Table of Contents

 
 
 
 
 
 
 
 
 
 
  UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549  
__________________________
FORM 10-Q
__________________________
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended April 3, 2016
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the Transition Period From __________ to ___________

Commission file number:  001-37760
SiteOne Landscape Supply, Inc.

(Exact name of registrant as specified in its charter)
__________________________
Delaware
46-4056061
(State or other jurisdiction of
incorporation or organization)
(IRS Employer
Identification No.)
  
  
Mansell Overlook, 300 Colonial Center Parkway, Suite 600, Roswell, Georgia 30076
(Address of principal executive offices) (Zip Code)
 
(770) 255-2100
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☐    No   ☒
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check One): 
Large accelerated filer
☐
Accelerated filer
☐
Non-accelerated filer
☒ (Do not check if a smaller reporting company)
Smaller reporting company
☐
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒ 
 
As of June 20, 2016 , 39,542,239 shares of the registrant’s common stock, $0.01 par value, were outstanding.

 
 
 
 
 
 
 
 
 
 

Table of Contents

 
 
TABLE OF CONTENTS
 
 
Part I. FINANCIAL INFORMATION
 
 
 
 
Part II. OTHER INFORMATION
 



1
Table of Contents

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
SiteOne Landscape Supply, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(In millions, except share and per share data)
 
 
 
 
 
Assets
 
April 3, 2016
 
January 3, 2016
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
20.5

 
$
20.1

Accounts receivable, net of allowance for doubtful accounts of $4.2 and $3.6, respectively
 
188.1

 
136.8

Inventory, net
 
324.1

 
265.9

Income tax receivable
 
10.9

 
7.3

Prepaid expenses and other current assets
 
14.7

 
12.1

Total current assets
 
558.3

 
442.2

 
 
 
 
 
Property and equipment, net (Note 3)
 
64.9

 
66.2

Goodwill (Note 4)
 
58.3

 
48.0

Intangible assets, net (Note 4)
 
104.7

 
104.3

Other Assets
 
8.6

 
8.0

Total assets
 
$
794.8

 
$
668.7

 
 
 
 
 
Liabilities and Stockholders' Equity
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
195.0

 
$
86.4

Current portion of capital leases (Note 5)
 
3.9

 
4.0

Accrued compensation
 
21.6

 
30.0

Long term debt, current portion (Note 7)
 
0.6

 
0.6

Accrued liabilities
 
27.7

 
23.8

Total current liabilities
 
248.8

 
144.8

 
 
 
 
 
Other long-term liabilities
 
9.7

 
8.9

Capital leases, less current portion (Note 5)
 
6.2

 
7.1

Deferred tax liabilities
 
27.7

 
26.2

Long term debt, less current portion (Note 7)
 
208.9

 
177.1

Total liabilities
 
501.3

 
364.1

 
 
 
 
 
Commitment and contingencies (Note 10)
 

 

Redeemable convertible preferred stock (Note 11)
 
216.8

 
216.8

 
 
 
 
 
Stockholders' equity (Note 1):
 
 
 
 
Common stock, par value $0.01; 1,000,000,000 shares authorized; 14,259,998 and 14,259,998 shares issued, and 14,241,987 and 14,250,111 shares outstanding at April 3, 2016 and January 3, 2016 , respectively
 
0.1

 
0.1

Additional paid-in capital
 
113.7

 
113.1

Accumulated deficit
 
(36.2
)
 
(24.2
)
Accumulated other comprehensive loss
 
(0.9
)
 
(1.2
)
Total equity
 
76.7

 
87.8

Total liabilities and equity
 
$
794.8

 
$
668.7


See Notes to unaudited Condensed Consolidated Financial Statements.

2

SiteOne Landscape Supply, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(In millions, except share and per share data)
 
 
Three Months Ended
 
 
April 3, 2016
 
March 29, 2015
 
 
 
 
 
Net sales
 
$
328.5

 
$
225.8

Cost of goods sold (exclusive of depreciation)
 
231.5

 
167.2

Gross profit
 
97.0

 
58.6

 
 
 
 
 
Selling, general and administrative expenses
 
104.6

 
73.1

Other income
 
1.2

 
0.8

Operating loss
 
(6.4
)
 
(13.7
)
 
 
 
 
 
Interest and other non-operating (income) expenses, net
 
2.6

 
2.4

Net loss before taxes
 
(9.0
)
 
(16.1
)
Income tax benefit
 
(3.4
)
 
(6.3
)
Net loss
 
(5.6
)
 
(9.8
)
Less:
 
 
 
 
Redeemable convertible preferred stock dividends
 
6.5

 
5.9

Redeemable convertible preferred stock beneficial conversion feature
 
—

 
1.8

Net loss attributable to common shares
 
$
(12.1
)
 
$
(17.5
)
 
 
 
 
 
Net loss per common share:
 
 
 
 
Basic
 
$
(0.85
)
 
$
(1.23
)
Diluted
 
$
(0.85
)
 
$
(1.23
)
Weighted average number of common shares outstanding (Note 1):
 
 
 
 
Basic
 
14,249,494

 
14,173,646

Diluted
 
14,249,494

 
14,173,646


See Notes to unaudited Condensed Consolidated Financial Statements.

3


SiteOne Landscape Supply, Inc.
Condensed Consolidated Statements of Comprehensive Loss (Unaudited)
(In millions)
 
 
Three Months Ended
 
 
April 3, 2016
 
March 29, 2015
 
 
 
 
 
Net loss
 
$
(5.6
)
 
$
(9.8
)
Foreign currency translation adjustments
 
0.3

 
(0.1
)
Comprehensive loss
 
$
(5.3
)
 
$
(9.9
)

See Notes to unaudited Condensed Consolidated Financial Statements.

4


SiteOne Landscape Supply, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In millions)
 
 
Three Months Ended
 
 
April 3, 2016
 
March 29, 2015
Cash Flows from Operating Activities:
 
 
 
 
Net loss
 
$
(5.6
)
 
$
(9.8
)
Adjustments to reconcile net loss to net cash provided by (used in ) operating activities:
 
 
 
 
Depreciation
 
3.4

 
2.6

Stock-based compensation
 
0.7

 
0.7

Amortization of software and intangible assets
 
5.2

 
3.8

Amortization of debt related costs
 
0.6

 
0.8

(Gain) loss on sale of equipment
 
(0.1
)
 
0.2

Deferred income taxes
 
—

 
(1.6
)
Other
 
(0.2
)
 
0.2

Changes in operating assets and liabilities:
 
 
 
 
Receivables
 
(44.2
)
 
(10.9
)
Inventory
 
(43.8
)
 
(50.3
)
Income tax receivable
 
(3.3
)
 
(4.7
)
Prepaid expenses and other assets
 
(1.0
)
 
2.6

Accounts payable
 
103.5

 
57.3

Accrued liabilities
 
(5.2
)
 
(6.1
)
Net Cash Provided By (Used In) Operating Activities
 
$
10.0

 
$
(15.2
)
 
 
 
 
 
Cash Flows from Investing Activities:
 
 
 
 
Purchases of property and equipment
 
(1.9
)
 
(1.3
)
Acquisitions, net of cash acquired
 
(31.2
)
 
(55.4
)
Proceeds from the sale of property and equipment
 
0.1

 
—

Net Cash Used In Investing Activities
 
$
(33.0
)
 
$
(56.7
)
 
 
 
 
 
Cash Flows from Financing Activities:
 
 
 
 
Equity proceeds from common stock
 
—

 
1.2

Purchase of treasury stock
 
(0.1
)
 
(0.1
)
Payments on capital lease obligations
 
(1.1
)
 
(1.0
)
Dividends paid
 
(6.5
)
 
—

Payments on Term Loan
 
(0.4
)
 
(0.2
)
Net change in credit facility borrowing
 
31.4

 
75.0

Net Cash Provided By Financing Activities
 
$
23.3

 
$
74.9

 
 
 
 
 
Effect of exchange rate on cash
 
0.1

 
(0.1
)
Net Change In Cash
 
0.4

 
2.9

 
 
 
 
 
Cash and cash equivalents:
 
 
 
 
Beginning
 
20.1

 
10.6

Ending
 
$
20.5

 
$
13.5

 
 
 
 
 
Supplemental Disclosures of Cash Flow Information:
 
 
 
 
Cash paid during the year for interest
 
2.0

 
1.5

Cash paid during the year for income taxes
 
0.3

 
0.4

 
 
 
 
 
Supplemental Disclosures of Noncash Investing and Financing Information:
 
 
 
 
Acquisition of property and equipment through capital leases
 
0.1

 
1.1


See Notes to unaudited Condensed Consolidated Financial Statements.

5



SiteOne Landscape Supply, Inc.
 
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Note 1.     Nature of Business and Significant Accounting Policies

Nature of Business

SiteOne Landscape Supply, Inc. (hereinafter collectively with all its consolidated subsidiaries referred to as the “Company”) is a supplier of irrigation, landscape lighting, hardscapes, lawn care supplies, nursery stock, and landscape accessories to green industry professionals. The Company currently has over 450 stores. Substantially all of the Company's sales are to customers located in the United States of America (“U.S.”), with less than two percent of sales and total assets in Canada and other countries for all periods presented. Based on the nature of the Company’s products and customers’ business cycles, sales are significantly higher in the spring and summer months.

Common Stock Split

On April 29, 2016, the Company filed a Certificate of Amendment to amend and restate the Company’s Certificate of Incorporation in the State of Delaware, effecting an 11.6181 for 1 common stock split. Each stockholder’s percentage ownership and proportional voting power remained unchanged as a result of the stock split. All applicable share data, per share amounts and related information in the consolidated financial statements and notes thereto have been adjusted retroactively to give effect to the 11.6181 for 1 common stock split.

Initial Public Offering

On May 11, 2016, the Company’s registration statement on Form S-1 (Registration No. 333-206444) relating to an IPO of its common stock was declared effective by the U.S. Securities and Exchange Commission (“SEC”). On May 17, 2016, the Company completed the IPO at a price to the public of $21.00 per share. In connection with the IPO, certain of the Company’s stockholders sold an aggregate of 10,000,000 shares of common stock. The underwriters also exercised their options to purchase an additional 1,500,000 shares of common stock, at the public offering price less the underwriting discounts and commissions. The selling stockholders received all of the net proceeds and bore all commissions and discounts from the sale of our common stock. The Company did not receive any proceeds from the IPO. Estimated offering expenses incurred by the Company in the period subsequent to April 3, 2016 were $3.2 million . On the day prior to the closing of the IPO, all of the Company’s then-outstanding cumulative convertible participating redeemable preferred stock (“Redeemable Convertible Preferred Stock”) converted into shares of common stock, resulting in the issuance by the Company of an additional 25,303,164 shares of its common stock. The conversion of preferred shares is accounted for from the date of conversion and is not retroactively adjusted in the financial statements.

Basis of Financial Statement Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) as applicable to interim financial reporting. In management’s opinion, the unaudited condensed financial information for the interim periods presented includes all adjustments, consisting of normal recurring accruals necessary for a fair statement of the financial position, results of operations and cash flows. Certain information and disclosures normally included in our annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. This condensed consolidated balance sheet as of January 3, 2016 and the unaudited condensed consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements for the year ended January 3, 2016 included in the Company’s Form S-1/A (Amendment No. 4 to Form S-1) filed on May 2, 2016 (the "2015 Annual Financial Statements"). The interim period financial results for the three month periods presented are not necessarily indicative of results to be expected for any other interim period for the entire year.

6

Use of Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and accompanying notes. Actual results could differ materially from these estimates.
Fiscal Year
The Company’s fiscal year is a 52- or 53-week period ending on the Sunday nearest to December 31. The fiscal year ending January 1, 2017 includes 52 weeks and the fiscal year ended January 3, 2016 includes 53 weeks. The three months ended April 3, 2016 and March 29, 2015 both include 13 weeks.

Principles of Consolidation

The unaudited condensed consolidated financial statements for the Company include the assets and liabilities used in operating the Company’s business, including entities in which the Company owns or controls more than 50% of the voting shares. The Company owns 100% of all subsidiaries presented in these financial statements. All intercompany balances and transactions have been eliminated in consolidation.

Significant Accounting Policies

There were no significant changes to the Company’s significant accounting policies for the three months ended April 3, 2016 from those disclosed in the 2015 Annual Financial Statements.

Recently Issued and Adopted Accounting Pronouncements

In September 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update, ("ASU") No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments, which amends Accounting Standards Codification ("ASC") 805, Business Combinations . This ASU requires that acquiring entities recognize measurement period adjustments in the reporting period the amounts are determined, including earnings adjustments that would have been recorded in previous periods if the adjustments were known at the acquisition date. Acquiring entities are no longer required to retrospectively adjust amounts in comparative periods. The adjustment amounts and reasons are still disclosed. The Company adopted ASU 2015-16 when it became effective in the first quarter of fiscal 2016. The adoption did not have a material effect on the Company’s financial position or results of operations.

Accounting Pronouncements Issued But Not Yet Adopted

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which amends existing revenue recognition standards and establishes a new ASC Topic 606. The core principle of this amendment is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for these goods or services. This standard is effective for public entities' annual reporting periods ended beginning after December 15, 2017, including interim reporting periods ended within that reporting period. Earlier application is permitted only as of annual reporting periods ended beginning after December 15, 2016, including interim reporting periods ended within that reporting period.

The guidance permits two implementation approaches, one requiring retrospective application of the new standard with restatement of prior years and one requiring prospective application of the new standard with disclosure of results under old standards. The Company is evaluating the impact of the pending adoption of ASU No. 2014-09. The Company has not selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

In July 2015, the FASB issued Accounting Standards Update 2015-11, Simplifying the Measurement of Inventory (“ASU 2015-11”) to simplify the guidance on the subsequent measurement of inventory, excluding inventory measured using last-in, first out or the retail inventory method. Under the new standard, inventory should be at the lower of cost and net realizable value. The new accounting guidance is effective for interim and annual periods ended beginning after December 15, 2016 with early adoption permitted. The Company is currently evaluating the impact of the pending adoption of ASU 2015-11.

7

In February 2016, the FASB issued ASU 2016-02, Leases , which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. The standard is effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early application of the amendment is permitted. The Company is currently evaluating the standard and the impact on its condensed consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Compensation—Stock Compensation: Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which simplifies several aspects of the accounting for employee share-based payment transactions for both public and nonpublic entities, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 is effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the standard and the impact on its condensed consolidated financial statements.
Note 2.     Acquisitions

From time to time the Company enters into strategic acquisitions in an effort to better service existing customers and to attain new customers. The Company completed the following acquisitions for cash considerations of approximately $31.9 million and $57.7 million for the periods ended April 3, 2016 and March 29, 2015 , respectively.
 
In February, 2015, the Company acquired all of the outstanding stock of CLP SN Holdings, Inc., parent of Shemin Nurseries (“Shemin”), which included 30 store locations supplying primarily nursery goods in 18 major metropolitan markets across 14 states of the Eastern region of the United States and Texas. See further description below under the heading "Shemin Acquisition Accounting.".

In January 2016, the Company acquired all of the outstanding stock of Hydro-Scape Products, Inc (“Hydro-Scape”). Based in San Diego, California, Hydro-Scape was a leading provider of landscape products (irrigation, lighting, maintenance, outdoor living and hardscapes) with 17 locations serving customers throughout Southern California.

These transactions were accounted for by the acquisition method, and accordingly the results of operations were included in the Company’s consolidated financial statements from their respective acquisition dates.

Shemin Acquisition Accounting:

The Shemin transaction has been accounted for as a business combination using the acquisition method of accounting, whereby the purchase price was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date, with the excess of purchase price over the estimated fair value of the net assets acquired recorded as goodwill. Transaction related costs incurred in connection with Shemin acquisition were approximately $2.7 million . These level 3 fair value measurements have been determined based on assumptions that market participants would use in the pricing of the asset or liability. Independent third-party appraisers were engaged to assist management and perform valuation of certain tangible and intangible assets acquired and liabilities assumed.

The real and personal property was valued using the cost, market and income approaches. The income approach was utilized to estimate the fair value of the lease interests via the discounted cash flow methodology. Personal property was valued using the indirect method of the cost approach and the market approach. Using the indirect approach, a reproduction cost of new personal property was determined from the historical cost.

Intangible assets separately valued in the transaction were customer relationships. Customer relationships were valued using the discounted cash flow method form of the income approach. After tax cash flow was discounted to present value using a 16.0% discount rate. Revenue growth was estimated based on long-term growth rates. Annual attrition was estimated at 10.0% .


8

The following table summarizes the adjusted aggregate fair values of the assets acquired and liabilities assumed at the acquisition date and subsequent adjustments for Shemin. The estimate of the fair values of assets acquired and liabilities assumed (in millions) is as follows:

Fair value of consideration transferred (in millions):
 
 
Cash consideration
 
$
57.8

Working capital adjustment
 
(0.1
)
Net consideration transferred
 
57.7

 
 
 
Assets acquired, at fair market value:
 
 
Cash and cash equivalents
 
$
2.3

Accounts receivable
 
5.7

Inventory
 
9.3

Deferred tax assets
 
3.5

Prepaid expenses and other current assets
 
2.2

Total current assets
 
23.0

Property and equipment
 
9.9

Intangible assets
 
27.2

Other assets
 
1.3

Total assets
 
61.4

 
 
 
Liabilities assumed, at fair market value:
 
 
Accounts payable
 
6.1

Accrued liabilities
 
6.7

Deferred tax liabilities
 
12.0

Total liabilities assumed
 
24.8

 
 
 
Identifiable net assets acquired
 
36.6

Goodwill
 
21.1

Net assets acquired
 
57.7


Goodwill is calculated as the excess of the purchase price over the estimated fair values of the assets acquired and the liabilities assumed in the acquisition, and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The amount allocated to goodwill associated with the Shemin acquisition is primarily the result of anticipated synergies. None of the goodwill associated with this transaction will be deductible for income tax purposes.

