SiteOne Landscape Supply, Inc. (Form: 10-Q, Received: 04/29/2020 06:17:46)

Three Months Ended

March 29, 2020

March 31, 2019

Weighted average potential common shares excluded because anti-dilutive

Employee stock options and RSUs

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

__________________________

FORM 10-Q

__________________________



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 29, 2020



☐	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.)

300 Colonial Center Parkway, Suite 600, Roswell, Georgia 30076

(Address of principal executive offices) (Zip Code)

(470) 277-7000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	SITE	New York Stock Exchange

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 every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒



Title of each class		Shares Outstanding as of April 24, 2020
Common Stock, $0.01 par value per share		41,877,761

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TABLE OF CONTENTS

Part I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheets	4
Consolidated Statements of Operations	5
Consolidated Statements of Comprehensive Loss	6
Consolidated Statements of Equity	7
Consolidated Statements of Cash Flows	8
Notes to Consolidated Financial Statements	10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3. Quantitative and Qualitative Disclosures About Market Risk	42
Item 4. Controls and Procedures	42

Part II. OTHER INFORMATION
Item 1. Legal Proceedings	43
Item 1A. Risk Factors	43
Item 6. Exhibits	44
Signatures	45

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Regarding Forward-Looking Statements and Information

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 that could cause our business not to develop as we expect may emerge from time to time 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:


•	the potential negative impact of the COVID-19 pandemic (which, among other things, may exacerbate each of the risks listed below);


•	economic downturn or recession;


•	cyclicality in residential and commercial construction markets;


•	general economic and financial conditions;


•	weather conditions, seasonality and availability of water to end-users;


•	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;


•	ability to pass along product cost increases;


•	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 (including work stoppages due to COVID-19);


•	retention of key personnel;


•	construction defect and product liability claims;


•	impairment of goodwill;


•	adverse credit and financial markets events and conditions (which have worsened and may continue to worsen as a result of the COVID-19 pandemic);


•	credit sale risks;


•	performance of individual branches;


•	environmental, health and safety laws and regulations;


•	hazardous materials and related materials;


•	laws and government regulations applicable to our business that could negatively impact demand for our products;


•	computer data processing systems;


•	cybersecurity incidents;


•	security of personal information about our customers;


•	intellectual property and other proprietary rights;


•	the possibility of securities litigation;


•	unanticipated changes in our tax provisions;


•	our substantial indebtedness and our ability to obtain financing in the future;


•	increases in interest rates;


•	risks related to our common stock;


•	terrorism or the threat of terrorism; 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.

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PART I - FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements (Unaudited)

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SiteOne Landscape Supply, Inc.

Consolidated Balance Sheets (Unaudited)

(In millions, except share and per share data)



Assets	March 29, 2020			December 29, 2019
Current assets:
Cash and cash equivalents	$	22.0		$	19.0
Accounts receivable, net of allowance for doubtful accounts of $9.5 and $8.3, respectively	295.7			283.4
Inventory, net	545.0			427.1
Income tax receivable	22.7			7.0
Prepaid expenses and other current assets	30.8			29.3
Total current assets	916.2			765.8

Property and equipment, net (Note 5)	111.9			104.9
Operating lease right-of-use assets, net (Note 7)	239.5			231.0
Goodwill (Note 6)	207.0			181.3
Intangible assets, net (Note 6)	162.8			150.6
Deferred tax assets	1.6			1.9
Other assets	7.5			7.8
Total assets	$	1,646.5		$	1,443.3

Liabilities and Equity
Current liabilities:
Accounts payable	$	251.4		$	162.2
Current portion of finance leases (Note 7)	7.9			6.7
Current portion of operating leases (Note 7)	50.5			48.6
Accrued compensation	27.3			39.7
Long-term debt, current portion (Note 9)	4.5			4.5
Accrued liabilities	53.8			49.1
Total current liabilities	395.4			310.8

Other long-term liabilities	17.4			13.2
Finance leases, less current portion (Note 7)	19.7			16.2
Operating leases, less current portion (Note 7)	193.2			186.3
Deferred tax liabilities	3.2			3.2
Long-term debt, less current portion (Note 9)	640.1			520.4
Total liabilities	1,269.0			1,050.1

Commitments and contingencies (Note 11)

Stockholders' equity:
Common stock, par value $0.01; 1,000,000,000 shares authorized; 41,883,358 and 41,591,727 shares issued, and 41,862,447 and 41,570,816 shares outstanding at March 29, 2020 and December 29, 2019, respectively	0.4			0.4
Additional paid-in capital	268.0			261.5
Retained earnings	120.3			137.8
Accumulated other comprehensive loss	(11.2		)	(6.5		)
Total equity	377.5			393.2
Total liabilities and equity	$	1,646.5		$	1,443.3

See Notes to Consolidated Financial Statements (Unaudited).

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SiteOne Landscape Supply, Inc.

Consolidated Statements of Operations (Unaudited)

(In millions, except share and per share data)



	Three Months Ended
	March 29, 2020			March 31, 2019

Net sales	$	459.8		$	417.3
Cost of goods sold	317.0			287.3
Gross profit	142.8			130.0

Selling, general and administrative expenses	167.1			155.8
Other income	1.0			1.1
Operating loss	(23.3		)	(24.7		)

Interest and other non-operating expenses, net	7.7			9.0
Loss before taxes	(31.0		)	(33.7		)
Income tax benefit	(13.5		)	(9.6		)
Net loss	$	(17.5	)	$	(24.1	)

Net loss per common share:
Basic	$	(0.42	)	$	(0.59	)
Diluted	$	(0.42	)	$	(0.59	)
Weighted average number of common shares outstanding:
Basic	41,766,317			40,964,224
Diluted	41,766,317			40,964,224

See Notes to Consolidated Financial Statements (Unaudited).

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SiteOne Landscape Supply, Inc.

Consolidated Statements of Comprehensive Loss (Unaudited)

(In millions)



	Three Months Ended
	March 29, 2020			March 31, 2019

Net loss	$	(17.5	)	$	(24.1	)
Other comprehensive income (loss):
Foreign currency translation adjustments	(0.9		)	0.2
Unrealized loss on interest rate swaps, net of taxes of $1.2 and $0.8, respectively	(3.8		)	(2.2		)
Total other comprehensive loss	(4.7		)	(2.0		)
Comprehensive loss	$	(22.2	)	$	(26.1	)

See Notes to Consolidated Financial Statements (Unaudited).

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SiteOne Landscape Supply, Inc.

