditions, and geopolitical conflicts such as the ongoing conflict between Russia and Ukraine, the conflict in the Gaza Strip, and unrest in the Middle East;
•risks related to our internal controls;
the possibility of securities litigation;
our substantialcurrent indebtedness and our ability to obtain financing in the future;
increases in interest rates;•financial institution disruptions;
•risks related to our common stock; and
•risks related to other factors discussed in this Quarterly Report on Form 10-Q.


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You should read this Quarterly Reportnot place undue reliance on Form 10-Q completely and with the understanding that actual future results may be materially different from expectations. Allany forward-looking statements, made in this Quarterly Report on Form 10-Q are qualified by these cautionary statements. These forward-looking statements are madewhich speak only as of the date made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible to predict all of this Quarterly Report on Form 10-Q,them. We assume no obligation and we do not undertake any obligation, other than as may be required by law,intend to update or revise any forward-looking or cautionary statements that are made from time to reflect changes in assumptions, the occurrencetime, either as a result of events, unanticipatedfuture developments, new information or otherwise, changes in future operating results over time or otherwise.except as may be required by law.


Comparisons of results for current and any prior periods are not intended to express any future trends, or indications of future performance, unless expressed as such, and should only be viewed as historical data.

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PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited)
SiteOne Landscape Supply, Inc.
Consolidated Balance Sheets (Unaudited)
(In millions, except share and per share data)

Assets October 1, 2017 January 1, 2017AssetsMarch 31, 2024December 31, 2023
Current assets:    
Cash and cash equivalents $24.1
 $16.3
Accounts receivable, net of allowance for doubtful accounts of $5.1 and $4.3, respectively 247.3
 169.0
Cash and cash equivalents
Cash and cash equivalents
Accounts receivable, net of allowance for doubtful accounts of $26.9 and $27.3, respectively
Inventory, net 374.6
 289.6
Income tax receivable 2.7
 1.6
Prepaid expenses and other current assets 33.1
 13.5
Total current assets 681.8
 490.0
    
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)
Property and equipment, net (Note 5)
Operating lease right-of-use assets, net (Note 7)
Goodwill (Note 6)
Intangible assets, net (Note 6)
Deferred tax assets
Other assets 10.0
 8.7
Total assets $985.0
 $742.6
    
Liabilities and Equity    
Liabilities and Stockholders' Equity
Liabilities and Stockholders' Equity
Liabilities and Stockholders' Equity
Current liabilities:
Current liabilities:
Current liabilities:    
Accounts payable $170.1
 $108.3
Current portion of capital leases (Note 6) 5.1
 4.3
Accounts payable
Accounts payable
Current portion of finance leases (Note 7)
Current portion of operating leases (Note 7)
Accrued compensation 33.7
 36.7
Long term debt, current portion (Note 8) 3.0
 3.0
Long-term debt, current portion (Note 9)
Income tax payable 3.8
 —
Accrued liabilities 37.4
 33.2
Total current liabilities 253.1
 185.5
    
Other long-term liabilities 17.0
 9.1
Capital leases, less current portion (Note 6) 7.7
 6.7
Other long-term liabilities
Other long-term liabilities
Finance leases, less current portion (Note 7)
Operating leases, less current portion (Note 7)
Deferred tax liabilities 25.0
 20.0
Long-term debt, less current portion (Note 8) 476.5
 372.5
Long-term debt, less current portion (Note 9)
Total liabilities 779.3
 593.8
    
Commitments and contingencies (Note 11) 
 
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:
Stockholders' equity:
Common stock, par value $0.01; 1,000,000,000 shares authorized; 45,520,704 and 45,404,091 shares issued, and 45,198,683 and 45,082,070 shares outstanding at March 31, 2024 and December 31, 2023, respectively
Common stock, par value $0.01; 1,000,000,000 shares authorized; 45,520,704 and 45,404,091 shares issued, and 45,198,683 and 45,082,070 shares outstanding at March 31, 2024 and December 31, 2023, respectively
Common stock, par value $0.01; 1,000,000,000 shares authorized; 45,520,704 and 45,404,091 shares issued, and 45,198,683 and 45,082,070 shares outstanding at March 31, 2024 and December 31, 2023, respectively
Additional paid-in capital 225.2
 219.3
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
Accumulated other comprehensive income
Treasury stock, at cost, 322,021 and 322,021 shares at March 31, 2024 and December 31, 2023, respectively
Total stockholders' equity
Total liabilities and stockholders' equity
See Notes to unaudited Consolidated Financial Statements.Statements (Unaudited).

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SiteOne Landscape Supply, Inc.
Consolidated Statements of Operations (Unaudited)
(In millions, except share and per share data)


Three Months Ended
Three Months Ended
Three Months Ended
March 31, 2024
March 31, 2024
March 31, 2024
Net sales
Net sales
Net sales
Cost of goods sold
Cost of goods sold
Cost of goods sold
Gross profit
Gross profit
Gross profit
Selling, general and administrative expenses
Selling, general and administrative expenses
Selling, general and administrative expenses
Other income
Other income
Other income
Operating loss
Operating loss
Operating loss
Interest and other non-operating expenses, net
Interest and other non-operating expenses, net
Interest and other non-operating expenses, net
Loss before taxes
Loss before taxes
Loss before taxes
Income tax benefit
Income tax benefit
Income tax benefit
Net loss
Net loss
Net loss
 Three Months Ended Nine Months Ended
 October 1, 2017 October 2, 2016 October 1, 2017 October 2, 2016
        
Net sales $502.4
 $444.5
 $1,446.0
 $1,286.5
Cost of goods sold 342.1
 306.1
 982.4
 882.5
Gross profit 160.3
 138.4
 463.6
 404.0
        
Selling, general and administrative expenses 128.1
 107.7
 368.4
 330.3
Other income 1.6
 1.2
 3.8
 3.3
Operating income 33.8
 31.9
 99.0
 77.0
        
Interest and other non-operating expenses, net 6.2
 6.3
 19.0
 15.4
Net income before taxes 27.6
 25.6
 80.0
 61.6
Income tax expense 10.7
 10.7
 29.4
 25.4
Net income 16.9
 14.9
 50.6
 36.2

        
Less:        
Redeemable convertible preferred stock dividends —
 —
 —
 9.6
Special cash dividend paid to preferred stockholders —
 —
 —
 112.4
Net income (loss) attributable to common shares $16.9
 $14.9
 $50.6
 $(85.8)
Net loss per common share:
        
Net income (loss) per common share:        
Net loss per common share:
Net loss per common share:
Basic
Basic
Basic $0.42
 $0.38
 $1.27
 $(3.15)
Diluted $0.41
 $0.36
 $1.23
 $(3.15)
Weighted average number of common shares outstanding (Note 1):        
Diluted
Diluted
Weighted average number of common shares outstanding:
Weighted average number of common shares outstanding:
Weighted average number of common shares outstanding:
Basic
Basic
Basic 39,779,852
 39,563,895
 39,713,486
 27,229,336
Diluted 41,373,375
 41,009,036
 41,247,133
 27,229,336
Diluted
Diluted
See Notes to unaudited Consolidated Financial Statements.Statements (Unaudited).


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SiteOne Landscape Supply, Inc.
Consolidated Statements of Comprehensive IncomeLoss (Unaudited)
(In millions)
  Three Months Ended Nine Months Ended
  October 1, 2017 October 2, 2016 October 1, 2017 October 2, 2016
         
Net income $16.9
 $14.9
 $50.6
 $36.2
Foreign currency translation adjustments 0.3
 (0.1) 0.6
 0.2
Unrealized losses on interest rate swaps, net of taxes (0.2) —
 (0.2) —
Comprehensive income $17.0
 $14.8
 $51.0
 $36.4

Three Months Ended
March 31, 2024April 2, 2023
Net loss$(19.3)$(4.5)
Other comprehensive loss:
Foreign currency translation adjustments(1.2)0.2 
Interest rate swaps - net unrealized gains (losses) and reclassifications into earnings, net of taxes of $0.3 and $0.7, respectively(0.7)(1.9)
Total other comprehensive loss(1.9)(1.7)
Comprehensive loss$(21.2)$(6.2)
See Notes to unaudited Consolidated Financial Statements.Statements (Unaudited).


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SiteOne Landscape Supply, Inc.
Consolidated Statements of Equity (Unaudited)
(In millions, shares in thousands)

Common Stock
Shares		Common Stock
Amount		Additional
Paid-in-Capital		Retained
Earnings		Accumulated Other
Comprehensive
Income (Loss)		Treasury
Stock		Total
Equity
Balance at December 31, 202345,082.1 $0.5 $601.8 $916.3 $4.2 $(36.7)$1,486.1 
Net loss— — — (19.3)— — (19.3)
Other comprehensive loss— — — — (1.9)— (1.9)
Issuance of common shares under stock-based compensation plan116.6 — (1.6)— — — (1.6)
Stock-based compensation— — 10.5 — — — 10.5 
Balance at March 31, 202445,198.7 $0.5 $610.7 $897.0 $2.3 $(36.7)$1,473.8 

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, 202344,916.3 $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 plan62.9 — (2.6)— — — (2.6)
Stock-based compensation— — 8.6 — — — 8.6 
Balance at April 2, 202344,979.2 $0.5 $583.1 $738.4 $6.0 $(25.3)$1,302.7 
See Notes to Consolidated Financial Statements (Unaudited).
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SiteOne Landscape Supply, Inc.
Consolidated Statements of Cash Flows (Unaudited)
(In millions)

  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

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Net Change In Cash 7.8
 5.8
     
Cash and cash equivalents:    
Beginning 16.3
 20.1
Ending $24.1
 $25.9
     
Supplemental Disclosures of Cash Flow Information:    
Cash paid during the year for interest 18.3
 12.6
Cash paid during the year for income taxes 27.5
 20.8
     
Supplemental Disclosures of Noncash Investing and Financing Information:    
Acquisition of property and equipment through capital leases 5.7
 2.8

Three Months Ended
March 31, 2024April 2, 2023
Cash Flows from Operating Activities:
Net loss$(19.3)$(4.5)
Adjustments to reconcile Net loss to net cash used in operating activities:
Amortization of finance lease right-of-use assets and depreciation16.9 15.5 
Stock-based compensation10.5 8.6 
Amortization of software and intangible assets16.0 15.3 
Amortization of debt related costs0.3 0.3 
Gain on sale of equipment(1.0)(0.4)
Other(1.5)(3.2)
Changes in operating assets and liabilities, net of the effects of acquisitions:
Receivables(38.1)(39.3)
Inventory(160.9)(168.2)
Income tax receivable(2.8)(3.1)
Prepaid expenses and other assets(8.9)(14.8)
Accounts payable121.0 81.8 
Income tax payable(8.0)— 
Accrued expenses and other liabilities(23.5)(40.6)
Net Cash Used In Operating Activities$(99.3)$(152.6)
Cash Flows from Investing Activities:
Purchases of property and equipment(8.9)(7.1)
Acquisitions, net of cash acquired— (33.2)
Proceeds from the sale of property and equipment1.6 0.7 
Net Cash Used In Investing Activities$(7.3)$(39.6)
Cash Flows from Financing Activities:
Equity proceeds from common stock2.6 1.1 
Repurchases of common stock— (0.6)
Repayments under term loan(1.0)(0.6)
Borrowings on asset-based credit facility158.2 298.3 
Repayments on asset-based credit facility(82.1)(85.3)
Payments on finance lease obligations(5.8)(3.9)
Payments of acquisition related contingent obligations(1.8)(1.6)
Other financing activities(4.4)(4.0)
Net Cash Provided By Financing Activities$65.7 $203.4 
Effect of exchange rate on cash(0.1)— 
Net change in cash(41.0)11.2 
Cash and cash equivalents:
Beginning82.5 29.1 
Ending$41.5 $40.3 
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for interest$6.0 $6.0 
Cash paid during the year for income taxes$1.1 $1.2 
See Notes to unaudited Consolidated Financial Statements.Statements (Unaudited).


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SiteOne Landscape Supply, Inc.
Notes to Consolidated Financial Statements
(Unaudited)


10
12
13
14
16
17
18
19
22
25
25
26
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Note 1.    Nature of Business and Significant Accounting Policies


Nature of Business


SiteOne Landscape Supply, Inc. (hereinafter collectively with all its consolidated subsidiaries referred to as the “Company”) is a supplierwholesale distributor of irrigation supplies, hardscapes (including pavers, natural stone, and blocks), fertilizer and control products irrigation supplies,(e.g., herbicides), landscape accessories, nursery goods, hardscapesoutdoor lighting, and outdoor lightingice melt products to green industry professionals. The Company currently has over 475 branches.also provides value-added consultative services to complement its product offering and to help customers operate and grow their businesses. Substantially all of the Company’s sales are to customers located in the United States of America (“U.S.”), with less than two percent of sales and less than three percent of total assets in Canada for all periods presented. As of March 31, 2024, the Company had over 690 branches. Based on the nature of the Company’s products and customers’ business cycles, sales are significantly higher in the springsecond and summer months.third quarters of each fiscal year.


Common Stock SplitShare Repurchase Program


On April 29, 2016,October 20, 2022, the Company’s Board of Directors authorized the Company filed a Certificate of Amendment to amend and restate the Company’s Certificate of Incorporation in the State of Delaware, effecting an 11.6181 for 1 common stock split. Each stockholder’s percentage ownership and proportional voting power remained unchanged as a result of the stock split. All applicable share data, per share amounts and related information in the consolidated financial statements and notes thereto have been adjusted retroactivelyrepurchase, at any time or from time to give effect to the 11.6181 for 1 common stock split.

Refinancing and Amendments of Term Loan and Special Cash Dividend

On April 29, 2016, the Company refinanced the existing term loan facility (the “Prior Term Loan Facility”) with an amended and restated $275.0 million term loan facility maturing in April 2022 (the “Term Loan Facility”). On April 29, 2016, the proceeds from the Term Loan Facility were used to repay all $60.3 million of borrowings outstanding under the Prior Term Loan Facility, to repay $29.9 million of borrowings outstanding under the senior asset-based credit facility (the “ABL Facility”), and to pay fees and expenses associated with the refinancing transaction.

