WILLIAM BLAIR INVESTOR PRESENTATION | JUNE 2017 - SITEONE ...
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William Blair Investor Presentation | June 2017
Disclaimer
Forward-Looking Statements
This presentation contains “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Some of the forward-looking statements can
be identified by the use of terms such as “may,” “intend,” “might,” “will,” “should,” “could,” “would,” “expect,” “believe,” “estimate,” “anticipate,” “predict,” “project,” “potential,” or the
negative of these terms, and similar expressions. You should be aware that these forward-looking statements are subject to risks and uncertainties that are beyond our control. Further,
any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or
circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time that may
cause our business not to develop as we expect, and it is not possible for us to predict all of them. Factors that may cause actual results to differ materially from those expressed or
implied by the forward-looking statements include, but are not limited to, the following: cyclicality in residential and commercial construction markets; general economic and financial
conditions; weather conditions, seasonality and availability of water to end-users; laws and government regulations applicable to our business that could negatively impact demand for
our products; public perceptions that our products and services are not environmentally friendly; competitive industry pressures; product shortages and the loss of key suppliers; product
price fluctuations; inventory management risks; ability to implement our business strategies and achieve our growth objectives; acquisition and integration risks; increased operating
costs; and other risks, as indicated in our Annual Report on Form 10-K and our Registration Statement on Form S-1 filed with the U.S. Securities and Exchange Commission
(Registration No. 333-217327).
Included in this presentation are estimated results for Q1 2017, which are preliminary, unaudited and subject to completion, reflect management’s current views and may change as a
result of management’s review of results and other factors, including a wide variety of significant business, economic and competitive risks and uncertainties. Such estimated preliminary
results are not guarantees of future performance or outcomes and that actual results may differ materially from the estimated preliminary results.
Non-GAAP Financial Information
This presentation includes certain financial information, not prepared in accordance with U.S. GAAP. Because not all companies calculate non-GAAP financial information identically (or
at all), the presentations herein may not be comparable to other similarly titled measures used by other companies. Further, these measures should not be considered substitutes for the
information contained in the historical financial information of the Company prepared in accordance with U.S. GAAP that is set forth herein.
We present Adjusted EBITDA in order to evaluate the operating performance and efficiency of our business. Adjusted EBITDA represents EBITDA as further adjusted for items
permitted under the covenants of our credit facilities. EBITDA represents our net income (loss) plus the sum of income tax (benefit), depreciation and amortization and interest expense,
net of interest income. Adjusted EBITDA is further adjusted for stock-based compensation, advisory fees, loss (gain) on sale of assets and rebranding, acquisitions and other
adjustments.
Adjusted EBITDA does not include pre-acquisition Adjusted EBITDA. Adjusted EBITDA is not a measure of our liquidity or financial performance under GAAP and should not be
considered as an alternative to net income, operating income or any other performance measures derived in accordance with GAAP, or as an alternative to cash flow from operating
activities as a measure of our liquidity. The use of Adjusted EBITDA instead of net income has limitations as an analytical tool. Because not all companies use identical calculations, our
presentation of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies, limiting its usefulness as a comparative measure. Net debt is calculated
as long-term debt plus capital leases, net of cash and cash equivalents. Free cash flow is defined as cash flow from operating activities less capital expenditures. See the Appendix for a
reconciliation of Adjusted EBITDA to net income (loss) and a reconciliation of free cash flow to cash flow from operating activities.
We present organic daily sales as we believe organic sales growth and organic daily sales growth are useful measures for evaluation 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. See the Appendix for a reconciliation of organic sales and organic
daily sales to net sales.
The Company’s fiscal year is a 52- or 53-week period ending on the Sunday nearest to December 31. The year ended January 1, 2017 includes 52 weeks. The year ended January 3,
2016 includes 53 weeks. The year ended December 28, 2014 includes 52 weeks. Unless the context otherwise indicates, references to years herein refer to our fiscal years.
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Confidential: Not for distribution or publication
Today’s presenters
Joined SiteOne in April 2014
Previously spent 18 years at CRH plc most recently as President and COO of Oldcastle Inc.