On an unaudited pro forma basis, the following represents the consolidated results of the Company had the Company acquired Shemin as of December 29, 2014 (the first day of the Company’s fiscal year 2015):
 
 
Three Months Ended
 
 
April 3, 2016
 
March 29, 2015
(In millions, except per share data)
 
 
 
 
Net sales
 
$
328.5

 
$
233.3

Net loss available to SiteOne common shareholders
 
$
(12.1
)
 
$
(20.3
)
Net loss per share of common stock attributable to SiteOne - diluted
 
$
(0.85
)
 
$
(1.43
)

9


Note 3.     Property and Equipment, Net

Property and equipment consisted of the following (in millions):

 
 
Useful
 
 
 
 
 
 
Life
 
 
 
 
 
 
Range
 
 
 
 
 
 
in Years
 
April 3, 2016
 
January 3, 2016
Land
 
 
 
$
14.5

 
$
14.6

Buildings and leasehold improvements:
 
 
 
 
 
 
  Buildings
 
1 - 20
 
9.8

 
9.8

  Leasehold improvements
 
1 - 20
 
10.4

 
9.8

Store equipment
 
1 - 12
 
14.7

 
14.3

Office furniture and fixtures and vehicles:
 
 
 
 
 
 
  Office furniture and fixtures
 
1 - 12
 
8.4

 
7.9

  Vehicles
 
2 - 6
 
30.0

 
29.2

Tooling
 
7
 
0.1

 
0.1

Construction in process
 
 
 
3.0

 
3.1

Total Property and equipment, gross
 
 
 
90.9

 
88.8

Accumulated depreciation
 
 
 
26.0

 
22.6

Total Property and equipment, net
 
 
 
$
64.9

 
$
66.2


Depreciation expense was approximately $3.4 million and $2.6 million for the three months ended April 3, 2016 and March 29, 2015 , respectively.
Note 4.     Goodwill and Intangible Assets, Net
Goodwill

Changes in the carrying amount of goodwill are as follows:

 
 
January 4, 2016
 
December 29, 2014
 
 
to April 3, 2016
 
to January 3, 2016
Beginning balance
 
$
48.0

 
$
11.4

Acquisitions
 
10.3

 
36.6

Ending balance
 
$
58.3

 
$
48.0


Additions to goodwill during the interim period 2016 relate to the acquisition of Hydro-Scape (as described in Note 2).
Intangible Assets

During the period ended April 3, 2016 , the Company recorded $5.3 million of intangible assets all of which related to customer relationships as a result of the Hydro-Scape acquisition.

The Company's customer relationship intangible assets will be amortized over a weighted-average period of 20 years. Trademarks and other intangible assets will be amortized over a weighted-average period of 10 years.
 
The following table summarizes the components of intangible assets (in millions except amortization period):

10


 
 
 
 
April 3, 2016
 
January 3, 2016
 
 
Years
 
Amount
 
Accumulated Amortization
 
Net
 
Amount
 
Accumulated Amortization
 
Net
Customer relationships
 
10 -21
 
$
133.0

 
$
31.2

 
$
101.8

 
$
127.7

 
$
26.5

 
$
101.2

Trademarks and other
 
5 -10
 
4.4

 
1.5

 
2.9

 
4.4

 
1.3

 
3.1

Total intangibles
 
 
 
$
137.4

 
$
32.7

 
$
104.7

 
$
132.1

 
$
27.8

 
$
104.3


Amortization expense for intangible assets was approximately $4.9 million and $3.7 million for the three months ended April 3, 2016 and March 29, 2015 , respectively.

Note 5.     Capital Leases
Capital leases, consisting of vehicle leases, included the following (in millions):

 
 
April 3, 2016
 
January 3, 2016
Capital lease obligations with rates ranging from 1.4% to 4.3% with monthly payments of approximately $0.4 million maturing through September 2020
 
$
10.1

 
$
11.1

Less current maturities
 
3.9

 
4.0

Total Capital leases, less current portion
 
$
6.2

 
$
7.1



Note 6.     Employee Benefit and Stock Incentive Plan

The Company sponsors a defined contribution benefit plan for substantially all of its employees. Company contributions to the plan are based on a percentage of employee wages. The Company’s contributions to the plan were approximately $1.7 million and $0.9 million for the three months ended April 3, 2016 and March 29, 2015 , respectively.

Share-based compensation expense is recognized in the financial statements based upon fair value on the date of grant. The Company recognized share-based compensation expense of approximately $0.7 million and $0.7 million for the three months ended April 3, 2016 and March 29, 2015 , respectively. During the three months ended April 3, 2016 , 4,500 options were forfeited. Total unrecognized compensation cost from share-based compensation arrangements at April 3, 2016 was approximate ly $9.8 million . The option related compensation is expected to be recognized over a weighted–average period of approximately 3.19 years .

Note 7.     Debt
Long-term debt was as follows (in millions):
 
 
April 3, 2016
 
January 3, 2016
ABL facility
 
159.4

 
128.0

Term loan facility
 
60.3

 
60.5

Debt discount
 
(10.2
)
 
(10.8
)
Total debt
 
$
209.5

 
$
177.7

 
 
 
 
 
Less current portion
 
(0.6
)
 
(0.6
)
Total long-term debt
 
$
208.9

 
$
177.1



11

On December 23, 2013, SiteOne Landscape Supply Holding, LLC (“Landscape Holding”) and SiteOne Landscape Supply, LLC (“Landscape,” and together with Landscape Holding, the “Borrowers”) entered into a senior asset-based credit facility (“ABL Facility”) of up to $250 million , subject to borrowing base availability. The ABL Facility is secured by a first lien on the inventory and receivables. The ABL Facility is guaranteed by SiteOne Landscape Supply Bidco, Inc. (“Bidco”), an indirect wholly-owned subsidiary of the Company. The availability under the ABL Facility was $158.3 million and $112.5 million as of April 3, 2016 and January 3, 2016 , respectively. Availability is determined using borrowing base calculations of eligible inventory and receivable balances less the current outstanding ABL Facility and letters of credit balances.
The interest rate on the ABL Facility is LIBOR plus an applicable margin ranging from 1.25% to 2.00% or an alternate base rate for U.S. denominated borrowings plus an applicable margin ranging from 0.25% to 1.00% . The interest rates on outstanding balances range from 2.19% to 4.50% and 2.04% to 4.25% at April 3, 2016 and January 3, 2016 , respectively. Additionally, the Borrowers pay a 0.25% commitment fee on the unfunded amount. The ABL Facility was scheduled to mature on December 23, 2018. On October 20, 2015 the ABL Facility was amended to extend the maturity date to October 20, 2020 and increase the availability to $325.0 million . The other terms of the ABL Facility were not significantly altered.
The ABL Facility contains customary representations and warranties and customary affirmative and negative covenants that, among other things, limit the ability of the Borrowers to pay dividends, redeem stock or make other distributions. The negative covenants consist of the following: fundamental changes, dividends and distributions, acquisitions, collateral, payments and modifications of restricted indebtedness, negative pledge clauses, changes in line of business, currency, commodity and other hedging transactions, transactions with affiliates, investments, limitations on indebtedness and liens. The negative covenants are subject to the customary exceptions and also permit the payment of dividends and distributions, investments, permitted acquisitions and payments or redemptions of junior indebtedness upon satisfaction of a payment condition.
The ABL Facility is subject to mandatory prepayments if the outstanding loans and letters of credit exceed either the aggregate revolving commitments or the current borrowing base, in an amount equal to such excess. Additionally, the ABL Facility is subject to various covenants requiring minimum financial ratios and additional borrowings may be limited by these financial ratios. Failure to meet any of these covenants could result in an event of default under these agreements. If an event of default occurs the lenders could elect to declare all amounts outstanding under these agreements to be immediately due and payable, enforce their interest in collateral pledged under the agreement, or restrict the Borrowers’ ability to obtain additional borrowings under these agreements.
On December 23, 2013, the Borrowers also entered into a senior term loan facility (the “Term Loan Facility”) in an aggregate principal amount of approximately $61.7 million . The Term Loan Facility is guaranteed by Bidco and each direct and indirect wholly-owned U.S. restricted subsidiary of Landscape. The Term Loan Facility is secured by a first lien on Property and equipment, Intangibles, and equity interests of Landscape, and a second lien on ABL Facility assets. The interest rate on the Term Loan Facility is LIBOR (minimum of 1.0% ) plus an applicable margin of 4.0% or an alternate base rate for U.S. denominated borrowings plus an applicable margin of 3.0% . The interest rates on the outstanding balances were 5.0% both at April 3, 2016 and January 3, 2016 . The Term Loan Facility matures on December 23, 2019.
The Term Loan Facility contains customary representations and warranties and customary affirmative and negative covenants that, among other things, limit the ability of the Borrowers to pay dividends, redeem stock or make other distributions. The negative covenants consist of the following: limitations on indebtedness, restricted payments, restrictive agreements, sales of assets and subsidiary stock, transactions with affiliates, liens, fundamental changes, amendments and lines of business. The negative covenants are subject to the customary exceptions.
The Term Loan is subject to annual mandatory prepayments in an amount equal to 50% of excess cash flow for the applicable fiscal year unless the secured leverage ratio is greater than 2.50 to 1.00.

On April 29, 2016, the Company refinanced the Term Loan Facility. See "Note 13. Subsequent Events."

During the three months ended April 3, 2016 , the Company incurred total interest expense of $2.6 million . $1.9 million of this total related to interest on the ABL Facility and Term Loan Facility. Amortization expense related to debt issuance costs was $0.6 million for the period. The remaining $0.1 million interest incurred related to interest attributable to capital leases.

During the three months ended March 29, 2015 the Company incurred total interest expense of $2.4 million . $1.5 million of this total related to interest on the ABL Facility and Term Loan Facility. Amortization expense related to debt issuance costs was $0.8 million for the period. The remaining $0.1 million interest incurred related to interest attributable to capital leases.

12

Note 8.     Income Taxes
The Company’s effective tax rate was approximately 37.8% for the three months ended April 3, 2016 and 39.1% for the three months ended March 29, 2015 , respectively. The decrease in the effective rate was primarily due to changes in state tax apportionment during the three months ended April 3, 2016 as compared to the three months ended March 29, 2015 .  The Company’s effective tax rate differs from its statutory rate based on a variety of factors, including overall profitability, the geographical mix of income taxes and the related tax rates in the jurisdictions in which it operates.
In accordance with the provisions of ASC Topic 740 Income Taxes, the Company provides a valuation allowance against deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The assessment considers all available positive and negative evidence and is measured quarterly. The Company maintains a valuation allowance against certain state deferred tax assets where sufficient negative evidence exists to require a valuation allowance. During the three months ended April 3, 2016 , and March 29, 2015 , respectively, the Company recorded no material increases or decreases to the valuation allowance against deferred tax assets.
Note 9.     Related Party Transactions

The Company offers a financing plan to its customers through John Deere Financial, a wholly-owned subsidiary of Deere. The Company paid John Deere Financial fees related to the financing offered, of approximately $0.1 million and $0.0 million for the three months ended April 3, 2016 and March 29, 2015 , respectively.

In December 2013, CD&R Landscapes Holdings, L.P. (the “CD&R Investor”), an affiliate of Clayton Dubilier & Rice, LLC (“CD&R”), acquired a majority stake in the Company (the “CD&R Acquisition”). In connection with the CD&R Acquisition, SiteOne Landscape Supply, Inc., SiteOne Landscape Supply Midco, Inc., Bidco, Landscape Holding and Landscape entered into consulting agreements (the “Consulting Agreements”) with each of CD&R and Deere & Company (“Deere”). CD&R and Deere each provided consulting services under the Consulting Agreements at an annual fee of $1.3 million plus expense reimbursement and $0.7 million plus expense reimbursement, respectively, for a 10 year term or earlier termination if CD&R’s or Deere’s ownership, respectively, of the Company was reduced below 10% . On May 17, 2016, the Company entered into termination agreements with CD&R and Deere pursuant to which the Company agreed to pay CD&R and Deere an aggregate fee of approximately $7.5 million to terminate the Consulting Agreements in connection with the consummation of the IPO. See “Note 13. Subsequent Events.”

TruGreen is a customer under common ownership of CD&R and therefore became a related party at the time of the CD&R Acquisition. Net sales included in the Company’s consolidated statement of operations with the customer were $0.8 million and $1.2 million for the three months ended April 3, 2016 and March 29, 2015 , respectively. Accounts receivable included in the Company’s consolidated balance sheets were $0.2 million and $0.1 million at April 3, 2016 and January 3, 2016 , respectively.
Note 10.     Commitments and Contingencies
Environmental liability: As part of the sale by LESCO, Inc. of its manufacturing assets in 2005, the Company retained the environmental liability associated with those assets. Remediation activities can vary substantially in duration and cost and it is difficult to develop precise estimates of future site remediation costs. The Company estimated in accrued liabilities the undiscounted cost of future remediation efforts to be approximately $4.6 million and $4.6 million as of April 3, 2016 and January 3, 2016 , respectively. As part of the CD&R Acquisition, Deere agreed to pay the first $2.5 million of the liability and cap the Company’s exposure to $2.4 million . The Company has recorded an indemnification asset against the liability as a result of these actions of approximately $2.2 million and $2.2 million as of April 3, 2016 and January 3, 2016 , respectively.
Letters of credit : As of April 3, 2016 and January 3, 2016 , outstanding letters of credit were $2.9 million and $1.8 million respectively. There were no amounts drawn on the letters of credit for either period presented.
Note 11.     Redeemable Convertible Preferred Stock
The CD&R Equity Investment
In connection with the CD&R Investor’s acquisition of a majority stake of the Company in December 2013, the Company issued Redeemable Convertible Preferred Stock to the CD&R Investor. Prior to the closing of the IPO, all of the then-outstanding Redeemable Convertible Preferred Stock converted into shares of common stock, resulting in the issuance by the Company of an additional 25,303,164 shares of common stock. See “Note 13. Subsequent Events.”

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In accordance with the SEC guidance within ASC Topic 480, Distinguishing Liabilities from Equity: Classification and Measurement of Redeemable Securities, the Company classified the Redeemable Convertible Preferred Stock as mezzanine equity because the Redeemable Convertible Preferred Stock contains a redemption feature which is contingent upon certain change of control events, the occurrence of which is not solely within the control of the Company. These contingent events are not and have not been considered probable of occurring and as such the Company does not accrete the mezzanine equity to its redemption value each period. The Company determined that none of the features included in the Redeemable Convertible Preferred Stock are required to be accounted for separately as a derivative under ASC Topic 815, Derivatives and Hedging.

The initial issuance of Redeemable Convertible Preferred Stock did not include a beneficial conversion feature (“BCF”) because the conversion price used to set the conversion ratio at the time of issuance was greater than the initial common stock price. The paid-in-kind dividends in the form of Redeemable Convertible Preferred Stock contained the same conversion price as the original issuance and in certain cases did include a BCF as of the dividend payment date. Since the Redeemable Convertible Preferred Stock did not have a fixed or determinable redemption date and was freely convertible at any time, the Company immediately amortized any BCF recognized through retained earnings. For the three months ended April 3, 2016 and March 29, 2015 , these amounts were $0.0 million and $1.8 million , respectively. During the three months ended April 3, 2016 , there was no share activity. The Company paid the cumulative dividends in cash; and accordingly, there was no BCF recognized.

Note 12.     Earnings Per Share

Basic earnings per common share is computed by dividing net income attributable to common shares by the weighted average number of common shares outstanding for the period. The Redeemable Convertible Preferred Stock has the right to participate in all distributions declared and paid on the Company’s common stock on an as-converted basis, and is therefore considered a participating security. The Company calculates basic earnings per share using the “two-class” method which reduces income available to common stockholders to reflect the hypothetical distribution of undistributed earnings to the Redeemable Convertible Preferred Stock in accordance with its contractual rights. In each period, the Company reduces income available to common stockholders and increases losses available to common stockholders to reflect the cumulative dividend on the Company’s Redeemable Convertible Preferred Stock whether or not declared or paid during the period. Similarly, the Company reduces income available to common stockholders and increases losses available to common stockholders for any amortization of beneficial conversion features recorded during each period.

The Company’s computation of diluted earnings per common share includes the effect of potential common stock, if dilutive. For the three months ended April 3, 2016 and March 29, 2015 , the assumed exercises of a portion of the Company’s employee stock options and the assumed conversion of all of the Redeemable Convertible Preferred Stock were anti-dilutive and, therefore, the following potential shares of common stock were not included in the diluted earnings per common share calculation:

 
 
For the three months ended
 
For the three months ended
 
 
April 3, 2016
 
March 29, 2015
Weighted average potential common shares excluded because anti-dilutive
 
 
 
 
Preferred Stock
 
25,186,801

 
22,791,282

Employee Stock Options
 
3,007,921

 
2,583,465


Note 13.     Subsequent Events
In April 2016, the Company acquired the assets and assumed liabilities of Blue Max Materials, Inc., Blue Max Materials of Charleston, Inc., Blue Max Materials of Columbia, Inc. and Blue Max Materials of the Grand Strand, Inc., which together comprise Blue Max (“Blue Max”). Blue Max is a hardscapes and landscape supplier with 5 locations serving North Carolina and South Carolina. The acquisition is not material and is not expected to have a significant impact on the condensed consolidated financial statements of the Company.