Consolidated Statements of Equity (Unaudited)

(In millions, shares in thousands)



	Common Stock Shares	Common Stock Amount		Additional Paid-in-Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total Equity
Balance at December 30, 2018	40,890.1	$	0.4	$	242.1	$	60.1		$	(0.8	)	$	301.8
Net loss	—	—		—		(24.1		)	—			(24.1		)
Other comprehensive loss	—	—		—		—			(2.0		)	(2.0		)
Issuance of common shares under stock-based compensation plan	89.4	—		0.2		—			—			0.2
Stock-based compensation	—	—		1.8		—			—			1.8
Balance at March 31, 2019	40,979.5	$	0.4	$	244.1	$	36.0		$	(2.8	)	$	277.7



	Common Stock Shares	Common Stock Amount		Additional Paid-in-Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total Equity
Balance at December 29, 2019	41,570.8	$	0.4	$	261.5	$	137.8		$	(6.5	)	$	393.2
Net loss	—	—		—		(17.5		)	—			(17.5		)
Other comprehensive loss	—	—		—		—			(4.7		)	(4.7		)
Issuance of common shares under stock-based compensation plan	291.6	—		4.0		—			—			4.0
Stock-based compensation	—	—		2.5		—			—			2.5
Balance at March 29, 2020	41,862.4	$	0.4	$	268.0	$	120.3		$	(11.2	)	$	377.5

See Notes to Consolidated Financial Statements (Unaudited).

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SiteOne Landscape Supply, Inc.

Consolidated Statements of Cash Flows (Unaudited)

(In millions)



	Three Months Ended
	March 29, 2020			March 31, 2019
Cash Flows from Operating Activities:
Net loss	$	(17.5	)	$	(24.1	)
Adjustments to reconcile Net income to net cash used in operating activities:
Amortization of finance lease right-of-use assets and depreciation	7.0			6.8
Stock-based compensation	2.5			1.8
Amortization of software and intangible assets	9.3			8.6
Amortization of debt related costs	0.5			0.5
Loss on extinguishment of debt	—			0.4
Loss on sale of equipment	0.1			0.1
Other	0.4			0.7
Changes in operating assets and liabilities, net of the effects of acquisitions:
Receivables	(10.9		)	21.1
Inventory	(112.5		)	(88.1		)
Income tax receivable	(15.7		)	(8.3		)
Prepaid expenses and other assets	(1.6		)	12.8
Accounts payable	84.1			42.9
Accrued expenses and other liabilities	(11.3		)	(23.7		)
Net Cash Used In Operating Activities	$	(65.6	)	$	(48.5	)

Cash Flows from Investing Activities:
Purchases of property and equipment	(4.6		)	(6.4		)
Purchases of intangible assets	(1.1		)	(0.2		)
Acquisitions, net of cash acquired	(45.2		)	(12.8		)
Proceeds from the sale of property and equipment	0.2			0.2
Net Cash Used In Investing Activities	$	(50.7	)	$	(19.2	)

Cash Flows from Financing Activities:
Equity proceeds from common stock	5.7			0.6
Repayments under term loan	(1.1		)	(2.2		)
Borrowings on asset-based credit facility	179.6			140.5
Repayments on asset-based credit facility	(59.2		)	(64.5		)
Payments of debt issuance costs	—			(0.9		)
Payments on finance lease obligations	(1.8		)	(1.7		)
Payments of acquisition related contingent obligations	(2.0		)	—
Other financing activities	(1.6		)	(0.4		)
Net Cash Provided By Financing Activities	$	119.6		$	71.4

Effect of exchange rate on cash	(0.3		)	0.1
Net Change In Cash	3.0			3.8

Cash and cash equivalents:
Beginning	19.0			17.3

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Ending	$	22.0	$	21.1

Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for interest	6.7		8.9
Cash paid during the year for income taxes	0.4		0.2

See Notes to Consolidated Financial Statements (Unaudited).

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SiteOne Landscape Supply, Inc.

Notes to Consolidated Financial Statements

(Unaudited)



Note 1. Nature of Business and Significant Accounting Policies	11
Note 2. Revenue from Contracts with Customers	14
Note 3. Acquisitions	14
Note 4. Fair Value Measurement and Interest Rate Swaps	15
Note 5. Property and Equipment, Net	18
Note 6. Goodwill and Intangible Assets, Net	19
Note 7. Leases	20
Note 8. Employee Benefit and Stock Incentive Plans	21
Note 9. Long-Term Debt	23
Note 10. Income Taxes	25
Note 11. Commitments and Contingencies	25
Note 12. Earnings (Loss) Per Share	25
Note 13. Subsequent Events	26

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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” or individually as “Holdings”) is a wholesale distributor of irrigation supplies, fertilizer and control products (e.g., herbicides), landscape accessories, nursery goods, hardscapes (including pavers, natural stone, and blocks), outdoor lighting, and ice melt products to green industry professionals. The Company also provides value-added consultative services to complement its product offering and to help customers operate and grow their businesses. 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 for all periods presented. As of March 29, 2020, the Company had over 550 branches. Based on the nature of the Company’s products and customers’ business cycles, historically, sales have been significantly higher in the second and third quarters of each fiscal year.

COVID-19 Pandemic

As a result of the novel coronavirus (or COVID-19) pandemic, the Company could experience impacts including, but not limited to, charges from potential adjustments of the carrying amounts of receivables and inventory, goodwill and other asset impairment charges, and deferred tax valuation allowances. The extent to which the COVID-19 pandemic impacts the Company's business, results of operations, and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to the duration, spread, and severity, of the COVID-19 pandemic, the effects of the COVID-19 pandemic on the Company's customers, suppliers, and vendors and the remedial actions and stimulus measures adopted by local and federal governments, and to what extent normal economic and operating conditions can resume. Even after the COVID-19 pandemic has subsided, the Company may experience an impact to its business as a result of any economic downturn, recession, or depression that has occurred or may occur in the future.

Basis of Financial Statement Presentation

The accompanying unaudited 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 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 U.S. Securities and Exchange Commission (“SEC”). These interim unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K filed with SEC for the fiscal year ended December 29, 2019. The interim period unaudited financial results for the three-month periods presented are not necessarily indicative of results to be expected for any other interim period or for the entire year.

Use of Estimates

The preparation of 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 3, 2021 and the fiscal year ended December 29, 2019 both include 52 weeks. The three months ended March 29, 2020 and March 31, 2019 both include 13 weeks.

Principles of Consolidation

The Company’s consolidated financial statements 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. All of the Company’s subsidiaries are wholly owned. All intercompany balances and transactions have been eliminated in consolidation.

Significant Accounting Policies

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Except as updated by the Recently Issued and Adopted Accounting Pronouncements section below, a description of the Company’s significant accounting policies is included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2019.

