Group 1 - SITE Centers (NYSE: SITC) has underperformed in 2025, delivering a negative return of approximately 16% compared to the Vanguard Real Estate Index Fund ETF (VNQ) and Curbline Properties (CURB) [1] - The investment strategy includes a focus on REITs, preferred stocks, and high-yield bonds, with a long-term fundamental approach [1] Group 2 - The article expresses a beneficial long position in CBL shares, indicating a personal investment interest [2] - The content reflects the author's opinions and is not influenced by compensation from any mentioned companies [2]

Core Viewpoint - SITE Centers Corp. reported disappointing fourth-quarter 2024 results, with significant declines in both revenues and operating funds from operations (OFFO) per share, leading to a 5.03% drop in share price on the NYSE [1][2]. Financial Performance - The company generated revenues of $32.9 million, missing the Zacks Consensus Estimate of $42.7 million, and reflecting a year-over-year decline of 66.4% [2]. - OFFO per share was reported at 16 cents, falling short of the Zacks Consensus Estimate of 23 cents, and representing an 84.5% decrease year-over-year [1][2]. - For the full year 2024, OFFO per share was $3.17, down 33% from the previous year and below the Zacks Consensus Estimate of $3.24 [3]. - Total revenues for 2024 were $271.1 million, a 39.2% decline year-over-year, also missing the Zacks Consensus Estimate of $366.8 million [3]. Leasing Metrics - The leased rate was reported at 91.1% as of December 31, 2024, slightly down from 91.3% as of September 30, 2024, and lower than the prior year's figure of 92.2% [4]. - The commenced rate improved to 90.6% as of December 31, 2024, up from 89.8% as of September 30, 2024, and better than the year-ago quarter's 89.6% [4]. - The base rent per square foot increased to $19.64 as of December 31, 2024, compared to $19.42 recorded a year ago [4]. Cash Position - SITE Centers exited the fourth quarter with $54.6 million in cash, a significant decrease from $1.06 billion as of September 30, 2024 [5]. Industry Comparison - Federal Realty Investment Trust (FRT) reported fourth-quarter 2024 FFO per share of $1.73, in line with estimates and up 5.5% year-over-year, indicating healthy leasing activity [6]. - Regency Centers Corporation (REG) reported fourth-quarter 2024 NAREIT FFO per share of $1.09, exceeding estimates and reflecting a 6.9% increase from the prior year, supported by strong leasing activity [7].