On April 29, 2016, the Company refinanced the existing term loan facility with an amended and restated $275.0 million term loan facility maturing in 2022 (the “Amended Term Loan Facility”). On April 29, 2016 the proceeds under the Amended Term Loan Facility were used to repay all $60.3 million of borrowings outstanding under the existing term loan facility, to repay $29.9 million of borrowings outstanding under the ABL Facility, and to pay fees and expenses associated with the refinancing transaction. A

14

special cash dividend of $176.0 million was paid to existing holders of our common stock and Redeemable Convertible Preferred Stock (on an as-converted basis) as of April 29, 2016 out of the proceeds of the Amended Term Loan Facility. In conjunction with the payment of the special cash dividend, the Company reduced the exercise price of certain outstanding options and made a cash payment to certain holders of options to offset the dilutive impact of the special cash dividend.

On April 29 2016, the Company filed a Certificate of Amendment to amend and restate the Company’s Certificate of Incorporation in the State of Delaware, effecting an 11.6181 for 1 common stock split. Each preferred and common stockholder’s percentage ownership and proportional voting power generally remained unchanged as a result of the stock split. All applicable share data, per share amounts and related information in the consolidated financial statements and notes thereto have been adjusted retroactively to give effect to the 11.6181 for 1 common stock split.

On May 17, 2016, the Company completed the IPO at a price to the public of $21.00 per share. In connection with the IPO, certain of the Company’s stockholders sold an aggregate of 10,000,000 shares of common stock. The underwriters also have exercised their rights to purchase an additional 1,500,000 shares of common stock, at the public offering price less the underwriting discounts and commissions. The selling stockholders received all of the net proceeds and bore all commissions and discounts from the sale of our common stock. The Company did not receive any proceeds from the IPO. Estimated offering expenses incurred by the Company in the period subsequent to April 3, 2016 were $3.2 million . On the day prior to the closing of the IPO, all of the Company’s then-outstanding Redeemable Convertible Preferred Stock converted into shares of common stock, resulting in the issuance by the Company of an additional 25,303,164 shares of its common stock. The conversion of preferred shares is accounted for from the date of conversion and is not retroactively adjusted in the financial statements. On May 17, 2016, the Company entered into termination agreements with CD&R and Deere pursuant to which the Company agreed to pay CD&R and Deere an aggregate fee of approximately $7.5 million to terminate the Consulting Agreements in connection with the consummation of the IPO.


15

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following information should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in this report. The following discussion may contain forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in these forward- looking statements. Factors that could cause or contribute to these differences include those factors discussed below and elsewhere in this report, particularly in “-Forward-Looking Statements” and the section entitled “Risk Factors” included in the Final Prospectus filed pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended, filed with the U.S. Securities and Exchange Commission (the “SEC”) on May 12, 2016 (Registration No. 333-206444).

Overview
SiteOne Landscape Supply, Inc. (collectively with all its subsidiaries referred to in this Quarterly Report on Form 10-Q as “SiteOne,” the “Company,” “we,” “us” and “our”) indirectly owns 100% of the membership interest in SiteOne Landscape Supply Holding, LLC (“Landscape Holding”). Landscape Holding is the parent and sole owner of SiteOne Landscape Supply, LLC (“Landscape”).
We are the largest and only national 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. We offer a comprehensive selection of fertilizer and control products (e.g., herbicides), irrigation supplies, landscape accessories, nursery goods, hardscapes (including pavers, natural stones and blocks) and outdoor lighting products.
On May 11, 2016, the Company’s registration statement on Form S-1 (Registration No. 333-206444) relating to an IPO of its common stock was declared effective by the U.S. Securities and Exchange Commission (“SEC”). On May 17, 2016, the Company completed the IPO at a price to the public of $21.00 per share. In connection with the IPO, certain of the Company’s stockholders sold an aggregate of 10,000,000 shares of common stock. The underwriters have also exercised their option to purchase an additional 1,500,000 shares of common stock, at the public offering price less the underwriting discounts and commissions. The selling stockholders received all of the net proceeds and bore all commissions and discounts from the sale of our common stock. The Company did not receive any proceeds from the IPO. On the day prior to the closing of the IPO, all of the Company’s then-outstanding cumulative convertible participating redeemable preferred stock (“Redeemable Convertible Preferred Stock”) converted into shares of common stock, resulting in the issuance by the Company of an additional 25,303,164 shares of its common stock. The conversion of preferred shares is accounted for from the date of conversion and is not retroactively adjusted in the financial statements.
Presentation
Our financial statements included in this report have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). We use a 52/53 week fiscal year with the fiscal year ending on the Sunday nearest to December 31 in each year. Our fiscal quarters end on the Sunday nearest to March 31, June 30 and September 30, respectively.
Key Business and Performance Metrics
We focus on a variety of indicators and key operating and financial metrics to monitor the financial condition and performance of our business. These metrics include:
Net sales . We generate net sales primarily through the sale of landscape supplies, including irrigation systems, fertilizer & control products, landscape accessories, nursery goods, hardscapes and outdoor lighting to our customers who are primarily landscape contractors serving the residential and commercial construction sectors. Our net sales include billings for freight and handling charges, and commissions on the sale of control products that we sell as an agent. Net sales are presented net of any discounts, returns, customer rebates, and sales or other revenue-based tax.
Organic sales. In managing our business, we consider all growth, including the opening of new greenfield stores, to be organic growth unless it results from an acquisition. When we refer to organic growth, we include increases in growth from newly-opened greenfield stores and decreases in growth from closing existing stores but exclude increases in growth from acquired stores until they have been under our ownership for at least four full fiscal quarters at the start of the fiscal reporting

16

period. We believe organic growth is a useful measure of our growth as we may choose to open or close stores in any given market depending upon the needs of our customers or our strategic growth opportunities.
Cost of goods sold . Our cost of goods sold includes all inventory costs, such as purchase price paid to suppliers, net of any rebates received, as well as inbound freight and handling, and other costs associated with the inventory, including direct and indirect labor costs. Our cost of goods sold excludes the cost to deliver the products to our customers through our stores (which is included in net sales). Cost of goods sold is recognized primarily using the first-in first-out method of accounting for the inventory sold.
Gross profit and gross margin. We believe that gross profit and gross margin are useful for evaluating our operating performance. We define gross profit as net sales less cost of goods sold, exclusive of depreciation. We define gross margin as gross profit divided by net sales.
Selling, general and administrative expenses (operating expenses) . Our operating expenses are primarily comprised of selling, general and administrative costs, which include personnel expenses (salaries, wages, employee benefits, payroll taxes, stock compensation and bonuses), rent, fuel, vehicle maintenance costs, insurance, utilities, repair and maintenance and professional fees. Operating expenses also include depreciation and amortization.
Net income (loss) attributable to common shares and earnings per share. Basic earnings per common share is computed by dividing net income attributable to common shares by the weighted average number of common shares outstanding for the period. The redeemable convertible preferred stock has the right to participate in all distributions declared and paid on the Company’s common stock on an as-converted basis, and is therefore considered a participating security. The Company calculates basic earnings per share using the “two-class” method which reduces income available to common stockholders to reflect the hypothetical distribution of undistributed earnings to the redeemable convertible preferred stock in accordance with its contractual rights. In each period, the Company reduces income available to common stockholders and increases losses available to common stockholders to reflect the cumulative dividend on the Company’s redeemable convertible preferred stock whether or not declared or paid during the period. Similarly, the Company reduces income available to common stockholders and increases losses available to common stockholders for any amortization of beneficial conversion features recorded during each period. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period, increased to include the number of shares of common stock that would have been outstanding had potential shares of common stock been issued, if dilutive. The dilutive effect of stock options are reflected in diluted net income per share by applying the treasury stock method. The presentation of net income and earnings per share provides GAAP measures of performance which are useful for investors, analysts and other interested parties in company-to-company operating performance comparisons.

Adjusted EBITDA. In addition to the metrics discussed above, we believe that Adjusted EBITDA is useful for evaluating our operating performance and efficiency of our business. EBITDA represents our net income (loss) plus the sum of interest expense, net of interest income excluding amortization of debt discount, income tax expense (benefit), depreciation and amortization. Adjusted EBITDA represents EBITDA as further adjusted for items such as stock-based compensation expense, related party management fees, loss (gain) on sale of assets, other non-cash items, other non-recurring (income) and loss (as defined below). See “Results of Operations-Quarterly Results of Operations Data” for more information about how we calculate EBITDA and Adjusted EBITDA and the limitations of those metrics.
Key Factors Affecting Our Operating Results
In addition to the metrics described above, a number of other important factors may affect our results of operations in any given period.
Weather Conditions and Seasonality
In a typical year, our operating results are impacted by seasonality. Typically, our net sales and net income have been higher in the second and third quarters of each fiscal year due to favorable weather and longer daylight conditions during these quarters. Our net sales have been significantly lower in the first and fourth quarters due to lower landscaping, irrigation and turf maintenance activities in these quarters, and we have typically incurred net losses in these quarters. Seasonal variations in operating results may also be significantly impacted by inclement weather conditions, such as snow or rain, which not only impact the demand for certain products like fertilizer and ice melt but also can delay construction projects where our products are used.

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Favorable weather conditions contributed positively to our operating results for the three months ended April 3, 2016. Temperatures across the United States were warmer than usual which increased the demand for our products. The warmer temperatures allowed landscape construction contractors to begin projects in February and early March, especially in northern markets. The early spring also resulted in fertilizer and control products being applied earlier in the season when compared to prior year. As a result of favorable weather conditions in our first quarter, some sales were pulled forward from the second quarter to the first quarter.
Industry and Key Economic Conditions
Our business depends on demand from customers for landscape products and services. The landscape supply industry includes a significant amount of landscape products, such as irrigation systems, outdoor lighting, lawn care supplies, nursery goods and landscape accessories, for use in the construction of newly built homes, commercial buildings and recreational spaces. The landscape distribution industry has historically grown in line with rates of growth in residential housing and commercial building. The industry is also affected by trends in home prices, home sales and consumer spending. As general economic conditions improve or deteriorate, consumption of these products and services tends also to fluctuate. The landscape distribution industry also includes a significant amount of landscape products like fertilizer, herbicides and ice melt for use in maintaining existing landscapes or facilities. The use of these products is also tied to general economic activity, but levels of sales are not as closely correlated to construction markets.
Acquisitions
In addition to our organic growth, we continue to grow our business through acquisitions in an effort to better service our existing customers and to attract new customers. These acquisitions have allowed us to further broaden our product lines and extend our geographic reach and leadership positions in local markets. In accordance with GAAP, the results of the acquisitions we have completed are reflected in our financial statements from the date of acquisition forward. We incur transaction costs in connection with identifying and completing acquisitions and ongoing integration costs as we integrate acquired companies and seek to achieve synergies at acquired companies. We completed the following acquisitions in the three-month periods ended April 3, 2016 and March 29, 2015:
On January 4, 2016, we acquired the outstanding stock of Hydro-Scape Products, Inc., which included 17 locations serving Southern California.
On February 27, 2015, we acquired all of the outstanding stock of CLP SN Holdings, Inc., the parent company of Shemin Nurseries, which included 30 store locations supplying primarily nursery goods in 18 major metropolitan markets across 14 states of the Eastern region of the United States and Texas.
Results of Operations
In the following discussion of our results of operations, we make comparisons between the three-month periods ended April 3, 2016 and March 29, 2015.

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Consolidated Statements of Operations
 
 
 
 
 
 
 
Three Months Ended
 
April 3, 2016
 
March 29, 2015
 
(in millions)
 
(unaudited)
Net sales
 $ 328.5
100.0%
 
 $ 225.8
100.0%
Cost of goods sold
         231.5
70.5%
 
         167.2
74.0%
Gross profit
           97.0
29.5%
 
           58.6
26.0%
Selling, general and administrative expenses
         104.6
31.8%
 
           73.1
32.4%
Other income
              1.2
0.4%
 
              0.8
0.4%
Operating loss
            (6.4)
(1.9%)
 
         (13.7)
(6.1%)
Interest and other non-operating (income) expenses
              2.6
0.8%
 
              2.4
1.1%
Income tax benefit
            (3.4)
(1.0%)
 
            (6.3)
(2.8%)
Net income (loss)
 $ (5.6)
(1.7%)
 
 $ (9.8)
(4.3%)
 
 
 
 
 
 
Comparison of the Three Months Ended April 3, 2016 to the Three Months Ended March 29, 2015
Net sales
Net sales for the three months ended April 3, 2016 increased 45% to $328.5 million as compared to $225.8 million for the three months ended March 29, 2015. Organic sales contributed 23% to overall growth and acquisitions contributed an additional 22%. Organic sales for irrigation, nursery, and other construction related products grew approximately 26% as favorable weather combined with strong demand allowed landscape contractors to begin projects in February and early March. Organic sales for fertilizer and other maintenance products grew approximately 21% as contractors applied spring fertilizer and control products earlier due to the warmer weather. Acquisitions contributed $50.8 million to net sales growth.
  Costs of goods sold
Cost of goods sold for the three months ended April 3, 2016 increased 38% to $231.5 million from $167.2 million for the three months ended March 29, 2015. The increase in cost of goods sold was primarily driven by the increased net sales growth, including acquisitions. Cost of goods also benefitted from lower inbound freight costs attributable to supply chain improvements and lower fuel costs.
Gross profit and gross margin
Gross profit for the three months ended April 3, 2016 increased 65.5% to $97.0 million as compared to $58.6 million for the three months ended March 29, 2015. Gross profit growth was driven by the increase in net sales resulting from organic growth and acquisitions in addition to margin expansion resulting from our focus on operational improvements. Gross margin increased 350 basis points to 29.5% for the three months ended April 3, 2016 as compared to 26.0% for the three months ended March 29, 2015. Operational improvements in pricing and category management contributed approximately 240 basis points to the improvement with the balance primarily attributable to improved supply chain efficiency including lower inbound freight costs.
Selling, general and administrative expenses (operating expenses)
Operating expenses for the three months ended April 3, 2016 increased 43% to $104.6 million from $73.1 million for the three months ended March 29, 2015. The increase in operating expenses was primarily driven by the acquisitions made in 2015 and 2016 as well as investments made in personnel to support our sales growth and strategic initiatives. Operating expenses expressed as a percentage of net sales decreased to 31.8% for the three months ended April 3, 2016 from 32.4% for the three months ended March 29, 2015 reflecting the strong sales growth during the first quarter of fiscal 2016. Depreciation and amortization expense increased $2.1 million to $8.6 million for the three months ended April 3, 2016, primarily as a result of our acquisitions in 2015 and 2016.

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Interest expense and other non-operating income/expense
Interest expense and other non-operating income/expense increased $0.3 million to $2.6 million for the three months ended April 3, 2016 from $2.3 million for the three months ended March 29, 2015. Interest expense and other non-operating income increase was primarily attributable to our higher average outstanding borrowings.
Income tax (benefit) expense
Income tax benefit was $3.4 million for the three months ended April 3, 2016 as compared to income tax benefit of $6.3 million for the three months ended March 29, 2015.  The effective tax rate was 37.8% for the three months ended April 3, 2016 as compared to 39.1% for the three months ended March 29, 2015. The effective rates for the three months ended April 3, 2016 and March 29, 2015, respectively, were impacted primarily by the effects of state income taxes.
Net income (loss) attributable to common shares
Net income (loss) attributable to common shares was $(12.1) million for the three months ended April 3, 2016 as compared to $(17.5) million for the three months ended March 29, 2015. The net income (loss) attributable to common shares is reflective of seasonality of our business.
Quarterly Results of Operations Data
The following tables set forth our net sales, cost of goods sold (exclusive of depreciation), gross profit, selling, general and administrative expenses, net income (loss) attributable to common shares and Adjusted EBITDA data (including a reconciliation of Adjusted EBITDA to net income (loss) for each of the most recent eight fiscal quarters. We have prepared the quarterly data on a basis that is consistent with the financial statements included in this report. In the opinion of management, the financial information reflects all necessary adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of these data. This information is not a complete set of financial statements and should be read in conjunction with our financial statements and related notes included in this report. The results of historical periods are not necessarily indicative of the results of operations for a full year or any future period.
 