On May 2, 2016, a one-time special cash dividend of $176.0 million was paid to existing holderstime, shares of the Company’s common stock having an aggregate purchase price not to exceed $400.0 million pursuant to a Rule 10b5-1 plan and/or pursuant to open market or accelerated share repurchase arrangements, tender offers, or privately negotiated transactions. The repurchase authorization does not have an expiration date and cumulative convertible participating redeemable preferred stock (“Redeemable Convertible Preferred Stock”) as of April 29, 2016 out of the proceeds from the Term Loan Facility. Of the $176.0 million paid to stockholders, $112.4 million was paid to holders of the Redeemable Convertible Preferred Stock in accordance with their right to participate in all distributions to common stockholders on an as-converted basis. The Redeemable Convertible Preferred Stock converted to common stock in accordance with its terms on May 16, 2016 resulting in the issuancemay be amended, suspended, or terminated by the CompanyCompany’s Board of an additional 25,303,164Directors at any time.

During the three months ended March 31, 2024, there were no shares purchased under the share repurchase program. As of its common stockMarch 31, 2024, the dollar value of shares that may yet be purchased under the share repurchase authorization was $363.6 million.

Inflation Reduction Act of 2022

In August 2022, the Inflation Reduction Act of 2022 was enacted, which, common shares are included in the weighted average common shares outstanding from that date forward. Prior to May 16, 2016, the Company’s earnings (loss) per share calculation reflected the impact of the Redeemable Convertible Preferred Stock. In conjunction with the payment of the special cash dividend, the Company reduced the exercise price of certain outstanding options and made a cash payment of $2.8 million to certain holders of options to offset the dilutive impact of the special cash dividend.

On November 23, 2016, the Company amended the Term Loan Facility (the “First Amendment”) to, among other things, (i) add an additional credit facility underimplements a 15% corporate alternative minimum tax on book income of certain large corporations effective for tax years beginning after December 31, 2022, and imposes a 1% excise tax on corporate stock repurchases after December 31, 2022. The Company does not expect 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 Facilityenacted legislation 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 First 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 of the Second Amendment and pay fees and expenses associated with the transaction.

Initial Public Offering

On May 11, 2016,have a material impact on the Company’s registration statement on Form S-1 (Registration No. 333-206444) relating to an initial public offering (the “IPO”) of its common stock was declared effective by the U.S. Securitiesconsolidated financial statements and Exchange Commission (“SEC”). On May 17, 2016, the Company completed the IPO at a price to the public of $21.00 per share. In connection with the IPO, certain of the Company’s stockholders 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 selling stockholders at the public offering price less the underwriting discounts and commissions. The selling stockholders received all of the net proceeds and bore all commissions and discounts from the sale of the Company’s common stock. The Company did not receive any proceeds from the IPO.related disclosures.

Secondary Offerings

On November 29, 2016, the Company’s registration statement on Form S-1 (Registration No. 333-214628) relating to a secondary offering of its common stock was declared effective by the SEC. On December 5, 2016, the Company completed this secondary offering at a price to the public of $33.00 per share. In connection with the secondary offering, certain of the Company’s stockholders sold an aggregate of 9,000,000 shares of common stock. The underwriters also exercised their option to purchase an additional 1,350,000 shares of common stock from the selling stockholders at the public offering price less the underwriting discounts and commissions. The selling stockholders received all of the net proceeds and bore all commissions and discounts from the sale of the Company’s common stock. The Company did not receive any proceeds from this secondary offering.

On April 25, 2017, the Company’s registration statement on Form S-1 (Registration No. 333-217327) relating to a secondary offering of its common stock was declared effective by the SEC.  On May 1, 2017, the Company completed this secondary offeringat a price to the public of $47.50 per share. In connection with this secondary offering, certain of the Company’s stockholders 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 selling stockholders at the public offering price less the underwriting discounts and commissions. The selling stockholders received all of the net proceeds and bore all commissions and discounts from the sale of the Company’s common stock. The Company did not receive any proceeds from this secondary offering.

On July 20, 2017, the Company’s shelf registration statement on Form S-3 (Registration No. 333-219370) became effective, registering the offering and sale from time to time, by certain selling stockholders, of 5,437,502 shares of the Company’s 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. The selling stockholders received all of the net proceeds and bore all commissions and discounts from the sale of the Company’s common stock. The Company did not receive any proceeds from this secondary offering.


Basis of Financial Statement Presentation


The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) as applicable to interim financial reporting. In management’s opinion, the unaudited financial information for the interim periods presented includes all adjustments, consisting of normal recurring accruals necessary for a fair statement of the financial position, results of operations, and cash flows. Certain information and disclosures normally included in ourthe Company’s annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC.Securities and Exchange Commission (“SEC”). These interim unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K filed with the SEC for the fiscal year ended January 1, 2017.December 31, 2023. The interim period unaudited financial results for the three and nine monththree-month periods presented are not necessarily indicative of results to be expected for any other interim period or for the entire year.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and accompanying notes. Actual results could differ materially from these estimates.

Fiscal Year

The Company’s fiscal year is a 52- or 53-week period ending on the Sunday nearest to December 31. The fiscal yearyears ending December 29, 2024 (the “2024 Fiscal Year”) and December 31, 2017 and the fiscal year ended January 1, 20172023 (the “2023 Fiscal Year”) both include 52 weeks. Additionally, the Company’s fiscal quarters end on the Sunday nearest to March 31, June 30, and September 30, respectively. The three months ended October 1, 2017March 31, 2024 and OctoberApril 2, 20162023 both include 13 weeks. The nine months ended October 1, 2017 and October 2, 2016 both include 39 weeks.



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Principles of Consolidation


The Company’s unaudited consolidated financial statements include the assets and liabilities used in operating the Company’s business, including entities in which the Company owns or controls more than 50% of the voting shares. The Company owns 100%All of allthe Company’s subsidiaries presented in these financial statements.are wholly owned. All intercompany balances and transactions have been eliminated in consolidation.


Significant Accounting Policies


There were no material changes toExcept as updated by the Recently Issued and Adopted Accounting Pronouncements section below, a description of the Company’s significant accounting policies foris included in the nine months ended October 1, 2017 from those disclosed in theCompany’s Annual Report on Form 10-K for the fiscal year ended January 1, 2017.2023 Fiscal Year.


Recently Issued and Adopted Accounting Pronouncements

In March 2016,October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, 2021-08, “Compensation-Stock CompensationBusiness Combinations (Topic 718)805): Improvements to Employee Share-Based Payment Accounting”Accounting for Contract Assets and Contact Liabilities from Contracts with Customers” (“ASU 2016-09”2021-08”), which simplifies several aspects of the accounting for employee share-based payment transactions for both public. The guidance requires an acquirer in a business combination to recognize and nonpublic entities, including the accounting for income taxes, forfeituresmeasure contract assets and statutory tax withholding requirements, as well as classificationliabilities in the statement of cash flows.accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606) rather than at fair value. The Company adopted ASU 2016-092021-08 on a prospective basis when it became effective in the first quarter of fiscal year 2017 on a prospective basis and as such, the Company’s prior year presentation has not changed. The primary impact of the adoption was the recognition of excess tax benefits as a component of Income tax expense on the Company’s Consolidated Statements of Operations. As a result, excess tax benefits of $0.4 million and $2.5 million were recognized in Income tax expense for the three and nine months ended October 1, 2017, respectively. Historically, these amounts were recorded as Additional paid-in capital in Stockholders’ equity on the Company’s Consolidated Balance Sheets. The Company also elected to adopt the cash flow presentation of the excess tax benefits prospectively commencing in the first quarter of 2017. The Company now presents excess tax benefits or tax deficiencies within operating cash flows versus financing activities on the Consolidated Statements of Cash Flows. Additionally, the Company elected to account for forfeitures of share-based payments as they occur and there was no material financial impact as a result. None of the other provisions in ASU 2016-09 had a material impact on the Company’s consolidated financial statements.
In July 2015, the FASB issued ASU 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory” (“ASU 2015-11”), which requires entities to measure inventory at the lower of cost or net realizable value rather than at the lower of cost or market. Net realizable value is defined as the estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation. The Company adopted ASU 2015-11 when it became effective in the first quarter of fiscal year 2017.2023 Fiscal Year. The adoption of ASU 2015-11 did not have a material impact on the Company’s consolidated financial statements.
In January 2017, the FASB issued ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”), which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge (also known as Step 2 under the current guidance). Rather, the measurement of a goodwill impairment charge will be based on the excess of a reporting unit’s carrying value over its fair value (Step 1 under the current guidance). ASU 2017-04 will be effective for annual and interim goodwill impairment tests performed in periods beginning after December 15, 2019 and should be applied prospectively. Early adoption is permitted for annual and interim goodwill impairment tests beginning after January 1, 2017. The Company adopted ASU 2017-04 in July 2017 with its annual goodwill impairment test. The adoption of ASU 2017-042021-08 did not have a material impact on the Company’s consolidated financial statements and related disclosures.

In August 2017,March 2020, the FASB issued ASU 2017-12, “Derivatives2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”), as amended in January 2021 by ASU 2021-01, “Reference Rate Reform (Topic 848): Scope” (“ASU 2021-01”), and Hedgingin December 2022 by ASU 2022-06, “Reference Rate Reform (Topic 815)848): Targeted Improvements to Accounting for Hedging Activities”Deferral of the Sunset Date of Topic 848” (“ASU 2017-12”2022-06”), which seeks.
•ASU 2020-04 provided optional expedients and exceptions for applying U.S. GAAP to improve the financial reporting ofcontracts, hedging relationships, to better portrayand other transactions affected by reference rate reform if certain criteria were met.
•ASU 2021-01 amended the economic results of an entity’s risk management activities in its financial statements. Additionally, ASU 2017-12 makes certain targeted improvements to simplify the applicationscope of the hedge-accounting guidance in current GAAPASU 2020-04 on the facilitation of the effects of reference rate reform on financial reporting. The amendments in ASU 2021-01 clarified that “certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting can apply to derivatives that are affected by the discounting transition”. These amendments applied only to contracts and hedging relationships that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform. The expedients are applicable to contract modifications made and hedging relationships entered into on or before December 31, 2022. The guidance was permitted to be elected over time as reference rate reform activities occurred.
•ASU 2022-06 deferred the expiration date of the reference rate reform relief guidance provided by ASU 2020-04 and ASU 2021-01 to December 31, 2024.

The Company previously elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions would be based matches the index for the corresponding derivatives. On March 27, 2023, the Company amended its term loans to implement a forward-looking interest rate based on the feedback received from preparers, auditors, users, and other stakeholders. ASU 2017-12 adds new disclosure requirements, amendssecured overnight financing rate (“SOFR”) in lieu of LIBOR. On March 31, 2023, the Company amended the terms of its interest rate swaps to implement SOFR in place of LIBOR. Concurrent with the amendments to its interest rate swaps, the Company elected certain of the optional expedients provided in Topic 848 that allowed the Company to preserve the past presentation of its derivatives without de-designating the existing ones and removes the requirement for entities to disclose amounts of hedge ineffectiveness. In addition, an entity must now provide tabular disclosures about: both (i) the total amounts reported in the statement of financial performance for each income and expense line item that is affected by fair value or cash flow hedging and (ii) the effects of hedging on those line items; and the carrying amounts and cumulative basis adjustments of items designated and qualifying as hedged items in fair value hedges. Early adoption is permitted in any interim period after issuance of ASU 2017-12. The Company adopted ASU 2017-12 in the third quarter of fiscal year 2017.relationships. The adoption of ASU 2017-12Topic 848 did not have a material impact on the Company’s consolidated financial statements. Refer to “Note 9. Long-Term Debt” and “Note 4. Fair Value Measurement and Interest Rate Swaps” for additional information regarding these amended agreements.



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In July 2023, the FASB issued ASU 2023-03, “Presentation of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718)” (“ASU 2023-03”). This ASU amends or supersedes various SEC paragraphs in the Accounting Standards Codification to primarily reflect the issuance of Staff Accounting Bulletin No. 120. ASU 2023-03 provides clarifying guidance related to employee and non-employee share-based payment accounting, including guidance to companies issuing share-based awards shortly before announcing material, nonpublic information to consider such material nonpublic information to adjust observable market prices if the release of material nonpublic information is expected to affect the share price. ASU 2023-03 does not provide new guidance so there is no transition or effective date associated with it. Therefore, these updates were immediately effective. The adoption of ASU 2023-03 did not have a material impact on the Company’s consolidated financial statements and related disclosures.

