SiteOne Landscape Supply Inc

Previous wording

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. As 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., herbicides), hardscapes (including pavers, natural stone, and blocks), landscape accessories, nursery goods, outdoor lighting, and ice melt products to green industry professionals. We also provide value-added consultative services to complement our product offerings and to help our customers operate and grow their businesses.

Current wording

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. As of June 30, 2024, we had over 710 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., herbicides), hardscapes (including pavers, natural stone, and blocks), landscape accessories, nursery goods, outdoor lighting, and ice melt products to green industry professionals. We also provide value-added consultative services to complement our product offerings and to help our customers operate and grow their businesses.

Previous wording

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 expect prices to be down approximately 2%, which is at the high 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 impact of acquisitions. Net loss increased to $19.3 million for the three months ended March 31, 2024, compared to $4.5 million for the three months ended April 2, 2023, primarily due to lower gross margin and higher 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 positive changes in working capital for the first three months of 2024 compared to the same period of 2023.

Current wording

Economic headwinds, including soft demand driven primarily by a weaker repair and remodel end market as well as persistent commodity price deflation in select products, continued to be a challenge during the three and six months ended June 30, 2024. The discretionary impacts on our business, which are affected by current general economic conditions, have decreased outdoor living spending. We expect the current macroeconomic trends, including elevated interest rates, tighter financial markets, reduced consumer spending, deflation in select commodity products, and general market and political uncertainty to continue to put pressure on Net sales growth and Net income for the remainder of 2024. Against these headwinds, Organic Daily Sales decreased 3% and 2% for the three and six months ended June 30, 2024, respectively, primarily due to commodity price deflation. Overall, we estimate price deflation reduced Organic Daily Sales by 3% for the three and six months ended June 30, 2024. The negative price trend that began in the second half of the 2023 Fiscal Year is expected to continue through the remainder of 2024 and then stabilize as we move into 2025. We expect prices to be down approximately 3% for the 2024 Fiscal Year, which is higher than our initial anticipated range of 1% to 2%. For the three and six months ended June 30, 2024, we achieved Net sales growth of 4% and 6%, respectively, driven primarily by positive contributions from acquisitions. Gross margin decreased 10 and 40 basis points for the three and six months ended June 30, 2024, respectively, primarily due to lower price realization, partially offset by contributions from acquisitions with higher gross margins. Selling, general and administrative expenses (“SG&A”) increased 7% and 10% for the three and six months ended June 30, 2024, respectively, primarily due to the impact of acquisitions. Net income attributable to common shares decreased to $120.2 million and $100.9 million for the three and six months ended June 30, 2024, compared to $124.0 million and $119.5 million for the three and six months ended July 2, 2023, primarily due to lower gross margins and higher SG&A from acquisitions, partially offset by Net sales growth. Net cash provided by operating activities decreased to $48.1 million for the six months ended June 30, 2024, compared to $101.2 million for the six months ended July 3, 2023 as a result of larger seasonal increase in working capital during the first six months of 2024 compared to the same period of 2023.

Previous wording

As we continue to navigate through the current uncertainty presented by market and economic conditions, we believe that we are prepared to meet the challenges ahead due to our 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 moderating prices and softer markets resulting from the challenging market conditions described above as well as the potential effects of uncertain 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 2023 Fiscal Year for a discussion of the various risks that could have a material adverse effect on our reputation, business, financial position, results of operations, and cash flows.

Current wording

As we continue to navigate through the current uncertainty presented by market and economic conditions, we believe that we are prepared to meet the challenges ahead due to our well-balanced business, strong financial condition, dedicated and experienced teams, and focused business strategy. Our strong balance sheet and liquidity position provide us the flexibility to operate effectively and execute our growth strategy, as well as complete share repurchases through the evolving market conditions. We continue to closely monitor the impact on our business and the related uncertainties and risks of declining prices and softer markets resulting from the challenging market conditions described above as well as the potential effects of uncertain 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 2023 Fiscal Year for a discussion of the various risks that could have a material adverse effect on our reputation, business, financial position, results of operations, and cash flows.

Previous wording

Our financial statements included in this report have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). Our fiscal year is 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.

Current wording

Our financial statements included in this report have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). Our fiscal year is 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 June 30, 2024 and July 2, 2023 both included 13 weeks. The six months ended June 30, 2024 and July 2, 2023 both included 26 weeks.

