SiteOne Landscape Supply (NYSE: SITE) reported Q3 EPS of $0.70, $0.02 worse than the analyst estimate of $0.72. Revenue for the quarter came in at $578.5 million versus the consensus estimate of $590.68 million.

• Net sales increased by 15% to $578.5 million
• Organic Daily Sales increased by 5%
• Gross profit increased by 19% to $191.0 million; gross margin expanded 110 basis points to 33.0%
• Net income increased by 77% to $29.9 million
• Adjusted EBITDA increased by 24% to $60.0 million; Adjusted EBITDA margin expanded by 80 basis points to 10.4%
• Net cash flow provided by operating activities increased by 310% to $70.1 million
• Completed four acquisitions: Landscape Express, Kirkwood, Stone Center, and CentralPro with approximately $75 million in combined annualized revenue

Outlook

“Our fall season has been impacted by hurricanes and wet weather in certain key markets which is preventing our customers from making up the spring shortfall,” Doug Black continued. “Additionally, the short-term dampening effect of significant cost inflation has impeded our gross margin improvement for the full year. As a result, we are updating our 2018 Adjusted EBITDA guidance to be in the range of $175 million to $180 million.

“Looking forward, we see solid underlying market conditions supported by robust customer backlogs and we expect the above average cost inflation to continue. Accordingly, we expect our base business organic sales growth to remain steady and the market growth to extend into 2019. We are well-positioned to improve gross margin while beginning to achieve operating leverage on SG&A – both of which should support good adjusted EBITDA expansion in 2019 and beyond.”

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