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 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.

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 September 29, 2024, we had over 700 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 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.

Current wording

The third quarter and first nine months of 2024 presented ongoing economic challenges, characterized by weakness in the repair and upgrade end market and commodity price deflation, particularly in PVC pipe and grass seed. Consumer discretionary spending on outdoor living has declined amid the current economic environment. While the Federal Reserve’s 50 basis point rate cut late in the third quarter provided some relief, we anticipate continued pressure on Net sales growth and Net income through the remainder of 2024 due to elevated interest rates, tighter financial markets, reduced consumer spending, persistent commodity price deflation, and general market and political uncertainty. Organic Daily Sales declined 1% and 2% for the three and nine months ended September 29, 2024, respectively, with price deflation reducing Organic Daily Sales by approximately 3% in both periods. Net sales grew 6% for the three and nine months ended September 29, 2024, respectively, primarily driven by acquisitions. The negative pricing trend that began in the second half of the 2023 Fiscal Year is expected to persist through the remainder of 2024, with price deflation projected to be approximately 3% for the 2024 Fiscal Year, exceeding our initial anticipated range of down 1% to 2%. Gross margin increased 10 basis points in the third quarter and decreased 20 basis points for the nine-month period ended September 29, 2024. The positive impact from higher-margin acquisitions was offset by lower price realization on a year-to-date basis. Selling, general and administrative expenses (“SG&A”) increased 12% and 10% for the three and nine months ended September 29, 2024, respectively, primarily reflecting the impact of acquisitions. Net income attributable to SiteOne decreased to $44.4 million in the third quarter of 2024 from $57.3 million in the same period of 2023, and declined to $145.3 million for the nine months ended September 29, 2024, from $176.8 million for the same prior year period. These decreases were primarily due to lower price realization and the Organic Daily Sales decrease resulting from price deflation. Net cash provided by operating activities decreased to $164.0 million for the nine months ended September 29, 2024, compared to $189.9 million for the same prior year period, reflecting the decline in Net income.

Previous wording

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 long-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 operational in four distribution center facilities across the United States that expanded our supply chain capacity in 2023.

Current wording

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. However, the long-term outlook for the landscape supply industry remains strong, driven by favorable population trends, housing demand, reduced levels of inflation, moderation of interest rates, and continued 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.

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 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.

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 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 upcoming 2024 elections, the ongoing war in Ukraine, the conflict in the Gaza Strip, and general 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 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.

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 September 29, 2024 and October 1, 2023 both included 13 weeks. The nine months ended September 29, 2024 and October 1, 2023 both included 39 weeks.

Previous 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).

Current wording

In the following discussion of our results of operations, we make comparisons between the three and nine months ended September 29, 2024 and October 1, 2023 (in millions, except percentages).

Previous 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.

Current wording

Net sales for the three months ended September 29, 2024 increased 6% to $1,208.8 million as compared to $1,145.1 million for the three months ended October 1, 2023, and increased 6% to $3,527.5 million for the nine months ended September 29, 2024 compared to $3,336.2 million for the nine months ended October 1, 2023. These increases were primarily due to contributions from acquisitions. Organic Daily Sales decreased 1% in the third quarter of 2024 and 2% for the nine months ended September 29, 2024 primarily due to 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 nine months ended September 29, 2024. Organic Daily Sales for agronomic products (fertilizer, control products, ice melt, equipment, and other products) increased 2% in the third quarter of 2024 and increased 3% for the nine months ended September 29, 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 2% in the third quarter of 2024 and 3% for the nine months ended September 29, 2024 reflecting price deflation and weaker demand in the repair and remodel end market. Acquisitions contributed $77.3 million, or 7%, to the Net sales growth for the third quarter of 2024 and $243.0 million, or 7%, to the Net sales growth for the nine months ended September 29, 2024.

Previous 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.

Current wording

Cost of goods sold increased 5% to $797.8 million for the three months ended September 29, 2024 compared to $757.0 million for the three months ended October 1, 2023, and increased 6% to $2,305.0 million for the nine months ended September 29, 2024 compared to $2,171.6 million for the nine months ended October 1, 2023. The increase in Cost of goods sold for the three and nine months ended September 29, 2024 was primarily attributable to acquisitions.

Previous 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.