Recently Issued and Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, “Leases (Topic 842),” amended by subsequent ASUs (collectively “ASC 842”), which supersedes the guidance for recognition, measurement, presentation and disclosures of lease arrangements. The amended standard requires recognition on the balance sheet for all leases with terms longer than 12 months as a lease liability and as a right-of-use (“ROU”) asset. The lease liability is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and the ROU asset is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The Company adopted ASC 842 when it became effective in the first quarter of fiscal year 2019 using a modified transition approach under which prior comparative periods were not adjusted. The Company elected the package of practical expedients, which permitted not reassessing its prior conclusions about lease identification, lease classification, and initial direct costs. In addition, the Company made the election for certain classes of underlying assets to not separate non-lease components from lease components. However, the Company did not elect the lease term hindsight practical expedient. For leases less than 12 months, the Company made an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities as permitted by the guidance. The adoption of the new standard had a material impact on the Company’s Consolidated Balance Sheets, but an immaterial impact on its Consolidated Statements of Operations and Consolidated Statements of Cash Flows. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while the accounting for finance leases remained substantially unchanged.

In February 2018, the FASB issued ASU 2018-02, “Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU 2018-02”). The FASB provided ongoing guidance on certain accounting and tax effects of the legislation in the Tax Cuts and Jobs Act (the “2017 Tax Act”), which was enacted in December 2017. ASU 2018-02 allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the 2017 Tax Act. The amendments in ASU 2018-02 also required certain disclosures about stranded tax effects. The Company adopted ASU 2018-02 when it became effective in the first quarter of fiscal year 2019. The Company has elected to not reclassify stranded tax effects resulting from the 2017 Tax Act. The adoption of ASU 2018-02 did not have a material impact on the Company’s consolidated financial statements and related disclosures.

In June 2018, the FASB issued ASU 2018-07, “Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting” (“ASU 2018-07”) which simplified the accounting for nonemployee share-based payment transactions by expanding the scope of ASC Topic 718, Compensation - Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. Under the standard, most of the guidance on stock compensation payments to nonemployees was aligned with the requirements for share-based payments granted to employees. The Company adopted ASU 2018-07 when it became effective in the first quarter of fiscal year 2019. The adoption of ASU 2018-07 did not have a material impact on the Company’s consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force)” (“ASU 2018-15”) which amends ASC 350-40 to address a customer’s accounting for implementation costs incurred in a cloud computing arrangement (“CCA”) that is a service contract. ASU 2018-15 amended ASC 350 and clarified that a customer should apply ASC 350-40 to determine which implementation costs should be capitalized in a CCA. The ASU did not expand on existing disclosure requirements except to require a description of the nature of hosting arrangements that are service contracts. Entities are permitted to apply either a retrospective or prospective transition approach to adopt the guidance. The Company early adopted the amended guidance on a prospective application basis during the first quarter of fiscal year 2019. The adoption of ASU 2018-15 did not have a material impact on the Company’s consolidated financial statements and related disclosures.

In October 2018, the FASB issued ASU 2018-16, “Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes” (“ASU 2018-16”). ASU 2018-16 allows for the use of the OIS rate based on the SOFR as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815, Derivatives and Hedging. The Company adopted ASU 2018-16 when it became effective in the first quarter of fiscal year 2019. The adoption of ASU 2018-16 did not have a material impact on the Company’s consolidated financial statements and related disclosures.

In July 2019, the FASB issued ASU 2019-07, “Codification Updates to SEC Sections - Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization and Miscellaneous Updates (SEC Update)” (“ASU 2019-07”). ASU 2019-07 clarifies or improves the disclosure and presentation requirements of a variety of codification topics by aligning them with the SEC’s regulations, thereby eliminating

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redundancies and making the codification easier to apply. ASU 2019-07 was effective upon issuance and did not have a material impact on the Company’s consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments,” amended by subsequent ASUs (collectively, “ASU 2016-13”), which changes the way companies evaluate credit losses for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model to evaluate impairment, potentially resulting in earlier recognition of allowances for losses. The new standard also requires enhanced disclosures, including the requirement to disclose the information used to track credit quality by year of origination for most financing receivables. The Company adopted the amended guidance when it became effective in the first quarter of fiscal year 2020. The adoption of ASU 2016-13 did not have a material impact on its consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”) which changes the fair value measurement disclosure requirements of ASC 820. The ASU adds new disclosure requirements and eliminates and modifies existing disclosure requirements. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments in ASU 2018-13 should be applied retrospectively to all periods presented. The Company adopted ASU 2018-13 when it became effective in the first quarter of fiscal year 2020. The adoption of ASU 2018-13 did not have a material impact on its consolidated financial statements and related disclosures.

Accounting Pronouncements Issued But Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes” (“ASU 2019-12”). The amendments in ASU 2019-12 simplify the accounting for income taxes by removing certain exceptions to the general principles in ASC Topic 740, Income Taxes. The amendments also improve consistent application of and simplify U.S. GAAP for other areas of ASC Topic 740 by clarifying and amending existing guidance. ASU 2019-12 will be effective for the Company commencing in the first quarter of fiscal year 2021 with early adoption permitted. The transition requirements are dependent upon each amendment within this update and will be applied either prospectively or retrospectively. The Company is currently evaluating the amended guidance and the impact on its consolidated financial statements and related disclosures.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”). The amendments provide optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference the London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective upon issuance and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The Company is currently evaluating the amended guidance and the impact on its consolidated financial statements and related disclosures.

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Note 2. Revenue from Contracts with Customers

The following table presents Net sales disaggregated by product category:



	Three Months Ended
	March 29, 2020		March 31, 2019
Landscaping products^(a)	$	320.2	$	277.3
Agronomic and other products^(b)	139.6		140.0
	$	459.8	$	417.3

______________

(a) Landscaping products include irrigation, nursery, hardscapes, outdoor lighting, and landscape accessories.

(b) Agronomic and other products include fertilizer, control products, ice melt, equipment, and other products.

Remaining Performance Obligations

Remaining performance obligations related to ASC 606 represent the aggregate transaction price allocated to performance obligations with an original contract term greater than one year which are fully or partially unsatisfied at the end of the period. Remaining performance obligations include the outstanding points balance related to the customer loyalty reward program. The program allows enrolled customers to earn loyalty rewards on purchases to be used on future purchases, to pay for annual customer trips hosted by the Company, or to obtain gift cards to other third-party retailers.

As of March 29, 2020, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $5.4 million. The Company expects to recognize revenue on the remaining performance obligations over the next 12 months.

Contract Balances

The timing of revenue recognition, billings, and cash collections results in billed accounts receivable, deferred revenue, and billings in excess of revenue recognized in the Company’s Consolidated Balance Sheets.

Contract liabilities

As of March 29, 2020 and December 29, 2019, contract liabilities were $5.4 million and $6.5 million, respectively, and are included within Accrued liabilities in the accompanying Consolidated Balance Sheets. The decrease in the contract liability balance during the three months ended March 29, 2020 is primarily a result of the $3.0 million of revenue recognized and the expiration of points related to the customer loyalty reward program during the period, partially offset by cash payments received in advance of satisfying performance obligations.

Note 3. Acquisitions

From time to time the Company enters into strategic acquisitions in an effort to better service existing customers and to attract new customers. The Company completed the following acquisitions for an aggregate purchase price of approximately $44.8 million and $12.7 million, and deferred contingent consideration of $6.2 million and zero for the three months ended March 29, 2020 and March 31, 2019, respectively.