Accounting Pronouncements Issued But Not Yet Adopted
In May 2014,November 2023, the FASB issued ASU 2014-09,2023-07, “Revenue from Contracts with CustomersSegment Reporting (Topic 606)280): Improvements to Reportable Segment Disclosures” (“ASU 2014-09”2023-07”), which amends existing revenue recognition standardsexpands reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 requires disclosure of (i) significant segment expenses that are regularly provided to the CODM and establishes a new Accounting Standards Codification (“ASC”) Topic 606. The core principleincluded within the segment measure of this amendment is that an entity should recognize revenue to depict the transfer of promised goodsprofit or services to customers inloss, (ii) an amount that reflectsand description of its composition for other segment items to reconcile to segment profit or loss, and (iii) the considerationtitle and position of the Company’s CODM. The ASU does not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to which the entity expects todetermine its reportable segments. The new standard will be entitled in exchangeeffective on a retrospective basis for these goods or services.fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company anticipates having substantially similar performance obligations underis currently evaluating the segment disclosure impact of the amended guidance as compared with deliverables and units of account currently being recognized. Additionally, the Company intendsguidance; however, ASU 2023-07 is not expected to make policy elections within the amended standard that are consistent with its current accounting. The Company continues to evaluate the effect that ASU 2014-09 will have a material impact on its consolidated financial statements and related disclosures and controls. Based on its preliminary assessment, the Company has determined that the adoption of ASU 2014-09 may impact the timing of revenue recognition through its incentive programs. The Company is also evaluating the principal versus agent considerations as it relates to certain arrangements with third parties that could impact the presentation of gross or net revenue reporting. Other areas which could be impacted may be identified as the Company continues its evaluation of ASU 2014-09. The Company plans to adopt ASU 2014-09 in the first quarter of 2018 using the modified retrospective transition method.statements.
In February 2016,December 2023, the FASB issued ASU 2016-02,2023-09, “LeasesIncome Taxes (Topic 842)740): Improvements to Income Tax Disclosures” (“(“ASU 2016-02”2023-09”), which amends. The amendments in ASU 2023-09 require public entities, on an annual basis, to provide disclosure of specific categories in the guidance for recognition, measurement, presentation and disclosuresrate reconciliation, as well as disclosure of lease arrangements and establishes a new ASC Topic 842. The amended standard will require recognition on the balance sheet for all leases with terms longer than 12 months as a lease liability and as a right-of-use asset. The lease liability is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and the right-of-use asset is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today.income taxes paid disaggregated by jurisdiction. The new standard requires lessors to accountwill be effective on a prospective basis for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leasesfiscal years beginning after December 15, 2024 and operating leases. ASU 2016-02 is effective for the Company commencing in the first quarter of fiscal year 2019.interim periods therein, with early adoption permitted. The Company is currently evaluating the amended guidance and does not expect the adoption to have a material impact on its consolidated financial statements and related disclosures.
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which changes the way companies evaluate credit losses for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model to evaluate impairment, potentially resulting in earlier recognition of allowances for losses. The new standard also requires enhanced disclosures, including the requirement to disclose the information used to track credit quality by year of origination for most financing receivables. ASU 2016-13 will be effective for the Company commencing in the first quarter of fiscal year 2020. The guidance must be applied using a cumulative-effect transition method. The Company is currently evaluating the amended guidance and the impact on its consolidated financial statements and related disclosures.
In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), to provide clarification on cash flow classification related to eight specific issues including debt prepayment or debt extinguishment costs and contingent consideration payments made after a business combination. The guidance in ASU 2016-15 should be applied using a retrospective transition method to each period presented. ASU 2016-15 becomes effective for the Company in the first quarter of fiscal year 2018. The Company is currently evaluating the amended guidance and the impact on its consolidated financial statements and related disclosures.
In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory”(“ASU 2016-16”), which amends existing guidance to require entities to recognize income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. ASU 2016-16 will be effective for the Company commencing in the first quarter of fiscal year 2018 using a modified retrospective method. The Company is currently evaluating the impact of this amended guidance; however, provisions of ASU 2016-16 are not expected to have a significant impact on the Company’s consolidated financial statements and related disclosures.
In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash” (“ASU 2016-18”), which requires restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Transfers between cash and cash equivalents and restricted cash or restricted cash equivalents are not reported as cash flow activities in the statement of cash flows. ASU 2016-18 will be effective for the Company in the first quarter of fiscal year 2018, using a retrospective transition method. The Company is currently evaluating the amended guidance and the impact on its consolidated financial statements and related disclosures.
In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business” (“ASU 2017-01”), to clarify the definition of a business to assist entities with evaluating whether transactions should be accounted for as

acquisitions of assets or businesses. ASU 2017-01 provides a screen to determine when an integrated set of assets and activities (collectively a “set”) is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. If the screen is not met, ASU 2017-01 requires that to be considered a business, a set must include an input and a substantive process that together significantly contribute to the ability to create output. ASU 2017-01 will be effective for the Company in the first quarter of fiscal year 2018, and should be applied prospectively. The Company is currently evaluating the amended guidance; however, the provisions of ASU 2017-01 are not expected to have a material impact on the Company's consolidated financial statements and related disclosures.

In May 2017, the FASB issued ASU 2017-09, “Compensation-Stock Compensation (Topic 718) - Scope of Modification” (“ASU 2017-09”), which provides clarity and reduces both diversity in practice and cost and complexity when applying the guidance in Topic 718 when there are changes to the terms or conditions of a share-based payment award. The amendments in ASU 2017-09 provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU 2017-09 will be effective for the Company in the first quarter of fiscal year 2018 on a prospective basis. The Company is currently evaluating the amended guidance and the impact on its consolidated financial statements and related disclosures.



Note 2.    Revenue from Contracts with Customers

The following table presents Net sales disaggregated by product category (in millions):
Three Months Ended
 March 31, 2024April 2, 2023
Landscaping products(a)
$670.8 $636.9 
Agronomic and other products(b)
234.0 200.5 
$904.8 $837.4 
______________
(a)    Landscaping products include irrigation supplies, hardscapes, landscape accessories, nursery goods, and outdoor lighting.
(b)    Agronomic and other products include fertilizer, control products, ice melt, equipment, and other products.

Remaining Performance Obligations

Remaining performance obligations related to Accounting Standards Codification Topic 606 represent the aggregate transaction price allocated to performance obligations with an original contract term greater than one year that are fully or partially unsatisfied at the end of the period. Remaining performance obligations include the outstanding points balance related to the customer loyalty rewards program. The program allows enrolled customers to earn loyalty rewards on purchases to be used on future purchases, to pay for annual customer trips hosted by the Company, or to obtain gift cards to other third-party retailers.

As of March 31, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was $11.5 million. The Company expects to recognize revenue on the remaining performance obligations over the next 12 months.

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Contract Balances

The timing of revenue recognition, billings, and cash collections results in billed accounts receivable, deferred revenue, and billings in excess of revenue recognized in the Company’s Consolidated Balance Sheets.

Contract liabilities

As of March 31, 2024 and December 31, 2023, contract liabilities were $11.5 million and $12.4 million, respectively, and were included within Accrued liabilities in the accompanying Consolidated Balance Sheets. The decrease in the contract liability balance during the three months ended March 31, 2024 is primarily a result of $4.6 million of revenue recognized and the expiration of points related to the customer loyalty rewards program during the period, partially offset by cash payments received in advance of satisfying performance obligations.

Note 3.    Acquisitions


From time to time theThe Company enters into strategic acquisitions in an effort to better service existing customers and to attainattract new customers. There were no acquisitions completed by the Company during the three months ended March 31, 2024. The Company completed acquisitions for an aggregate purchase price of $31.8 million and deferred contingent consideration of $3.5 million for the three months ended April 2, 2023. As of March 31, 2024, the Company completed the following acquisitions for aggregate cash considerationssince the start of approximately $66.8 million and $58.5 million for the nine months ended October 1, 2017 and October 2, 2016, respectively.2023 Fiscal Year:

•In September 2017,December 2023, the Company acquired the assets and assumed the liabilities of Marshall Stone,Newsom Seed, Inc. and Davis Supply, LLC (collectively, “Marshall Stone”(“Newsom Seed”). With two locations in Greensboro, North Carolina and Roanoke, Virginia, Marshall StoneFulton, Maryland, Newsom Seed is a market leader in the distributionwholesale distributor of natural stoneseed and hardscape materialsagronomic products to landscape professionals.

•In August 2017,2023, the Company acquired the assets and assumed the liabilities of Bondaze Enterprises, Inc., a California corporation doing business as South Coast SupplyJMJ Organics LTD (“South Coast Supply”JMJ Organics”). With twofive locations in Orange County, California, South Coast SupplyHouston, Texas, JMJ Organics is a market leader in the distributionwholesale distributor of hardscape, natural stonelandscape supplies, nursery products, and related productshardscapes to landscape professionals.

•In May 2017,August 2023, the Company acquired the assets and assumed the liabilities of Evergreen Partners of Raleigh, LLC, Evergreen Partners of Myrtle Beach, LLC,Regal Chemical Company and Evergreen Logistics,Monarch Scientific, LLC (collectively, “Evergreen”“Regal”). With twoone location in Alpharetta, Georgia, Regal is a wholesale distributor of agronomic products to landscape professionals.
•In August 2023, the Company acquired all of the outstanding stock of Pioneer Landscape Centers, Inc. and JLL Pioneer LLC (collectively, “Pioneer”). With 18 locations in Raleigh, North CarolinaColorado and Myrtle Beach, South Carolina, Evergreen16 locations in Arizona, Pioneer is a market leader in the distributionwholesale distributor of nursery supplieshardscapes and landscape supply products, including decorative rock, pavers, bulk materials, artificial turf, and supporting products to landscape professionals.

•In March 2017,August 2023, the Company acquired the assets and assumed the liabilities of Angelo’s Supplies, Inc. and Angelo’s Wholesale Supplies, Inc. (collectively, “Angelo’s”Timothy’s Center for Gardening, LLC (“Timothy’s”) with two locations. With one location in Wixom and Farmington Hills, Michigan, both suburbs of Detroit. Angelo’sRobbinsville, New Jersey, Timothy’s is a hardscapewholesale distributor of hardscapes, nursery products, and landscape supply distributor, and has been a market leader since 1984.

In March 2017, the Company acquired all of the outstanding stock of American Builders Supply, Inc. and MasonryClub, Inc. and subsidiary (collectively, “AB Supply”) with 10 locations in the greater Los Angeles, California area and two locations in Las Vegas, Nevada. AB Supply is a market leader in the distribution of hardscape, natural stone and related productsbulk materials to landscape professionals.

•In February 2017,August 2023, the Company acquired the assets and assumed the liabilities of Stone Forest Materials, LLCNew England Silica, Inc. (“Stone Forest”New England Silica”) with. With one location in Kennesaw, Georgia. Stone ForestSouth Windsor, Connecticut, New England Silica is a market leader in the distributionwholesale distributor of hardscape productshardscapes to landscape professionals.

•In January 2017,July 2023, the Company acquired the assets and assumed the liabilities of Aspen Valley Landscape Supply, Inc.Hickory Hill Farm & Garden, LLC (“Aspen Valley”Hickory Hill”) with three locations. Headquartered. With one location in Homer Glen, Illinois, Aspen ValleyEatonton, Georgia, Hickory Hill is a market leader in the distributionwholesale distributor of hardscapesirrigation, nursery, and landscape supplies in the Chicago Metropolitan Area.to landscape professionals.

•In September 2016,May 2023, the Company acquired the assets and assumed the liabilities of Glen Allen Nursery & Garden Center,Link Inc., doing business as Link Outdoor Lighting Distributors (“Glen Allen”Link”). With one locationfour locations in Richmond, VA, Glen AllenAltamonte Springs and Naples, Florida, Nashville, Tennessee, and Houston, Texas, Link is a leader in the distributionwholesale distributor of nurserylandscape lighting products to landscape professionals.

•In August 2016,May 2023, the Company acquired the assets and assumed the liabilities of Bissett Nursery Corp.Adams Wholesale Supply, Inc. (“Adams Wholesale Supply”). With three locations in the San Antonio, Houston, and acquired all of the outstanding stock of Bissett Equipment Corp. (collectively, “Bissett”). Headquartered in Holtsville, NY, BissettDallas, Texas markets, Adams Wholesale Supply is a leader in the distributionwholesale distributor of nursery, hardscapes, landscape supplies as well as equipment sales, rental and repairsagronomic products to landscape professionals with three locations serving customers throughout the New York City metropolitan area.professionals.

•In April 2016,March 2023, the Company acquired the assets and assumed the liabilities of Blue Max Materials,Triangle Landscape Supplies, Inc., Blue Max MaterialsTriangle Landscape Supplies of Charleston,J.C., LLC, and Triangle Landscape Supplies of Apex, Inc., Blue Max Materials (collectively, “Triangle”). With four locations in the Raleigh-Durham, North Carolina market, Triangle is a wholesale distributor of Columbia, Inc. and Blue Max Materials of the Grand Strand, Inc., which together comprise Blue Max (“Blue Max”), a hardscapes and landscape supplier with five locations serving North Carolina and South Carolina.supplies to landscape professionals.

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•In January 2016,March 2023, the Company acquired allthe assets and assumed the liabilities of the outstanding stockJ&J Materials Corp. (“J&J Materials”). With five locations in Rhode Island and Southeastern Massachusetts, J&J Materials is a wholesale distributor of Hydro-Scape Products, Inc. (“Hydro-Scape”), a leading provider ofhardscapes to landscape products (irrigation, lighting, maintenance, outdoor living and hardscapes) with 17 locations serving customers throughout Southern California.professionals.


These transactions were accounted for by the acquisition method, and accordingly, the results of operations arewere included in the Company’s consolidated financial statements from their respective acquisition dates.


Note 3.4.    Fair Value Measurement and Interest Rate Swaps

Fair value is defined as an exit price, representing an amount that would be received to sell an asset or the amount paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The inputs used to measure fair value are prioritized into the following three-tiered value hierarchy:
•Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.
•Level 2: Unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active or inputs, other than quoted prices in active markets, which are observable either directly or indirectly.
•Level 3: Unobservable inputs for which there is little or no market data.

The hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The classification of fair value measurement within the hierarchy is based upon the lowest level of input that is significant to the measurement.

The Company’s financial instruments consist of cash and cash equivalents, accounts receivables, forward-starting interest rate swap contracts, and long-term debt. The variable interest rate on the long-term debt is reflective of current market borrowing rates. As such, the Company has determined that the carrying value of these financial instruments approximates fair value.
Interest Rate Swaps


The Company is subject to interest rate risk with regard to existing and future issuances of debt. The Company utilizes interest rate swap contracts to reduce its exposure to fluctuations in variable interest rates for future interest payments on its unsecured syndicated senior Term Loan Facility. In June 2017, theexisting debt. The Company entered into two forward-startingis 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.