Three Months Ended
 
April 3, 2016
 
January 3, 2016
 
September 27, 2015
 
June 28, 2015
 
March 29, 2015
 
December 28, 2014
 
September 28, 2014
 
June 29, 2014
 
(in millions)
 
(unaudited)
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
Net sales
$
328.5

 
$
339.8

 
$
404.5

 
$
481.5

 
$
225.8

 
$
249.5

 
$
326.2

 
$
388.5

Cost of goods sold
231.5

 
235.2

 
286.1

 
334.0

 
167.2

 
184.0

 
242.1

 
279.6

Gross profit
97.0

 
104.6

 
118.4

 
147.5

 
58.6

 
65.5

 
84.1

 
108.9

Selling, general and administrative expenses
104.6

 
110.7

 
98.2

 
91.3

 
73.1

 
68.8

 
67.9

 
71.1

Other income
1.2

 
1.2

 
1.3

 
0.7

 
0.8

 
1.1

 
0.7

 
0.6

Operating income (loss)
(6.4
)
 
(4.9
)
 
21.5

 
56.9

 
(13.7
)
 
(2.2
)
 
16.9

 
38.4

Interest and other non-operating (income) expenses
2.6

 
3.6

 
2.8

 
2.6

 
2.4

 
2.2

 
2.2

 
2.3

Income tax (benefit) expense
(3.4
)
 
(2.7
)
 
7.4

 
21.1

 
(6.3
)
 
(1.8
)
 
6.0

 
14.2

Net income (loss)
$
(5.6
)
 
$
(5.8
)
 
$
11.3

 
$
33.2

 
$
(9.8
)
 
$
(2.6
)
 
$
8.7

 
$
21.9

Adjusted EBITDA (1)
$
4.5

 
$
11.9

 
$
33.7

 
$
66.6

 
$
(5.7
)
 
$
7.1

 
$
23.7

 
$
45.9

Net sales as a percentage of annual net sales
 
 
23.4
%
 
27.9
%
 
33.2
%
 
15.5
 %
 
21.2
%
 
27.7
%
 
33.0
%
Gross profit as a percentage of annual gross profit
 
 
24.4
%
 
27.6
%
 
34.4
%
 
13.6
 %
 
21.1
%
 
27.0
%
 
35.0
%
Adjusted EBITDA as a percentage of annual Adjusted EBITDA
 
 
11.2
%
 
31.7
%
 
62.4
%
 
(5.3
)%
 
9.6
%
 
32.1
%
 
62.2
%

_____________________________________
(1)
In addition to our net income (loss) determined in accordance with GAAP, we present Adjusted EBITDA in this report to evaluate the operating performance and efficiency of the Company’s business. EBITDA represents our net income (loss) plus the sum of interest expense, net of interest income and excluding amortization of debt discount, income tax expense (benefit), depreciation, and amortization. Adjusted EBITDA is further adjusted for stock-based compensation expense, related party advisory fees, loss (gain) on sale of assets, other non-cash items, other non-recurring (income) and loss.

20

We previously included the pre-acquisition Adjusted EBITDA of certain acquired companies in the calculation but have chosen to exclude it going forward for greater consistency with our reported financial results. We believe that Adjusted EBITDA is an important supplemental measure of operating performance because:
•
Adjusted EBITDA is used to test compliance with certain covenants under our Credit Facilities;
•
we believe Adjusted EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an Adjusted EBITDA measure when reporting their results;
•
we believe Adjusted EBITDA is helpful in highlighting operating trends, because it excludes the results of decisions that are outside the control of operating management and that can differ significantly from company to company depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate, age and book depreciation of facilities and capital investments;
•
we consider (gains) losses on the acquisition, disposal and impairment of assets as resulting from investing decisions rather than ongoing operations; and
•
other significant non-recurring items, while periodically affecting our results, may vary significantly from period to period and have a disproportionate effect in a given period, which affects comparability of our results.
Adjusted EBITDA is not a measure of our liquidity or financial performance under GAAP and should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a measure of our liquidity. The use of Adjusted EBITDA instead of net income has limitations as an analytical tool. For example, these measures:
•
do not reflect changes in, or cash requirements for, our working capital needs;
•
do not reflect our interest expense, or the cash requirements necessary to service interest or principal payments, on our debt;
•
do not reflect our tax expense or the cash requirements to pay our taxes;
•
do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; and
•
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and do not reflect any cash requirements for such replacements.
Management compensates for these limitations by relying primarily on our GAAP results and by using Adjusted EBITDA only as a supplement to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone. Because not all companies use identical calculations, our presentation of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies limiting their usefulness as a comparative measure. The following table presents a reconciliation of Adjusted EBITDA to net income (loss):

21


 
 
Three Months Ended
 
 
April 3, 2016
 
January 3, 2016
 
September 27, 2015
 
June 28, 2015
 
March 29, 2015
 
December 28, 2014
 
September 28, 2014
 
June 29, 2014
 
 
(in millions)
 
 
(unaudited)
Reported net income (loss)
$
(5.6
)
 
$
(5.8
)
 
$
11.3

 
$
33.2

 
$
(9.8
)
 
$
(2.6
)
 
$
8.7

 
$
21.9

 
Income tax (benefit) expense
(3.4
)
 
(2.7
)
 
7.4

 
21.1

 
(6.3
)
 
(1.8
)
 
6.0

 
14.2

 
Interest expense, net
2.6

 
3.6

 
2.7

 
2.7

 
2.4

 
2.1

 
2.2

 
2.3

 
Depreciation & amortization
8.6

 
8.7

 
8.3

 
7.8

 
6.4

 
5.6

 
4.9

 
5.5

EBITDA
2.2

 
3.8

 
29.7

 
64.8

 
(7.3
)
 
3.3

 
21.8

 
43.9

 
Non-cash stock-based compensation (a)
0.7

 
0.7

 
0.8

 
0.8

 
0.7

 
0.6

 
0.5

 
1.0

 
(Gain) loss on sale of assets (b)
(0.1
)
 
0.2

 
—

 
0.2

 
—

 
—

 
0.2

 
0.3

 
Advisory fees (c)
0.5

 
0.5

 
0.5

 
0.5

 
0.5

 
0.5

 
0.5

 
0.5

 
Financing fees (d)
—

 
3.5

 
2.0

 
—

 
—

 
—

 
—

 
—

 
Rebranding and other adjustments (e)
1.2

 
3.2

 
0.7

 
0.3

 
0.4

 
2.7

 
0.7

 
0.2

Adjusted EBITDA (f)
$
4.5

 
$
11.9

 
$
33.7

 
$
66.6

 
$
(5.7
)
 
$
7.1

 
$
23.7

 
$
45.9


_____________________________________
(a)
Represents non-cash stock-based compensation expense recorded during the period.
(b)
Represents any gain or loss associated with the sale or write-down of assets not in the ordinary course of business.
(c)
Represents fees paid to CD&R and Deere for consulting services. In connection with the IPO, we entered into termination agreements with CD&R and Deere pursuant to which the parties agreed to terminate the related consulting agreements. See “Certain Relationships and Related Party Transactions-Consulting Agreements” within our Final Prospectus.
(d)
Represents fees associated with our debt amendment completed during the 2015 Fiscal Year and our initial registration process, which were recorded as an expense during the 2015 Fiscal Year.
(e)
Represents (i) expenses related to our rebranding to the name SiteOne, (ii) professional fees, retention and performance bonuses related to historical acquisitions, (iii) severance payments and (iv) consulting and professional fees. Although we have incurred professional fees, retention and performance bonuses related to acquisitions in several historical periods and expect to incur such fees for any future acquisitions, we cannot predict the timing or amount of any such fees.
(f)
Adjusted EBITDA excludes any earnings or loss of acquisitions prior to their respective acquisition dates for all periods presented.
  Liquidity and Capital Resources
Our ongoing liquidity needs are expected to be funded by cash on hand, net cash provided by operating activities and, as required, borrowings under the ABL Facility. We expect that cash provided from operations and available capacity under the ABL Facility will provide sufficient funds to operate our business, make expected capital expenditures, and meet our liquidity requirements for the following 12 months, including payment of interest and principal on our debt.
Our borrowing base capacity under the ABL Facility was $158.3 million as of April 3, 2016, after giving effect to approximately $159.4 million of revolving credit loans under the ABL Facility, a $31.4 million increase from $128.0 million of revolving credit loans as of January 3, 2016. As of April 3, 2016, on a pro forma as adjusted basis, after giving effect to the acquisition that closed subsequent to April 3, 2016, debt refinancing and the special cash dividend of $176.0 million (the "Special Cash Dividend") and each of the other items described in the section entitled “Capitalization” included in the Final Prospectus, we had total cash and cash equivalents of $9.0 million, debt of $402.4 million and capital leases of $10.1 million. See “Note 13. Subsequent Events” in the notes to the condensed consolidated financial statements for a discussion of the debt refinancing and the Special Cash Dividend.
Working capital, excluding cash and cash equivalents, was $289.0 million as of April 3, 2016, increasing $11.7 million as compared to $277.3 million at the year ended January 3, 2016. The increase in working capital was attributable to increases in accounts receivable and inventory offset by higher accounts payable, resulting from the seasonality of our business and the acquisition of Hydro-Scape.

22

Information about our cash flows, by category, is presented in our statements of cash flows and is summarized below:
 
Three Months Ended
 
April 3, 2016
 
March 29, 2015
 
(in millions)
 
(unaudited)
Net cash provided by (used in):
 
 
 
    Operating activities
$
10.0

 
$
(15.2
)
    Investing activities
$
(33.0
)
 
$
(56.7
)
    Financing activities
$
23.3

 
$
74.9

Cash flow from operating activities
Cash flow from operating activities for the three months ended April 3, 2016 was $10.0 million as compared to cash used of $15.2 million for the three months ended March 29, 2015. Cash flow from operations during the first quarter of fiscal 2016 benefited from higher net income and a smaller working capital build resulting from the our sales increase and timing on our vendor payments.

Cash flow used in investing activities
Cash used in investing activities was $33.0 million for the three months ended April 3, 2016 as compared to $56.7 million for the three months ended March 29, 2015, reflecting the difference in the size of acquisitions for the three months ended April 3, 2016 relative to the three months ended March 29, 2015. Cash used for capital expenditures was $1.9 million for the three months ended April 3, 2016 up slightly from $1.3 million for the three months ended March 29, 2015 reflecting greater investments in facilities and information technology to support our growth.
Cash flow provided by (used in) financing activities
Cash provided by financing activities was $23.3 million for the three months ended April 3, 2016 compared to cash provided of $74.9 million for the three months ended March 29, 2015. The ABL facility was the primary source of cash in both the three months ended April 3, 2016 and the three months ended March 29, 2015. Cash requirements were lower for the three months ended April 3, 2016 as a result of the positive cash flow from operations and less investment in acquisitions partially offset by a $6.5 million in preferred dividend paid during the first quarter of fiscal 2016.

23

External Financing
Term Loan Facility
Prior Term Loan Facility
On December 23, 2013, Landscape Holding and Landscape (collectively, the “Term Loan Borrowers”) entered into a senior term loan facility (the “Prior Term Loan Facility”) in an aggregate principal amount of approximately $61.7 million. The Prior Term Loan Facility was guaranteed by SiteOne Landscape Supply Bidco, Inc. (“Bidco”), an indirect wholly-owned subsidiary of SiteOne Landscape Supply, Inc., and each direct and indirect wholly-owned U.S. restricted subsidiary of Landscape. As of April 3, 2016, the interest rate on the Prior Term Loan Facility was LIBOR (minimum of 1.0%) plus an applicable margin of 4.0% or an alternate base rate for U.S. denominated borrowings plus an applicable margin of 3.0%. The interest rate on the outstanding balance at April 3, 2016 was 5.0%. The Prior Term Loan Facility maturity date was December 23, 2019.
Refinancing
On April 29, 2016, we completed the refinancing of the Prior Term Loan Facility by entering into a senior secured term loan facility in the amount of $275.0 million (the “Amended Term Loan Facility”). We used borrowings under the Amended Term Loan Facility to repay all $60.3 million of borrowings outstanding under the Prior Term Loan Facility, repay $29.9 million of borrowings outstanding under the ABL Facility, pay the Special Cash Dividend and pay fees and expenses associated with the refinancing.
Amended Term Loan Facility
The Term Loan Borrowers are parties to the Amended and Restated Term Loan Credit Agreement, dated April 29, 2016, with UBS AG, Stamford Branch as administrative agent and collateral agent, and the other financial institutions and lenders from time to time party thereto (the “Amended and Restated Term Loan Credit Agreement”) providing for the Amended Term Loan Facility.
The final maturity date of the Amended Term Loan Facility is April 29, 2022. In addition, however, the Amended and Restated Term Loan Credit Agreement provides the right for individual lenders to extend the maturity date of their loans upon the request of the Term Loan Borrowers and without the consent of any other lender.
Subject to certain conditions, without the consent of the then existing lenders (but subject to the receipt of commitments), the Amended Term Loan Facility may be expanded (or a new term loan facility, revolving credit facility or letter of credit facility added) by up to (i) $100.0 million plus (ii) an additional amount that will not cause the net secured leverage ratio after giving effect to the incurrence of that additional amount and any use of proceeds thereof to exceed 3.50 to 1.00.
The Amended Term Loan Facility is subject to mandatory prepayment provisions, covenants and events of default described in “Description of Certain Indebtedness-Term Loan Facility” within our Final Prospectus. Failure to comply with these covenants and other provisions could result in an event of default under the Amended Term Loan Facility. If an event of default occurs, the lenders could elect to declare all amounts outstanding under the Amended Term Loan Facility to be immediately due and payable and enforce their interest in collateral pledged under the agreement.
ABL Facility
Landscape Holding and Landscape are borrowers under the senior asset-based credit facility of up to $325.0 million (the “ABL Facility”), subject to borrowing base availability. The ABL Facility is secured by a first lien on the inventory and receivables. The ABL Facility is guaranteed by Bidco. Availability is determined using borrowing base calculations of eligible inventory and receivable balances. The interest rate on the ABL Facility is LIBOR plus an applicable margin ranging from 1.25% to 2.00% or an alternate base rate for U.S. dollar-denominated borrowings plus an applicable margin ranging from 0.25% to 1.00%. The interest rates on outstanding balances at April 3, 2016 range from 2.19% to 4.50%. Additionally, the borrowers pay a 0.25% commitment fee on the unfunded amount. The ABL Facility matures on October 20, 2020.
The ABL Facility is subject to mandatory prepayments if the outstanding loans and letters of credit exceed either the aggregate revolving commitments or the current borrowing base, in an amount equal to such excess. Additionally, the ABL Facility is subject to various covenants requiring minimum financial ratios, and additional borrowings may be limited by these financial ratios. The ABL Facility is also subject to other covenants and events of default described in “Description of Certain Indebtedness-ABL Facility” within our Final Prospectus. Failure to comply with these covenants and other provisions could result in an event of default under the ABL Facility. If an event of default occurs, the lenders could elect to declare all amounts

24

outstanding under the ABL Facility to be immediately due and payable, enforce their interest in collateral pledged under the agreement or restrict the borrowers’ ability to obtain additional borrowings thereunder.
Limitations on Distributions and Dividends by Subsidiaries
The ability of our subsidiaries to make distributions and dividends to us depends on their operating results, cash requirements and financial condition and general business conditions, as well as restrictions under the laws of our subsidiaries’ jurisdictions.
The agreements governing the Amended Term Loan Facility and the ABL Facility (collectively, the “Credit Facilities”) restrict the ability of our subsidiaries to pay dividends, make loans or otherwise transfer assets to us. Further, our subsidiaries are permitted under the terms of the Credit Facilities and other indebtedness to incur additional indebtedness that may restrict or prohibit the making of distributions, the payment of dividends or the making of loans to us.
Contractual Obligations and Commitments
The following table summarizes material changes to our contractual obligations as of April 3, 2016, resulting from the changes in our long term debt through April 3, 2016. These changes primarily resulted from increased borrowing under the ABL Facility.

 
Payment Due by Period
 
(in millions)
 
 
Less than
 
 
More than
 
Total
1 Year
1-3 Years
3-5 Years
5 Years
 
 
 
 
 
 
Long term debt, including current maturities (1)
$
219.7

$
0.6

$
1.2

$
217.9

$
—

Interest on long term debt (2)
32.3

7.1

14.1

11.1

—


(1)
The table above does not give effect to our April debt refinancing transactions discussed in “Note 13. Subsequent Events.” For additional information see “Note 7. Debt” in the notes to the condensed consolidated financial statements. In addition, the table excludes the debt discount of $10.2 million.
(2)
Interest payments on debt are calculated for future periods using interest rates in effect as of April 3, 2016. Certain of these projected interest payments may differ in the future based on changes in floating interest rates or other factors and events. The projected interest payments only pertain to obligations and agreements outstanding as of April 3, 2016. See “Note 7. Debt” in the notes to the condensed consolidated financial statements for further information regarding our debt instruments.
The following table summarizes material changes to our contractual obligations as of April 3, 2016, on a pro forma basis reflecting both changes to our long term debt through April 3, 2016 as well as our April debt refinancing transactions discussed in “Note 13. Subsequent Events” in the notes to the condensed consolidated financial statements.

 
Payment Due by Period
 
(in millions)
 
 
Less than
 
 
More than
 
Total
1 Year
1-3 Years
3-5 Years
5 Years
 
 
 
 
 
 
Long term debt, including current maturities (1)
$
416.0

$
2.8

$
5.5

$
146.5

$
261.2

Interest on long term debt (2)
118.6

20.8

41.1

40.4

16.3


(1)
The table reflects the debt refinancing activities, the Special Cash Dividend and the acquisition that closed subsequent to April 3, 2016 described in “Note 13. Subsequent Events” in the notes to the condensed consolidated financial statements, and each of the other items described in the section entitled “Capitalization” included in the Final Prospectus. In addition, the table excludes the debt discount on a pro forma basis of $13.6 million.
(2)
Interest payments on debt are calculated for future periods using interest rates in effect as of April 3, 2016. Certain of these projected interest payments may differ in the future based on changes in floating interest rates or other factors and events.