Company Overview - The company is the largest national full product line wholesale distributor of landscape supplies in the U.S., with over 690 branch locations across 45 states and six Canadian provinces[20]. - The company is the only national wholesale distributor to carry a full product line of landscape supplies, competing primarily against regional and local distributors[66]. Market Segmentation - Approximately 61% of the company's 2024 Fiscal Year net sales were derived from the residential construction sector, 31% from the commercial construction sector, and 8% from recreational and other sectors[22]. - The addressable market for wholesale distribution of landscape supplies in North America was estimated at approximately $25 billion in revenue for 2024[26]. - The customer base consists of more than 430,000 firms and individuals, with the top 10 customers accounting for less than 4% of the 2024 Fiscal Year Net sales[62]. - Small customers (annual purchases up to $25,000) made up 23% of the 2024 Fiscal Year Net sales, while large customers (annual purchases over $150,000) accounted for 46%[62]. Sales and Revenue - Net sales for the fiscal year ending December 29, 2024, reached $4,540.6 million, up from $4,301.2 million in the previous year, indicating an increase of about 5.6%[348]. - Gross profit for the same period was $1,560.1 million, compared to $1,491.2 million in the prior year, reflecting a growth of approximately 4.6%[348]. - The majority of the company's net sales in the 2024 fiscal year were derived from credit sales, which depend on the economic strength of the geographic areas where customers operate[147]. Product Offerings - Proprietary branded products, including LESCO, SiteOne Green Tech, and Pro-Trade, accounted for approximately 14% of the company's 2024 Fiscal Year net sales[44]. - The company has a balanced mix of sales across product categories, with approximately 35% of net sales from products related to new construction and another 35% from maintenance of existing properties[22]. - The company plans to expand its Pro-Trade product line in the 2025 Fiscal Year, which includes new products such as synthetic turf and garden hoses[45]. Operational Strategy - The Partners Program had approximately 52,000 enrolled customers as of December 29, 2024, contributing to about 60% of the company's net sales for the 2024 Fiscal Year[51]. - The company aims to grow market share in existing markets with limited capital investment by optimizing its network of locations and improving sales force performance[30]. - The company sources products from approximately 5,800 suppliers, ensuring a comprehensive product offering for its customers[21]. Financial Performance - The company reported a net income of $124.4 million for the year ending December 29, 2024, down from $173.4 million in the previous year, a decrease of about 28.2%[348]. - Total liabilities increased to $1,478.9 million as of December 29, 2024, from $1,342.8 million at the end of 2023, reflecting a rise of about 10.1%[347]. - The company’s cash and cash equivalents increased to $107.1 million as of December 29, 2024, compared to $82.5 million at the end of 2023, marking a growth of approximately 29.8%[347]. Challenges and Risks - The company experienced a softening in the residential construction sector during the 2024 Fiscal Year, attributed to home price inflation and higher mortgage rates, which persisted despite a 50-basis point reduction in interest rates in September 2024[96]. - Inflation and increased operating costs have adversely impacted the company’s business, with ongoing inflationary pressures expected to continue affecting financial performance[99]. - The company is subject to various environmental, health, and safety laws, which could result in significant compliance costs and liabilities[90]. - Supply chain disruptions, including delays and product shortages, have negatively impacted revenues and margins, particularly during the COVID-19 pandemic[124]. Human Resources - As of December 29, 2024, the company employed approximately 8,300 associates, with 92% being full-time, year-round employees[70]. - The ability to attract and retain key personnel is critical for the company's success, and losing key executives could adversely affect operations and growth[137]. - The company relies on approximately 8,300 associates, and changes in labor laws or increased competition for workers could significantly impact operating costs and business performance[133]. Acquisitions and Growth Strategy - Future acquisitions are a key element of the company's growth strategy, but challenges include identifying suitable targets and potential integration difficulties[130]. - The company completed various acquisitions during the year, accounting for customer relationship intangible assets valued at $34.0 million[342]. Debt and Financing - As of December 29, 2024, the company had $393.3 million in total long-term consolidated indebtedness and $130.6 million in finance lease obligations excluding interest[163]. - The company’s ability to engage in acquisitions is limited due to its current indebtedness, which may impair its ability to obtain additional financing[165]. - An increase of one percentage point in interest rates would result in an increase of approximately $4.0 million in projected interest payments for the 2025 Fiscal Year[167]. Environmental and Regulatory Factors - The company has identified short-, medium-, and long-term climate-related risks and opportunities for its business strategy and financial planning[79]. - Compliance with environmental regulations could result in significant costs and liabilities, impacting the company's reputation and financial position[110]. - The company is subject to public perception risks regarding the environmental safety of its products, which could adversely affect demand and lead to increased regulatory scrutiny[116].

Financial Data and Key Metrics Changes - The company reported a net sales increase of 5% to $1.01 billion for Q4 2024 and a 6% increase to $4.54 billion for the full fiscal year 2024 [33] - Organic daily sales increased by 1% in Q4 2024, driven by a 4% growth in volume, partially offset by 3% price deflation [34] - Adjusted EBITDA decreased by 20% to $31.8 million for Q4 2024 and by 8% to $378.2 million for the full year [48][49] - The net loss attributable to the company was $21.7 million for Q4 2024, compared to a net loss of $3.4 million in the prior year [46] Business Line Data and Key Metrics Changes - Organic daily sales for agronomic products increased by 6% in Q4 and 4% for the full year, driven by strong volume growth [36] - Organic daily sales for landscaping products decreased by 1% in Q4 and 3% for the full year due to price deflation and weaker demand [38] - Acquisition sales contributed approximately $43 million or 4% to net sales growth in Q4 2024 and approximately $286 million or 7% for the full year [39][40] Market Data and Key Metrics Changes - Five out of nine regions achieved positive organic daily sales growth in Q4 2024, with solid growth in northern markets [38] - The repair and upgrade market, representing 30% of sales, was the weakest end market in 2024, with high single-digit volume declines [67] - The maintenance end market, which represents 35% of sales, achieved good sales volume growth in 2024 and is expected to continue growing steadily in 2025 [68] Company Strategy and Development Direction - The company aims to leverage its scale and resources to support local teams and deliver superior value to customers and suppliers [13] - The strategy includes filling in product lines through acquisitions and organic growth, with a focus on maintaining a balanced mix of business [12][14] - The company has a robust pipeline of potential acquisitions and expects to continue adding companies to support growth [18] Management's Comments on Operating Environment and Future Outlook - Management noted that while the macro environment remains uncertain, they expect commodity price deflation to moderate in 2025 [64] - The company anticipates low single-digit organic daily sales growth for 2025, driven by sales volume offsetting price deflation [69] - Management expressed confidence in achieving solid performance and growth in 2025, supported by commercial initiatives and improved operating leverage [9][70] Other Important Information - The company completed 99 acquisitions since 2014, adding approximately $2 billion in trailing 12-month net sales [60] - Digital sales grew by 180% in 2024, with a significant increase in regular online purchasers [27][130] - The company expects to achieve good operating leverage in 2025, yielding solid improvement in adjusted EBITDA margin [69] Q&A Session Summary Question: Are the focus branches and Pioneer the most impactful cost initiatives for 2025? - Management confirmed that focus branches and Pioneer are significant cost initiatives, with expectations for good results in 2025 [74][76] Question: Are there any initial signs of labor issues from customers? - Management indicated that while customers are concerned about labor issues, no significant impacts have been observed yet [78] Question: How much of the product is coming from China and Mexico regarding tariffs? - Management estimated that 10% to 15% of sales are sourced from Mexico, China, and Canada, and they expect to pass through any tariff-related price increases relatively quickly [91] Question: What is the impact of grass seed pricing on the business? - Management noted that grass seed pricing is expected to continue its deflation trend, with more clarity expected in the spring [81] Question: Can you provide details on the focus stores and Pioneer? - Management explained that significant restructuring and integration efforts have been made at Pioneer, and improvements in focus branches are expected to yield benefits over the next few years [115]