The Company recognizes any differences between the variable interest rate payments and the fixed interest rate settlements with the swap counterparties as an adjustment to interest expense over the life of the swaps. The Company has designated these swaps as cash flow hedges and records the estimated fair value of the swaps to Accumulated other comprehensive income (loss) (“AOCI”) on its Consolidated Balance Sheets. If it becomes probable the forecasted transactions 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.

On March 31, 2023, the Company amended the terms of its 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, the Company applied the expedients and exceptions provided in Topic 848 to preserve the past presentation of its 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 contracts are scheduledSOFR (subject to become effectivea floor of 0.23839% for interest rate swaps 7, 8, and 9) as applied to the notional amounts of each interest rate swap.

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On March 23, 2021, the Company restructured the interest rate swap positions of its forward-starting interest rate swaps 4, 5, and 6 to extend the terms to maturity using a strategy referred to as a “blend and extend” in order to continue to manage its exposure to interest rate risk on borrowings under the term loans. Refer to “Note 9. Long-Term Debt” for additional information regarding the Company’s term loans. As a result of these transactions, all existing agreements for forward-starting interest rate swaps 4, 5, and 6 at that time were amended and restructured as new agreements designated by the Company as interest rate swaps 7, 8, and 9 with the same counterparties. Each of the liability positions of the forward-starting interest rate swaps were blended into the amended interest rate swap agreements and the term of the hedged positions were extended to mature on March 11, 201923, 2025. Due to the size of the initial net investment amounts resulting from the termination values of the forward-starting interest rate swaps that were rolled into the interest rate swap arrangements, interest rate swaps 7, 8, and terminate on June 11, 2021. 9 were determined to be hybrid debt instruments containing embedded at-market interest rate swap derivatives. As a result, the Company bifurcated the derivative instruments from the debt host instruments for accounting purposes. Refer to “Note 9. Long-Term Debt” for additional information regarding the Company’s hybrid debt instruments.

The following table provides additional details related to the swap contracts designated as hedging instruments as of March 31, 2024:
Derivatives designated as hedging instrumentsInception DateAmended Effective DateMaturity DateNotional Amount
(in millions)		Fixed Interest RateType of Hedge
Interest rate swap 7March 23, 2021March 31, 2023March 23, 2025$50.0 0.73300 %Cash flow
Interest rate swap 8March 23, 2021March 31, 2023March 23, 2025$90.0 0.74300 %Cash flow
Interest rate swap 9March 23, 2021March 31, 2023March 23, 2025$70.0 0.75424 %Cash flow

The following table provides additional details related to interest rate swap 3, which was designated as a hedging instrument and terminated upon maturity on January 14, 2024:
Derivatives designated as hedging instrumentsInception DateAmended Effective DateMaturity DateNotional Amount
(in millions)		Fixed Interest RateType of Hedge
Interest rate swap 3December 17, 2018April 14, 2023January 14, 2024$34.0 2.73040%Cash flow

The Company recognizes the unrealized gains or unrealized losses for interest rate swap contracts as either assets or liabilities at fair value on its Consolidated Balance Sheets. The interest rate swap contracts are subject to master netting arrangements. The Company has elected not to offset the fair value of assets with the fair value of liabilities related to these contracts. The following table summarizes the fair value of the derivative instruments and the respective lines in which they were recorded in the Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023 (in millions except fixed interest rate)millions):
Derivative Assets
March 31, 2024December 31, 2023
Derivatives designated as hedging instrumentsBalance Sheet LocationFair ValueBalance Sheet LocationFair Value
Interest rate contractsPrepaid expenses and other current assets$8.7 Prepaid expenses and other current assets$8.4 
Other assets— Other assets1.3 
Total derivative assets$8.7 $9.7 
            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
 $—


For determining the fair value of the interest rate swap contracts, the Company uses significant observable market data or assumptions (Level 2 inputs) that market participants would use in pricing similar assets or liabilities, including assumptions about counterparty risk. The fair value estimates reflect an income approach based on the terms of the interest rate swap contracts and inputs corroborated by observable market data including interest rate curves. The Company recognizes the unrealized gains or unrealized losses as either assets or liabilities at fair value on its Consolidated Balance Sheets. As of October 1, 2017, the fair value changes of the forward-starting interest rate swaps in the amount of $0.2 million was recorded in Other long-term liabilities.


The Company will recognize any differences between the variable interest rate payments and the fixed interest rate settlements with the swap counterparties as an adjustment to interest expense over the life of the swaps. The Company has designated these swaps as cash flow hedges and records the changes in the estimated fair value of the swaps to Accumulated other comprehensive income (loss) on its Consolidated Balance Sheets. As of October 1, 2017, the fair value changes of the forward-starting interest rate swaps in the amount of $0.2 million was recorded in accumulated other comprehensive loss as a component of other comprehensive income. To the extent the interest rate swaps are determined to be ineffective, the Company recognizes the changes in the estimated fair value of the swaps in earnings. For the three and nine months ended October 1, 2017,March 31, 2024 and April 2, 2023, there was no ineffectiveness recognized in earnings. The netafter-tax amount of unrealized gain or loss on derivative instruments included in Accumulated other comprehensive income (loss)AOCI related to the forward-starting interest rate swap contracts maturing and expected to be realizedreclassified to earnings during the next twelve months was zero$6.5 million as of October 1, 2017.March 31, 2024. The ultimate amount recognized will vary based on fluctuations of interest rates through the maturity dates.


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The table below provides details regarding pre-tax amounts in AOCI and gain (loss) reclassified into income for derivatives designated as cash flow hedges for the three months ended March 31, 2024 and April 2, 2023 (in millions):
Three Months Ended
March 31, 2024April 2, 2023
Derivatives in Cash Flow Hedging RelationshipsGain (Loss) Recorded in OCIClassification of Gain (Loss) Reclassified from AOCI into IncomeGain (Loss) Reclassified from
AOCI into Income		Gain (Loss) Recorded in OCIClassification of Gain (Loss) Reclassified from AOCI into IncomeGain (Loss) Reclassified from
AOCI into Income
Interest rate contracts$1.5 Interest and other non-operating expenses, net$2.5 $(0.8)Interest and other non-operating expenses, net$1.9 

The table below provides details regarding gain (loss) reclassified from AOCI into income for derivatives not designated as hedging instruments for the three months ended March 31, 2024 and April 2, 2023 (in millions):
Three Months Ended
Gain (Loss) Reclassified from AOCI into Income
Derivatives not designated as hedging instrumentsLocation of Gain (Loss)March 31, 2024April 2, 2023
Interest rate contractsInterest and other non-operating expenses, net$— $(0.1)

Failure of the swap counterparties to make payments would result in the loss of any potential benefit to the Company under the swap agreements. In this case, the Company would still be obligated to pay the variable interest payments underlying the debt agreements. Additionally, failure of the swap counterparties would not eliminate the Company’s obligation to continue to make payments under the existing swap agreements if it continues to be in a net pay position.


Note 4.5.    Property and Equipment, Net


Property and equipment consisted of the following (in millions):

March 31, 2024December 31, 2023
Land$13.2 $13.2 
Buildings and leasehold improvements:
Buildings8.4 8.4 
Leasehold improvements58.6 55.7 
Branch equipment118.5 121.5 
Office furniture and fixtures and vehicles:
Office furniture and fixtures30.5 30.4 
Vehicles75.4 77.5 
Finance lease right-of-use assets166.6 151.0 
Mineral rights2.2 2.2 
Construction in progress16.5 14.0 
Total property and equipment, gross489.9 473.9 
Less: accumulated depreciation and amortization237.8 224.5 
Property and equipment, net$252.1 $249.4 

  October 1, 2017 January 1, 2017
Land $14.5
 $14.5
Buildings and leasehold improvements:    
  Buildings 8.6
 8.6
  Leasehold improvements 16.0
 14.0
Store equipment 24.5
 17.6
Office furniture and fixtures and vehicles:    
  Office furniture and fixtures 12.9
 11.1
  Vehicles 44.8
 36.1
Tooling 0.1
 1.0
Construction in process 4.7
 3.3
Total property and equipment, gross 126.1
 106.2
Accumulated depreciation (48.3) (36.4)
Total property and equipment, net $77.8
 $69.8

DepreciationAmortization of finance right-of-use (“ROU”) assets and depreciation expense was approximately $4.7$16.9 million and $12.9$15.5 million for the three and nine months ended October 1, 2017,March 31, 2024 and $3.5April 2, 2023, respectively.

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Capitalized software has an estimated useful life of three years. The amounts of total capitalized software costs, including purchased and internally developed software, included in Other assets at March 31, 2024 and December 31, 2023 were $19.7 million and $10.3$19.7 million, less accumulated amortization of $11.7 million and $11.1 million, respectively. Amortization of these software costs was $0.6 million and $0.2 million for the three and nine months ended OctoberMarch 31, 2024 and April 2, 2016,2023, respectively.


Note 5.6.    Goodwill and Intangible Assets, Net

Goodwill


ChangesThe changes in the carrying amount of goodwill were as follows (in millions):

January 1, 2024January 2, 2023
to March 31, 2024to December 31, 2023
Beginning balance$485.5 $411.9 
Goodwill acquired during the period— 75.4 
Goodwill adjusted during the period(0.3)(1.8)
Ending balance$485.2 $485.5 
  January 2, 2017
  to October 1, 2017
Beginning balance $70.8
Goodwill acquired 35.1
Goodwill adjusted (0.1)
Ending balance $105.8
Additions to goodwill during the nine months ended October 1, 2017 related to the acquisitions of Aspen Valley, Stone Forest, AB Supply, Angelo’s, Evergreen, South Coast Supply and Marshall Stone (as described in Note 2).
Intangible Assets


DuringIntangible assets include customer relationships as well as trademarks and other intangibles acquired through acquisitions. Intangible assets with finite useful lives are amortized on an accelerated method or a straight-line method over their estimated useful lives. An accelerated amortization method reflecting the nine months ended October 1, 2017,pattern in which the asset will be consumed is utilized if that pattern can be reliably determined. If that pattern cannot be reliably determined, a straight-line amortization method is used. The Company recorded $24.0 millionconsiders the period of expected cash flows and the underlying data used to measure the fair value of the intangible assets which related to customer relationships, trademarks and trade names, and non-competition agreements aswhen selecting a result of the Aspen Valley, Stone Forest, AB Supply, Angelo’s, Evergreen, South Coast Supply and Marshall Stone acquisitions (as described in Note 2).

useful life. The Company’s customer relationship intangible asset lives range from 10 to 21 years. Trademarks, trade names and other intangible asset lives range from 2 to 10 years.
relationships are amortized on an accelerated method.
The following table summarizes the components of intangible assets (in millions, except weighted average remaining useful life):

March 31, 2024December 31, 2023
Weighted Average Remaining Useful LifeAmountAccumulated AmortizationNetAmountAccumulated AmortizationNet
Customer relationships16.7 years$553.1 $308.8 $244.3 $551.8 $295.7 $256.1 
Trademarks and other3.2 years49.3 26.7 22.6 49.5 24.8 24.7 
Total intangibles$602.4 $335.5 $266.9 $601.3 $320.5 $280.8 
During the three months ended March 31, 2024, the Company recorded $1.2 million of intangible assets, including $1.3 million in Customer relationship intangibles and $(0.1) million in Trademarks and other intangibles. There were no acquisitions completed during the three months ended March 31, 2024. Updates of purchase price allocations related to prior year acquisitions during the allowable measurement period and currency translation adjustments of Customer relationship intangibles and Trademarks and other intangibles, net were $1.3 million and $(0.1) million, respectively.
    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


During the three months ended April 2, 2023, the Company recorded $15.9 million of intangible assets, including $15.8 million in Customer relationship intangibles and $0.1 million in Trademarks and other intangibles. The change in Customer relationship intangibles and Trademarks and other intangibles included additions of $13.3 million and $1.1 million, respectively, as a result of the acquisitions completed in 2023 as described in “Note 3. Acquisitions.” Updates of purchase price allocations related to prior year acquisitions during the allowable measurement period and currency translation adjustments of Customer relationship intangibles and Trademarks and other intangibles, net were $2.5 million and $(1.0) million, respectively.

The Customer relationship intangible assets are amortized over a weighted-average period of approximately 20 years. The trademarks and other intangible assets are amortized over a weighted-average period of approximately five years.

Amortization expense for intangible assets was approximately $6.0$15.4 million and $17.6$15.1 million for the three and nine months ended October 1, 2017, respectively,March 31, 2024 and $5.9 million and $16.3 million for the three and nine months ended OctoberApril 2, 2016,2023, respectively.

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Total future amortization estimated as of October 1, 2017,March 31, 2024 is as follows (in millions):
Fiscal year ending:
2024 (remainder)$41.7 
202547.0 
202638.5 
202730.1 
202822.9 
Thereafter86.7 
Total future amortization$266.9 

Fiscal year ending: 
2017 (remainder)$5.8
201820.5
201916.5
202013.5
202111.1
Thereafter42.2
Total future amortization$109.6



Note 6.     Capital7.    Leases
Capital
The Company determines if an arrangement is a lease at inception of a contract. The Company leases consistingequipment 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 followingROU 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
Lease CostClassificationMarch 31, 2024April 2, 2023
Finance lease cost:
Amortization of right-of-use assetsSelling, general and administrative expenses$6.2 $4.2 
Interest on lease liabilitiesInterest and other non-operating expenses, net1.4 0.8 
Operating lease costCost of goods sold2.0 1.7 
Operating lease costSelling, general and administrative expenses24.3 20.4 
Short-term lease costSelling, general and administrative expenses0.9 0.8 
Variable lease costSelling, general and administrative expenses0.9 0.4 
Sublease incomeSelling, general and administrative expenses(0.2)(0.2)
Total lease cost$35.5 $28.1 

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

Three Months Ended
Other InformationMarch 31, 2024April 2, 2023
Cash paid for amounts included in the measurements of lease liabilities:
Operating cash flows from finance leases$1.4 $0.8 
Operating cash flows from operating leases$27.4 $22.2 
Financing cash flows from finance leases$5.8 $3.9 
Right-of-use assets obtained in exchange for new lease liabilities:
Finance leases$15.8 $8.7 
Operating leases$12.6 $49.8 

The aggregate future lease payments for operating and finance leases as of March 31, 2024 were as follows (in millions):
Maturity of Lease LiabilitiesOperating LeasesFinance Leases
Fiscal year:
2024 (remainder)$69.4 $22.1 
202588.6 26.7 
202672.5 23.6 
202758.7 19.8 
202846.3 16.0 
202934.5 8.0 
Thereafter91.3 0.4 
Total lease payments461.3 116.6 
Less: interest73.2 15.1 
Present value of lease liabilities$388.1 $101.5 

The weighted-average lease terms and discount rates were as follows:
Lease Term and Discount RateMarch 31, 2024April 2, 2023
Weighted-average remaining lease term:
Finance leases4.6 years4.3 years
Operating leases6.2 years6.4 years
Weighted-average discount rate:
Finance leases6.2 %5.0 %
Operating leases5.2 %4.7 %

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$4.9 million and $5.0$4.6 million for the three and nine months ended October 1, 2017,March 31, 2024 and $1.3 million and $4.3 million for the three and nine months ended OctoberApril 2, 2016,2023, respectively.