25

Off-Balance Sheet Arrangements
In accordance with GAAP, operating leases for the majority of our store locations are not reflected in our consolidated balance sheet.
Critical Accounting Estimates
There were no material changes in our critical accounting estimates since the filing of our Final Prospectus.
Recently Issued and Adopted Accounting Pronouncements
See “Note 1. Nature of Business and Significant Accounting Policies” in the notes to the condensed consolidated financial statements.
Accounting Pronouncements Issued But Not Yet Adopted
See “Note 1. Nature of Business and Significant Accounting Policies” in the notes to the condensed consolidated financial statements.
Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements and cautionary statements. Some of the forward-looking statements can be identified by the use of terms such as “may,” “intend,” “might,” “will,” “should,” “could,” “would,” “expect,” “believe,” “estimate,” “anticipate,” “predict,” “project,” “potential,” or the negative of these terms, and similar expressions. You should be aware that these forward-looking statements are subject to risks and uncertainties that are beyond our control. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time that may cause our business not to develop as we expect, and it is not possible for us to predict all of them. Factors that may cause actual results to differ materially from those expressed or implied by the forward-looking statements include, but are not limited to, the following:
•
cyclicality in residential and commercial construction markets;
•
general economic and financial conditions;
•
weather conditions, seasonality and availability of water to end-users;
•
laws and government regulations applicable to our business that could negatively impact demand for our products;
•
public perceptions that our products and services are not environmentally friendly;
•
competitive industry pressures;
•
product shortages and the loss of key suppliers;
•
product price fluctuations;
•
inventory management risks;
•
ability to implement our business strategies and achieve our growth objectives;
•
acquisition and integration risks;
•
increased operating costs;
•
risks associated with our large labor force;
•
adverse credit and financial markets events and conditions;
•
credit sale risks;
•
retention of key personnel;
•
performance of individual stores;
•
environmental, health and safety laws and regulations;

26

•
hazardous materials and related materials;
•
construction defect and product liability claims;
•
rebranding;
•
computer data processing systems;
•
security of personal information about our customers;
•
intellectual property and other proprietary rights;
•
requirements of being a public company;
•
risks related to our internal controls;
•
the possibility of securities litigation;
•
our substantial indebtedness and our ability to obtain financing in the future;
•
increases in interest rates; and
•
risks related to other factors discussed in this Quarterly Report on Form 10-Q.

You should read this Quarterly Report on Form 10-Q completely and with the understanding that actual future results may be materially different from expectations. All forward-looking statements made in this Quarterly Report on Form 10-Q are qualified by these cautionary statements. These forward-looking statements are made only as of the date of this Quarterly Report on Form 10-Q, and we do not undertake any obligation, other than as may be required by law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, changes in future operating results over time or otherwise.

Comparisons of results for current and any prior periods are not intended to express any future trends, or indications of future performance, unless expressed as such, and should only be viewed as historical data.


Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes from the information provided in our Final Prospectus.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of the end of the period covered by this report. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.



27

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are not currently involved in any material litigation or arbitration. We anticipate that, similar to the rest of the landscape supply industry, we will be subject to litigation and arbitration from time to time in the ordinary course of business. At this time, we do not expect any of these proceedings to have a material effect on our reputation, business, financial position, results of operations or cash flows. However, we can give no assurance that the results of any such proceedings will not materially affect our reputation, business, financial position, results of operations and cash flows.

Item 1A. Risk Factors

We discuss in our Final Prospectus filed pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended, filed with the SEC on May 12, 2016 (Registration No. 333-206444) and our other filings with the SEC, various risks that may materially affect our business. There have been no material changes to the risk factors disclosed in the Final Prospectus. The materialization of any risks and uncertainties identified in “Forward-Looking Statements” contained in this report together with those previously disclosed in the Final Prospectus and our other filings with the SEC or those that are presently unforeseen could result in significant adverse effects on our financial condition, results of operations and cash flows. See “Forward-Looking Statements.”


Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

28

Item 6. Exhibits.

Exhibit
Number
 
 
Description
 
 
 
 
3.1
 
Second Amended and Restated Certificate of Incorporation of SiteOne Landscape Supply, Inc., is incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-8 of SiteOne Landscape Supply, Inc., Registration No. 333-211422 (the “Form S-8”).
 
 
 
3.2
 
Second Amended and Restated By-Laws of SiteOne Landscape Supply, Inc., is incorporated by reference to Exhibit 3.2 to the Form S-8.
 
 
 
4.1
 
Form of Common Stock Certificate of SiteOne Landscape Supply, Inc., is incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-1 of SiteOne Landscape Supply, Inc., Registration No. 333-206444 (the “Form S-1”).
 
 
 
10.1#
 
Amended and Restated Stockholders Agreement, dated as of May 12, 2016, by and among SiteOne Landscape Supply, Inc., CD&R Landscapes Holdings, L.P. and Deere & Company.
 
 
 
10.2
 
Amendment No. 3 to the Term Loan Credit Agreement, dated as of April 29, 2016, by and among SiteOne Landscape Supply Holding, LLC (f/k/a JDA Holding LLC), SiteOne Landscape Supply, LLC (f/k/a John Deere Landscapes LLC), other subsidiary borrowers and the several banks and other financial institutions from time to time party thereto, and UBS AG, Stamford Branch LLC, as successor administrative agent, is incorporated by reference to Exhibit 10.18 to the Form S-1.
 
 
 
10.3
 
Amended and Restated Term Loan Credit Agreement, dated as of April 29, 2016 SiteOne Landscape Supply Holding, LLC (f/k/a JDA Holding LLC), SiteOne Landscape Supply, LLC (f/k/a John Deere Landscapes LLC), other subsidiary borrowers and the several banks and other financial institutions from time to time party thereto, and UBS AG, Stamford Branch, as administrative agent, is incorporated by reference to Exhibit 10.18A to the Form S-1.
 
 
 
10.4*
 
Form of Employee Stock Option Agreement, is incorporated by reference to Exhibit 10.22 to the Form S-1.
 
 
 
10.5*
 
Form of Employee Stock Subscription Agreement, is incorporated by reference to Exhibit 10.23 to the Form S-1.
 
 
 
10.6*
 
Form of Director Indemnification Agreement between SiteOne Landscape Supply, Inc. and each of its directors, is incorporated by reference to Exhibit 10.25 to the Form S-1.
 
 
 
10.7*
 
SiteOne Landscape Supply, Inc. 2016 Omnibus Incentive Plan, is incorporated by reference to Exhibit 10.26 to the Form S-1.
 
 
 
10.7.1*
 
2016 Form of Employee Option Agreement, is incorporated by reference to Exhibit 10.32 to the Form S-1.
 
 
 
10.7.2*
 
2016 Form of Employee Restricted Stock Unit Agreement, is incorporated by reference to Exhibit 10.33 to the Form S-1.
 
 
 
10.7.3*
 
2016 Form of Non-Employee Director Deferred Stock Unit Agreement, is incorporated by reference to Exhibit 10.34 to the Form S-1.
 
 
 
10.8*
 
Form of Separation Benefit Agreement, is incorporated by reference to Exhibit 10.30 to the Form S-1.
 
 
 
10.9*
 
Form of Employee Offer Letter, is incorporated by reference to Exhibit 10.31 to the Form S-1.
 
 
 
10.10*
 
Summary of Non-Employee Director Compensation Program, is incorporated by reference to Exhibit 10.35 to the Form S-1.
 
 
 
10.11*
 
Executive Stock Ownership Policy, is incorporated by reference to Exhibit 10.37 to the Form S-1.
 
 
 
10.12#
 
Consulting Agreement Termination Letter Agreement, dated May 17, 2016, by and among SiteOne Landscape Supply, Inc., SiteOne Landscape Supply Midco, Inc., SiteOne Landscape Supply Bidco, Inc., SiteOne Landscape Supply Holding, LLC, SiteOne Landscape Supply, LLC and Clayton, Dubilier & Rice, LLC.
 
 
 

29

Exhibit
Number
 
 
Description
 
 
 
 
10.13#
 
Consulting Agreement Termination Letter Agreement, dated May 17, 2016, by and among SiteOne Landscape Supply, Inc., SiteOne Landscape Supply Midco, Inc., SiteOne Landscape Supply Bidco, Inc., SiteOne Landscape Supply Holding, LLC, SiteOne Landscape Supply, LLC and Deere & Company.
 
 
 
31.1#
 
Certification of Chief Executive Officer Pursuant to Exchange Act Rule 13a - 14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
 
 
31.2#
 
Certification of Chief Financial Officer Pursuant to Exchange Act Rule 13a - 14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
 
 
32.1#
 
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
 
32.2#
 
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
 
101.INS#
 
XBRL Instance Document
 
 
 
101.SCH#
 
XBRL Taxonomy Extension Schema
 
 
 
101.CAL#
 
XBRL Taxonomy Extension Calculation Linkbase
 
 
 
101.DEF#
 
XBRL Taxonomy Extension Definition Linkbase
 
 
 
101.LAB#
 
XBRL Taxonomy Extension Label Linkbase
 
 
 
101.PRE#
 
XBRL Extension Presentation Linkbase

____________________________________

# Filed herewith.
* Denotes management compensatory plans, contracts or arrangements.


30

SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
  
SITEONE LANDSCAPE SUPPLY, INC.
 
  
  
  
Date:
June 22, 2016
By:
/s/ Doug Black
 
  
  
Doug Black
 
  
  
Chief Executive Officer
 
  
  
  
Date:
June 22, 2016
By:
/s/ John Guthrie
 
  
  
John Guthrie
 
  
  
Chief Financial Officer


31
Exhibit 10.1









AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
OF
SITEONE LANDSCAPE SUPPLY, INC.


dated as of May 12, 2016


TABLE OF CONTENTS
 
 
Page

 
 
 
ARTICLE I
 
 
 
DEFINITIONS
 
 
 
SECTION 1.1.
Certain Defined Terms
2

SECTION 1.2.
Other Definitional Provisions
7

SECTION 1.3.
Methodology for Calculations
7

 
 
 
ARTICLE II
 
 
 
CORPORATE GOVERNANCE
 
 
 
SECTION 2.1.
Board
7

SECTION 2.2.
Voting Agreement
10

SECTION 2.3.
Financial Information
10

SECTION 2.4.
Access
11

 
 
 
ARTICLE III
 
 
 
TRANSFERS
 
 
 
SECTION 3.3.
Restrictions on Transfer
12

 
 
 
ARTICLE IV
 
 
 
MISCELLANEOUS
 
 
 
SECTION 4.1.
Transfer of Rights
12

SECTION 4.2.
Certificate of Incorporation and By-laws
12

SECTION 4.3.
Termination
13

SECTION 4.4.
Confidentiality
13

SECTION 4.5.
Amendments and Waivers
13

SECTION 4.6.
Successors, Assigns and Transferees
14

SECTION 4.7.
Legends
14

SECTION 4.8.
Notices
15

SECTION 4.9.
Further Assurances
16

SECTION 4.10.
Entire Agreement; Third Party Beneficiaries
16

SECITON 4.11.
Restrictions on Other Agreements
17

SECITON 4.12.
Delays or Omissions
17

SECTION 4.13.
Governing Law
17


i

SECTION 4.14.
Dispute Resolution; Jurisdiction
17

SECTION 4.15.
Waiver of Jury Trial
18

SECTION 4.16.
Specific Performance
18

SECTION 4.17.
Severability
19

SECTION 4.18.
Titles and Subtitles
19

SECTION 4.19.
No Recourse
19

SECTION 4.20.
Counterparts; Facsimile Signatures
19

 
 
 
 
 
 
Exhibits
 
 
 
 
 
Exhibit A - Form of Assignment and Assumption Agreement


ii

THIS AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (as amended from time to time, this “ Agreement ”) is entered as of May 12, 2016, by and among SITEONE LANDSCAPE SUPPLY, INC., a Delaware corporation (the “ Company ”), DEERE & COMPANY, a Delaware corporation (“ Deere Investor ”), CD&R LANDSCAPES HOLDINGS, L.P., a Cayman Islands exempted limited partnership (“ CD&R Investor ”), and any Person who becomes a party hereto after the date hereof pursuant to Section 3.1 (each of the foregoing, excluding the Company, a “ Stockholder ” and collectively, the “ Stockholders ”).
RECITALS
WHEREAS, Deere Investor, SiteOne Holding LLC, formerly known as JDA Holding LLC (“ JDA ”), SiteOne Landscape Supply LLC, formerly known as John Deere Landscapes LLC (“ OpCo ”), SiteOne Landscape Supply Bidco, Inc., formerly known as CD&R Landscapes Bidco, Inc. (“ Bidco ”), CD&R Landscapes Merger Sub, Inc., CD&R Landscapes Merger Sub 2, Inc. and CD&R Investor entered into an Investment Agreement, dated as of October 26, 2013 (as it may be amended from time to time, the “ Investment Agreement ”), pursuant to which CD&R Investor acquired a sixty percent (60%) equity interest in the Company and Bidco acquired from Deere Investor 100% of the limited liability company interests of JDA (which owns 100% of the limited liability company interests of OpCo) and 100% of the outstanding capital stock of LESCO, Inc. (the “ Investment ”), in consideration for cash and a forty percent (40%) equity interest in the Company;
WHEREAS, the Company and each of the Stockholders entered into a Registration Rights Agreement, dated as of December 23, 2013 (the “ Registration Rights Agreement ”), pursuant to which certain registration rights have been granted to the Stockholders, upon the terms and subject to the conditions set forth in the Registration Rights Agreement;
WHEREAS, in connection with the Investment, the Company and the Stockholders entered into a Stockholders Agreement, dated as of December 23, 2013, as amended (the “ Initial Stockholders Agreement ”), to set forth certain terms and conditions regarding the ownership of Equity Securities, including certain restrictions on the Transfer of such securities, and the management of the Company and its Subsidiaries;
WHEREAS, the Company intends to undertake an underwritten initial public offering (the “ IPO ”) of Common Stock; and
WHEREAS, in connection with the IPO, and effective as of the date of the listing of the Common Stock on the NYSE in connection with the IPO (the “ Listing Date ”), pursuant to Section 5.5 of the Initial Stockholders Agreement, Deere Investor, CD&R Investor and the Company desire to further amend and restate the Initial Stockholders Agreement to set forth their respective rights and obligations on and after the Listing Date.
NOW, THEREFORE, in consideration of the foregoing recitals and of the mutual promises hereinafter set forth, the parties hereto agree as follows:



ARTICLE I

DEFINITIONS
SECTION 1.1.     Certain Defined Terms . As used herein, the following terms shall have the following meanings:
“ Additional VCOC ” has the meaning assigned to such term in Section 2.1(i) .
“ Affiliate ” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with, such Person.
“ Agreement ” has the meaning assigned to such term in the preamble.
“ beneficial owner ” or “ beneficially own ” has the meaning given such term in Rule 13d-3 under the Exchange Act, and a Person’s beneficial ownership of Common Stock or other Equity Securities of the Company shall be calculated in accordance with the provisions of such Rule; provided , however , that for purposes of determining beneficial ownership, ( i ) a Person shall be deemed to be the beneficial owner of any security which may be acquired by such Person, whether within sixty (60) days or thereafter, upon the conversion, exchange or exercise of any warrants, options, rights or other securities and ( ii ) no Person shall be deemed to beneficially own any security solely as a result of such Person’s execution of this Agreement.
“ Board ” means the Board of Directors of the Company.
“ Business Day ” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by Law to be closed in New York City.
“ By-laws ” means the Second Amended and Restated By-laws of the Company, as in effect on the date hereof and as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof, the terms of the Charter and the terms of this Agreement.
“ CD&R Advisor Fund ” means CD&R Advisor Fund VIII Co-Investor, L.P.
“ CD&R Designee ” has the meaning assigned to such term in Section 2.1(c) .
“ CD&R F&F Fund VIII ” means CD&R Friends & Family Fund VIII, L.P.
“ CD&R Fund VIII ” means Clayton, Dubilier & Rice Fund VIII, L.P.
“ CD&R Holders ” means, collectively, CD&R Investor, its Permitted Affiliate Transferees, and its Permitted Transferees (other than any Transferee pursuant to any distribution pursuant to the Registration Rights Agreement).
“ CD&R Indemnification Agreement ” means the Indemnification Agreement, dated as of December 23, 2013, among the Company, CD&R Landscapes Midco, Inc., Bidco, JDA, OpCo,

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CD&R Investor, CD&R Fund VIII, CD&R F&F Fund VIII, CD&R Advisor Fund, Clayton, Dubilier & Rice, Inc. and CD&R Manager, as the same may be amended from time to time in accordance with its terms.
“ CD&R Investor ” has the meaning set forth in the preamble.
“ CD&R Manager ” means Clayton, Dubilier & Rice, LLC.
“ Chairman ” has the meaning assigned to such term in Section 2.1(g) .
“ Charter ” means the Second Amended and Restated Certificate of Incorporation of the Company, as in effect on the date hereof and as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof and the terms of this Agreement.
“ Common Stock ” means the common stock of the Company, par value $0.01 per share.
“ Common Stock Equivalent ” means all options, warrants and other securities convertible into, or exchangeable or exercisable for (at any time or upon the occurrence of any event or contingency and without regard to any vesting or other conditions to which such securities may be subject) shares of Common Stock or other equity securities of the Company (including any notes or other debt securities convertible into or exchangeable for shares of Common Stock or other equity securities of the Company).
“ Company ” has the meaning assigned to such term in the preamble.
“ control ” (including the terms “ controlling ,” “ controlled by ” and “ under common control with ”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise.
“ Controlled Affiliate ” means, with respect to any Person, any Affiliate of such Person that is, directly or indirectly, controlled by such Person.
“ Deere Designee ” has the meaning assigned to such term in Section 2.1(d) .
“ Deere Holders ” means, collectively, Deere Investor, its Permitted Affiliate Transferees and its and their respective Permitted Transferees (other than any Transferee pursuant to any distribution pursuant to the Registration Rights Agreement).
“ Deere Indemnification Agreement ” means the Indemnification Agreement, dated as of December 23, 2013, between the Company, CD&R Landscapes Midco, Inc., Bidco, Deere Investor, JDA and OpCo, as the same may be amended from time to time in accordance with its terms.
“ Deere Investor ” has the meaning assigned to such term in the preamble.