Current wording

Gross profit increased 6% to $411.0 million for the three months ended September 29, 2024 compared to $388.1 million for the three months ended October 1, 2023, and increased 5% to $1,222.5 million for the nine months ended September 29, 2024 compared to $1,164.6 million for the nine months ended October 1, 2023. Gross profit growth was driven by Net sales growth, including acquisitions. Gross margin increased 10 basis points to 34.0% for the third quarter of 2024 as compared to 33.9% for the third quarter of 2023 primarily due to contributions from acquisitions with higher gross margins, partially offset by lower price realization. Gross margin decreased 20 basis points to 34.7% for the nine months ended September 29, 2024 compared to 34.9% for the nine months ended October 1, 2023. The decrease in gross margin is primarily due to lower price realization.

Previous wording

SG&A increased 7% to $343.8 million for the three months ended June 30, 2024 compared to $320.6 million for the three months ended July 2, 2023, and increased 10% to $671.5 million for the six months ended June 30, 2024 compared to $612.0 million for the six months ended July 2, 2023. SG&A as a percentage of Net sales increased 60 basis points to 24.3% for the for the three months ended June 30, 2024 compared to 23.7% for the second quarter of 2023, and increased 110 basis points to 29.0% for the six months ended June 30, 2024 compared to 27.9% for the six months ended July 2, 2023. These increases were primarily due to the impact of acquisitions. Depreciation and amortization expense increased $3.6 million to $34.6 million for the three months ended June 30, 2024, compared to $31.0 million for the three months ended July 2, 2023, and increased $5.7 million to $67.5 million for the six months ended June 30, 2024 compared to $61.8 million for the six months ended July 2, 2023. The increase in depreciation and amortization for the three and six months ended June 30, 2024 was primarily attributable to our acquisitions.

Current wording

SG&A increased 12% to $349.1 million for the three months ended September 29, 2024 compared to $311.8 million for the three months ended October 1, 2023, and increased 10% to $1,020.6 million for the nine months ended September 29, 2024 compared to $923.8 million for the nine months ended October 1, 2023. SG&A as a percentage of Net sales increased 170 basis points to 28.9% for the three months ended September 29, 2024 compared to 27.2% for the third quarter of 2023, and increased 120 basis points to 28.9% for the nine months ended September 29, 2024 compared to 27.7% for the nine months ended October 1, 2023. These increases were primarily due to the impact of acquisitions. Depreciation and amortization expense increased $4.6 million to $35.9 million for the three months ended September 29, 2024, compared to $31.3 million for the three months ended October 1, 2023, and increased $10.3 million to $103.4 million for the nine months ended September 29, 2024 compared to $93.1 million for the nine months ended October 1, 2023. The increase in depreciation and amortization for the three and nine months ended September 29, 2024 was primarily attributable to our acquisitions.

Previous wording

Interest and other non-operating expenses, net increased $1.7 million to $9.0 million for the three months ended June 30, 2024 compared to $7.3 million for the three months ended July 2, 2023, and increased $1.5 million to $15.7 million for the six months ended June 30, 2024 compared to $14.2 million for the six months ended July 2, 2023. The increase in interest expense was primarily due to increased borrowings during the three and six months ended June 30, 2024 as compared to the same periods of 2023.

Current wording

Interest and other non-operating expenses, net increased $3.1 million to $9.5 million for the three months ended September 29, 2024 compared to $6.4 million for the three months ended October 1, 2023, and increased $4.6 million to $25.2 million for the nine months ended September 29, 2024 compared to $20.6 million for the nine months ended October 1, 2023. The increase in interest expense was primarily due to higher average borrowings and the Loss on extinguishment of debt of $1.8 million during the three and nine months ended September 29, 2024 as compared to the same periods of 2023.

Previous wording

Income tax expense was $40.0 million for both the three months ended June 30, 2024 and the three months ended July 2, 2023. The effective tax rate was 24.9% for the three months ended June 30, 2024 compared to 24.4% for the three months ended July 2, 2023. The increase in the effective tax rate was primarily due to a decrease in the amount of excess tax benefits from stock-based compensation recognized as a component of Income tax expense in the Consolidated Statements of Operations. Excess tax benefits of $0.5 million were recognized for the three months ended June 30, 2024 as compared to $1.1 million for the three months ended July 2, 2023.