Prior to the adoption of theThe 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 Planbecame effective on April 28, 2016, in connection withprovided for the IPO. Upon adoptiongrant 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 whichthat 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”); andor 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.
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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 Incentive2020 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 Omnibus2020 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 1,871,030 remain available as of March 31, 2024.


During the nine months ended October 1, 2017, the Company granted 390,998 options, 18,880 DSUs and 46,898 RSUs; in addition, 51,285Stock 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 percent25% per year. The DSUs granted to non-employee directors vest immediately. Options and RSUsStock options expire ten years after the date of grant. The compensation cost forPSUs 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 recognizedgranted 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 overor prior to the requisiteeffective date or the pro-rated vesting period. The weighted-average grant-date fair valueschedule 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 duringretirement to reflect the nine months ended October 1, 2017.Rule of 65.


The fair value of each stock option award wasis estimated on the date of grant using the Black-Scholes optionsoption pricing model. Since the start of the 2023 Fiscal Year, expected volatilities are based on the historical volatility of the Company’s common stock. Prior to the 2023 Fiscal Year, 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 had been publicly traded, which exceeded the expected term of the stock options at the start of the 2023 Fiscal Year. 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 RSUsPSUs 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 costs for stock options and RSUs are recognized on a straight-line basis over the requisite vesting periods. The Company recognized share-basedrecognizes compensation expense for PSUs when it is probable that the performance conditions will be achieved. The Company reassesses the probability of approximately $1.5 millionvesting at each reporting period and $4.5 millionadjusts its compensation cost accordingly.

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A summary of stock-based compensation activities during the three months ended March 31, 2024 was as follows (in thousands):
Stock OptionsRSUsDSUsPSUs
Outstanding as of December 31, 2023837.0 239.5 54.7 62.5 
Granted— 114.2 — 51.9 
Exercised/Vested/Settled(a)
(71.6)(70.9)— — 
Expired or forfeited(0.6)(3.4)— (0.3)
Outstanding as of March 31, 2024764.8 279.4 54.7 114.1 
______________
(a)    Does not include 25.1 thousand stock options and 47.0 thousand RSUs granted to retirement eligible associates under the Rule of 65. While these shares immediately vested, they have not been settled.

The weighted average grant date fair value of awards granted were as follows:
March 31, 2024April 2, 2023
Stock options$— $72.24 
RSUs$157.66 $149.09 
DSUs$— $— 
PSUs$157.57 $149.36 

A summary of stock-based compensation expenses recognized during the periods was as follows (in millions):
Three Months Ended
March 31, 2024April 2, 2023
Stock options(a)
$0.8 $2.4 
RSUs(a)
8.5 5.4 
DSUs0.1 0.1 
PSUs1.1 0.7 
Total stock-based compensation$10.5 $8.6 
______________
(a)    Stock-based compensation expense for the three and nine months ended October 1, 2017,March 31, 2024 and $1.1April 2, 2023 included accelerated expense related to retirement eligible associates under the Rule of 65. These amounts on a net expense basis included $0.1 million related to stock options and $4.1$4.6 million related to RSUs for the three and nine months ended OctoberMarch 31, 2024 and $1.5 million related to stock options and $2.5 million related to RSUs for the three months ended April 2, 2016, respectively. Total2023.

A summary of unrecognized compensation cost from share-based compensation arrangements as of October 1, 2017 was approximately $12.5 million. Share-basedstock-based compensation expense is expected to be recognized over a weighted–average periodwas as follows:
March 31, 2024December 31, 2023
Unrecognized Compensation
(in millions)		Weighted Average
Remaining Period		Unrecognized Compensation
(in millions)		Weighted Average
Remaining Period
Stock options$4.0 2.1 years$4.9 2.3 years
RSUs$32.6 2.9 years$23.7 2.5 years
DSUs$0.1 0.9 years$0.2 0.9 years
PSUs$10.9 2.4 years$3.9 1.7 years

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Note 8.9.    Long-Term Debt

Long-term debt was as follows (in millions):
March 31, 2024December 31, 2023
ABL facility$83.6 $7.5 
Term loans368.7 369.6 
Hybrid debt instruments1.5 1.9 
Total gross long-term debt453.8 379.0 
Less: unamortized debt issuance costs and discounts on debt(5.8)(6.1)
Total debt$448.0 $372.9 
Less: current portion(5.3)(5.3)
Total long-term debt$442.7 $367.6 
  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 amendedare parties to the credit agreement during 2015 (such agreement, asdated 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$497.6 million and $164.5$578.2 million as of October 1, 2017March 31, 2024 and January 1, 2017,December 31, 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 OmnibusSeventh 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.


Loans under the ABL Credit Agreement bear interest, at Landscape Holding’s option, at either (i) an adjusted term SOFR rate equal to term SOFR plus 0.10% (subject to a floor of 0.00%) plus an applicable margin of 1.25% or 1.50% or (ii) an alternate base rate plus an applicable margin of 0.25% or 0.50%, in each case depending on the average daily excess availability under the ABL Credit Agreement, and in each case subject to a 0.125% reduction when the Consolidated First Lien Leverage Ratio (as defined in the ABL Credit Agreement) is less than 1.50:1.00. 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 rangingranged from 1.25%6.54483% 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%6.55167% as of October 1, 2017March 31, 2024 and January 1, 2017, respectively. Additionally, the Borrowers paid awas 6.69508% as of December 31, 2023. The commitment fee of 0.250%on unfunded amounts was 0.25% and 0.375% on the unfunded amount0.25% as of October 1, 2017March 31, 2024 and January 1, 2017,December 31, 2023, respectively.

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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, requiringincluding 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 ofare 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,March 31, 2024, the Company iswas in compliance with theseall of the ABL Facility covenants.

Term Loan FacilityLoans

The Borrowers entered into the Term Loan Facilitya 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, (seeDecember 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. On July 12, 2023, Landscape Holding, as representative for the Borrowers, entered into the Increase Supplement (the “Increase Supplement”) to the Second Amended and Restated Credit Agreement, providing for an additional $120.0 million of New Term Loans. The New Term Loan Facility isLoans are guaranteed by Bidco and each direct and indirect wholly-owned U.S. restricted subsidiary of Landscape. The PriorNew Term Loan Facility hasLoans 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 PropertyMarch 23, 2028.

Amendments of Term Loans

On July 12, 2023, the Company, through its subsidiary, Landscape Holding, entered into the Increase Supplement by and

equipment, Intangibles, between Landscape Holding, as borrower representative, and equity interestsJPMorgan Chase Bank, N.A., as increasing lender (the “Increasing Lender”), to the Second Amended and Restated Credit Agreement. The Increase Supplement provided for an additional $120.0 million of New Term Loans and made such other changes to the Second Amended and Restated Credit Agreement as agreed between Landscape Holding and a second lien on ABL Facility assets. The final maturity datethe Increasing Lender. Proceeds of the Term Loan Facility is April 29, 2022.
Refinancing

On April 29, 2016,term loans borrowed pursuant to the Company refinanced its then-existing term loan facility with the Term Loan Facility. The proceeds under the Term Loan FacilityIncrease Supplement were used, among other things, to (i) repay all $60.3 million of borrowings outstanding under the Prior Term Loan Facility, repay $29.9 million of borrowingscertain loans 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(ii) pay fees and expenses associated withrelated to the refinancing transaction.Increase Supplement. The maturity date of the New Term Loans of March 23, 2028 did not change as a result of the Increase Supplement.
Term Loan Facility Amendments
On November 23, 2016,March 27, 2023, the Company, through its subsidiary, Landscape Holding, entered into the Sixth Amendment, which amended the Term Loan Facility (the “First Amendment”)Second Amended and Restated Credit Agreement to among other things, (i) add an additional credit facility under the Term Loan Facility consistingimplement a forward-looking interest rate based on SOFR in lieu 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 First 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 of the Second Amendment and pay fees and expenses associated with the transaction.

LIBOR. The Tranche CNew 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 termsVoluntary prepayments of the Tranche CNew Term Loans are generallypermitted at any time, in minimum principal amounts, without premium or penalty, unless in connection with certain repricing transactions that occurred within the same asfirst 12 months after the terms applicable todate of the Tranche Binitial funding of the New Term Loans. The interest rate on the outstanding balance of the New Term Loans was 4.74% at October 1, 2017.7.44464% as of March 31, 2024.

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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 amended and restated the Amended and Restated Credit Agreement, dated as of April 29, 2016, among the Borrowers, the lenders from time to time party thereto, and UBS AG, Stamford Branch (the “Existing Agent”) as administrative agent and collateral agent (as amended prior to March 23, 2021, the “Existing Credit Agreement” and, as so amended and restated pursuant to the Fifth Amendment, the “Second Amended and Restated Credit Agreement”) in order to, among other things, (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.

The Term Loan FacilitySecond Amended and Restated Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants. The negative covenants consist ofare 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 alsoLoans 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 March 31, 2024, the Company was in compliance with all of the Second Amended and Restated Credit Agreement covenants.

Interest Expense

During the three and nine months ended October 1, 2017,March 31, 2024, the Company incurred total interest expense of $6.2$6.7 million, and $19.0 million, respectively. Of this total, $5.4 million and $16.4of which $5.2 million related to interest on the ABL Facility and the Term Loan Facility for the three and nine months ended October 1, 2017, respectively. The debtterm loans. 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 million and $2.2was $0.3 million for the three and nine months ended October 1, 2017, respectively.March 31, 2024. The remaining $0.1$1.2 million and $0.3 millionof 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 months ended March 31, 2024.


During the three and nine months ended OctoberApril 2, 20162023, the Company incurred total interest expense of $6.3$6.9 million, and $15.4 million, respectively. Of this total, $5.6 million and $12.2of which $5.9 million related to interest on the ABL Facility and Term Loan Facility for the three and nine months endedOctober 2, 2016, respectively. The debtterm loans. 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 million and $3.0was $0.3 million for the three and nine

months ended OctoberApril 2, 2016, respectively.2023. The remaining $0.1$0.7 million and $0.2 millionof interest incurred for the three and nine months ended October 2, 2016, respectively,expense is primarily related to interest attributable to capital leases.finance leases, partially offset by interest income for the three months ended April 2, 2023.

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 for the interest rate swap arrangements executed on March 23, 2021 that were determined to be hybrid debt instruments containing embedded at-market swap derivatives. As of March 31, 2024, the outstanding amount of $1.5 million was classified as Long-term debt, 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.

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Note 9.10.    Income Taxes

The Company’s effective tax rate was approximately 36.8%33.4% for the ninethree months ended October 1, 2017March 31, 2024 and 41.2%approximately 37.5% for the ninethree months ended OctoberApril 2, 2016, respectively.2023. The decreasechange in the effective rate was primarily due primarily to (i) the adoption of ASU 2016-09an increase in the first quarter of 2017, which resulted in the recognitionamount of excess tax benefits from stock-based compensation recognized as a component of Income tax expensebenefit in the Company’s Consolidated Statements of Operations, and (ii) a reduction in nondeductible transaction costs incurred duringOperations. The Company recognized excess tax benefits of $2.3 million for the ninethree months ended October 1, 2017 as compared toMarch 31, 2024, and $0.8 million for the ninethree months ended OctoberApril 2, 2016.2023. 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 ninethree months ended October 1, 2017March 31, 2024 and OctoberApril 2, 2016, respectively,2023, 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 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.

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: 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 estimatedrecorded in accruedOther long-term liabilities the undiscounted cost estimate of future remediation efforts to be approximately $4.0of $3.9 million and $4.0$3.9 million as of October 1, 2017March 31, 2024 and January 1, 2017,December 31, 2023, respectively. As part of the CD&R Acquisition, Deere 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 Assetsassets 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, 2017March 31, 2024 and January 1, 2017,December 31, 2023, respectively.

Letters of credit: Credit

As of October 1, 2017March 31, 2024 and January 1, 2017,December 31, 2023, outstanding letters of credit were $4.5$18.8 million and $2.9$14.3 million, respectively. There were no amounts drawn on the letters of credit for either period presented.


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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


BasicThe Company computes basic earnings (loss) per common share is computed(“EPS”) by dividing netNet 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 calculatesincludes 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 toweighted 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 months ended March 31, 2024 and April 2, 2023:
Three Months Ended
March 31, 2024April 2, 2023
Shares used in the computation of basic earnings per share45,263,984 45,045,851 
Effect of dilutive securities:
Stock options— — 
RSUs and PSUs— — 
DSUs— — 
Shares used in the computation of diluted earnings per share(a)
45,263,984 45,045,851 
______________
(a)    The shares used in the computation of diluted EPS do not give effect to any dilutive securities for the three months ended March 31, 2024 and April 2, 2023 as its inclusion would have the effect of decreasing the Net loss per common share.