3


“ DGCL ” means the Delaware General Corporation Law, as amended from time to time.
“ Director ” means any member of the Board.
“ Dispute ” has the meaning assigned to such term in Section 4.14(a) .
“ Equity Securities ” means any and all shares of Common Stock or other equity securities of the Company, securities of the Company convertible into, or exchangeable or exercisable for, such shares or other equity securities, and options, warrants or other rights to acquire shares of Common Stock or other equity securities of the Company.
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“ Governmental Body ” means any domestic or foreign government, including any foreign, federal, state, provincial, local, territorial or municipal government or any governmental division, agency or authority thereof, court or judicial authority, tribunal or commission.
“ Indemnification Agreements ” means, collectively, the CD&R Indemnification Agreement and the Deere Indemnification Agreement.
“ Information ” means all information about the Company, any of its Subsidiaries or any Stockholder or Affiliate thereof that is or has been furnished to any Stockholder or any of its Representatives (acting in their capacity as such) by or on behalf of the Company or any of its Subsidiaries, or any of their respective Representatives, and any other information supplied by or relating to the Company, its Subsidiaries or any Stockholder in connection with the matters contemplated by the Investment Agreement or any other Transaction Agreement (in any such case, whether written or oral or in electronic or other form and whether prepared by the Company, its advisers or otherwise), together with all written or electronically stored documentation prepared by such Stockholder or its Representatives based on or reflecting, in whole or in part, such information; provided that the term “Information” does not include any information that ( i ) is or becomes generally available to the public through no action or omission by such Stockholder or its Representatives, ( ii ) is or becomes available to such Stockholder on a non-confidential basis from a source, other than the Company or any of its Subsidiaries, or any of their respective Representatives, that to such Stockholder’s knowledge is not prohibited from disclosing such portions to such Stockholder by a contractual, legal or fiduciary obligation, ( iii ) is independently developed by a Stockholder or its Representatives or Affiliates on its own behalf without use of any Information, or ( iv ) is in the possession of or known to such Stockholder prior to the date of its disclosure to such Stockholder.
“ Initial Stockholders Agreement ” has the meaning assigned to such term in the recitals.
“ Investment ” has the meaning assigned to such term in the recitals.
“ Investment Agreement ” has the meaning assigned to such term in the recitals.
“ IPO ” has the meaning assigned to such term in the recitals.

4


“ JDA ” has the meaning assigned to such term in the recitals.
“ Law ” means any foreign, federal, state or local law, statute, regulation, ordinance, rule, order, decree, judgment, consent decree or other binding directive issued, enacted, promulgated, entered into, agreed or imposed by any Governmental Body.
“ Listing Date ” has the meaning assigned to such term in the recitals.
“ OpCo ” has the meaning assigned to such term in the recitals.
“ Outstanding Capital Shares ” means, at any time, the shares of Common Stock issued and outstanding as of such time.
“ Permitted Affiliate Transferee ” means:
(i)    with respect to CD&R Investor and its Permitted Affiliate Transferees, ( A ) a Controlled Affiliate of CD&R Investor, CD&R Fund VIII, CD&R F&F Fund VIII or CD&R Advisor Fund or ( B ) an Affiliate of CD&R Investor, CD&R Associates VIII, Ltd. or CD&R Manager (other than, with respect to clauses (A) and (B), ( x ) any portfolio company of any of the foregoing in (A) or (B), and ( y ) the limited partners of any of CD&R Fund VIII, CD&R F&F Fund VIII or CD&R Advisor Fund or any other fund or alternative investment vehicle managed directly or indirectly by CD&R Manager or CD&R Associates VIII, Ltd.), in each case, who has irrevocably granted to and appointed CD&R Investor as such Person’s proxy and attorney-in-fact (with full power of substitution), for and in the name, place and stead of such Person (and with respect to whom CD&R Investor has provided, at Deere Investor’s written request, to Deere Investor written evidence reasonably satisfactory to Deere Investor of such grant and appointment), to vote at any annual or special meeting of Stockholders, to take any action by written consent in lieu of such meeting with respect to, and to otherwise take all action as may be required by, permitted under, or as may be exercised under this Agreement in respect of, all of the Equity Securities owned or held of record by such holder that are entitled to vote at such meeting or to act by written consent in lieu of such meeting;
(ii)    with respect to Deere Investor and its Permitted Affiliate Transferees, ( A ) a Controlled Affiliate of Deere Investor or ( B ) any other Affiliate of Deere Investor, in each case, who has irrevocably granted to and appointed Deere Investor as such Person’s proxy and attorney-in-fact (with full power of substitution), for and in the name, place and stead of such Person (and with respect to whom Deere Investor, at CD&R Investor’s written request, has provided to CD&R Investor written evidence reasonably satisfactory to CD&R Investor of such grant and appointment), to vote at any annual or special meeting of Stockholders, to take any action by written consent in lieu of such meeting with respect to, and to otherwise take all action as may be required by, permitted under, or as may be exercised under this Agreement in respect of, all of the Equity Securities owned or held of record by such holder that are entitled to vote at such meeting or to act by written consent in lieu of such meeting; and

5


(iii)    with respect to any other Stockholder who is a Permitted Transferee of CD&R Investor or Deere Investor (for the avoidance of doubt, other than a Permitted Affiliate Transferee of CD&R Investor or Deere Investor pursuant to clauses (i) or (ii) above, as applicable), a Controlled Affiliate of such Stockholder (other than, with respect to any such Stockholder who is an investment fund or alternative investment vehicle, ( x ) any portfolio company of such investment fund or alternative investment vehicle and ( y ) the limited partners of such investment fund or alternative investment vehicle, or the limited partners of any other investment fund or alternative investment vehicle managed directly or indirectly by the manager of such investment fund or alternative investment vehicle or any of its Affiliates);
provided that, in each case, any such Transferee shall agree in a writing in the form attached as Exhibit A hereto to be bound by and to comply with all applicable provisions of this Agreement; provided , further , that in no event shall the Company or any of its Subsidiaries constitute a “Permitted Affiliate Transferee” of any Stockholder.
“ Permitted Transferee ” means any Transferee of Outstanding Capital Shares of CD&R Investor, Deere Investor or any of their respective Permitted Affiliate Transferees, or any of their respective Permitted Transferees, permitted in accordance with this Agreement.
“ Person ” means any natural person, partnership, limited liability company, corporation, joint stock company, trust, estate, joint venture, group, association or unincorporated organization or any other form of business or professional entity, but does not include a Governmental Body.
“ Registration Rights Agreement ” has the meaning assigned to such term in the recitals.
“ Representatives ” means with respect to any Person, any of such Person’s or its Affiliates’ directors, officers, employees, general partners, Affiliates, direct or indirect shareholders, members or limited partners, attorneys, accountants, financial and other advisers, and other agents and representatives.
“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“ Stockholder ” or “ Stockholders ” has the meaning set forth in the preamble.
“ Subsidiary ” or “ Subsidiaries ” means, with respect to any Person, any other Person of which ( i ) if a corporation, a majority of the total voting power of shares of capital stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or ( ii ) if a limited liability company, partnership, association or other business entity (other than a corporation), a majority of partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more other Subsidiaries of that Person or a combination thereof and for this purpose, a Person or Persons owns a majority

6


ownership interest in such a business entity (other than a corporation) if such Person or Persons shall be allocated a majority of such business entity’s gains or losses or shall be or control any managing director or general partner of such business entity (other than a corporation). For the purposes hereof, the term “Subsidiary” shall include all Subsidiaries of such Subsidiary.
“ Transaction Agreements ” means, collectively, this Agreement, the Investment Agreement, the Registration Rights Agreement and the Indemnification Agreements.
“ Transfer ” means, directly or indirectly, to sell, transfer, assign, pledge, encumber, hypothecate or similarly dispose of, either voluntarily or involuntarily, or to enter into any contract, option or other arrangement or understanding with respect to the sale, transfer, assignment, pledge, encumbrance, hypothecation or similar disposition of, any shares of Equity Securities beneficially owned by a Person or any interest in any shares of Equity Securities beneficially owned by a Person. The noun “ Transfer ” has a meaning correlative to the foregoing.
“ Transferee ” means any Person to whom any Stockholder Transfers Equity Securities in accordance with the terms hereof.
SECTION 1.2.     Other Definitional Provisions . The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Article and Section references are to this Agreement unless otherwise specified. The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. The use of the terms “including” or “include” shall in all cases herein mean “including, without limitation” or “include, without limitation,” respectively.
SECTION 1.3.     Methodology for Calculations .
(a)    Except as otherwise expressly provided herein, any Transfer or proposed Transfer of a Common Stock Equivalent shall be treated as a Transfer or proposed Transfer of the shares of Common Stock into or for which such Common Stock Equivalent can be converted, exchanged or exercised.
(b)    Except as otherwise expressly provided in this Agreement, for purposes of calculating ( i ) the total number of Outstanding Capital Shares as of any date or ( ii ) the number of Outstanding Capital Shares owned by any Person hereunder as of any date, no Common Stock Equivalents shall be treated as having been converted, exchanged or exercised.
(c)    In the event of any stock split, stock dividend, reverse stock split, any combination of Equity Securities or any similar event, with respect to all references in this Agreement to a Stockholder or Stockholders holding a number of Outstanding Capital Shares, the applicable amount shall be appropriately adjusted to give effect to such stock split, stock dividend, reverse stock split, any combination of the Equity Securities or similar event.

7


ARTICLE II

CORPORATE GOVERNANCE
SECTION 2.1.     Board .
(a)    Following the Listing Date, the CD&R Holders, as a group, shall have the right, but not the obligation, to designate for nomination by the Board as Directors a number of designees equal to: ( i ) at least 33% of the total number of Directors comprising the Board at such time as long as the CD&R Holders collectively beneficially own at least 30% of the Outstanding Capital Shares; ( ii ) at least 20% of the total number of Directors comprising the Board at such time as long as the CD&R Holders collectively beneficially own at least 15% but less than 30% of the Outstanding Capital Shares and ( iii ) at least 10% of the total number of Directors comprising the Board at such time as long as CD&R Investor and its Affiliates collectively beneficially own at least 5% but less than 15% of the Outstanding Capital Shares. For purposes of calculating the number of CD&R Designees that the CD&R Holders are entitled to designate for nomination pursuant to the formula outlined above, any fractional amounts shall automatically be rounded up to the next whole number (e.g., one and one quarter (1 1 / 4 ) Directors shall equate to two (2) Directors) and any such calculations shall be made on a pro forma basis after taking into account any increase in the size of the Board.
(b)    Following the Listing Date, the Deere Holders, as a group, shall have the right, but not the obligation, to designate for nomination by the Board as Directors a number of designees equal to: ( i ) at least 20% of the total number of Directors comprising the Board at such time as long as the Deere Holders collectively beneficially own at least 15% of the Outstanding Capital Shares and ( ii ) at least 10% of the total number of Directors comprising the Board at such time as long as Deere Investor and its Affiliates collectively beneficially own at least 5% but less than 15% of the Outstanding Capital Shares. For purposes of calculating the number of Deere Designees that the Deere Holders are entitled to designate for nomination pursuant to the formula outlined above, any fractional amounts shall automatically be rounded up to the next whole number (e.g., one and one quarter (1 1 / 4 ) Directors shall equate to two (2) Directors) and any such calculations shall be made on a pro forma basis after taking into account any increase in the size of the Board.
(c)    If the CD&R Holders have designated for nomination by the Board less than the total number of designees the CD&R Holders shall be entitled to designate for nomination pursuant to Section 2.1(a) , the CD&R Holders shall have the right, at any time, to designate for nomination such additional designee or designees to which they are entitled, in which case, the Company and the Directors shall take all necessary corporation action, to the fullest extent permitted by applicable Law (including with respect to any fiduciary duties under Delaware law), to ( x ) enable the CD&R Holders to designate for nomination and effect the election or appointment of such additional individuals, whether by increasing the size of the Board, or otherwise, and ( y ) to designate such additional individual or individuals designated for nomination by the CD&R Holders to fill such newly-created vacancies or to fill any other existing vacancies. Each such individual whom the CD&R Holders shall actually designate for

8


nomination pursuant to this Section 2.1 and who is thereafter elected to the Board to serve as a Director shall be referred to herein as a “ CD&R Designee .”
(d)    If the Deere Holders have designated for nomination by the Board less than the total number of designees the Deere Holders shall be entitled to designate for nomination pursuant to Section 2.1(b) , the Deere Holders shall have the right, at any time, to designate for nomination such additional designee or designees to which they are entitled, in which case, the Company and the Directors shall take all necessary corporation action, to the fullest extent permitted by applicable Law (including with respect to any fiduciary duties under Delaware law), to ( x ) enable the Deere Holders to designate for nomination and effect the election or appointment of such additional individual or individuals, whether by increasing the size of the Board, or otherwise, and ( y ) to designate such additional individual or individuals designated for nomination by the Deere Holders to fill such newly-created vacancy or to fill any other existing vacancies. Each such individual whom the Deere Holders shall actually designate for nomination pursuant to this Section 2.1 and who is thereafter elected to the Board to serve as a Director shall be referred to herein as a “ Deere Designee .”
(e)    If a vacancy is created at any time by the death, retirement or resignation of any Director designated by the CD&R Holders or the Deere Holders pursuant to this Section 2.1 , the remaining Directors and the Company shall, to the fullest extent permitted by applicable Law (including with respect to any fiduciary duties under Delaware law), cause the vacancy created thereby to be filled by a new designee of the CD&R Holders or the Deere Holders, as the case may be, as soon as possible, and the Company hereby agrees to take, to the fullest extent permitted by applicable Law (including with respect to any fiduciary duties under Delaware law), at any time and from time to time, all actions necessary to accomplish the same.
(f)    The Company agrees, to the fullest extent permitted by applicable Law (including with respect to any fiduciary duties under Delaware law), to include in the slate of nominees recommended by the Board for election at any meeting of stockholders called for the purpose of electing Directors the individuals designated pursuant to this Section 2.1 and to nominate and recommend each such individual to be elected as a Director as provided herein, and to solicit proxies or consents in favor thereof.
(g)    For so long as the CD&R Holders collectively beneficially own at least 25% of the Outstanding Capital Shares, a CD&R Designee shall serve as the Chairman of the Board (“ Chairman ”).
(h)    Insofar as the Company is or becomes subject to requirements under applicable Law or the regulations of any self-regulatory organization, including the NYSE or such other national securities exchange upon which the Common Stock is listed to which the Company is then subject, relating to the composition of the Board or committees thereof, their respective responsibilities or the qualifications of their respective members, the CD&R Holders and the Deere Holders shall cooperate in good faith to select for nomination their respective designees to the Board under this Section 2.1 so as to permit the Company to comply with all such applicable requirements.

9


(i)    Notwithstanding anything to the contrary in this Agreement, ( i ) for so long as the CD&R Holders have the right to designate one or more Directors pursuant to this Section 2.1 , such right of designation as to one of such Directors shall be exercised solely by CD&R Fund VIII and ( ii ) ( x ) in the event that any Permitted Affiliate Transferee of CD&R Investor (in addition to CD&R Fund VIII) holding, directly or indirectly (for example, through a wholly owned Subsidiary), Equity Securities intends to qualify as a “venture capital operating company” (as defined in U.S. Department of Labor regulation sec. 2510.3-101) (each, an “ Additional VCOC ”) or ( y ) in the event that CD&R Fund VIII shall no longer have the right to designate Directors pursuant to clause (i) above, then such Additional VCOCs (in the case of clause (x)) or CD&R Fund VIII (in the case of clause (y)) shall be entitled to the information rights contained in Section 2.3 and the access rights contained in Section 2.4 ; provided, that, if the CD&R Holders have the right to designate more than one Director pursuant to this Section 2.1 , CD&R Investor may assign any such designation rights to any of the Additional VCOCs upon written notice to the Company and Deere Investor (which notice shall be acknowledged in writing by the Company), provided that such Additional VCOC shall remain subject to the obligations hereunder in respect of any of its Director designees.
SECTION 2.2.     Voting Agreement . Subject to Section 4.3 , each of CD&R Investor and Deere Investor agree to vote, or act by written consent with respect to, any Equity Securities beneficially owned by it that are entitled to vote in the election of Directors and shall take all other necessary or desirable actions within CD&R Investor’s or Deere Investor’s control (including, but not limited to, attendance at any annual or special meeting of the stockholders of the Company in person or by proxy for purposes of obtaining a quorum), at any annual or special meeting of stockholders of the Company at which Directors are to be elected, or to take all actions by written consent in lieu of any such meeting as are necessary to cause any CD&R Designee or Deere Designee designated for nomination in accordance with Section 2.1 to be elected to the Board. CD&R Investor and Deere Investor agree to use their commercially reasonable efforts to cause the election of each such designee to the Board, including nominating such individuals to be elected as members of the Board. Upon the written request of CD&R Investor or Deere Investor, as applicable, the other shall vote, or act by written consent with respect to, all Equity Securities beneficially owned by it that are entitled to vote in the election of Directors and otherwise take or cause to be taken any and all actions necessary to remove any Director designated by CD&R Investor or Deere Investor and to elect any replacement Director designated for nomination as provided in Section  2.1 . Neither CD&R Investor nor Deere Investor shall take any action to cause the removal of any Director designated by the other unless requested to do so in writing by the party that designated such Director.
SECTION 2.3.     Financial Information . To the extent necessary to comply with the Company’s obligations pursuant to Section 2.1(i) , upon the request of the CD&R Holders or any Permitted Affiliate Transferee of a CD&R Holder that intends to qualify as an Additional VCOC, the Company shall deliver or cause to be delivered the following information to ( x ) CD&R Investor for so long as it and its Permitted Affiliate Transferees own in the aggregate a number of Outstanding Capital Shares representing at least ten percent (10%) of the Outstanding Capital Shares, as applicable, and ( y ) any Permitted Transferee of CD&R Investor, for so long as it owns

10


(together with its Permitted Affiliate Transferees) at least ten percent (10%) of Outstanding Capital Shares:
(a)     Monthly Reports . As soon as available after the end of each month, and in any event within thirty (30) days thereafter, an unaudited consolidated balance sheet of the Company and its Subsidiaries as of the end of each such monthly period, and the related consolidated statements of operations, stockholders’ equity, comprehensive income (loss) and cash flows of the Company and its Subsidiaries for such monthly period and for the current fiscal year to date, prepared in accordance with GAAP consistently applied (subject to normal year-end audit adjustments and the absence of notes thereto);
(b)     Quarterly Reports . As soon as available after the end of the first, second and third quarterly accounting periods in each fiscal year of the Company, and in any event within forty-five (45) days thereafter, an unaudited consolidated balance sheet of the Company and its Subsidiaries as of the end of each such quarterly period, and the related consolidated statements of operations, stockholders’ equity, comprehensive income (loss) and cash flows of the Company and its Subsidiaries for such quarterly period and for the current fiscal year to date, together with all related notes and schedules thereto, prepared in accordance with GAAP consistently applied (subject to normal year-end audit adjustments and the absence of notes thereto) and setting forth in comparative form the figures for the corresponding periods of the previous fiscal year, in reasonable detail;
(c)     Annual Reports . As soon as available after the end of each fiscal year of the Company, and in any event within ninety (90) days thereafter, an audited combined balance sheet of the Company and its Subsidiaries as of the end of such fiscal year, and the related combined statements of operations, stockholders’ equity, comprehensive income (loss) and cash flows of the Company and its Subsidiaries for such year, together with all related notes and schedules thereto, prepared in accordance with GAAP consistently applied and setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and accompanied by the reports thereon of the Company’s independent auditors, in reasonable detail; and
(d)     Other Requested Information . With reasonable promptness, such other information and data (including such information and reports made available to any lender of the Company or any of its Subsidiaries under any credit agreement or otherwise) with respect to the Company and each of its Subsidiaries as may be necessary for such Person to comply with its respective reporting, regulatory, or other legal requirements and as may from time to time be reasonably requested by any such Person.
Notwithstanding anything to the contrary in this Section 2.3 , the Company may satisfy its obligations hereunder by providing the specified reports, financial statements or other information, as applicable, to the U.S. Securities and Exchange Commission on EDGAR or otherwise making them publicly available.