Group 1: Earnings Performance - SiteOne Landscape reported a quarterly loss of $0.48 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.28, and compared to a loss of $0.08 per share a year ago, indicating a significant decline in performance [1] - The earnings surprise for this quarter was -71.43%, and the company had previously expected earnings of $1.18 per share but reported $0.97, resulting in a surprise of -17.80% [1][2] - Over the last four quarters, SiteOne Landscape has surpassed consensus EPS estimates only once [2] Group 2: Revenue Performance - The company posted revenues of $1.01 billion for the quarter ended December 2024, exceeding the Zacks Consensus Estimate by 0.60%, and this represents an increase from year-ago revenues of $965 million [2] - SiteOne Landscape has topped consensus revenue estimates four times over the last four quarters [2] Group 3: Stock Performance and Outlook - SiteOne Landscape shares have increased by approximately 1.1% since the beginning of the year, while the S&P 500 has gained 3.2% [3] - The future price movement of the stock will largely depend on management's commentary during the earnings call and the earnings outlook [3][4] - The current consensus EPS estimate for the upcoming quarter is -$0.53 on revenues of $952.7 million, and for the current fiscal year, it is $3.84 on revenues of $4.82 billion [7] Group 4: Industry Context - The Industrial Services industry, to which SiteOne Landscape belongs, is currently ranked in the top 37% of over 250 Zacks industries, indicating a favorable industry outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5][6]