Held a variety of roles including CEO and COO of Oldcastle Materials
Doug Black Previously a consultant with McKinsey
CEO & Director M.B.A. from Duke and B.S. from the U.S. Military Academy at West Point
Joined SiteOne in July 2014
10 years at CRH plc, recently as SVP of Strategy and Development for Oldcastle Materials
Previously CRH’s Managing Director for concrete and landscaping operations in France
Pascal Convers Spent 13 years at Eastman Chemical Company, held senior leadership roles in Europe, North America
EVP of Strategy, and Asia-Pacific
Development & M.B.A. from Duke, M.S. from Ecole Des Mines de Paris and B.S. in Chemical Engineering from Rennes
Investor Relations
3
Confidential: Not for distribution or publicationSection 1 Company overview
SiteOne: transforming the landscape distribution industry
Company highlights 2016 net sales mix
■ Largest and only national By product category By end market By construction sector
wholesale distributor of Outdoor
Hardscapes Lighting Recreational
Repair &
landscape supplies 6% 4%
Upgrade & Other
Landscape Maintenance
18% 15% Residential
– More than four times the size Accessories
Irrigation
43%
54%
11%
of next competitor 33%
Nursery
– Approx. 10% market share 12%
New Commercial
Control Fertilizer
■ ~$17bn highly fragmented market Products & Other
Construction
39%
31%
17% 17%
■ Serving residential and
commercial landscape Key financials
professionals Net sales Adjusted EBITDA
1,800 1,648 140 134
■ Complementary value-add 1,500
1,452 120 107
services and product support 1,177 100
($ in millions)
($ in millions)
1,200 1,078
80 74
68
900
■ Over 100,000 SKUs 60
600
40
300 20
■ 478 branches in 45 states and 0 0
five provinces1 2013 2014 2015 2016 2013 2014 2015 2016
% margin 6.3% 6.3% 7.3% 8.1%
1 As of April 2, 2017 5
Source: Company filings, Management estimates
Confidential: Not for distribution or publicationSiteOne plays a critical role in the professional landscape supply value chain
Thousands Hundreds of thousands
of suppliers of customers
Critical business partner Small: ~18% of 2016 net sales
■ $200K in avg. annual
One-stop shop purchases
Source: Company data, Management estimates 6
Confidential: Not for distribution or publicationWe are the Only National One-stop Shop Provider in the Industry
Fertilizer Control Landscape Outdoor
Irrigation & Other Products Nursery Accessories Hardscapes Lighting
% of 2016 Sales 33% 17% 17% 12% 11% 6% 4%
Key Products
Key Suppliers
Market Position #1 #1 #1 #1 #1 #1 #1
Source: Management estimates, Company data; Wholesale outlets only
7
7 Confidential: Not for distribution or publicationSiteOne is poised for long-term growth and margin enhancement
Current strategy
Leverage strengths of both large and local company
■ Fully exploit our scale, resources and capabilities
■ Execute local market growth strategies
■ Deliver superior value to our customers and
suppliers
Value creation levers
■ Close and integrate high value-added acquisitions
■ Entrepreneurial local area teams supported by
world-class leadership and functional support 1) Organic growth
2) Margin expansion
Early innings of operational and commercial excellence 3) Acquisition growth
■ Category management
■ Pricing
■ Supply chain
■ Salesforce performance
■ Marketing
8
Confidential: Not for distribution or publicationProven management team driving performance and growth
Local leadership team Senior leadership team Functional excellence
Avg yrs % former Name Experience ■ Recently added top
industry contractors / industry talent from best-
Position #1 expertise golf super’int Doug Black
CEO & Director in-class companies
John Guthrie ■ Functional areas with
Regional EVP & CFO
11 24 18% recent hires include:
VP
Pascal Convers
EVP, Strategy, Development & IR
Finance
Ross Anker
Area EVP, Category Mgmt, Marketing & IT
45 23 64% Pricing
Manager
Briley Brisendine
General Counsel
Joseph Ketter
Area SVP, Human Resources
Category management
Business 34 19 59%
Manager Matt Hart
West Division President
Marketing
Jon Kerr
Branch North Division President