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SECTION 2.4.     Access . To the extent necessary to comply with the Company’s obligations pursuant to Section 2.1(i) , upon the request of the CD&R Holders or any Permitted Affiliate Transferee of a CD&R Holder that intends to qualify as an Additional VCOC, and subject to the provisions of Section 4.4 , for so long as ( x ) CD&R Investor (together with its Permitted Affiliate Transferees) owns in the aggregate ten percent (10%) of the Outstanding Capital Shares and ( y ) any Permitted Transferee of CD&R Investor (other than Permitted Affiliate Transferees of CD&R Investor) owns (together with its Permitted Affiliate Transferees) a number of Outstanding Capital Shares representing at least ten (10%) of the Outstanding Capital Shares, the Company shall, and shall cause its Subsidiaries, officers, Directors, employees, auditors and other agents to, ( a ) afford the officers, employees, auditors and other agents of CD&R Investor (and its Permitted Affiliate Transferees) or Deere Investor (and its Permitted Affiliate Transferees) or any such Permitted Transferee, as applicable, during normal business hours and upon reasonable notice reasonable access at all reasonable times to its officers, employees, auditors, legal counsel, properties, offices, plants and other facilities and to all books and records and ( b ) afford such Person the opportunity to discuss the affairs, finances and accounts of the Company and its Subsidiaries with their respective officers from time to time as such Person may reasonably request.
ARTICLE III

TRANSFERS
SECTION 3.1.     Restrictions on Transfer . From and after the date of this Agreement, it shall be a condition precedent to any Transfer to any Person of any Equity Securities other than in connection with a distribution of Equity Securities to the public (including any Transfer to a Permitted Affiliate Transferee) that the Transferee ( i ) if not already party to this Agreement, become a party to this Agreement by executing and delivering a joinder agreement hereto, substantially in the form attached as Exhibit A hereto, ( ii ) execute all such other agreements or documents as may reasonably be requested by the Company, and ( iii ) deliver such agreements and documents to the Company at its address specified in Section  4.8 . Such Transferee shall, upon satisfaction of such conditions (to the reasonable satisfaction of the Company) and its acquisition of Equity Securities, be a Stockholder for all purposes under this Agreement. For the avoidance of doubt, any Transfer of Equity Securities owned by Deere Investor to a Permitted Affiliated Transferee that is otherwise permitted or required under this Agreement may be accomplished indirectly by means of the Transfer of equity interests in Deere Investor to such Permitted Affiliated Transferee, and the indirect Transferee of such Equity Securities may and shall satisfy the applicable conditions set forth in this Agreement.
ARTICLE IV

MISCELLANEOUS
SECTION 4.1.     Transfer of Rights .
(a)    Any rights and obligations under this Agreement that are personal to CD&R Investor or Deere Investor may not be assigned to, or be exercised by, any Person, except that

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CD&R Investor or Deere Investor may assign such rights and obligations to a Permitted Affiliate Transferee to whom all of its Equity Securities have been Transferred in accordance with this Agreement; provided , however , that no such assignment shall relieve CD&R Investor or Deere Investor, as the case may be, of its obligations under this Agreement.
SECTION 4.2.     Certificate of Incorporation and By-laws . The rights and obligations of the Stockholders with respect to the Company shall be determined pursuant to the DGCL, the Charter, the By-laws and this Agreement. To the extent that the rights or obligations of a Stockholder are different by reason of any provision of this Agreement than they would be in the absence of such provision, this Agreement, to the extent permitted by the DGCL, shall control. Each of the Stockholders covenants and agrees to vote all of its Equity Securities with respect to which it has the power to vote or act by written consent, and to take any other action reasonably requested by the Company or any Stockholder, to amend the By-laws or the Charter so as to avoid any conflict with the provisions hereof.
SECTION 4.3.     Termination . Subject to the early termination of any provision as a result of an amendment to this Agreement agreed to by the Company and the Stockholders as provided under Section 4.5 :
(a)    the provisions of Section 2.2 shall terminate when either CD&R Investor shall cease to beneficially own at least 5% of the Outstanding Capital Shares or Deere Investor shall cease to beneficially own at least 5% of the Outstanding Capital Shares;
(b)    this Agreement shall terminate on the earlier to occur of ( i ) such time as neither CD&R Investor nor Deere Investor is entitled to designate a nominee for nomination by the Board pursuant to Section 2.1 and ( ii ) upon the delivery of a written notice by CD&R Investor and Deere Investor to the Company requesting that this Agreement terminate.
Nothing in this Agreement shall relieve any party from any liability for the breach of any obligations set forth in this Agreement.
SECTION 4.4.     Confidentiality . Each party hereto agrees to, and shall cause its Representatives to, keep confidential and not divulge any Information, and to use, and cause its Representatives to use, such Information only in connection with the operation of the Company and its Subsidiaries; provided that nothing herein shall prevent any party hereto from disclosing such Information ( i ) upon the order of any court or administrative agency, ( ii ) upon the request or demand of any regulatory agency or authority having jurisdiction over such party or Representative, ( iii ) to the extent required by Law or legal process, including to satisfy any public reporting obligations, or required or requested pursuant to subpoena, interrogatories or other discovery requests, ( iv ) to the extent necessary in connection with the exercise of any remedy hereunder, ( v ) to other Stockholders, ( vi ) to such party’s Representatives that in the reasonable judgment of such party need to know such Information, ( vii ) in the case of the CD&R Holders, to such party’s direct or indirect limited partners, prospective limited partners and/or their respective advisors or ( viii ) to any bona fide proposed Transferee to whom such proposed Transfer would be permitted in accordance with Section 3.1 in connection with a proposed Transfer of Equity Securities from such Stockholder, so long as such Transferee agrees to be

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bound by the provisions of this Section 4.4 as if a Stockholder, provided further that, in the case of clause (i), (ii) or (iii), such party shall notify the other parties hereto of the proposed disclosure as far in advance of such disclosure as practicable and use commercially reasonable efforts to ensure that any Information so disclosed is accorded confidential treatment, when and if available. Each Stockholder acknowledges that CD&R Manager’s (including its affiliated private equity funds’) review of the Information may inevitably enhance its knowledge and understanding of the industries in which the Company and its Subsidiaries operate in a way that cannot be separated from such Person’s or its affiliated private equity funds’ other knowledge and each party hereto agrees that the foregoing sentence shall not restrict such Person’s (including its affiliated private equity funds’) use of such general industry knowledge and understanding, including in connection with investments in other companies in the same or similar industries.
SECTION 4.5.     Amendments and Waivers . This Agreement may be amended, and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if any such amendment, action or omission to act, has been approved by the Company, CD&R Investor and Deere Investor; provided that no Stockholder shall be subject to any additional obligation hereunder resulting from any such amendment that the Stockholder did not approve and no right hereunder of a Stockholder specific to such Stockholder or CD&R Investor and Deere Investor may be adversely affected by such amendment without the prior consent of such Stockholder. The failure of any party to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms. Any Stockholder may waive (in writing) the benefit of any provision of this Agreement with respect to itself for any purpose. Any such waiver shall constitute a waiver only with respect to the specific matter described in such writing and shall in no way impair the rights of the Stockholder granting such waiver in any other respect or at any other time.
SECTION 4.6.     Successors, Assigns and Transferees . This Agreement shall bind and inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns. Stockholders may assign their respective rights and obligations hereunder to any Transferees only to the extent expressly provided herein.
SECTION 4.7.     Legends
(a)    All certificates representing the Equity Securities and all book-entry positions representing Equity Securities held by any Stockholder shall bear a legend, or include a notation, as appropriate, substantially in the following form:
“THE SECURITIES EVIDENCED HEREBY AND THE VOTING THEREOF ARE SUBJECT TO A STOCKHOLDERS AGREEMENT (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY). NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES EVIDENCED HEREBY

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MAY BE MADE EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH STOCKHOLDERS AGREEMENT AND (A) PURSUANT TO A REGISTRATION STATEMENT EFFECTIVE UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION THEREUNDER. THE HOLDER OF THE SECURITIES EVIDENCED HEREBY AGREES TO BE BOUND BY ALL OF THE PROVISIONS OF SUCH STOCKHOLDERS AGREEMENT.”
(b)     Certificates . Upon the permitted sale of any Equity Securities pursuant to ( i ) an effective registration statement under the Securities Act or pursuant to Rule 144 under the Securities Act or ( ii ) another exemption from registration under the Securities Act or upon the termination of this Agreement, any certificates, representing such Equity Securities shall be replaced, at the expense of the Company, with certificates or instruments not bearing the legends required by this Section 4.7(b) and any book-entry positions representing such Equity Securities shall have the legends required by this Section 4.7(b) removed, at the expense of the Company; provided that the Company may condition such replacement of any certificates or removal of such legend from any book-entry positions under clause (ii) upon the receipt of an opinion of securities counsel reasonably satisfactory to the Company.
SECTION 4.8.     Notices . All notices and other communications to be given to any party hereunder shall be sufficiently given for all purposes hereunder if in writing and delivered by hand, courier or overnight delivery service, or when received in the form of a facsimile or other electronic transmission (receipt confirmation requested), and shall be directed to the address set forth below (or at such other address or facsimile number as such party shall designate by like notice):
(a)    if to the Company, to:
Mansell Overlook
300 Colonial Center Parkway
Suite 600
Roswell, GA 30076
Attention: Briley Brisendine
Fax: (470) 277-7478
and
Clayton, Dubilier & Rice, LLC
375 Park Avenue
18 th Floor
New York, New York 10152
Attention:    Kenneth A. Giuriceo
Fax: (212) 407-5252

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and
Debevoise & Plimpton LLP
919 Third Avenue
New York, New York 10022
Attention:    Peter J. Loughran, Esq.
    Andrew L. Bab, Esq.
Fax: (212) 909-6836
(b)    if to Deere Investor, to:
Law Department
One John Deere Place
Moline, IL 61265
Attention:    General Counsel
Fax: (309) 749-0085
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10036
Attention:    Gregory Fernicola
Fax: (917) 777-2918
(c)    if to CD&R Investor, to:
Clayton, Dubilier & Rice, LLC
375 Park Avenue
18 th Floor
New York, New York 10152
Attention:    Kenneth A. Giuriceo
Fax: (212) 407-5252
with a copy (which shall not constitute notice) to:
Debevoise & Plimpton LLP
919 Third Avenue
New York, New York 10022
Attention:    Peter J. Loughran, Esq.
    Andrew L. Bab, Esq.
Fax: (212) 909-6836
(d)    if to any other Stockholder, to the address of such other Stockholder as shown in the stock record book of the Company.

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SECTION 4.9.     Further Assurances . At any time or from time to time after the date hereof, the parties agree to cooperate with each other, and at the request of any other party, to execute and deliver any further instruments or documents and to take all such further action as the other party may reasonably request in order to evidence or effectuate the consummation of the transactions contemplated hereby in accordance with their terms and to otherwise carry out the intent of the parties hereunder.
SECTION 4.10.     Entire Agreement; Third Party Beneficiaries . Except as otherwise expressly set forth herein, this Agreement, together with the Investment Agreement and the other Transaction Agreements, embody the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or among the parties, written or oral, that may have related to the subject matter hereof in any way. This Agreement is not intended to confer in or on behalf of any Person not a party to this Agreement (and their successors and assigns) any rights, benefits, causes of action or remedies with respect to the subject matter or any provision thereof (except as set forth in Section 2.1(i) in respect of CD&R Fund VIII or any Additional VCOC).
SECTION 4.11.     Restrictions on Other Agreements . Following the date hereof, no Stockholder shall enter into or agree to be bound by any stockholder agreements or arrangements of any kind with any Person with respect to any Equity Securities, to the extent that such agreement or arrangement would conflict with or violate any provision or term of this Agreement or otherwise be intended to circumvent the provisions set forth herein, except pursuant to the agreements specifically contemplated by the Investment Agreement and the Registration Rights Agreement. From and after the date hereof, the Company shall not enter into any agreement, arrangement or understanding that violates or conflicts with any provision of this Agreement or impedes or prevents the Company’s ability to fulfill and comply with its obligations, or the Stockholders’ ability to utilize their rights, set forth herein.
SECTION 4.12.     Delays or Omissions . It is agreed that no delay or omission to exercise any right, power or remedy accruing to any party, upon any breach, default or noncompliance by another party under this Agreement, shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of or in any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or character on the part of any party hereto of any breach, default or noncompliance under this Agreement or any waiver on such party’s part of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, by Law, or otherwise afforded to any party, shall be cumulative and not alternative.
SECTION 4.13.     Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware applicable to contracts made and to be performed within the State of Delaware, without giving effect to conflicts of law rules that would require or permit the application of the laws of another jurisdiction.

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SECTION 4.14.     Dispute Resolution; Jurisdiction .
(a)    CD&R Investor and Deere Investor shall first endeavor to resolve any and all disputes, controversies or claims arising out of or in connection with this Agreement or the alleged breach, termination or validity thereof (each, a “ Dispute ”) through good faith negotiations for a period of up to twenty (20) Business Days. If the CD&R Investor and the Deere Investor fail to resolve such Dispute during such period, then the matter shall be submitted to John D. Lagemann of Deere Investor and Kenneth A. Giuriceo a designee of CD&R Investor. Such persons shall meet within ten (10) Business Days after the Dispute is submitted to them and shall attempt in good faith to resolve the Dispute as soon as reasonably practicable. If such persons are unable to resolve the Dispute within thirty (30) Business Days of meeting, then either party may seek resolution of the Dispute through litigation in accordance with Section 4.14(b) or Section 4.16 .
(b)    Each of the parties hereto irrevocably agrees that any legal action or proceeding in connection with or with respect to this Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder brought by the other party hereto or its successors or assigns shall be brought and determined in the Court of Chancery of the State of Delaware and any state appellate court therefrom within the State of Delaware (or, if the Court of Chancery of the State of Delaware declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware and any direct appellate court therefrom). Each of the parties hereto hereby irrevocably submits with regard to any such action or proceeding for itself and in respect of its property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not bring any action in connection with or relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than the aforesaid courts. Each of the parties hereto hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding in connection with or with respect to this Agreement, ( i ) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason other than the failure to serve in accordance with this Section 4.14(b) , ( ii ) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and ( iii ) to the fullest extent permitted by applicable Law, any claim that ( A ) the suit, action or proceeding in such court is brought in an inconvenient forum, ( B ) the venue of such suit, action or proceeding is improper or ( C ) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.
(c)    Each of the parties hereto irrevocably consents to the service of any summons and complaint and any other process in any other action in connection with or relating to this Agreement, on behalf of itself or its property, by the personal delivery of copies of such process to such party or by sending or delivering a copy of the process to the party to be served at the address and in the manner provided for the giving of notices in Section 4.8 . Nothing in this Section 4.14 shall affect the right of any party hereto to serve legal process in any other manner permitted by Law.