Financial Performance - Fourth Quarter 2024 net sales increased 5% to $1.01 billion compared to $965.0 million in the prior year[5] - Full Year 2024 net sales increased 6% to $4.54 billion, with acquisitions contributing $286.0 million, or 7%, to net sales growth[9] - Fourth Quarter 2024 gross profit increased 3% to $337.6 million, while gross margin decreased 50 basis points to 33.3%[6] - Full Year 2024 adjusted EBITDA decreased 8% to $378.2 million, with an adjusted EBITDA margin of 8.3%[13] - Net sales for the year reached $4,540.6 million, up 5.6% from $4,301.2 million in 2023[29] - Gross profit for the year was $1,560.1 million, an increase of 4.6% compared to $1,491.2 million in 2023[29] - Net income for the year was $124.4 million, down 28.3% from $173.4 million in 2023[29] - Operating income for the year was $192.3 million, down 23.1% from $250.3 million in 2023[29] - Basic net income per share for the year was $2.73, down from $3.84 in 2023[29] - Reported net income for the 2024 fiscal year was $124.4 million, a significant recovery from a net loss of $21.5 million in Q4 2023[35] - Adjusted EBITDA for the 2024 fiscal year was $378.2 million, with Q4 2024 contributing $331.3 million, reflecting a 10.7% increase from Q4 2023[35] Acquisitions - The company closed two acquisitions in the fourth quarter and seven acquisitions during the full year, contributing approximately $200 million in trailing twelve months net sales[4] - The company made acquisitions totaling $138.2 million in 2024, compared to $192.7 million in 2023[31] - Acquisition contribution to net sales for the 2024 fiscal year was $406.5 million, with Q4 contribution at $100.8 million[39] Debt and Assets - Net debt to adjusted EBITDA at year-end was 1.1x, compared to 0.9x at year-end 2023[14] - Total assets increased to $3,070.8 million in 2024 from $2,828.9 million in 2023, representing an increase of 8.5%[27] - Total current liabilities increased to $640.8 million in 2024 from $578.3 million in 2023, a rise of 10.8%[27] Cash Flow and Expenses - The company reported a net cash provided by operating activities of $283.4 million, a decrease from $297.5 million in 2023[31] - The company reported an interest expense of $31.9 million in Q4 2024, compared to $27.1 million in Q4 2023, reflecting increased financing costs[35] - Depreciation and amortization expenses for the 2024 fiscal year totaled $139.0 million, with Q4 expenses at $35.6 million[35] - The company recorded stock-based compensation of $25.0 million for the 2024 fiscal year, with Q4 expenses at $5.5 million[35] Sales Outlook - The company expects low single-digit organic daily sales growth for 2025, despite ongoing commodity price deflation[16] - The projected adjusted EBITDA for 2025 is expected to be in the range of $400 million to $430 million[16] - The company anticipates continued growth in organic daily sales, projecting $17.6 million for the 2025 fiscal year[41] - Organic sales for the 2024 fiscal year were $4,134.1 million, with Q4 organic sales at $912.3 million, indicating a growth trend[39] Other Information - SG&A as a percentage of net sales increased 150 basis points to 36.0% in the fourth quarter, primarily due to acquisitions[7] - The number of selling days in 2024 was 252, consistent with the previous year, which may impact sales comparisons[39] - Cash and cash equivalents at the end of 2024 were $107.1 million, up from $82.5 million in 2023[31]

Acquisition and Expansion Strategy - SiteOne Landscape Supply's majority-owned joint venture, Devil Mountain Wholesale Nursery, acquired Pacific Nurseries, a wholesale distributor of nursery products [1] - The acquisition aligns with SiteOne Landscape Supply and Devil Mountain's growth strategies and expands their presence in the Bay Area [2] - SiteOne Landscape Supply has been actively pursuing acquisitions, completing seven in 2024 and 11 in 2023, reflecting its expansion strategy [3] - Devil Mountain's acquisition of Pacific Nurseries marks its first acquisition in 2025 [3] Financial Performance - SiteOne Landscape Supply reported an adjusted EPS of 97 cents in Q3 2024, missing the Zacks Consensus Estimate of $1.18 [4] - The company's Q3 2024 revenue was $1.21 billion, surpassing the Zacks Consensus Estimate of $1.18 billion and representing a 2.4% year-over-year increase [4] - SiteOne Landscape Supply's stock price declined by 15.6% over the past year, underperforming the industry's 8.9% growth [5] Industry Comparison - Graham Corporation (GHM) delivered an average trailing four-quarter earnings surprise of 101.85% and is expected to achieve 145.2% year-over-year earnings growth in 2024 [8] - Federal Signal Corporation (FSS) delivered an average trailing four-quarter earnings surprise of 11.8% and is expected to achieve 29.5% year-over-year earnings growth in 2024 [9] - Gates Industrial Corporation plc (GTES) is expected to achieve 11.8% year-over-year earnings growth in 2024 [9]

Core Insights - SITE Centers Corp. reported a decline in operating funds from operations (OFFO) per share to 81 cents, missing the Zacks Consensus Estimate of 87 cents, leading to a 3.97% drop in share price on October 30, 2024 [1] - The company generated revenues of $89.4 million, which was below the Zacks Consensus Estimate of $101.8 million, reflecting a year-over-year decline of 37.5% [2] - The leased rate decreased to 91.3% as of September 30, 2024, down from 93.2% as of June 30, 2024, and lower than the prior year's figure of 94.6% [3] Financial Performance - OFFO per share fell by 31.1% year-over-year [2] - Base rent per square foot decreased to $19.60 from $20.20 a year ago [4] - The company ended the third quarter with $1.06 billion in cash, down from $1.18 billion as of June 30, 2024 [4] Portfolio Activity - During the third quarter, SITE Centers disposed of 25 properties for an aggregate price of $1.4 billion, completing the sale of most properties in its active disposition pipeline [3][6] - The company acquired seven convenience shopping centers for $145.3 million, which were included in the Curbline spin-off [5] - The spin-off of Curbline was completed on October 1, 2024, with Curbline holding a portfolio of 79 properties and $800 million in unrestricted cash [5] Market Outlook - Upcoming earnings releases for other retail REITs, such as Realty Income and Tanger, Inc., are anticipated, with Realty Income's FFO per share estimated at $1.05, indicating a 2.9% year-over-year increase [7] - The Zacks Consensus Estimate for Tanger's FFO per share is pegged at 53 cents, implying a 6% year-over-year increase [8]