Previous wording

Non-GAAP Adjusted EBITDA. In addition to the metrics discussed above, we believe that Adjusted EBITDA is useful for evaluating the operating performance and efficiency of our business. EBITDA represents our Net income (loss) plus the sum of income tax (benefit) expense, interest expense, net of interest income, and depreciation and amortization. Adjusted EBITDA represents EBITDA as further adjusted for items such as stock-based compensation expense, (gain) loss on sale of assets and termination of finance leases not in the ordinary course of business, financing fees, as well as other fees and expenses related to acquisitions, and other non-recurring (income) loss. Refer to “Results of Operations – Quarterly Results of Operations Data” for more information regarding how we calculate EBITDA and Adjusted EBITDA and the limitations of those metrics.

Current wording

Non-GAAP Adjusted EBITDA. In addition to the metrics discussed above, we believe that Adjusted EBITDA is useful for evaluating the operating performance and efficiency of our business. EBITDA represents consolidated Net income (loss) plus the sum of income tax (benefit) expense, interest expense, net of interest income, and depreciation and amortization. Adjusted EBITDA represents EBITDA as further adjusted for items such as stock-based compensation expense, (gain) loss on sale of assets and termination of finance leases not in the ordinary course of business, financing fees, as well as other fees and expenses related to acquisitions, and other non-recurring (income) loss. Adjusted EBITDA includes Adjusted EBITDA attributable to non-controlling interest. Refer to “Results of Operations – Quarterly Results of Operations Data” for more information regarding how we calculate EBITDA and Adjusted EBITDA and the limitations of those metrics.

Previous wording

In the following discussion of our results of operations, we make comparisons between the three months ended March 31, 2024 and April 2, 2023 (in millions, except percentages).

Current wording

In the following discussion of our results of operations, we make comparisons between the three and six months ended June 30, 2024 and July 2, 2023 (in millions, except percentages).

Previous wording

Net sales for the three months ended March 31, 2024 increased 8% to $904.8 million as compared to $837.4 million for the three months ended April 2, 2023 primarily due to contributions from acquisitions. Organic Daily Sales for the first quarter of 2024 increased by 1% compared to the 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.

Current wording

Net sales for the three months ended June 30, 2024 increased 4% to $1,413.9 million as compared to $1,353.7 million for the three months ended July 2, 2023, and increased 6% to $2,318.7 million compared to $2,191.1 million for the six months ended June 30, 2024. These increases were primarily due to contributions from acquisitions. Organic Daily Sales decreased 3% in the second quarter of 2024 and 2% in the first half of 2024, primarily due to soft demand and commodity price deflation. Based upon year-over-year price changes in our highest selling SKUs, we estimate price deflation reduced Organic Daily Sales by 3% for the three and six months ended June 30, 2024. Organic Daily Sales for agronomic products (fertilizer, control products, ice melt, equipment, and other products) decreased 1% in the second quarter of 2024 primarily due to price deflation, and increased 4% in the first half of 2024 primarily due to strong volume growth resulting from lower prices and solid end market demand. Organic Daily Sales for landscaping products (irrigation supplies, hardscapes, landscape accessories, nursery goods, and outdoor lighting) decreased 4% in the second quarter of 2024 and 3% in the first half of 2024 reflecting price deflation and weaker demand in the repair and remodel end market. Acquisitions contributed $103.2 million, or 8%, to the Net sales growth for the second quarter of 2024 and $165.7 million, or 8%, to the Net sales growth for the six months ended June 30, 2024.

Previous wording

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 April 2, 2023. The increase in Cost of goods sold was primarily attributable to acquisitions.

Current wording

Cost of goods sold increased 5% to $903.6 million for the three months ended June 30, 2024 compared to $864.3 million for the three months ended July 2, 2023, and increased 7% to $1,507.2 million for the six months ended June 30, 2024 compared to $1,414.6 million for the six months ended July 2, 2023. The increase in Cost of goods sold for the three and six months ended June 30, 2024 was primarily attributable to acquisitions.

Previous wording

Gross profit for the three months ended March 31, 2024 increased 5% to $301.2 million compared to $287.1 million for the three months ended April 2, 2023. Gross profit growth was driven by Net sales growth, including acquisitions. Gross margin decreased 100 basis points to 33.3% for the first quarter of 2024 as compared to 34.3% for the first quarter of 2023. The decrease in gross margin is primarily due to lower price realization, partially offset by contributions from acquisitions with higher gross margins.

Current wording

Gross profit increased 4% to $510.3 million for the three months ended June 30, 2024 compared to $489.4 million for the three months ended July 2, 2023, and increased 5% to $811.5 million for the six months ended June 30, 2024 compared to $776.5 million for the six months ended July 2, 2023. Gross profit growth was driven by Net sales growth, including acquisitions. Gross margin decreased 10 basis points to 36.1% for the second quarter of 2024 as compared to 36.2% for the second quarter of 2023 and decreased 40 basis points to 35.0% for the six months ended June 30, 2024 compared to 35.4% for the six months ended July 2, 2023. The decrease in gross margin is primarily due to lower price realization, partially offset by contributions from acquisitions with higher gross margins.