Current wording

Income tax expense was $15.8 million the three months ended September 29, 2024 compared to $17.5 million for the three months ended October 1, 2023. The effective tax rate was 26.2% for the three months ended September 29, 2024 compared to 23.4% for the three months ended October 1, 2023. The increase in the effective tax rate was primarily due to a decrease in the amount of excess tax benefits from stock-based compensation recognized as a component of Income tax expense in the Consolidated Statements of Operations. Excess tax benefits of $0.1 million were recognized for the three months ended September 29, 2024 as compared to $2.4 million for the three months ended October 1, 2023.

Previous 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.

Current wording

Income tax expense was $46.1 million for the nine months ended September 29, 2024 as compared to $54.8 million for the nine months ended October 1, 2023. The effective tax rate was 24.0% for the nine months ended September 29, 2024 compared to 23.7% for the nine months ended October 1, 2023. The increase in the effective tax rate was primarily due to a decrease in the amount of excess tax benefits from stock-based compensation recognized as a component of Income tax expense in the Consolidated Statements of Operations. Excess tax benefits of $2.9 million were recognized for the nine months ended September 29, 2024 as compared to $4.3 million for the nine months ended October 1, 2023.

Previous wording

Net income attributable to non-controlling interest was $0.4 million for the three and six months ended June 30, 2024 as a result of the acquisition of Devil Mountain. There was no Net income attributable to non-controlling interest for the three and six months ended July 2, 2023.

Current wording

Net income attributable to non-controlling interest was $0.2 million for the three months ended September 29, 2024 and $0.6 million for the nine months ended September 29, 2024 as a result of the acquisition of Devil Mountain. There was no Net income attributable to non-controlling interest for the three and nine months ended October 1, 2023.

Previous 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.

Current wording

(d) Represents professional fees, performance bonuses, and retention and severance payments related to historical acquisitions, as well as the cost of inventory that was stepped up to fair value during the second quarter of 2024 related to the purchase accounting of Devil Mountain. 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. Adjusted EBITDA includes Adjusted EBITDA attributable to non-controlling interest of $0.9 million for the second quarter of 2024.

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 $0.8 million and $0.9 million for the third and second quarter of 2024, respectively.

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 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.

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 nine months ended September 29, 2024, we repurchased 143,022 shares of our common stock at an average price per share of $151.46. As of September 29, 2024, the dollar value of shares that may yet be purchased under the share repurchase authorization was $342.0 million.

Previous 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.

Current wording

Our borrowing base capacity under the ABL Facility was $561.2 million as of September 29, 2024, after giving effect to $20.0 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 September 29, 2024, we had total cash and cash equivalents of $85.5 million, total gross long-term debt of $416.0 million, and total finance lease obligations (excluding interest) of $124.2 million.

Previous 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.

Current wording

Working capital was $991.7 million as of September 29, 2024, an increase of $164.7 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 $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.

Current wording

Our gross long-term debt balance increased $37.0 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 $4.7 million, which includes $4.0 million related to the term loan facility and $0.7 million related to the hybrid debt instruments. The projected interest payments on our debt only pertain to obligations and agreements outstanding as of September 29, 2024 and expected payments for agent administration fees. The projected interest payments are calculated for future periods through maturity dates of our long-term debt using interest rates in effect as of September 29, 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 $41.5 million since December 31, 2023 to $153.9 million, primarily due to the extension of the maturity date of the term loan facility as well as the increase in borrowings under the term loan 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 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.

Current wording

Net cash provided by operating activities for the nine months ended September 29, 2024 was $164.0 million compared to $189.9 million for the nine months ended October 1, 2023. The decrease in cash provided by operating activities primarily reflects a decline in Net income during the first nine months of 2024 compared to the same period of 2023.

Previous 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.

Current wording

Net cash used in investing activities was $140.3 million for the nine months ended September 29, 2024 compared to $209.2 million for the nine months ended October 1, 2023. The decrease reflects lower acquisition investments in the first nine months of 2024 compared to the same period of 2023. Capital expenditures were $31.0 million for the first nine months of 2024 compared to $24.1 million for the same period of 2023 due to increased investment in branch improvements and information technology.

Previous wording

Cash flow provided by financing activities

Current wording

Cash flow (used in) provided by financing activities

Previous wording

Net cash provided by financing activities was $61.4 million for the six months ended June 30, 2024 compared to $14.0 million for the six months ended July 2, 2023. The increase primarily reflects higher borrowings under the ABL Facility to fund the larger seasonal increase in working capital and our acquisition investments during the first six months of 2024 compared to the same period of 2023.