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SECTION 4.15.     Waiver of Jury Trial . Each party hereby waives, to the fullest extent permitted by applicable Law, any right it may have to a trial by jury in respect of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby. Each party ( a ) certifies and acknowledges that no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver, and ( b ) acknowledges that it understands and has considered the implications of this waiver and makes this waiver voluntarily, and that it and the other parties have been induced to enter into the Agreement by, among other things, the mutual waivers and certifications in this Section 4.15 .
SECTION 4.16.     Specific Performance . The parties agree that irreparable damage would occur for which money damages would not suffice in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached and that the parties would not have any adequate remedy at law. It is accordingly agreed that the non-breaching party shall be entitled to an injunction, temporary restraining order or other equitable relief in respect of, and to prevent, any breach of this Agreement in the Chancery Court of the State of Delaware (or, if the Court of Chancery of the State of Delaware declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware and any direct appellate court therefrom). The foregoing is in addition to any other remedy to which any party is entitled at law, in equity or otherwise.
SECTION 4.17.     Severability . If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party hereto. Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.
SECTION 4.18.     Titles and Subtitles . The titles of the sections and subsections of this Agreement are for convenience of reference only and will not affect the meaning or interpretation of this Agreement.
SECTION 4.19.     No Recourse . Notwithstanding anything that may be expressed or implied in this Agreement, the Company and each Stockholder covenant, agree and acknowledge that no recourse under this Agreement or any documents or instruments delivered in connection with this Agreement shall be had against any current or future director, officer, employee, general or limited partner or member of any Stockholder or of any Affiliate or assignee thereof (other than any such Person serving as a Director and then solely to the extent in his or her capacity as such), whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any statute, regulation or other applicable Law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise

19


be incurred by any current or future officer, agent or employee of any Stockholder or any current or future member of any Stockholder or any current or future director, officer, employee, partner or member of any Stockholder or of any Affiliate or assignee thereof (other than any such Person serving as a Director and then solely to the extent in his or her capacity as such) for any obligation of any Stockholder under this Agreement or under any documents or instruments delivered in connection with this Agreement for any claim based on, in respect of or by reason of such obligations or their creation.
SECTION 4.20.     Counterparts; Facsimile Signatures . This Agreement may be executed in counterparts, each of which shall constitute one and the same instrument. Signatures provided by facsimile or electronic transmission in “pdf” or equivalent format will be deemed to be original signatures.
[ Remainder of page intentionally left blank ]


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IN WITNESS WHEREOF, the parties hereto have executed this Amended and Restated Stockholders Agreement as of the date first set forth above.
SITEONE LANDSCAPE SUPPLY, INC.
By:
/s/ L. Briley Brisendine, Jr.    
Name: L. Briley Brisendine, Jr.
Title: Executive Vice President, General Counsel and Secretary
DEERE & COMPANY
By:
/s/ Todd E. Davies    
Name: Todd E. Davies
Title: Corporate Secretary
CD&R LANDSCAPES HOLDINGS, L.P.
By:
/s/ Theresa A. Gore    
Name: Theresa A. Gore
Title: Vice President, Treasurer and Assistant Secretary

[Signature Page to Amended and Restated Stockholders Agreement]


Exhibit A
Assignment and Assumption Agreement
Reference is made to the Amended and Restated Stockholders Agreement, dated as of [●], 2016 (the “ Stockholders Agreement ”), among SiteOne Landscape Supply, Inc. (the “ Company ”), Deere & Company (“ Deere Investor ”), CD&R Landscapes Holdings, L.P. (“ CD&R Investor ”), and any Person who becomes a party hereto after the date hereof pursuant to Section 3.1 (each of the foregoing, a “ Stockholder ” and collectively, the “ Stockholders ”). Capitalized terms used but not defined herein shall have the meanings assigned to them in the Stockholders Agreement.
Section 1. Assignment and Assumption . Pursuant to Section 3.1 of the Stockholders Agreement, [●], a [●] (the “ Transferor ”), hereby assigns to the undersigned (the “ Transferee ”) the rights of the Transferor under the Stockholders Agreement that may be assigned thereunder other than the rights under Sections [●], which the Transferor, Transferee and Company hereby acknowledge shall be retained by the Transferor, and the Transferee hereby agrees that, having acquired Equity Securities as permitted by the terms of the Stockholders Agreement, the Transferee shall assume the obligations of the Transferor under the Stockholders Agreement with respect to the Equity Securities being Transferred to the Transferee hereunder.
Listed below is information regarding the Equity Securities:
Number of Shares of Common Stock             
Section 2. Representations and Warranties . The Transferor and the Transferee each represents and warrants, solely with respect to itself, to each other and to the Company, as follows:
(a) Organization; Authority . If the Stockholder is a corporation, then it is duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation. If the Stockholder is a partnership, trust or limited liability company, then it is duly formed, validly existing and in good standing (to the extent applicable) under the laws of its jurisdiction of formation. Such Stockholder has all requisite power and authority to enter into this Assignment and Assumption Agreement (this “ Agreement ”) and to perform its obligations hereunder, and to consummate the transactions contemplated hereby.
(b) Due Authorization; Binding Agreement . This Agreement has been duly authorized, executed and delivered by such Stockholder and constitutes a valid and binding obligation of such Stockholder enforceable against such Stockholder in accordance with its terms, except to the extent that the enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting the

A-1


enforcement of creditors’ rights generally and general equitable principles, regardless of whether such enforceability is considered in a proceeding at law or in equity. If such Stockholder is a trust, no consent of any beneficiary is required for the foregoing.
(c) Non-Contravention . The Stockholder is not a party to any agreement which is inconsistent with its obligations hereunder or the rights of any party hereunder or otherwise conflicts with the provisions hereof. The execution and delivery of this Agreement by such Stockholder, the performance of its obligations hereunder, and the consummation of the transactions contemplated hereby, will not violate, conflict with or result in a breach, or constitute a default (with or without notice or lapse of time or both) under any provision of its charter, by-laws or other similar organizational documents or any agreement or other instrument to which it is a party.
(d) Consents and Approvals . Other than pursuant to this Agreement, no consent, waiver, approval or authorization of, or filing, registration or qualification with, or notice to, any governmental unit or any other person is required to be made, obtained or given by the Stockholder in connection with the execution, delivery and performance of this Agreement.
(e) Investment Intent . At such time at which the Stockholder acquired the Equity Securities, ( i ) it acquired such Equity Securities for its own account with the intention of holding such securities for purposes of investment and ( ii ) it had no intention of selling such securities in a public distribution in violation of the federal securities laws or any applicable state securities laws.
(f) Securities Law Matters . The Stockholder is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
(g) Restriction on Resale . The Stockholder understands and acknowledges that its Equity Securities have not been registered for sale under any federal or state securities law and must be held indefinitely unless subsequently registered or an exemption from such registration is available.
(h) Due Diligence . The Stockholder ( i ) has performed its own due diligence and business investigations with respect to the Company, ( ii ) is fully familiar with the nature of the investment in the Company, the speculative and financial risks thereby assumed, and the uncertainty with respect to the timing and amounts of distributions, if any, to be made by the Company, ( iii ) does not desire any further information which may be available with respect to these matters and (iv) has had the opportunity to ask questions and receive answers concerning the terms and conditions of the offering of such Equity Securities and had access to such other information concerning the Company as it requested.
[ Remainder of page intentionally left blank ]

A-2


IN WITNESS WHEREOF, the parties have executed this Assignment as of __________ ___, ________.
[NAME OF TRANSFEROR]
By:
    
Name:
Title:
[NAME OF TRANSFEREE]
By:
    
Name:
Title:
Address:
    
    
    




Acknowledged by:

SITEONE LANDSCAPE SUPPLY, INC.


By:___________________________
Name:
Title:

A-3

Exhibit 10.12

May 17, 2016
Clayton, Dubilier & Rice, LLC
375 Park Avenue, 18 th Floor
New York, NY 10152
Tel: (212) 407-5200
Attention: Theresa A. Gore
Ladies and Gentlemen:
Reference is made to the Consulting Agreement, dated as of December 23, 2013 (the “ CD&R Consulting Agreement ”), by and among SiteOne Landscape Supply, Inc. (formerly known as CD&R Landscapes Parent, Inc.), a Delaware corporation (the “ Company ”), SiteOne Landscape Supply Midco, Inc. (formerly known as CD&R Landscapes Midco, Inc.), a Delaware corporation (“ Midco ”), SiteOne Landscape Supply Bidco, Inc. (formerly known as CD&R Landscapes Bidco, Inc.), a Delaware corporation (“ Bidco ”), SiteOne Landscape Supply Holding, LLC (formerly known as JDA Holding LLC), a Delaware limited liability company (“ Landscape Holding ”), SiteOne Landscape Supply, LLC (formerly known as John Deere Landscapes LLC), a Delaware limited liability company (“ OpCo ” and together with the Company, Midco, Bidco and Landscape Holding, the “ Company Group ”) and Clayton, Dubilier & Rice, LLC, a Delaware limited liability company (“ CD&R Manager ”). The CD&R Consulting Agreement sets forth, among other things, the fees to be paid, or caused to be paid, to CD&R Manager by the Company for Consulting Services to be performed by CD&R Manager thereunder. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the CD&R Consulting Agreement.
Upon the terms and conditions of this letter agreement, the parties hereby agree to terminate the CD&R Consulting Agreement in connection with the Company’s initial public offering of shares of its common stock pursuant to the Company’s Registration Statement on Form S-1 (Registration No. 333-206444) (the “ IPO ”). In connection with and as consideration for such termination, the Company Group, jointly and severally, agrees to pay a fee of $4,884,000 million to CD&R Manager (the “ CD&R Termination Fee ”) on the closing date of the Company’s IPO. Upon the payment of the CD&R Termination Fee, the CD&R Consulting Agreement will terminate, provided that Section 3 thereof shall survive solely as to any portion of any Initial Consulting Fee, Additional Consulting Fee or Expenses accrued, but not paid or reimbursed, prior to such termination. The termination of the CD&R Consulting Agreement shall not affect the CD&R Indemnification Agreement which shall survive such termination.
This letter agreement may be executed in any number of counterparts, with each executed counterpart constituting an original, but all together one and the same

1


instrument. This letter agreement sets forth the entire understanding and agreement among the parties with respect to the transactions contemplated herein and supersedes and replaces any prior understanding, agreement or statement of intent, in each case written or oral, of any kind and every nature with respect hereto. This letter agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York applicable to agreements made and to be performed within that state, without regard to principles of conflict of laws to the extent that such principles would require or permit the application of the laws of another jurisdiction.
[ Remainder of the page left intentionally blank. ]

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If the foregoing is in accordance with your understanding and agreement, please sign and return this letter agreement, whereupon this letter agreement shall constitute a binding agreement with respect to the matters set forth herein.
Sincerely,
SITEONE LANDSCAPE SUPPLY, INC.
By:     /s/ L. Briley Brisendine, Jr.    
    Name: L. Briley Brisendine, Jr.
    Title: Executive Vice President, General     Counsel and Secretary
SITEONE LANDSCAPE SUPPLY MIDCO, INC.
By:     /s/ L. Briley Brisendine, Jr.    
    Name: L. Briley Brisendine, Jr.
    Title: Executive Vice President, General     Counsel and Secretary
SITEONE LANDSCAPE SUPPLY BIDCO, INC.
By:     /s/ L. Briley Brisendine, Jr.    
    Name: L. Briley Brisendine, Jr.
    Title: Executive Vice President, General     Counsel and Secretary     
SITEONE LANDSCAPE SUPPLY HOLDING, LLC
By:     /s/ L. Briley Brisendine, Jr.    
    Name: L. Briley Brisendine, Jr.
    Title: Executive Vice President, General     Counsel and Secretary

[ Signature Page to Termination Agreement re: CD&R Consulting Agreement ]


SITEONE LANDSCAPE SUPPLY, LLC
By:     /s/ L. Briley Brisendine, Jr.    
    Name: L. Briley Brisendine, Jr.
    Title: Executive Vice President, General     Counsel and Secretary
Acknowledged and agreed as of the
date first above written:

CLAYTON, DUBILIER & RICE, LLC
By:     /s/ Theresa A. Gore    
    Name: Theresa A. Gore
    Title: Vice President, Treasurer & Assistant Secretary

[ Signature Page to Termination Agreement re: CD&R Consulting Agreement ]

Exhibit 10.13

May 17, 2016
Deere & Company
Law Department
One John Deere Place
Moline, IL 61265
Attention: General Counsel
Ladies and Gentlemen:
Reference is made to the Consulting Agreement, dated as of December 23, 2013 (the “ Deere Consulting Agreement ”), by and among SiteOne Landscape Supply, Inc. (formerly known as CD&R Landscapes Parent, Inc.), a Delaware corporation (the “ Company ”), SiteOne Landscape Supply Midco, Inc. (formerly known as CD&R Landscapes Midco, Inc.), a Delaware corporation (“ Midco ”), SiteOne Landscape Supply Bidco, Inc. (formerly known as CD&R Landscapes Bidco, Inc.), a Delaware corporation (“ Bidco ”), SiteOne Landscape Supply Holding, LLC (formerly known as JDA Holding LLC), a Delaware limited liability company (“ Landscape Holding ”), SiteOne Landscape Supply, LLC (formerly known as John Deere Landscapes LLC), a Delaware limited liability company (“ OpCo ” and together with the Company, Midco, Bidco and Landscape Holding, the “ Company Group ”) and Deere & Company, a Delaware corporation (“ Deere Investor ”). The Deere Consulting Agreement sets forth, among other things, the fees to be paid, or caused to be paid, to Deere Investor by the Company for Consulting Services to be performed by Deere Investor thereunder. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Deere Consulting Agreement.
Upon the terms and conditions of this letter agreement, the parties hereby agree to terminate the Deere Consulting Agreement in connection with the Company’s initial public offering of shares of its common stock pursuant to the Company’s Registration Statement on Form S-1 (Registration No. 333-206444) (the “ IPO ”). In connection with and as consideration for such termination, the Company Group, jointly and severally, agrees to pay a fee of $2,630,000 to Deere Investor (the “ Deere Termination Fee ”) on the closing date of the Company’s IPO. Upon the payment of the Deere Termination Fee, the Deere Consulting Agreement will terminate, provided that Section 3 thereof shall survive solely as to any portion of any Consulting Fee or Expenses accrued, but not paid or reimbursed, prior to such termination. The termination of the Deere Consulting Agreement shall not affect the Deere Indemnification Agreement which shall survive such termination.
This letter agreement may be executed in any number of counterparts, with each executed counterpart constituting an original, but all together one and the same instrument. This letter agreement sets forth the entire understanding and agreement


among the parties with respect to the transactions contemplated herein and supersedes and replaces any prior understanding, agreement or statement of intent, in each case written or oral, of any kind and every nature with respect hereto. This letter agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York applicable to agreements made and to be performed within that state, without regard to principles of conflict of laws to the extent that such principles would require or permit the application of the laws of another jurisdiction.
[ Remainder of the page left intentionally blank. ]


If the foregoing is in accordance with your understanding and agreement, please sign and return this letter agreement, whereupon this letter agreement shall constitute a binding agreement with respect to the matters set forth herein.
Sincerely,
SITEONE LANDSCAPE SUPPLY, INC.
By:     /s/ L. Briley Brisendine, Jr.    
    Name: L. Briley Brisendine, Jr.
    Title: Executive Vice President, General     Counsel and Secretary
SITEONE LANDSCAPE SUPPLY MIDCO, INC.
By:     /s/ L. Briley Brisendine, Jr.    
    Name: L. Briley Brisendine, Jr.
    Title: Executive Vice President, General     Counsel and Secretary
SITEONE LANDSCAPE SUPPLY BIDCO, INC.
By:     /s/ L. Briley Brisendine, Jr.    
    Name: L. Briley Brisendine, Jr.
    Title: Executive Vice President, General     Counsel and Secretary     
SITEONE LANDSCAPE SUPPLY HOLDING, LLC
By:     /s/ L. Briley Brisendine, Jr.    
    Name: L. Briley Brisendine, Jr.
    Title: Executive Vice President, General     Counsel and Secretary


SITEONE LANDSCAPE SUPPLY, LLC
By:     /s/ L. Briley Brisendine, Jr.    
    Name: L. Briley Brisendine, Jr.
    Title: Executive Vice President, General     Counsel and Secretary
Acknowledged and agreed as of the
date first above written:

DEERE & COMPANY
By:     /s/ Todd E. Davies    
    Name: Todd E. Davies
    Title: Corporate Secretary

[ Signature Page to Termination Agreement re: Deere Consulting Agreement ]


Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13a-14(a) OF THE EXCHANGE ACT, AS AMENDED,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Doug Black, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of SiteOne Landscape Supply, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Not applicable;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 22, 2016
 
/s/ Doug Black
Doug Black
Chief Executive Officer




Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13a-14(a) OF THE EXCHANGE ACT, AS AMENDED,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John T. Guthrie, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of SiteOne Landscape Supply, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Not applicable;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 22, 2016
 
/s/ John T. Guthrie
John T. Guthrie
Chief Financial Officer





Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Doug Black, the Chief Executive Officer of SiteOne Landscape Supply, Inc., certify that (i) the Quarterly Report on Form 10-Q for the quarter ended April 3, 2016 , fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of SiteOne Landscape Supply, Inc.
Dated: June 22, 2016
 
/s/ Doug Black
Doug Black
 





Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, John T. Guthrie, the Chief Financial Officer of SiteOne Landscape Supply, Inc., certify that (i) the Quarterly Report on Form 10-Q for the quarter ended April 3, 2016 , fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of SiteOne Landscape Supply, Inc.
Dated: June 22, 2016
 
/s/ John T. Guthrie
John T. Guthrie