•	In March 2020, the Company acquired the assets and assumed the liabilities of Big Rock Natural Stone and Hardscapes, Inc. (“Big Rock”). With one location in the greater Greenville, South Carolina market, Big Rock is a distributor of hardscapes and landscape supplies to landscape professionals.


•	In January 2020, the Company acquired the assets and assumed the liabilities of The Garden Dept. Corp. (“Garden Dept.”). With three locations in the greater Long Island, New York market, Garden Dept. is a distributor of nursery and landscape supplies to landscape professionals.


•	In January 2020, the Company acquired the assets and assumed the liabilities of Empire Supplies (“Empire”). With three locations in the greater Newark-Union, New Jersey market, Empire is a distributor of hardscapes and landscape supplies to landscape professionals.

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•	In January 2020, the Company acquired the assets and assumed the liabilities of Wittkopf Landscape Supply (“Wittkopf”). With two locations in the Spokane Valley, Washington market, Wittkopf is a distributor of hardscapes and landscape supplies to landscape professionals.


•	In December 2019, the Company acquired the assets and assumed the liabilities of Daniel Stone & Landscaping Supplies, Inc. (“Daniel Stone”). With one location in the greater Austin, Texas market, Daniel Stone is a distributor of hardscapes and landscape supplies to landscape professionals.


•	In December 2019, the Company acquired all of the members’ interests of Dirt Doctors, Inc. (“Dirt Doctors”). With three locations in the greater New England market, Dirt Doctors is a distributor of hardscapes and landscape supplies to landscape professionals.


•	In September 2019, the Company acquired the assets and assumed the liabilities of Design Outdoor, Inc. (“Design Outdoor”). With one location in the greater Reno/Lake Tahoe, Nevada area, Design Outdoor is a distributor of hardscapes products to landscape professionals.


•	In August 2019, the Company acquired the assets and assumed the liabilities of Trendset Concrete Products, Inc. (“Trendset”). With one location in the Greater Seattle, Washington market, Trendset is a distributor of hardscapes products to landscape professionals.


•	In July 2019, the Company acquired the assets and assumed the liabilities of L.H. Voss Materials Dublin and its affiliates, Mt. Diablo Landscape Centers and Clark’s Home & Garden (collectively, “Voss”). With five locations across the East Bay in Northern California, Voss is a distributor of hardscapes and landscape supplies to landscape professionals.


•	In May 2019, the Company acquired the assets and assumed the liabilities of Stone and Soil Depot, Inc. (“Stone and Soil”). With three locations in the Greater San Antonio, Texas market, Stone and Soil is a market leader in the distribution of hardscapes and landscape supplies to landscape professionals.


•	In April 2019, the Company acquired the assets and assumed the liabilities of Fisher’s Landscape Depot (“Fisher’s”). With two locations in Western Ontario, Canada, Fisher’s is a market leader in the distribution of hardscapes and landscape supplies to landscape professionals.


•	In April 2019, the Company acquired the assets and assumed the liabilities of Landscape Depot, Inc. (“Landscape Depot”). With three locations in the Greater Boston, Massachusetts market, Landscape Depot is a market leader in the distribution of hardscapes and landscape supplies to landscape professionals.


•	In February 2019, the Company acquired the assets and assumed the liabilities of All Pro Horticulture, Inc. (“All Pro”). With one location in Long Island, New York, All Pro is a market leader in the distribution of agronomics and erosion control products to landscape professionals.


•	In January 2019, the Company acquired the assets and assumed the liabilities of Cutting Edge Curbing Sand & Rock (“Cutting Edge”). With one location in Phoenix, Arizona, Cutting Edge is a market leader in the distribution of hardscapes and landscape supplies to landscape professionals.

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

Note 4. Fair Value Measurement and Interest Rate Swaps

Fair value is defined as an exit price, representing an amount that would be received to sell an asset or the amount paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The inputs used to measure fair value are prioritized into the following three-tiered value hierarchy:


•	Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.


•	Level 2: Unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active or inputs, other than quoted prices in active markets, which are observable either directly or indirectly.


•	Level 3: Unobservable inputs for which there is little or no market data.

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The hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The classification of fair value measurement within the hierarchy is based upon the lowest level of input that is significant to the measurement.

The Company’s financial instruments consist of cash and cash equivalents, accounts receivables, forward-starting interest rate swap contracts and long-term debt. The variable interest rate on the long-term debt is reflective of current market borrowing rates. As such, the Company has determined that the carrying value of these financial instruments approximates fair value.

Interest Rate Swaps

The Company is subject to interest rate risk with regard to existing and future issuances of debt. The Company utilizes interest rate swap contracts to reduce its exposure to fluctuations in variable interest rates for future interest payments on existing debt. The Company is party to various forward-starting interest rate swap contracts to convert the variable interest rate to a fixed interest rate on portions of the borrowings under the Term Loan Facility. The following table provides additional details related to the swap contracts:

Derivatives designated as hedging instruments

Inception Date

Effective Date

Maturity Date

Notional Amount
(in millions)

Fixed Interest Rate

Type of Hedge

Forward-starting interest rate swap 1

June 30, 2017

March 11, 2019

June 11, 2021

58.0

2.1345

Cash flow

Forward-starting interest rate swap 2

June 30, 2017

March 11, 2019

June 11, 2021

116.0

2.1510

Cash flow

Forward-starting interest rate swap 3

December 17, 2018

July 14, 2020

January 14, 2024

34.0

2.9345

Cash flow

Forward-starting interest rate swap 4

December 24, 2018

January 14, 2019

January 14, 2023

50.0

2.7471

Cash flow

Forward-starting interest rate swap 5

December 26, 2018

January 14, 2019

January 14, 2023

90.0

2.7250

Cash flow

Forward-starting interest rate swap 6

May 30, 2019

July 15, 2019

January 14, 2023

70.0

2.1560

Cash flow

The Company recognizes the unrealized gains or unrealized losses as either assets or liabilities at fair value on its Consolidated Balance Sheets. The forward-starting interest rate swap contracts are subject to master netting arrangements. The Company has elected not to offset the fair value of assets with the fair value of liabilities related to these contracts. The following table summarizes the fair value of the derivative instruments and the respective lines in which they were recorded in the Consolidated Balance Sheets as of March 29, 2020 and December 29, 2019 (in millions):



	Derivative Assets						Derivative Liabilities
	March 29, 2020			December 29, 2019			March 29, 2020			December 29, 2019
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments
Interest rate contracts	Prepaid expenses and other current assets	$	—	Prepaid expenses and other current assets	$	—	Accrued liabilities	$	4.6	Accrued liabilities	$	2.1
	Other assets	—		Other assets	—		Other long-term liabilities	7.8		Other long-term liabilities	5.3
Total derivatives		$	—		$	—		$	12.4		$	7.4

For determining the fair value of the interest rate swap contracts, the Company uses significant observable market data or assumptions (Level 2 inputs) that market participants would use in pricing similar assets or liabilities, including assumptions about counterparty risk. The fair value estimates reflect an income approach based on the terms of the interest rate swap contracts and inputs corroborated by observable market data including interest rate curves.

