SiteOne Landscape Supply Inc.

The stable outlook on SiteOne reflects our expectation that low single digit organic growth will continue to be supplemented by tuck-in acquisitions – roughly in line with previous years. We expect credit measures to remain stable over the next 12 -24 months, with debt to EBITDA of about 3.0x-3.5x, and adjusted funds from operations (FFO) to debt of about 20%-22%. We expect the company to sustain these metrics in light of prevailing housing market conditions, flat housing starts, and slower repair and remodel activity. We view a downgrade as unlikely over the next 12 months given the current favorable operating environment and a degree of downside cushion in current adjusted credit measures. However, we could lower our rating on SiteOne

...We expect SiteOne Landscape Supply Inc.'s revenues and EBITDA to grow in the low- to mid-single-digits organically, supplemented by acquisitions. SiteOne's products (landscaping supplies, nursery products, and hardscapes) are relatively low cost and are replaced regularly. Sales remain susceptible to discretionary demand, as well as to weather events and the seasonality of construction markets. Still, we expect low- to mid-single-digit organic growth. We expect SiteOne's margins to remain at or above the current levels. We expect pricing actions, operating efficiencies, and further spreading of corporate costs over a wider network to offset any input cost inflation. We expect adjusted leverage to be 3.0-3.5x from 2019-2020. We expect the company to continue to make small tuck-in acquisitions, utilizing the asset-based lending (ABL) facility over the next 12 to 24 months, keeping adjusted leverage above 3.0x....

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