Current wording

Net cash used in financing activities was $(20.5) million for the nine months ended September 29, 2024 compared to net cash provided by financing activities of $65.1 million for the nine months ended October 1, 2023. The change in cash flows from financing activities primarily reflects lower borrowings to fund our acquisition investments during the first nine months of 2024 compared to the same period of 2023.

Previous wording

Landscape Holding and Landscape, as borrowers (collectively, the “Borrowers”), entered into the Fifth Amendment to the Amended and Restated Credit Agreement, the (“Fifth Amendment”), dated as of March 23, 2021, with 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, incur $325.0 million of term loans (the “New Term Loans”). The New Term Loans mature on March 23, 2028.

Current wording

Landscape Holding and Landscape, as borrowers (collectively, the “Borrowers”), entered into the Fifth Amendment to the Amended and Restated Credit Agreement, the (“Fifth Amendment”), dated as of March 23, 2021, with 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, incur $325.0 million of term loans (the “New Term Loans”).

Previous wording

Subject to certain conditions, without the consent of the then existing lenders (but subject to the receipt of commitments), the New Term Loans may be increased (or a new term loan facility, revolving credit facility, or letter of credit facility added) by up to (i) the greater of (a) $275.0 million and (b) 100% of Consolidated EBITDA (as defined in the Second Amended and Restated Credit Agreement) for the trailing 12-month period plus (ii) an additional amount that will not cause the net secured leverage ratio after giving effect to the incurrence of such additional amount and any use of proceeds thereof to exceed 4.00 to 1.00.

Current wording

Subject to certain conditions, without the consent of the then existing lenders (but subject to the receipt of commitments), the Tranche B Term Loans may be increased (or a new term loan facility, revolving credit facility, or letter of credit facility added) by up to (i) the greater of (a) $392.0 million and (b) 100% of Consolidated EBITDA (as defined in the Second Amendment) for the trailing 12-month period plus (ii) an additional amount that will not cause the net secured leverage ratio after giving effect to the incurrence of such additional amount and any use of proceeds thereof to exceed 4.00 to 1.00.

Previous wording

The New Term Loans are subject to mandatory prepayment provisions, covenants, and events of default. Failure to comply with these covenants and other provisions could result in an event of default under the Second Amended and Restated Credit Agreement. If an event of default occurs, the lenders could elect to declare all amounts outstanding under the New Term Loans to be immediately due and payable and enforce their interest in collateral pledged under the agreement.

Current wording

The Tranche B Term Loans are subject to mandatory prepayment provisions, covenants, and events of default. Failure to comply with these covenants and other provisions could result in an event of default under the Second Amendment. If an event of default occurs, the lenders could elect to declare all amounts outstanding under the Tranche B Term Loans to be immediately due and payable and enforce their interest in collateral pledged under the agreement.

Previous wording

On July 2, 2024, Landscape Holding and Landscape entered into the Second Amendment to the Second Amended and Restated Credit Agreement (the “Second Amendment”) that amends and restates the Second Amended and Restated Credit Agreement, dated as of March 23, 2021. The Second Amendment provides for an aggregate principal amount of approximately $392.7 million in term loans (“Tranche B Term Loans”), and makes certain other changes to the existing credit agreement. Proceeds of the Tranche B Term Loans were used, among other things, (i) to repay in full the term loans outstanding immediately prior to the effectiveness of the Second Amendment, (ii) to pay fees, costs and expenses related to the foregoing transactions, and (iii) to finance the working capital, capital expenditures, business requirements and for general corporate purposes of Holding and its subsidiaries. The Tranche B Term Loans bear interest, at Landscape Holding’s option, at either (i) an adjusted Term SOFR rate plus an applicable margin equal to 1.75% (with a Term SOFR floor of 0.50%) or (ii) an alternative base rate plus an applicable margin equal to 0.75%. Voluntary prepayments of the Tranche B Term Loans are permitted at any time, in minimum principal amounts, without premium or penalty, unless in connection with certain repricing transactions that occur within the first six-months after the date of effectiveness of the Second Amendment. The Tranche B Term Loans will mature on March 22, 2030.