The Company recognizes any differences between the variable interest rate payments and the fixed interest rate settlements with the swap counterparties as an adjustment to interest expense over the life of the swaps. The Company has designated these swaps as cash flow

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hedges and records the estimated fair value of the swaps to Accumulated other comprehensive income (loss) (“AOCI”) on its Consolidated Balance Sheets. For the three months ended March 29, 2020 and March 31, 2019, there was no ineffectiveness recognized in earnings. The after-tax amount of unrealized loss on derivative instruments included in Accumulated other comprehensive loss related to the forward-starting interest rate swap contracts maturing and expected to be reclassified to earnings during the next twelve months was $3.4 million as of March 29, 2020. The ultimate amount recognized will vary based on fluctuations of interest rates through the maturity dates.

The table below details pre-tax amounts in AOCI and gain (loss) reclassified into income for derivatives designated as cash flow hedges for the three months ended March 29, 2020 and March 31, 2019 (in millions):



	Three Months Ended
	March 29, 2020							March 31, 2019
	Gain (Loss) Recorded in OCI			Classification of Gain (Loss) Reclassified from AOCI into Income	Gain (Loss) Reclassified from AOCI into Income			Gain (Loss) Recorded in OCI			Classification of Gain (Loss) Reclassified from AOCI into Income	Gain (Loss) Reclassified from AOCI into Income
Derivatives in Cash Flow Hedging Relationships
Interest rate contracts	$	(5.0	)	Interest and other non-operating expenses, net	$	(0.6	)	$	(3.0	)	Interest and other non-operating expenses, net	$	0.1

Failure of the swap counterparties to make payments would result in the loss of any potential benefit to the Company under the swap agreements. In this case, the Company would still be obligated to pay the variable interest payments underlying the debt agreements. Additionally, failure of the swap counterparties would not eliminate the Company’s obligation to continue to make payments under the existing swap agreements if it continues to be in a net pay position.

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Note 5. Property and Equipment, Net

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



	March 29, 2020		December 29, 2019
Land	$	12.2	$	12.2
Buildings and leasehold improvements:
Buildings	7.8		7.8
Leasehold improvements	26.8		25.5
Branch equipment	49.3		47.9
Office furniture and fixtures and vehicles:
Office furniture and fixtures	20.6		21.4
Vehicles	32.7		30.2
Finance lease right-of-use assets	52.8		46.3
Tooling	0.1		0.1
Construction in progress	3.3		2.9
Total property and equipment, gross	205.6		194.3
Less: accumulated depreciation and amortization	93.7		89.4
Total property and equipment, net	$	111.9	$	104.9

Amortization of finance ROU assets and depreciation expense was approximately $7.0 million for the three months ended March 29, 2020, and $6.8 million for the three months ended March 31, 2019, respectively.

Capitalized software has an estimated useful life of three years. The amounts of total capitalized software costs, including purchased and internally developed software, included in Other assets as of March 29, 2020 and December 29, 2019 were approximately $11.1 million and $10.9 million, less accumulated amortization of approximately $7.8 million and $7.4 million, respectively. Amortization of these software costs was approximately $0.6 million and $0.5 million for the three months ended March 29, 2020 and March 31, 2019, respectively.

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Note 6. Goodwill and Intangible Assets, Net

Goodwill

The changes in the carrying amount of goodwill were as follows (in millions):



	December 30, 2019
	to March 29, 2020
Beginning balance	$	181.3
Goodwill acquired during the period	25.9
Goodwill adjusted during the period	(0.2		)
Ending balance	$	207.0

Additions to goodwill during the three months ended March 29, 2020 related to the acquisitions completed in 2020 as described in Note 3.

Intangible Assets

Intangible assets include customer relationships, and trademarks and other intangibles. Intangible assets with finite useful lives are amortized on an accelerated method or a straight-line method of amortization over their estimated useful lives. An accelerated amortization method reflecting the pattern in which the asset will be consumed is utilized if that pattern can be reliably determined. If that pattern cannot be reliably determined, a straight-line amortization method is used. The Company considers the period of expected cash flows and underlying data used to measure the fair value of the intangible assets when selecting a useful life.

During the three months ended March 29, 2020, the Company recorded $20.9 million of intangible assets which related to customer relationships, and trademarks and other, primarily as a result of the acquisitions completed in 2020 as described in Note 3 and adjustments to purchase price allocations related to prior year acquisitions during the allowable measurement period.

The customer relationship intangible assets will be amortized over a weighted-average period of approximately 20 years. The trademarks and other intangible assets recorded will be amortized over a weighted-average period of approximately five years.

The following table summarizes the components of intangible assets (in millions, except weighted average remaining useful life):



		March 29, 2020						December 29, 2019
	Weighted Average Remaining Useful Life (Years)	Amount		Accumulated Amortization		Net		Amount		Accumulated Amortization		Net
Customer relationships	17.0	$	287.7	$	132.3	$	155.4	$	267.9	$	124.4	$	143.5
Trademarks and other	3.4	18.1		10.7		7.4		17.0		9.9		7.1
Total intangible assets		$	305.8	$	143.0	$	162.8	$	284.9	$	134.3	$	150.6

Amortization expense for intangible assets was approximately $8.7 million for the three months ended March 29, 2020, and $8.1 million for the three months ended March 31, 2019, respectively.

Total future amortization estimated as of March 29, 2020, is as follows (in millions):

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Fiscal year ending:
2020 (remainder)	$	24.7
2021	27.9
2022	22.9
2023	18.3
2024	14.3
Thereafter	54.7
Total future amortization	$	162.8

Note 7. Leases

The Company determines if an arrangement is a lease at inception of a contract. The Company leases equipment and real estate including office space, branch locations, and distribution centers under operating leases. Finance lease obligations consist primarily of the Company’s vehicle fleet. Most leases include one or more options to renew, with renewal terms that can extend the lease term from 1 to 5 years or more. The exercise of lease renewal options is at the Company’s sole discretion. Certain leases include options to purchase the leased property. The lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Leases with an initial term of 12 months or less are not recorded in the Consolidated Balance Sheets. The Company accounts for each separate lease component of a contract and its associated non-lease components as a single lease component. Variable lease payment amounts that cannot be determined at the commencement of the lease such as increases in lease payments based on changes in index rates or usage, are not included in the ROU assets or lease liabilities and are expensed as incurred and recorded as variable lease expense.