Previous wording

Income tax benefit was $9.7 million for the three months ended March 31, 2024 as compared to $2.7 million for the three months ended April 2, 2023. The effective tax rate was 33.4% for the first quarter of 2024 as compared to 37.5% for the first quarter of 2023. The change in the effective tax rate was primarily due to an increase in the amount of excess tax benefits from stock-based compensation recognized as a component of Income tax benefit in the Consolidated Statements of Operations. Excess tax benefits of $2.3 million were recognized for the first quarter of 2024 as compared to $0.8 million for the first quarter of 2023.

Current wording

Income tax expense was $30.3 million for the six months ended June 30, 2024 as compared to $37.3 million for the six months ended July 2, 2023. The effective tax rate was 23.0% for the six months ended June 30, 2024 compared to 23.8% for the six months ended July 2, 2023. The decrease in the effective tax rate was primarily due to an increase in the amount of excess tax benefits from stock-based compensation recognized as a component of Income tax expense in the Consolidated Statements of Operations. Excess tax benefits of $2.8 million were recognized for the six months ended June 30, 2024 as compared to $1.9 million for the six months ended July 2, 2023.

Previous wording

Net loss for the three months ended March 31, 2024 increased $14.8 million to $19.3 million as compared to $4.5 million for the three months ended April 2, 2023. The increase in Net loss was primarily due to lower gross margins and higher SG&A, partially offset by an increase in Net sales.

Current wording

Net income attributable to common shares decreased $3.8 million to $120.2 million for the three months ended June 30, 2024 as compared to $124.0 million for the three months ended July 2, 2023, and decreased $18.6 million to $100.9 million for the six months ended June 30, 2024 compared to $119.5 million for the six months ended July 2, 2023. The decrease in net income attributable to common shares for the three and six months ended June 30, 2024 was primarily due to higher SG&A from acquisitions and lower gross margins, partially offset by an increase in Net sales.

Previous wording

(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:

Current wording

(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 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:

Previous wording

•does not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; and

Current wording

•does not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments;

Previous wording

(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.

Current wording

(d) Represents the cost of inventory that was stepped up to fair value during the purchase accounting related to Devil Mountain, and also includes professional fees, performance bonuses, and retention and severance payments related to historical acquisitions. Although we have incurred purchase accounting adjustments, professional fees, performance bonuses, and retention and severance payments related to acquisitions in 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 Cost of goods sold and Selling, general and administrative expenses in the Consolidated Statements of Operations.

Previous wording

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

Current wording

(e) Adjusted EBITDA excludes any earnings or loss of acquisitions prior to their respective acquisition dates for all periods presented. Adjusted EBITDA includes Adjusted EBITDA attributable to non-controlling interest of $0.9 million for the second quarter of 2024.

Previous wording

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.

Current wording

In October 2022, our Board of Directors approved a share repurchase authorization for up to $400.0 million of our common stock. We intend to purchase shares under the repurchase authorization from time to time on the open market at the discretion of management, subject to strategic considerations, market conditions, and other factors. The share repurchase authorization does not have an expiration date and may be amended, suspended, or terminated by our Board of Directors at any time. During the three and six months ended June 30, 2024, we repurchased 128,922 shares of our common stock at an average price per share of $153.84. As of June 30, 2024, the dollar value of shares that may yet be purchased under the share repurchase authorization was $343.8 million.

Previous wording

Our borrowing base capacity under the ABL Facility was $497.6 million as of March 31, 2024, after giving effect to $83.6 million of revolving credit loans under the ABL Facility and outstanding letters of credit of $18.8 million. Our borrowing base capacity under the ABL Facility was $578.2 million as of December 31, 2023, after giving effect to $7.5 million of revolving credit loans under the ABL Facility and outstanding letters of credit of $14.3 million. As of March 31, 2024, we had total cash and cash equivalents of $41.5 million, total gross long-term debt of $453.8 million, and total finance lease obligations (excluding interest) of $101.5 million.

Current wording

Our borrowing base capacity under the ABL Facility was $470.6 million as of June 30, 2024, after giving effect to $110.6 million of revolving credit loans under the ABL Facility and outstanding letters of credit of $18.8 million. Our borrowing base capacity under the ABL Facility was $578.2 million as of December 31, 2023, after giving effect to $7.5 million of revolving credit loans under the ABL Facility and outstanding letters of credit of $14.3 million. As of June 30, 2024, we had total cash and cash equivalents of $71.9 million, total gross long-term debt of $485.6 million, and total finance lease obligations (excluding interest) of $115.3 million.