Financial Data and Key Metrics - Net sales increased by 6% to $1.21 billion in Q3 2024, with organic daily sales declining by 1% due to a 3% price deflation, partially offset by 2% volume growth [31] - Gross profit increased by 6% to $411 million, with gross margin improving by 10 basis points to 34% [35] - Adjusted EBITDA decreased by 4% to $114.8 million, with adjusted EBITDA margin declining by 100 basis points to 9.5% [41] - SG&A expenses increased by 12% to $349 million, with SG&A as a percentage of net sales rising by 170 basis points to 28.9% [36] - Net income attributable to SiteOne decreased by $12.9 million to $44.4 million [40] Business Line Performance - Organic daily sales for agronomic products increased by 2%, driven by strong volume growth, while landscaping products decreased by 2% due to price deflation and weak repair and remodel demand [33] - Price deflation was primarily driven by double-digit declines in PVC pipe and grass seed, while most other product prices remained flat [21] - The company expects price deflation to moderate in 2025, with modest price increases in most products [21] Market Performance - Five out of nine regions achieved positive organic daily sales growth in Q3, with strong agronomic sales in the Midwest and Northeast, and robust construction demand in Texas [34] - Hurricane Helene negatively impacted sales in the Southeast by approximately $7 million, with an additional $8 million impact expected in Q4 due to Hurricane Milton [34] Company Strategy and Industry Competition - The company aims to leverage its scale and resources to drive organic growth, improve productivity, and expand its product portfolio through acquisitions [15] - SiteOne has completed 96 acquisitions since 2014, adding approximately $1.9 billion in trailing 12-month net sales, and expects to continue acquiring companies to strengthen its market position [18][46] - The company is focused on improving the performance of underperforming branches, with plans to consolidate or close 16 branches in Q4 to reduce costs and improve operational efficiency [28] Management Commentary on Operating Environment and Future Outlook - Management expects challenging market conditions to persist through Q4, with price declines offsetting sales volume growth, leading to low single-digit organic daily sales decline [50] - The company anticipates a more stable pricing environment in 2025, with commodity price deflation moderating and modest price increases in most products [8][21] - Adjusted EBITDA for fiscal 2024 is expected to be in the range of $370 million to $380 million, including a $5 million charge related to branch consolidations [55] Other Important Information - The company repurchased approximately 14,000 shares for $1.8 million in Q3 [40] - Net debt at the end of Q3 was approximately $449 million, with leverage at 1.2x trailing 12-month adjusted EBITDA [43] - The company refinanced its term loan, extending the maturity to March 2030 and reducing the interest rate by 25 basis points [44] Q&A Session Summary Question: Sales performance and market stabilization - Management noted that while the repair and remodel market remains weak, the company is gaining market share, particularly in the maintenance and new construction markets, contributing to better-than-expected organic sales performance [57] Question: Growth and EBITDA margin outlook - Management expects EBITDA growth to be enhanced in the future, driven by a recovery in price realization, improved performance of underperforming branches, and the integration of Pioneer, which is expected to contribute to margin expansion in 2025 and beyond [58][59] Question: Pricing trends and branch closures - Price deflation is expected to persist through 2024, with normalization expected in 2025, particularly for grass seed and PVC pipe [63] - The branch closures are part of a broader effort to optimize the branch network, with most closures being consolidations aimed at retaining sales while reducing costs [66] Question: Pioneer acquisition performance - The integration of Pioneer has been slower than expected due to the decision to merge its point-of-sale and delivery systems with SiteOne's, but management remains confident in its long-term potential [81][82] Question: End market dynamics and pricing for 2025 - Management expects modest price increases in non-commodity products in 2025, with low single-digit pricing expected from manufacturers [87] - The company is optimistic about the potential for improved demand in the repair and remodel market if interest rates decline, but it is too early to make definitive predictions for 2025 [85][92]

SiteOne Landscape (SITE) came out with quarterly earnings of $0.97 per share, missing the Zacks Consensus Estimate of $1.18 per share. This compares to earnings of $1.25 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -17.80%. A quarter ago, it was expected that this company would post earnings of $2.50 per share when it actually produced earnings of $2.63, delivering a surprise of 5.20%. Over the last four quarters, the comp ...