ROU assets represent the Company's right to use an underlying asset during the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at commencement date based on the net present value of fixed lease payments over the lease term. ROU assets also include any advance lease payments and are adjusted for lease incentives. As most of the Company's operating leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Finance lease agreements generally include an interest rate that is used to determine the present value of future lease payments. Operating fixed lease expense and finance lease amortization expense are recognized on a straight-line basis over the lease term.

The components of lease expense were as follows (in millions):



		Three Months Ended
Lease cost	Classification	March 29, 2020			March 31, 2019
Finance lease cost
Amortization of right-of-use assets	Selling, general and administrative expenses	$	2.0		$	1.8
Interest on lease liabilities	Interest and other non-operating expenses, net	0.3			0.2
Operating lease cost	Cost of goods sold	0.8			0.8
Operating lease cost	Selling, general and administrative expenses	16.0			14.8
Short-term lease cost	Selling, general and administrative expenses	0.4			0.4
Variable lease cost	Selling, general and administrative expenses	0.2			0.1
Sublease income	Selling, general and administrative expenses	(0.3		)	(0.1		)
Total lease cost		$	19.4		$	18.0

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Supplemental cash flow information related to leases was as follows (in millions):



	Three Months Ended
Other information	March 29, 2020		March 31, 2019
Cash paid for amounts included in the measurements of lease liabilities
Operating cash flows from finance leases	$	0.3	$	0.2
Operating cash flows from operating leases	$	16.5	$	15.0
Financing cash flows from finance leases	$	1.8	$	1.7
Right-of-use assets obtained in exchange for new lease liabilities
Finance leases	$	6.6	$	3.3
Operating leases	$	21.5	$	10.6

The aggregate future lease payments for operating and finance leases as of March 29, 2020 were as follows (in millions):



Maturity of Lease Liabilities	Operating Leases		Finance Leases
Fiscal year:
2020 (remainder)	$	42.7	$	6.8
2021	57.9		8.4
2022	47.5		6.7
2023	37.2		5.0
2024	27.9		2.6
2025	18.4		0.4
Thereafter	73.6		—
Total lease payments	305.2		29.9
Less: interest	61.5		2.3
Present value of lease liabilities	$	243.7	$	27.6

Average lease terms and discount rates were as follows:



Lease Term and Discount Rate	March 29, 2020
Weighted-average remaining lease term (years)
Finance leases	3.8
Operating leases	7.0
Weighted-average discount rate
Finance leases	4.4	%
Operating leases	5.9	%

Note 8. Employee Benefit and Stock Incentive Plans

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 $2.7 million for the three months ended March 29, 2020, and $2.6 million for the three months ended March 31, 2019.

The Company’s Omnibus Equity Incentive Plan (the “Omnibus Incentive Plan”), which became effective on April 28, 2016, provides for the grant of awards in the form of stock options, which may be either incentive stock options or non-qualified stock options; stock purchase rights; restricted stock; restricted stock units (“RSUs”); performance shares; performance stock units (“PSUs”); stock appreciation rights (“SARs”); dividend equivalents; deferred stock units (“DSUs”); and other stock-based awards. The Company also has outstanding stock-based awards under its stock incentive plan (“Stock Incentive Plan”) which commenced in May 2014 and terminated

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upon adoption of the Omnibus Incentive Plan. However, awards previously granted under the Stock Incentive Plan were unaffected by the termination of the Stock Incentive Plan. Any shares covered by an award, or any portion thereof, granted under the Omnibus Incentive Plan or Stock Incentive Plan that terminates, is forfeited, is repurchased, expires or lapses for any reason will again be available for the grant of awards. Additionally, any shares tendered or withheld to satisfy the grant or exercise price or tax withholding obligations pursuant to any award under the Omnibus Incentive Plan will again be available for issuance. The aggregate number of shares which may be issued under the Omnibus Incentive Plan is 2,000,000 shares of which 563,176 remain available as of March 29, 2020.

The stock options and RSUs granted to employees vest over a four-year period at 25% per year. The DSUs granted to non-employee directors vest immediately but settlement is deferred until termination of the director’s service on the board or until a change of control of the Company. Stock options and RSUs expire ten years after the date of grant. PSUs granted to employees vest upon the achievement of the performance conditions, over a three-year period, measured by the growth of the Company’s pre-tax income plus amortization relative to a select peer group, subject to adjustment based upon the application of a return on invested capital modifier.

The fair value of each stock option is estimated on the date of grant using the Black-Scholes options pricing model. The DSUs, RSUs and PSUs have grant date fair values equal to the fair market value of the underlying stock on the date of grant. Share-based compensation expense is recognized in the financial statements based upon fair value on the date of grant. The compensation cost for stock options and RSUs is recognized on a straight-line basis over the requisite vesting period. The Company recognizes compensation expense for PSUs when it is probable that the performance conditions will be achieved. The Company reassesses the probability of vesting at each reporting period and adjusts its compensation cost accordingly.

A summary of stock-based compensation activities during the three months ended March 29, 2020 was as follows (in thousands):



	Stock Options		RSUs		DSUs	PSUs
Outstanding as of December 29, 2019	1,998.8		148.5		32.8	28.4
Granted	137.0		72.0		0.3	16.9
Exercised/Vested/Settled	(265.6	)	(41.4	)	—	—
Expired or forfeited	(15.2	)	(4.3	)	—	(1.1	)
Outstanding as of March 29, 2020	1,855.0		174.8		33.1	44.2

The weighted average grant date fair value of awards granted during the three months ended March 29, 2020 was as follows:



	Weighted Average Grant Date Fair Value
Stock options	$	26.04
RSUs	$	101.77
DSUs	$	70.12
PSUs	$	101.87

A summary of stock-based compensation expenses recognized during the periods was as follows (in millions):



	Three Months Ended		Three Months Ended
	March 29, 2020		March 31, 2019
Stock options	$	1.2	$	1.1
RSUs	0.9		0.5
DSUs	0.2		0.1
PSUs	0.2		0.1
Total stock-based compensation	$	2.5	$	1.8

A summary of unrecognized stock-based compensation expense as of March 29, 2020 was as follows:

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	Unrecognized Compensation (in millions)		Weighted Average Remaining Period (Years)
Stock options	$	9.9	2.75
RSUs	$	12.1	3.28
DSUs	$	0.3	1.29
PSUs	$	2.5	2.42

Note 9. Long-Term Debt

Long-term debt was as follows (in millions):



	March 29, 2020			December 29, 2019
ABL facility	$	213.1		$	92.8
Term loan facility	440.7			441.8
Total gross long-term debt	653.8			534.6
Less: unamortized debt issuance costs and discounts on debt	(9.2		)	(9.7		)
Total debt	$	644.6		$	524.9
Less: current portion	(4.5		)	(4.5		)
Total long-term debt	$	640.1		$	520.4