The diluted earnings (loss) per common share includescalculation for the three months ended March 31, 2024 and April 2, 2023 excluded the effect of 1,042,007 and 1,253,714 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 and the assumed conversion of all of the Redeemable Convertible Preferred Stock were anti-dilutive and, therefore, the following potential shares of common stock were not included in the diluted earnings (loss) per common share calculation:anti-dilutive.


  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 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.

Note 14.13.    Subsequent Events


On October 17, 2017,In April 2024, the Company acquired the assets and assumed the liabilities of Harmony Gardens, Inc.Eggemeyer Land Clearing, LLC (“Harmony Gardens”Eggemeyer”). With two locationsone location in the metro Denver and Fort Collins, Colorado areas, Harmony GardensNew Braunfels, Texas, Eggemeyer is a leadingwholesale distributor of bulk landscape supplies to landscape professionals.

In April 2024, the Company entered into a joint venture agreement with Devil Mountain Wholesale Nursery, LLC (“Devil Mountain”), pursuant to which it acquired a 75% ownership interest in Devil Mountain. The agreement contains separate put and call options whereby the remaining 25% ownership interest in Devil Mountain may be sold to the Company through the exercise of the joint venture partner’s put option or purchased by the Company through the exercise of the Company’s call option. With eight wholesale nursery distribution branches and six growing facilities across California, Devil Mountain is a wholesale distributor in the state. The acquisition of Harmony Gardens is not materiallandscape trees and not expectedplants to have a significant impact on the Company’s consolidated financial statements.landscape professionals.

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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,Quarterly Report on Form 10-Q, 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.

December 31, 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 March 31, 2024, we had over 690 branch locations in 45 U.S. states and six Canadian provinces. Through our expansive North American network, we offer a comprehensive selection of approximately 160,000 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 offeringofferings and to help our customers operate and grow their businesses.
Initial Public OfferingBusiness Environment and Trends
On May 17, 2016,Economic headwinds, including softer markets, commodity price deflation, and cost inflation, continued to be a challenge during the three months ended March 31, 2024. We expect the current macroeconomic trends, including elevated interest rates, tighter financial markets, reduced consumer spending, continuing inflation, and deflation in select commodity products, to continue to put pressure on Net sales growth and Net income during 2024. Organic Daily Sales growth was 1% for the three months ended March 31, 2024 due to solid demand, partially offset by commodity price deflation. Overall, price deflation reduced Organic Daily Sales by 4% for the three months ended March 31, 2024. The negative price trend that began in the second half of the 2023 Fiscal Year is expected to continue before moderating in the second half of 2024. For the 2024 Fiscal Year, we completedexpect prices to be down approximately 2%, which is at the IPO at ahigh end of our initial range of 1% to 2%. For the three months ended March 31, 2024, we achieved Net sales growth of 8%, driven primarily by contributions from acquisitions. Gross margin decreased 100 basis points for the three months ended March 31, 2024, primarily due to lower price realization, partially offset by contributions from acquisitions with higher gross margins. Selling, general and administrative expenses (“SG&A”) increased 12% for the three months ended March 31, 2024, primarily due to the publicimpact of $21.00 per share. In connection withacquisitions. Net loss increased to $19.3 million for the IPO,three months ended March 31, 2024, compared to $4.5 million for the CD&R Investorthree months ended April 2, 2023, primarily due to lower gross margin and Deere together sold an aggregatehigher SG&A, partially offset by Net sales growth. Net cash used in operating activities decreased to $99.3 million for the three months ended March 31, 2024, compared to $152.6 million for the three months ended April 2, 2023, as a result of 10,000,000 sharespositive changes in working capital for the first three months of common stock.2024 compared to the same period of 2023.
Looking forward, the trend of consumers spending more time at home and investing in their outdoor living spaces is expected to continue, although at lower levels compared to the three-year pandemic peak. Increases in home values, lack of affordable new homes, and elevated mortgage interest rates for prolonged periods have resulted in homeowners staying in their homes for longer periods. The underwriterslong-term outlook for the landscape supply industry remains strong however, driven by favorable population trends, housing demand, and increased interest in outdoor living. We are confident in the landscape supply industry growth opportunities and our ability to continue 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. With a robust acquisition pipeline and a flexible business model, we remain committed to our strategic and operational initiatives and will continue to focus on driving growth organically and through acquisitions while gaining market share and delivering margin expansion by leveraging our scale, resources, and capabilities. We are also exercised their optionoperational in four distribution center facilities across the United States that expanded our supply chain capacity in 2023.
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As we continue to purchase an additional 1,500,000 sharesnavigate through the current uncertainty presented by market and economic conditions, we believe that we are prepared to meet the challenges ahead due to our balanced business, strong financial condition, dedicated and experienced teams, and focused business strategy. We continue to closely monitor the impact on our business and the related uncertainties and risks of common stockmoderating prices and softer markets resulting 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 all of the net proceeds and bore all commissions and discounts from the sale of our common stock. We did not receive any proceeds 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,challenging market conditions described above as well as 1,350,000 sharesthe potential effects of common stock solduncertain political conditions and geopolitical conflicts, such as the ongoing war in Ukraine, the conflict in the Gaza Strip, and unrest in the Middle East. These conditions are beyond our control, and we cannot estimate with certainty the full extent of their impact on our business, results of operations, cash flows, and/or financial condition. To mitigate the effects of these conditions, we 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 Form 10-K for 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 at2023 Fiscal Year for a price of $33.00 per share. We did not receive anydiscussion of the proceeds from the aggregate 10,350,000 sharesvarious risks that could have a material adverse effect on our reputation, business, financial position, results of common stock sold by the selling stockholders.

On April 25, 2017, we registered on behalf of certain stockholders the offeringoperations, and sale of 10,000,000 shares of common stock, as well as 1,500,000 shares of common stock sold to the underwriters pursuant to an option to purchase additional shares. On May 1, 2017, the selling stockholders completed the offering of 11,500,000 shares of common stock at a price of $47.50 per share. We did not receive any of the proceeds from the aggregate 11,500,000 shares of common stock sold by the selling stockholders.

On July 20, 2017, we registered on behalf of certain stockholders the offering 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 weekOur fiscal year with the fiscal yearis a 52- or 53-week period ending on the Sunday

nearest to December 31 in each year. Our fiscal years ending December 29, 2024 (the “2024 Fiscal Year”) and December 31, 2023 (the “2023 Fiscal Year”) 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 March 31, 2024 and April 2, 2023 both included 13 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 netNet sales primarily through the sale of landscape supplies, including irrigation systems,supplies, fertilizer and control products, hardscapes, landscape accessories, nursery goods, hardscapesoutdoor lighting, and outdoor lightingice melt products to our customers who are primarily landscape contractors serving the residential and commercial construction sectors. Our netNet 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 costCost 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. Cost of goods sold also includes salaries, wages, employee benefits, payroll taxes, bonuses, depreciation, and amortization related to inventory production activities. Our costCost 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 grossGross profit and gross margin are useful for evaluating our operating performance. We define grossGross profit as netNet sales less costCost of goods sold, exclusive of depreciation.sold. We define gross margin as grossGross profit divided by netNet 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, stockstock-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 netNet 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 itemsfees and expenses related to acquisitions, and other non-recurring (income) loss. SeeRefer to “Results of Operations-QuarterlyOperations – Quarterly Results of Operations Data” for more information aboutregarding 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 netOur Net sales and netNet 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 netNet 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 facilities, and recreational spaces. The landscape distributionsupply 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 distributionsupply industry also includes a significant amount of landscapeagronomic 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 heightenedan 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 attainattract 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 andas well as ongoing integration costs as we integrate acquired companies and seek to achieve synergies. WeAs of March 31, 2024, we completed the following acquisitions duringsince the nine months ended October 1, 2017 and October 2, 2016:start of the 2023 Fiscal Year:
•In September 2017,December 2023, we acquired the assets and assumed the liabilities of Marshall Stone,Newsom Seed, Inc. and Davis Supply, LLC (collectively, “Marshall Stone”(“Newsom Seed”). With two locations in Greensboro, North Carolina and Roanoke, Virginia, Marshall StoneFulton, Maryland, Newsom Seed is a market leader in the distributionwholesale distributor of natural stoneseed and hardscape materialsagronomic products to landscape professionals.

•In August 2017,2023, we acquired the assets and assumed the liabilities of Bondaze Enterprises, Inc., a California corporation doing business as South Coast SupplyJMJ Organics LTD (“South Coast Supply”JMJ Organics”). With twofive locations in Orange County, California, South Coast SupplyHouston, Texas, JMJ Organics is a market leader in the distributionwholesale distributor of hardscape, natural stonelandscape supplies, nursery products, and related productshardscapes to landscape professionals.

•In May 2017,August 2023, we acquired the assets and assumed the liabilities of Evergreen Partners of Raleigh, LLC, Evergreen Partners of Myrtle Beach, LLC,Regal Chemical Company and Evergreen Logistics,Monarch Scientific, LLC (collectively, “Evergreen”“Regal”). With twoone location in Alpharetta, Georgia, Regal is a wholesale distributor of agronomic products to landscape professionals.
•In August 2023, we acquired all of the outstanding stock of Pioneer Landscape Centers, Inc. and JLL Pioneer LLC (collectively, “Pioneer”). With 18 locations in Raleigh, North CarolinaColorado and Myrtle Beach, South Carolina, Evergreen16 locations in Arizona, Pioneer is a market leader in the distributionwholesale distributor of nursery supplieshardscapes and landscape supply products, including decorative rock, pavers, bulk materials, artificial turf, and supporting products to landscape professionals.

•In March 2017,August 2023, we acquired the assets and assumed the liabilities of Angelo’s Supplies, Inc. and Angelo’s Wholesale Supplies, Inc. (collectively, “Angelo’s”Timothy’s Center for Gardening, LLC (“Timothy’s”) with two locations. With one location in Wixom and Farmington Hills, Michigan, both suburbs of Detroit. Angelo’sRobbinsville, New Jersey, Timothy’s is a hardscapewholesale distributor of hardscapes, nursery products, and landscape supply distributor, and has been a market leader since 1984.


In March 2017, we acquired all of the outstanding stock of American Builders Supply, Inc. and MasonryClub, Inc. and subsidiary (collectively, “AB Supply”) with 10 locations in the greater Los Angeles, California area and two locations in Las Vegas, Nevada. AB Supply is a market leader in the distribution of hardscape, natural stone and related productsbulk materials to landscape professionals.

•In February 2017,August 2023, we acquired the assets and assumed the liabilities of Stone Forest Materials, LLCNew England Silica, Inc. (“Stone Forest”New England Silica”) with. With one location in Kennesaw, Georgia. Stone ForestSouth Windsor, Connecticut, New England Silica is a market leader in the distributionwholesale distributor of hardscape productshardscapes to landscape professionals.

•In January 2017,July 2023, we acquired the assets and assumed the liabilities of Aspen Valley Landscape Supply, Inc.Hickory Hill Farm & Garden, LLC (“Aspen Valley”Hickory Hill”) with three locations. Headquartered. With one location in Homer Glen, Illinois, Aspen ValleyEatonton, Georgia, Hickory Hill is a market leader in the distributionwholesale distributor of hardscapesirrigation, nursery, and landscape supplies in the Chicago Metropolitan Area.to landscape professionals.

•In September 2016,May 2023, we acquired the assets and assumed the liabilities of Glen Allen Nursery & Garden Center,Link Inc., doing business as Link Outdoor Lighting Distributors (“Glen Allen”Link”). With one locationfour locations in Richmond, VA, Glen AllenAltamonte Springs and Naples, Florida, Nashville, Tennessee, and Houston, Texas, Link is a leader in the distributionwholesale distributor of nurserylandscape lighting products to landscape professionals.

•In August 2016,May 2023, we acquired the assets and assumed the liabilities of Bissett Nursery Corp.Adams Wholesale Supply, Inc. (“Adams Wholesale Supply”). With three locations in the San Antonio, Houston, and acquired all of the outstanding stock of Bissett Equipment Corp. (collectively, “Bissett”). Headquartered in Holtsville, NY, BissettDallas, Texas markets, Adams Wholesale Supply is a leader in the distributionwholesale distributor of nursery, hardscapes, landscape supplies as well as equipment sales, rental and repairsagronomic products to landscape professionals with three locations serving customers throughout the New York City metropolitan area.professionals.

•In April 2016,March 2023, we acquired the assets and assumed the liabilities of Blue Max Materials,Triangle Landscape Supplies, Inc., Blue Max MaterialsTriangle Landscape Supplies of Charleston,J.C., LLC, and Triangle Landscape Supplies of Apex, Inc., Blue Max Materials of Columbia, Inc. and Blue Max Materials of the Grand Strand, Inc., which together comprise Blue Max Materials. Blue Max Materials includes five (collectively, “Triangle”). With four locations serving both North and South Carolina. The acquisition creates a leading position for SiteOne in the Raleigh-Durham, North and South Carolina market, Triangle is a wholesale distributor of hardscapes and landscape accessories markets.supplies to landscape professionals.

•In January 2016,March 2023, we acquired allthe assets and assumed the liabilities of the outstanding stockJ&J Materials Corp. (“J&J Materials”). With five locations in Rhode Island and Southeastern Massachusetts, J&J Materials is a wholesale distributor of Hydro-Scape Products, Inc. (“Hydro-Scape”), a leading providerhardscapes to landscape professionals.
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Table of landscape products (irrigation, lighting, maintenance, outdoor living and hardscapes) with 17 locations serving customers throughout Southern California.Contents

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 generallytypically have annual supplier agreements, and while they typicallygenerally 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 limitedcertain cases, we have enteredenter into supply contracts with terms that exceed one year for the manufacture of our LESCO® branded fertilizer, and some nursery stockgoods, grass seed, and grass seed,landscape supply products, which may require us to purchase products in the future.