Current wording

On July 2, 2024, Landscape Holding and Landscape entered into the Second Amendment that amends and restates the Second Amended and Restated Credit Agreement, dated as of March 23, 2021. The Second Amendment provides for, among other things, an aggregate principal amount of approximately $392.7 million in Tranche B Term Loans, and makes certain other changes to the existing credit agreement. Proceeds of the Tranche B Term Loans were used, among other things, (i) to repay in full the term loans outstanding immediately prior to the effectiveness of the Second Amendment, (ii) to repay certain loans outstanding under the ABL Facility, and (iii) to pay fees, costs, and expenses related to the foregoing transactions. The Tranche B Term Loans bear interest, at Landscape Holding’s option, at either (i) an adjusted Term SOFR rate plus an applicable margin equal to 1.75% (with a Term SOFR floor of 0.50%) or (ii) an alternative base rate plus an applicable margin equal to 0.75%. Voluntary prepayments of the Tranche B Term Loans are permitted at any time, in minimum principal amounts, without premium or penalty, unless in connection with certain repricing transactions that occur within the first six-months after the date of effectiveness of the Second Amendment. The Tranche B Term Loans will mature on March 22, 2030. The interest rate on the outstanding balance of the Tranche B Term Loans was 6.95055% as of September 29, 2024.

Previous wording

On July 12, 2023, Landscape Holding, as representative for the Borrowers, entered into the Increase Supplement, which 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 JPMorgan Chase Bank, N.A. Proceeds of the term loans borrowed pursuant to the Increase Supplement were used, among other things, to (i) repay certain loans outstanding under the ABL Facility and (ii) pay fees and expenses related to the Increase Supplement. The maturity date of the New Term Loans of March 23, 2028 did not change as a result of the Increase Supplement.

Current wording

On July 12, 2023, Landscape Holding, as representative for the Borrowers, entered into the Increase Supplement, which 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 JPMorgan Chase Bank, N.A. Proceeds of the term loans borrowed pursuant to the Increase Supplement were used, among other things, to (i) repay certain loans outstanding under the ABL Facility and (ii) pay fees and expenses related to the Increase Supplement.

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 7.45841% as of June 30, 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 bore 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%.

Previous wording

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:

Current wording

The Second Amendment contains customary representations and warranties and customary affirmative and negative covenants. The negative covenants limit the ability of Landscape Holding and Landscape to:

Previous 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.

Current wording

The interest rates on outstanding balances under the ABL Facility were 6.33577% as of September 29, 2024 and 6.69508% as of December 31, 2023. The commitment fees on unfunded amounts were 0.25% and 0.25% as of September 29, 2024 and December 31, 2023, respectively.

Previous wording

Loans under the Devil Mountain ABL facility bear interest at either (i) an adjusted term SOFR rate equal to term SOFR plus an applicable margin of 1.90% or 2.10% or (ii) an alternate base rate plus an applicable margin of 0.80% or 1.00%, subject to a 0.20% reduction when the Fixed Charge Coverage Ratio (as defined in the Devil Mountain ABL Facility) is greater than 2.00:1.00. Additionally, undrawn commitments under the Devil Mountain ABL Facility bear a commitment fee of 0.25% on the actual undrawn portion of the commitments under the Devil Mountain ABL Facility based upon the daily utilization for the previous quarter. The interest rate on the outstanding balance under the Devil Mountain ABL Facility was 7.42918% as of June 30, 2024.

Current wording

Loans under the Devil Mountain ABL facility bear interest at either (i) an adjusted term SOFR rate equal to term SOFR plus an applicable margin of 1.90% or 2.10% or (ii) an alternate base rate plus an applicable margin of 0.80% or 1.00%, subject to a 0.20% reduction when the Fixed Charge Coverage Ratio (as defined in the Devil Mountain ABL Facility) is greater than 2.00:1.00. Additionally, undrawn commitments under the Devil Mountain ABL Facility bear a commitment fee of 0.25% on the actual undrawn portion of the commitments under the Devil Mountain ABL Facility based upon the daily utilization for the previous quarter. The interest rate on the outstanding balance under the Devil Mountain ABL Facility was 7.30055% as of September 29, 2024.

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. 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.

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 September 29, 2024, the outstanding amount of $0.7 million was classified as Long-term debt, current portion on our Consolidated Balance Sheets.