ABL Facility

SiteOne Landscape Supply Holding, LLC (“Landscape Holding”) and SiteOne Landscape Supply, LLC (“Landscape,” and together with Landscape Holding, the “Borrowers”), each an indirect wholly-owned subsidiary of the Company, are parties to the credit agreement dated December 23, 2013 (as amended by the First Amendment to the Credit Agreement, dated June 13, 2014, the Second Amendment to the Credit Agreement, dated January 26, 2015, the Third Amendment to the Credit Agreement, dated February 13, 2015, the Fourth Amendment to the Credit Agreement, dated October 20, 2015, the Omnibus Amendment to the Credit Agreement, dated May 24, 2017, and the Sixth Amendment to the Credit Agreement, dated February 1, 2019, the “ABL Credit Agreement”) providing for an asset-based credit facility (the “ABL Facility”) of up to $375.0 million, subject to borrowing base availability. The ABL Facility is secured by a first lien on the inventory and receivables of the Borrowers. The ABL Facility is guaranteed by SiteOne Landscape Supply Bidco, Inc. (“Bidco”), an indirect wholly-owned subsidiary of the Company, and each direct and indirect wholly-owned U.S. restricted subsidiary of Landscape. The availability under the ABL Facility was $155.0 million and $263.4 million as of March 29, 2020 and December 29, 2019, 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.

On February 1, 2019, the Company entered into the Sixth Amendment to Credit Agreement, to among other things, (i) extend the termination date to February 1, 2024, (ii) increase the aggregate principal amount of the commitments under the ABL Credit Agreement to $375.0 million pursuant to an increase via use of the existing “incremental” provisions of the ABL Credit Agreement, and (iii) amend certain terms of the ABL Credit Agreement and Guarantee and Collateral Agreement.

The interest rate on the ABL Facility is LIBOR plus an applicable margin ranging from 1.25% to 1.75% or an alternate base rate for U.S. denominated borrowings plus an applicable margin ranging from 0.25% to 0.75%. The interest rates on outstanding balances ranged from 2.86% to 3.50% as of March 29, 2020 and was 3.21% as of December 29, 2019, respectively. Additionally, the Borrowers paid a commitment fee of 0.25% and 0.25% on the unfunded amount as of March 29, 2020 and December 29, 2019, respectively.

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

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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.

The ABL Facility contains customary representations and warranties and customary affirmative and negative covenants. 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. As of March 29, 2020, the Company is in compliance with all of the ABL Facility covenants.

Term Loan Facility

The Borrowers entered into a syndicated senior term loan facility dated April 29, 2016, which was amended on November 23, 2016, May 24, 2017, December 12, 2017 and August 14, 2018 (the “Term Loan Facility”). 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 has a first lien on Property and equipment, Intangibles, and equity interests of Landscape, and a second lien on ABL Facility assets. In connection with the amendment on August 14, 2018, the final maturity date of the Term Loan Facility was extended to October 29, 2024.

Term Loan Facility Amendments

On August 14, 2018, the Company amended the Term Loan Facility (the “Fourth Amendment”) to, among other things, (i) add an additional credit facility under the Term Loan Facility consisting of additional term loans (the “Tranche E Term Loans”) in an aggregate principal amount of $347.4 million and (ii) increase the aggregate principal amount of Tranche E Term Loans under the Term Loan Facility to $447.4 million. Proceeds of the Tranche E Term Loans were used to, among other things, (i) repay in full the Tranche D Term Loans and (ii) repay approximately $96.8 million of borrowings outstanding under the ABL Facility.

The Tranche E Term Loans bear interest, at Landscape Holding’s option, at either (i) an adjusted LIBOR rate (as defined in the Term Loan Facility) plus an applicable margin equal to 2.75% or (ii) an alternative base rate plus an applicable margin equal to 1.75%. The other terms of the Tranche E Term Loans are generally the same as the terms applicable to the previously existing term loans under the Term Loan Facility, provided that certain terms of the Term Loan Facility were modified by the Fourth Amendment. The interest rate on the outstanding balance was 4.36% at March 29, 2020.

The Term Loan Facility contains customary representations and warranties and customary affirmative and negative covenants, which fully restrict retained earnings of the Borrowers. The negative covenants are limited to the following: limitations on indebtedness, restricted payments, restrictive agreements, sales of assets and subsidiary stock, transactions with affiliates, liens, fundamental changes, amendments, lines of business, and limitations on certain actions of the parent borrower. The negative covenants are subject to the customary exceptions.

The Term Loan Facility is payable in consecutive quarterly installments equal to 0.25% of the aggregate initial principal amount of the Tranche E Term Loans until the maturity date. In addition, the Term Loan Facility is subject to annual mandatory prepayments in an amount equal to 50% of excess cash flow, as defined in the Term Loan Credit Agreement for the applicable fiscal year if 50% of excess cash flow exceeds $10.0 million and the secured leverage ratio is greater than 3.00 to 1.00. As of March 29, 2020, the Company is in compliance with all of the Term Loan Facility covenants.

During the three months ended March 29, 2020, the Company incurred total interest expense of $7.7 million. Of this total, $6.9 million related to interest on the ABL Facility and the Term Loan Facility for the three months ended March 29, 2020. The debt issuance costs and discounts are amortized as interest expense over the life of the debt. Amortization expense related to debt issuance costs and discounts were $0.5 million for the three months ended March 29, 2020. The remaining $0.3 million of interest is primarily related to interest attributable to finance leases for the three months ended March 29, 2020.

During the three months ended March 31, 2019, the Company incurred total interest expense of $9.0 million. Of this total, $7.9 million related to interest on the ABL Facility and the Term Loan Facility. The debt issuance costs and discounts are amortized as interest expense over the life of the debt. As a result of the Sixth Amendment of the ABL Facility, unamortized debt issuance costs and discounts in the amount of $0.4 million were written off to expense and new debt fees and issuance costs of $0.9 million were capitalized during the three months ended March 31, 2019. Amortization expense related to debt issuance costs and discounts were $0.5 million. The remaining $0.2 million interest expense primarily related to interest attributable to finance leases.

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Note 10. Income Taxes

The Company’s effective tax rate was approximately 43.5% for the three months ended March 29, 2020 and 28.5% for the three months ended March 31, 2019. The beneficial change in the effective rate was due primarily to an increase in the amount of excess tax benefits from stock-based compensation recognized as a component of Income tax benefit in the Company’s Consolidated Statements of Operations. The Company recognized excess tax benefits of $5.5 million for the three months ended March 29, 2020 and $0.8 million for the three months ended March 31, 2019. 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 March 29, 2020 and March 31, 2019, the Company recorded no material increases or decreases to the valuation allowance against deferred tax assets.

Note 11. 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 $3.6 million and $3.6 million as of March 29, 2020 and December 29, 2019, respectively. The Company’s exposure is capped at $2.4 million. The Company has recorded an indemnification asset in Other Assets against the liability as a result of these actions of approximately $1.2 million and $1.2 million as of March 29, 2020 and December 29, 2019, respectively.