Strategic Initiatives

We have undertaken significant operationalcontinue 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 systemssystem functionalities and evaluating ways to further improve the freight and logistics processesnew 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, assortment planning, private label expansion, line of business training, and supplier management.
•Supply chain initiatives, including the implementation of new inventory planning and stocking systems and functionalities, the continued expansion of our distribution network footprint and capabilities, local hubs in large markets, inbound freight optimization, and local fleet utilization and cost improvements.
•Sales force initiatives, including optimizing our commercial sales strategies, leads, and opportunities, while improving the skills and performance of the team.
•Marketing initiatives, including customer analytics and lifecycle marketing, product marketing, Hispanic customer engagement, optimization of our digital marketing strategy, and a continued focus on the new Partners Program.
•Digital initiatives, including increasing customer demand as well as adoption of our website, mobile application, and overall B2B e-Commerce platform, SiteOne.com, which provides the convenience of an online sales channel, enhanced account management functionality, and industry specific productivity tools for our customers.
•Operational excellence initiatives, including the implementation of best practices in branch operations which encompasses safety, merchandising, stocking and assortment, customer engagement, delivery, labor management, as well as the additional automation and enhancement of branch systems, including the rollout of improved associate mobile capabilities.
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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 netNet 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 mightmay not always be able to reflect these increaseschanges 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 months endedOctober 1, 2017March 31, 2024 and OctoberApril 2, 2016.2023 (in millions, except percentages).
(In millions)           
Consolidated Statements of Operations
           
Consolidated Statements of Operations
Three Months Ended Nine Months Ended
October 1, 2017 October 2, 2016 October 1,
2017		 October 2,
2016
Consolidated Statements of Operations
Three Months EndedThree Months Ended
March 31, 2024March 31, 2024April 2, 2023
Net sales$502.4
100.0% $444.5
100.0% $1,446.0
100.0% $1,286.5
100.0%Net sales$904.8 100.0 100.0 %$837.4 100.0 100.0 %
Cost of goods sold342.1
68.1% 306.1
68.9% 982.4
67.9% 882.5
68.6%Cost of goods sold603.6 66.7 66.7 %550.3 65.7 65.7 %
Gross profit160.3
31.9% 138.4
31.1% 463.6
32.1% 404.0
31.4%Gross profit301.2 33.3 33.3 %287.1 34.3 34.3 %
Selling, general and administrative expenses128.1
25.5% 107.7
24.2% 368.4
25.5% 330.3
25.7%Selling, general and administrative expenses327.7 36.2 36.2 %291.4 34.8 34.8 %
Other income1.6
0.3% 1.2
0.3% 3.8
0.3% 3.3
0.3%Other income4.2 0.5 0.5 %4.0 0.5 0.5 %
Operating income33.8
6.7% 31.9
7.2% 99.0
6.8% 77.0
6.0%
Operating lossOperating loss(22.3)(2.5)%(0.3)— %
Interest and other non-operating expenses, net6.2
1.2% 6.3
1.4% 19.0
1.3% 15.4
1.2%Interest and other non-operating expenses, net6.7 0.7 0.7 %6.9 0.8 0.8 %
Income tax expense10.7
2.1% 10.7
2.4% 29.4
2.0% 25.4
2.0%
Net income$16.9
3.4% $14.9
3.4% $50.6
3.5% $36.2
2.8%
Income tax benefitIncome tax benefit(9.7)(1.1)%(2.7)(0.3)%
Net lossNet loss$(19.3)(2.1)%$(4.5)(0.5)%
Net sales
Net sales for the three months ended March 31, 2024 increased 13%8% to $502.4$904.8 million as compared to $837.4 million for the three months ended October 1, 2017April 2, 2023 primarily due to contributions from acquisitions. Organic Daily Sales for the first quarter of 2024 increased by 1% compared to $444.5the first quarter of 2023 due to solid demand, partially offset by commodity price deflation. Based upon year-over-year price changes in our highest selling SKUs, we estimate price deflation reduced Organic Daily Sales by 4% during the three months ended March 31, 2024. Organic Daily Sales for agronomic products (fertilizer, control products, ice melt, equipment, and other products) increased 10% primarily due to strong volume growth resulting from lower prices, solid end market demand, more snow events, and an earlier start to spring in many of our key Northern markets. Organic Daily Sales for landscaping products (irrigation supplies, hardscapes, landscape accessories, nursery goods, and outdoor lighting) decreased 2% reflecting lower prices and less favorable weather in several of our key construction markets. Acquisitions contributed $62.5 million, or 7%, to the Net sales growth for the first quarter of 2024.
Cost of goods sold
Cost of goods sold for the three months ended March 31, 2024 increased 10% to $603.6 million from $550.3 million for the three months ended OctoberApril 2, 2016, and increased 12% to $1,446.0 million for the nine months ended October 1, 2017 compared with $1,286.5 million for the nine months ended October 2, 2016. Organic Daily Sales increased 5% in the third quarter of 2017 and 5% for the nine months ended October 1, 2017. Organic Daily Sales growth for nursery, irrigation, outdoor lighting, hardscapes and landscapes accessories grew 7% in the third quarter of 2017 and 7% for the nine months ended October 1, 2017 as the Company continued to benefit from strength in the residential and commercial construction and repair and remodel end markets. Organic Daily Sales for agronomic products increased 2% in the third quarter of 2017 and 2% for the nine months ended October 1, 2017. Acquisitions contributed $34.1 million, or 8%, to third quarter growth of 2017 and $104.3 million, or 8%, to the growth in the nine months ended October 1, 2017.
Costs of goods sold
Cost of goods sold increased 12% to $342.1 million for the three months ended October 1, 2017 compared to $306.1 million for the three months ended October 2, 2016, and increased 11% to $982.4 million for the nine months ended October 1, 2017 compared to $882.5 million for the nine months ended October 2, 2016.2023. The increase in Cost of goods sold for the third quarter of 2017 and the first nine months of 2017 was primarily driven by Net sales growth, including acquisitions, partially offset by lower material costs including manufacturer incentives.attributable to acquisitions.
Gross profit and gross margin
Gross profit for the three months ended March 31, 2024 increased 16%5% to $160.3$301.2 million compared to $287.1 million for the three months ended October 1, 2017 compared to $138.4 million for the three months ended OctoberApril 2, 2016, and increased 15% to $463.6 million for the nine months ended October 1, 2017 compared to $404.0 million for the nine months ended October 2, 2016.2023. Gross profit growth for the third quarter of 2017 was driven by the increase in Net sales growth, including acquisitions. Gross margin increased 80decreased 100 basis points to 31.9%33.3% for the thirdfirst quarter of 2017 compared to 31.1% for the same period of 2016 primarily driven by our category management initiatives. For the nine months

ended October 1, 2017, gross margin increased 70 basis points to 32.1%2024 as compared to 31.4%34.3% for the nine months ended October 2, 2016. Our category management initiatives drove the majorityfirst quarter of the increase.2023. The decrease in gross margin is primarily due to lower price realization, partially offset by contributions from acquisitions with higher gross margins.
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Selling, general and administrative expenses (operating expenses)
Operating expensesSG&A for the three months ended March 31, 2024 increased 19%12% to $128.1$327.7 million from $291.4 million for the three months ended October 1, 2017 from $107.7 million for the three months ended OctoberApril 2, 2016, and increased 12% to $368.4 million for the nine months ended October 1, 2017 compared to $330.3 million for the nine 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 expressed2023. SG&A as a percentage of Net sales increased 140 basis points to 25.5%36.2% for the three months ended October 1, 2017first quarter of 2024 compared to 24.2%34.8% for the three months ended October 2, 2016, and decreasedfirst quarter of 2023 primarily due to 25.5% for the nine months ended October 1, 2017 compared to 25.7% for the nine months ended October 2, 2016. The increase in operating expenses as a percentage of sales for the last quarter reflected the impact of acquisitions and increases in labor and other operating expenses focused on building our capabilities to accelerate organic 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.acquisitions. Depreciation and amortization expense increased $1.1$2.1 million to $10.8$32.9 million for the three months ended October 1, 2017 compareddue to $9.7 million for three months ended October 2, 2016, and increased $4.0 million to $31.4 million for the nine months ended October 1, 2017 compared to $27.4 million for the nine months ended October 2, 2016. The increase in depreciation and amortization in both the third quarter and the first nine months of 2017 was primarily caused by our acquisitions.
Interest and other non-operating expenses, net
Interest and other non-operating expenses, net decreased $0.1$0.2 million to $6.2$6.7 million for the three months ended October 1, 2017March 31, 2024 from $6.3$6.9 million for the three months ended OctoberApril 2, 2016, and increased $3.6 million to $19.0 million for the nine months ended October 1, 2017 compared to $15.4 million for the nine months ended October 2, 2016.2023. The decrease in interest expense forwas primarily due to decreased borrowings, partially offset by a higher average interest rate during the thirdfirst quarter reflected lower interest rates on our Term Loan resulting from our Term Loan Facility Amendments. The increase in interest expense forof 2024 as compared to the last nine months primarily reflected higher debt levels following our Refinancing which occurred in April 29, 2016.first quarter of 2023.
Income tax (benefit) expensebenefit
Income tax expensebenefit was $10.7$9.7 million for the three months ended October 1, 2017March 31, 2024 as compared to $10.7$2.7 million for the three months ended OctoberApril 2, 2016.  For the nine months ended October 1, 2017, income tax expense was $29.4 million as compared to $25.4 million for the nine months ended October 2, 2016.2023. The effective tax rate was 38.8%33.4% for the three months ended October 1, 2017first quarter of 2024 as compared to 41.8%37.5% for the three months ended October 2, 2016.  For the nine months ended October 1, 2017,first quarter of 2023. The change in the effective tax rate was 36.8% as comparedprimarily due to 41.2% for the nine months ended October 2, 2016. The decreasean increase in the effective rate was due primarily to (i) the adoption of ASU 2016-09 in the first quarter of 2017, which resulted in the recognitionamount of excess tax benefits from stock-based compensation recognized as a component of Income tax expensebenefit in the Company’s Consolidated Statements of Operations, and (ii) a reduction in nondeductible transaction costs incurred duringOperations. Excess tax benefits of $2.3 million were recognized for the nine months ended October 1, 2017first quarter of 2024 as compared to $0.8 million for the ninefirst quarter of 2023.
Net income
Net loss for the three months ended October 2, 2016.
Net income (loss)
Net incomeMarch 31, 2024 increased $2.0$14.8 million to $16.9$19.3 million as compared to $4.5 million for the three months ended October 1, 2017 compared to $14.9 million for the three months ended OctoberApril 2, 2016, and increased $14.4 million to $50.6 million for the nine months ended October 1, 2017 compared to $36.2 million for the nine months ended October 2, 2016.2023. The increase in Net income for the third quarterloss was primarily attributabledue to our sales growthlower gross margins and gross margin improvement.higher SG&A, partially offset by an increase in Net sales.



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Quarterly Results of Operations Data
The following tables settable sets forth certain financial data for each of the most recent eight fiscal quarters including our netunaudited Net sales, costCost of goods sold, grossGross profit, selling,Selling, general and administrative expenses, netNet income (loss), and Adjusted EBITDA data (including a reconciliation of Adjusted EBITDA to netNet 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 thethis 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)               
2017 2016 2015
Qtr 3 Qtr 2 Qtr 1 Qtr 4 Qtr 3 Qtr 2 Qtr 1 Qtr 4
               
(In millions, except per share information and percentages)
(In millions, except per share information and percentages)
(In millions, except per share information and percentages)
2024
Qtr 1
Qtr 1
Qtr 1
Net sales
Net sales
Net sales$502.4
 $608.6
 $335.0
 $361.8
 $444.5
 $513.4
 $328.5
 $339.8
Cost of goods sold342.1
 406.2
 234.1
 250.0
 306.1
 344.9
 231.5
 235.2
Cost of goods sold
Cost of goods sold
Gross profit
Gross profit
Gross profit160.3
 202.4
 100.9
 111.8
 138.4
 168.5
 97.0
 104.6
Selling, general and administrative expenses128.1
 126.6
 113.7
 116.2
 107.7
 118.0
 104.6
 110.7
Other income1.6
 1.3
 0.9
 1.4
 1.2
 1.0
 1.2
 1.2
Selling, general and administrative expenses
Selling, general and administrative expenses
Other income, net
Other income, net
Other income, net
Operating income (loss)33.8
 77.1
 (11.9) (3.0) 31.9
 51.5
 (6.4) (4.9)
Interest and other non-operating expenses6.2
 6.6
 6.2
 6.7
 6.3
 6.5
 2.6
 3.7
Income tax (benefit) expense10.7
 26.3
 (7.6) (4.1) 10.7
 18.1
 (3.4) (2.7)
Operating income (loss)
Operating income (loss)
Interest and other non-operating expenses, net
Interest and other non-operating expenses, net
Interest and other non-operating expenses, net
Income tax expense (benefit)
Income tax expense (benefit)
Income tax expense (benefit)
Net income (loss)$16.9
 $44.2
 $(10.5) $(5.6) $14.9
 $26.9
 $(5.6) $(5.9)
Net income (loss)
Net income (loss)
Net income (loss) per common share:
Net income (loss) per common share:
Net income (loss) per common share:
Basic
Basic
Basic
Diluted
Diluted
Diluted
Adjusted EBITDA(1)(a)
$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(1)(a)
Adjusted EBITDA(1)(a)
Net sales as a percentage of annual Net sales
Net sales as a percentage of annual Net sales
Net sales as a percentage of annual Net sales
Gross profit as a percentage of annual Gross profit
Gross profit as a percentage of annual Gross profit
Gross profit as a percentage of annual Gross profit
Adjusted EBITDA as a percentage of annual Adjusted EBITDA      8.3% 32.5% 55.8% 3.4% 11.2%
Adjusted EBITDA as a percentage of annual Adjusted EBITDA
Adjusted EBITDA as a percentage of annual Adjusted EBITDA

(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 expense (benefit), interest expense, net of interest income, and depreciation and amortization. Adjusted EBITDA is 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 netNet income, operatingOperating 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 netNet 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 incomeIncome tax expense (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 ourthe 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):

202420232022
Qtr 1Qtr 4Qtr 3Qtr 2Qtr 1Qtr 4Qtr 3Qtr 2
Reported Net income (loss)$(19.3)$(3.4)$57.3 $124.0 $(4.5)$(0.9)$73.3 $140.7 
Income tax expense (benefit)(9.7)(5.0)17.5 40.0 (2.7)(4.6)22.9 44.8 
Interest expense, net6.7 6.5 6.4 7.3 6.9 5.5 5.6 4.6 
Depreciation and amortization32.9 34.6 31.3 31.0 30.8 31.6 27.4 23.1 
EBITDA10.6 32.7 112.5 202.3 30.5 31.6 129.2 213.2 
Stock-based compensation(a)
10.5 5.0 5.0 7.1 8.6 4.3 4.5 5.8 
(Gain) loss on sale of assets(b)
(1.0)(0.1)(0.2)0.2 (0.4)0.2 (0.7)(0.2)
Financing fees(c)
— — 0.4 0.1 — — 0.1 0.2 
Acquisitions and other adjustments(d)
1.0 2.3 2.1 1.5 1.1 2.8 2.5 3.0 
Adjusted EBITDA(e)
$21.1 $39.9 $119.8 $211.2 $39.8 $38.9 $135.6 $222.0 

(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.
(c)    Represents fees associated with our debt refinancing and debt amendments.
(d)    Represents professional fees, retention and severance payments, and performance bonuses related to historical acquisitions. 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. These amounts are recorded in Selling, general and administrative expenses in the Consolidated Statements of Operations.
(e)    Adjusted EBITDA excludes any earnings or loss of acquisitions prior to their respective acquisition dates for all periods presented.