460 15 44%
Manager
Taylor Koch
South Division President Strategy
Jim Slomka
VP, Sales
Outside
~350 17 52% Supply chain
Sales Rep2 Greg Weller
SVP, Supply Chain
1 Excludes open positions. As of December 31, 2016 9
2 Includes Agronomic Sales Rep (ASR)
Source: Employee Survey Results, Company data
Confidential: Not for distribution or publicationSignificant room to grow across geographies and products
Number of MSAs
■ Well positioned in large,
fragmented and growing SiteOne #1 or #2 SiteOne All product
MSAs Total MSAs presence market position lines offered
– #1 or #2 local market 381
position in ~80% of
MSAs where SiteOne has
a presence
■ Significant “white space”
for growth
177
– SiteOne currently has a 381
1
presence in only ~46% 142
3
of total MSAs
– Full product line is 176
139 43
currently offered in only
12
~24% of the U.S. MSAs
31
where SiteOne has a
branch
Current 2014
Source: Company filings, Freedonia, Management estimates 10
Confidential: Not for distribution or publicationAcquisitions are a key part of the value creation strategy
■ Strengthens our business
Geographic footprint Growth, margin
Product expansion & cash flow
Market consolidation
improvement
Talent / capabilities
■ Significant synergies
Purchasing scale
Overhead leverage
Cross-selling
Branch network optimization Strategic
Commercial & operating best practices acquisitions
11
Confidential: Not for distribution or publicationRobust track record of acquisitions
2014 2015 2016 2017 YTD
Annualized sales1 ~$40M ~$230M ~$150M ~$95M
# branches added 18 50 29 20
Target Locations Strategic rationale
Bissett 3 locations in NY Led to #1 nursery position in Long Island & NYC
Glen Allen 1 location in VA #1 nursery position in the Richmond metro
Loma Vista 2 locations in MO & KS #1 nursery position in the Kansas City metro
Acquisitions
since IPO
East Haven 1 location in CT Strengthened #1 nursery position in New Haven, CT
Aspen Valley 3 locations in IL #1 landscape accessories and #2 hardscapes position in Chicago metro
Stone Forest 1 location in GA Strengthened #1 hardscapes position in Atlanta metro
Angelo’s 2 locations in MI #1 hardscapes position in Detroit metro
AB Supply 12 locations in CA and NV Leading hardscapes platform in Southern California and Las Vegas
Evergreen 2 locations in NC and SC #1 nursery position in Myrtle Beach and strengthened existing nursery position in Raleigh
1 Trailing twelve month revenues in the year acquired 12
Source: Company filings, Press release
Confidential: Not for distribution or publicationMarket example: Acquisitions made us a full-line supplier in Chicago
SiteOne Chicago market pre-acquisitions (FY14) SiteOne Chicago market post-acquisitions (FY16)
Irrigation
Irrigation Hardscapes 17%
37% 19%
Nursery
Lighting 12%
5% Landscape
Nursery Accessories Lighting
2% 20% 5%
Agronomics
Landscape
54%
Accessories Agronomics
3% 32%
SiteOne
Woodstock
Shemin
Aspen Valley
Geneva
Wheaton Chicago
Aurora Naperville
Joliet
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Confidential: Not for distribution or publicationRobust pipeline of opportunities provides accelerated growth
~10%
A SiteOne is a leading player in industry consolidation
B Significant sourcing advantage with 60+ associates scouting
C Our pipeline is deep and expanding ~90% opportunity
~$15bn1
D M&A team in place to execute larger pipeline
E Acquisitions are accretive and present significant profit growth potential
1 Represents 90% of the ~$17bn professional landscape supply industry not covered by SiteOne 14
Source: Company data, Management estimates
Confidential: Not for distribution or publicationSiteOne’s 2017 outlook
Underlying market trends remain positive
Sales & marketing initiatives expected to accelerate market share gains
Gross margin expansion expected to continue
SG&A as % of net sales expected to decline slightly
Expected acceleration of M&A activity from a robust pipeline
2017 Adjusted EBITDA expectation of $155 million to $165 million
Source: Company data 15
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