Previous wording

Working capital was $910.0 million as of March 31, 2024, an increase of $83.0 million compared to $827.0 million as of December 31, 2023. The change in working capital was primarily attributable to the seasonality of our business.

Current wording

Working capital was $1,006.6 million as of June 30, 2024, an increase of $179.6 million compared to $827.0 million as of December 31, 2023. The change in working capital was primarily attributable to the seasonality of our business.

Previous wording

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 our 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 $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.

Current wording

Our gross long-term debt balance increased $106.6 million since December 31, 2023. This increase was primarily attributable to funding the seasonal increase in our working capital and our acquisition investments. We have current maturities on our long-term debt of $4.9 million, which includes $3.8 million related to the term loan facility and $1.1 million related to the hybrid debt instruments. The projected interest payments on our debt only pertain to obligations and agreements outstanding as of June 30, 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 June 30, 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 $12.5 million since December 31, 2023 to $124.9 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.

Previous wording

Net cash used in operating activities for the three months ended March 31, 2024 was $99.3 million compared to $152.6 million for the three months ended April 2, 2023. The decrease in cash used in operating activities reflects a lower seasonal investment in working capital.

Current wording

Net cash provided by operating activities for the six months ended June 30, 2024 was $48.1 million compared to $101.2 million for the six months ended July 2, 2023. The decrease in cash provided by operating activities reflects a larger seasonal increase in working capital.

Previous wording

Net cash used in investing activities was $7.3 million for the three months ended March 31, 2024 compared to $39.6 million for the three months ended April 2, 2023. The decrease reflects no acquisition investments in the first three months of 2024 compared to $33.2 million for the same period of 2023. Capital expenditures were $8.9 million for the first three months of 2024 compared to $7.1 million for the same period of 2023 due to increased investment in material handling equipment used in our branches.

Current wording

Net cash used in investing activities was $119.8 million for the six months ended June 30, 2024 compared to $74.9 million for the six months ended July 2, 2023. The increase reflects higher acquisition investments in the first six months of 2024 compared to the same period of 2023. Capital expenditures were $21.0 million for the first six months of 2024 compared to $16.3 million for the same period of 2023 due to increased investment in material handling equipment used in our branches.

Previous wording

On March 27, 2023, Landscape Holding entered into the Sixth Amendment, which amended the Second Amended and Restated Credit Agreement to implement a forward-looking interest rate based on SOFR in lieu of LIBOR. The New Term Loans bear interest, at Landscape Holding’s option, at either (i) an adjusted Term SOFR rate plus an applicable margin equal to 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 equal to 1.00%. Voluntary prepayments of the New Term Loans are permitted at any time, in minimum principal amounts, without premium or penalty, unless in connection with certain repricing transactions that occurred within the first 12 months after the date of the initial funding of the New Term Loans. The interest rate on the outstanding balance of the New Term Loans was 7.44464% as of March 31, 2024.

Current wording

On March 27, 2023, Landscape Holding entered into the Sixth Amendment, which amended the Second Amended and Restated Credit Agreement to implement a forward-looking interest rate based on SOFR in lieu of LIBOR. The New Term Loans bear interest, at Landscape Holding’s option, at either (i) an adjusted Term SOFR rate plus an applicable margin equal to 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 equal to 1.00%. Voluntary prepayments of the New Term Loans are permitted at any time, in minimum principal amounts, without premium or penalty, unless in connection with certain repricing transactions that occurred within the first 12 months after the date of the initial funding of the New Term Loans. The interest rate on the outstanding balance of the New Term Loans was 7.45841% as of June 30, 2024.

Previous wording

The interest rate on outstanding balances under the ABL Facility ranged from 6.54483% to 6.55167% as of March 31, 2024 and was 6.69508% as of December 31, 2023. The commitment fee paid on unfunded amounts was 0.25% and 0.25% as of March 31, 2024 and December 31, 2023, respectively.

Current wording

The interest rate on outstanding balances under the ABL Facility ranged from 6.55130% to 6.55252% as of June 30, 2024 and was 6.69508% as of December 31, 2023. The commitment fee paid on unfunded amounts was 0.25% and 0.25% as of June 30, 2024 and December 31, 2023, respectively.

Previous wording

During the first quarter of 2021, we amended and restructured certain of our interest rate swap contracts using a strategy referred to as a “blend and extend”. 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 31, 2024, the outstanding amount of $1.5 million was classified as Long-term debt, current portion on our Consolidated Balance Sheets.

Current wording

During the first quarter of 2021, we amended and restructured certain of our interest rate swap contracts using a strategy referred to as a “blend and extend”. 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. As of June 30, 2024, the outstanding amount of $1.1 million was classified as Long-term debt, current portion on our Consolidated Balance Sheets.