35
(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) expense10.7
 26.3
 (7.6) (4.1) 10.7
 18.1
 (3.4) (2.7)
 Interest expense, net6.2
 6.6
 6.2
 6.7
 6.3
 6.5
 2.6
 3.7
 Depreciation and amortization11.1
 10.8
 9.8
 9.6
 9.7
 9.1
 8.6
 8.7
EBITDA44.9
 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):

(In millions, except Selling Days)          
 2017 2016
 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
Organic Sales457.4
 548.1
 318.5
 433.6
 506.6
 328.5
Acquisition contribution(a)
45.0
 60.5
 16.5
 10.9
 6.8
 —
2024
2024
20242023
Qtr 1Qtr 1Qtr 1
Reported Net sales
Organic Sales(a)
Acquisition contribution(b)
Selling DaysSelling Days63
 64
 64
 63
 64
 65
Organic Daily SalesOrganic Daily Sales$7.3
 $8.6
 $5.0
 $6.9
 $7.9
 $5.1

(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 2024 and 2023.
(b)    Represents Net sales from acquired branches that have not been under our ownership for at least four full fiscal quarters at the start of the 2024 Fiscal Year. Includes Net sales from branches acquired in 2024 and 2023.
Liquidity and Capital Resources

Our ongoingWe assess our liquidity needs are expected to be funded byin terms of our cash and cash equivalents on hand netand the ability to generate cash provided byto fund our operating and investing activities, repurchase shares, and as required,service our debt, taking into consideration available borrowings underand 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 followingnext 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 months ended March 31, 2024, we did not repurchase shares under the share repurchase program. As of March 31, 2024, the dollar value of shares that may yet be purchased under the share repurchase authorization was $363.6 million.
Our borrowing base capacity under the ABL Facility was $126.9$497.6 million as of October 1, 2017,March 31, 2024, after giving effect to approximately $193.7$83.6 million of revolving credit loans under the ABL Facility an increaseand outstanding letters of $102.7credit of $18.8 million. Our borrowing base capacity under the ABL Facility was $578.2 million from $91.0as of December 31, 2023, after giving effect to $7.5 million of revolving credit loans asunder the ABL Facility and outstanding letters of January 1, 2017.credit of $14.3 million. As of October 1, 2017,March 31, 2024, we had total cash and cash equivalents of $24.1$41.5 million, total gross long-term debt of $479.5$453.8 million, and capital leasestotal finance lease obligations (excluding interest) of $12.8$101.5 million.
Working capital was $428.7$910.0 million as of October 1, 2017,March 31, 2024, an increase of $124.2$83.0 million as compared to $304.5$827.0 million as of January 1, 2017.December 31, 2023. The increasechange in working capital iswas primarily attributable to the seasonality of our businessbusiness.
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The following table summarizes current and growthlong-term material cash requirements related to our long-term debt as of March 31, 2024 (in millions):
TotalNext 12 MonthsBeyond 12 Months
Long-term debt, including current maturities$453.8 $5.3 $448.5 
Interest on long-term debt$123.3 $25.5 $97.8 
Our gross long-term debt balance increased $74.8 million since December 31, 2023. This increase was primarily attributable to funding the seasonal increase in inventory from acquisitionsour working capital. We have current maturities on our long-term debt of $5.3 million, which includes $3.8 million related to the term loan facility and higher stocking levels.$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 March 31, 2024 and expected payments for agent administration fees. The projected interest payments are calculated for future periods through maturity dates of our long-term debt using interest rates in effect as of March 31, 2024. 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 loan facility and the ABL Facility. The total amount of interest on long-term debt increased $10.9 million since December 31, 2023 to $123.3 million, primarily due to the increase in borrowings under the ABL Facility. Refer to “Note 9. Long-Term Debt” in the notes to the consolidated financial statements for further information regarding our debt instruments.
Cash Flow Summary
Information about our cash flows, by category, is presented in our statements of cash flows and is summarized below:below (in millions):
(In millions)   
Nine Months Ended
October 1, 2017 October 2, 2016
Net cash (used in) provided by:   
Three Months Ended
Three Months Ended
Three Months Ended
Net cash provided by (used in):Net cash provided by (used in):March 31, 2024April 2, 2023
Operating activities$(14.6) $9.2
Investing activities$(76.9) $(62.5)
Financing activities$99.1
 $59.0
Cash flow (used in) provided byused in operating activities

Net cash used in operating activities for the ninethree months ended October 1, 2017March 31, 2024 was $14.6$99.3 million compared to cash provided of $9.2$152.6 million for the ninethree months ended OctoberApril 2, 2016. Net2023. The decrease in cash fromused in operating activities during the first nine months of 2017 wasreflects a lower than the first nine months of 2016 primarily due to the increaseseasonal investment in net working capital.


Cash flow used in investing activities

Net cash used in investing activities was $76.9$7.3 million for the ninethree months ended October 1, 2017March 31, 2024 compared to $62.5$39.6 million for the ninethree months ended OctoberApril 2, 2016.2023. The increasedecrease reflects greater investmentno acquisition investments in acquisitions during the first nine

three months of 20172024 compared to $33.2 million for the same period of 2016.2023. Capital expenditures were $10.3$8.9 million for the first ninethree months of 2017, up from $6.22024 compared to $7.1 million for the first nine monthssame period of 20162023 due to increased investmentsinvestment 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$65.7 million for the ninethree months ended October 1, 2017March 31, 2024 compared to cash provided of $59.0$203.4 million for the ninethree months ended OctoberApril 2, 2016.2023. The increasedecrease primarily reflects lower borrowings under the ABL Facility to fundas a result of no acquisition investments and a lower seasonal increase in working capital and acquisitions.during the first three months of 2024 compared to the same period of 2023.

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External Financing
Term Loan FacilityLoans
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 amended and restated the Amended and Restated Credit Agreement, dated as of April 29, 2016, among the Borrowers, the lenders from time to time party thereto.
Landscape Holdingthereto, and Landscape areUBS 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 inFifth 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 LoanLoans”). 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 “Sixth Amendment”) to implement a forward-looking interest rate based on SOFR in lieu of LIBOR.
On July 12, 2023, Landscape Holding, as representative for the rightBorrowers, entered into the Increase Supplement (the “Increase Supplement”) to the Second Amended and Restated Credit Agreement to provide for individual lenders to extend the maturity datean additional $120.0 million of their loans upon the request of theNew Term Loan Borrower and without the consent of any other lender.Loans.
Subject to certain conditions, without the consent of the then existing lenders (but subject to the receipt of commitments), the New Term Loan FacilityLoans may be expandedincreased (or a new term loan facility, revolving credit facility, or letter of credit facility added) by up to (i) $100.0the 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 thatsuch additional amount and any use of proceeds thereof to exceed 3.504.00 to 1.00.
The New Term Loan Facility isLoans 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 FacilityLoans to be immediately due and payable and enforce their interest in collateral pledged under the agreement.
RefinancingAmendments of Term Loans
On April 29, 2016, we refinanced our then-existing term loan facility, orJuly 12, 2023, Landscape Holding, as representative for the “Prior Term Loan Facility,” withBorrowers, entered into the Term Loan Facility. We refer to this refinancing transaction as the “Refinancing.” We used borrowings under the Term Loan Facility to repay all $60.3Increase Supplement, which provided for an additional $120.0 million of borrowings outstanding underNew Term Loans and made such other changes to the Prior Term Loan Facility,Second Amended and Restated Credit Agreement as agreed between Landscape Holding and JPMorgan Chase Bank, N.A. Proceeds of the term loans borrowed pursuant to the Increase Supplement were used, among other things, to (i) repay $29.9 million of borrowingscertain loans 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(ii) pay fees and expenses associated withrelated to the Refinancing.
Increase Supplement. The maturity date of the New Term Loan Facility AmendmentsLoans of March 23, 2028 did not change as a result of the Increase Supplement.
On November 23, 2016, weMarch 27, 2023, Landscape Holding entered into the Sixth Amendment, which amended the Term Loan Facility (the “First Amendment”)Second Amended and Restated Credit Agreement to among other things, (i) add an additional credit facility under the Term Loan Facility consistingimplement a forward-looking interest rate based on SOFR in lieu 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 First 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 of the Second Amendment and pay fees and expenses associated with the transaction.

LIBOR. The Tranche CNew 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 termsVoluntary prepayments of the Tranche CNew Term Loans are generallypermitted at any time, in minimum principal amounts, without premium or penalty, unless in connection with certain repricing transactions that occurred within the samefirst 12 months after the date of the initial funding of the New Term Loans. The interest rate on the outstanding balance of the New Term Loans was 7.44464% as of March 31, 2024.
On March 23, 2021, the terms applicableBorrowers 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, 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 Term Loans.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.
ABL Facility
Landscape Holding and Landscape (collectively, the “ABL Borrowers”) are borrowers underparties to the ABL Facilitycredit 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.
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 the average daily excess availability under the ABL Credit Agreement, and in each case subject to a 0.125% reduction when the Consolidated First Lien Leverage Ratio (as defined in the ABL Credit Agreement) is less than 1.50:1.00. 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 rangingranged from 1.25%6.54483% to 2.00% or an alternate base rate for U.S. dollar-denominated borrowings plus an applicable margin ranging from 0.25% to 1.00%.6.55167% as of March 31, 2024 and was 6.69508% as of December 31, 2023. The interest ratescommitment fee paid on outstanding balances at October 1, 2017 range from 2.99% to 5.00%. Additionally, the borrowers paid aunfunded amounts was 0.25% and 0.375% commitment fee on the unfunded amount0.25% as of October 1, 2017March 31, 2024 and January 1, 2017,December 31, 2023, respectively. As
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Table of October 1, 2017, the outstanding balance on the ABL Facility was $193.7 million. The ABL Facility matures on October 20, 2020.Contents
The ABL Facility is subject to mandatory prepayments if the outstanding loans and letters of credit exceed either the aggregate revolving commitments or the current borrowing base, in an amount equal to such excess. Additionally, the ABL Facility is subject to various covenants, requiringincluding 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 alsosecured 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 covenantscustomary 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.
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.
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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-startingexisting 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. TheSOFR (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 effectiveusing a strategy 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 our Consolidated Balance Sheets for the interest rate swap arrangements executed during the first quarter of 2021 that were determined to be hybrid debt instruments containing embedded at-market swap derivatives. As of March 11, 2019 and terminate31, 2024, the outstanding amount of $1.5 million was classified as Long-term debt, 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 bethey were in a net pay position.
Limitations on DistributionsFor additional information, refer to “Note 1. Nature of Business and Dividends by SubsidiariesSignificant 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.


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(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 criticalThe accounting estimates sincewe believe to be most sensitive due to their significance to the filingfinancial 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 Fiscal Year 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 Fiscal Year.


Item 4. Controls and Procedures


Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive officerChief 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-Q10-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 officerChief Executive Officer and chief financial officer,Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Additionally, baseddisclosure as of the end of the period covered by this Quarterly Report on the most recent evaluation, we have concluded thatForm 10-Q.

Changes in Internal Control over Financial Reporting
There were no significant changechanges in our disclosure controls and procedures occurredinternal control over financial reporting during the last fiscal quarter that hashave 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, orand cash flows. However, we can give no assurance that the results of any such proceedings will not materially affect our reputation, business, financial position, results of operations, and cash flows.


Item 1A. Risk Factors


There have been no material changesThe significant factors known to the risk factorsus 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 year2023 Fiscal Year.

Item 5. Other Information

Rule 10b5-1 Trading Plans

During the three months ended January 1, 2017.March 31, 2024, 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
31.1
Description
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
32.1#32.1
32.2#32.2
101
The following unaudited financial information from this Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 is formatted in Inline XBRL (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.INS#XBRL Instance Document
104
101.SCH#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.

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SIGNATURESSIGNATURE
 
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:November 8, 2017May 1, 2024By:/s/ John T. Guthrie
John T. Guthrie
Executive Vice President, Chief Financial Officer and Assistant Secretary

(Principal Financial Officer and Principal Accounting Officer)



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