Letters of credit: As of March 29, 2020 and December 29, 2019, outstanding letters of credit were $6.9 million and $5.3 million, respectively. There were no amounts drawn on the letters of credit for either period presented.

Note 12. Earnings (Loss) Per Share

The Company computes basic earnings (loss) per share (“EPS”) by dividing Net income (loss) attributable to common shares by the weighted average number of common shares outstanding for the period. The Company includes vested DSUs in the basic weighted average number of common shares calculation. The Company’s computation of diluted EPS reflects the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common stock, which include in-the-money outstanding stock options and RSUs. PSUs are excluded from the calculation of dilutive potential common shares until the performance conditions have been achieved. Using the treasury stock method, the effect of dilutive securities includes the additional shares of common stock that would have been outstanding based on the assumption that these potentially dilutive securities had been issued. The calculation of the effect of dilutive securities excludes any derived excess tax benefits or deficiencies from assumed future proceeds.

RSUs and stock options with exercise prices that are higher than the average market prices of our common stock for the periods presented are excluded from the diluted EPS calculation because the effect is anti-dilutive.

For the three months ended March 29, 2020 and March 31, 2019, the assumed exercises of a portion of the Company’s employee stock options and RSUs were anti-dilutive and, therefore, the following potential shares of common stock were not included in the diluted earnings (loss) per common share calculation:

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Note 13. Subsequent Events

On April 1, 2020, the Company borrowed approximately $100 million under the ABL Facility, resulting in approximately $319 million

outstanding. The Company elected to borrow such amount as a precautionary measure in order to increase its cash position and preserve financial flexibility in light of uncertainty in the global markets resulting from the COVID-19 pandemic. The Company currently does not have plans to deploy these new funds other than seasonal investments in working capital. Borrowings under the ABL Facility are scheduled to mature on February 1, 2024.

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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 consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q. 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 herein and in the Annual Report on Form 10-K for the fiscal year ended December 29, 2019.

Overview

SiteOne Landscape Supply, Inc. (collectively with all of 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. Through our expansive North American network of over 550 branch locations in 45 U.S. states and six Canadian provinces, we offer a comprehensive selection of more than 120,000 SKUs, including irrigation supplies, fertilizer and control products (e.g., herbicides), landscape accessories, nursery goods, hardscapes (including pavers, natural stone, and blocks), outdoor lighting, and ice melt products to green industry professionals. We also provide value-added consultative services to complement our product offerings and to help our customers operate and grow their businesses.

Impact of COVID-19 on Our Business

With the global outbreak of the novel coronavirus, COVID-19, and the declaration of a pandemic by the World Health Organization on March 11, 2020, we are keeping the safety of our associates, customers, and suppliers as our top priority while striving to continue to deliver quality products and exceptional service to our customers and communities. We are monitoring developments and following appropriate recommendations from health and government authorities while proactively seeking to implement safe behaviors, minimize potential exposures, and facilitate safe and healthy environments in our branches and other facilities.

The COVID-19 pandemic has resulted, and is likely to continue to result, in significant economic disruption and has and will likely continue to negatively affect our business. As of the date of this Quarterly Report, significant uncertainty exists concerning the magnitude of the impact and duration of the COVID-19 pandemic. Factors arising from the COVID-19 response that have or may negatively impact sales and gross margin in the future include, but are not limited to: limitations on the ability of our suppliers to manufacture, or procure from manufacturers, the products we sell, or to meet delivery requirements and commitments; limitations on the ability of our employees to perform their work due to impacts caused by the pandemic or local, state, or federal orders that restrict our operations or the operations of our customers; limitations on the ability of carriers to deliver our products to our branches and customers; limitations on the ability of our customers to conduct their business and purchase our products and services; decreased demand for our customers’ services; and limitations on the ability of our customers to pay us on a timely basis. While our branches and other facilities continue to operate, the COVID-19 pandemic and accompanying economic disruption have negatively impacted sales beginning at the end of the first quarter. We have experienced a decline in Organic Daily Sales of approximately 11% in April 2020 compared to the same period of 2019 as of the date of this filing. The decline has been consistent from the last week of the first quarter. We expect this trend to continue in the near-term given government mandated COVID-19 related restrictions and anticipate an improvement in demand when restrictions are eased and the COVID-19 pandemic and associated economic impacts moderate.

In response to the negative sales trend, we are evaluating and taking actions to reduce costs and spending across our organization. This includes reducing hiring activities, furloughing employees, and limiting discretionary spending. We have reduced and paused anticipated spending on capital investment projects, including the postponement of pending acquisitions, without sacrificing significant long-term growth or market opportunities.

Although there have been operational and other challenges to date, as well as lower sales at the end of the first quarter through the date of this filing, there has been no material adverse impact on our first quarter 2020 results of operations. We currently believe we have sufficient liquidity on hand to continue business operations during this volatile period. As disclosed in the Liquidity and Capital Resources section below, we had total available liquidity of approximately $177 million as of March 29, 2020, consisting of cash on hand and available capacity under an asset-based credit facility (the “ABL Facility”). In addition, on April 1, 2020, we borrowed approximately $100 million on our ABL Facility to enhance our cash position and increase our financial flexibility should market conditions continue to deteriorate. As of April 27, 2020, we have approximately $122 million of cash on hand and approximately

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$47 million in available capacity under our ABL Facility. In addition, we have no debt maturities under our credit facilities until 2024.

We will continue to actively monitor the COVID-19 pandemic and may take further actions that alter our business operations if required by federal, state or local authorities or that we determine are in the best interests of our employees, customers, suppliers, and shareholders. While we are unable to determine or predict the nature, duration, or scope of the overall impact the COVID-19 pandemic will have on our business, results of operations, liquidity, or capital resources, we believe that it is important to provide this update on our Company, how our response to COVID-19 is progressing, and how our operations and financial condition may change as the fight against COVID-19 progresses. The situation surrounding COVID-19 remains fluid and the potential for a material impact to our Company increases the longer the virus impacts the level of economic activity in the United States and globally. For this reason, we cannot reasonably estimate with any degree of certainty the future impact COVID-19 may have on our results of operations, financial position, and liquidity. See Part II, Item 1A. - “Risk Factors”, for a discussion of risks which could have a material adverse effect on our operations and financial results.

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.

The discussion of our financial condition is presented for the three months ended March 29, 2020, which included 13 weeks and 65 Selling Days, and the three months ended March 31, 2019, which included 13 weeks and 64 Selling Days. “Selling Days” are defined below within the Key Business and Performance Metrics section.

We manage our business as a single reportable segment. Within our organizational framework, the same operational resources support multiple geographic regions and performance is evaluated at a consolidated level. We also evaluate performance based on discrete financial information on a regional basis. Since all of our regions have similar operations and share similar economic characteristics, we aggregate regions into a single operating and reportable segment. These similarities include (1) long-term financial performance, (2) the nature of products and services, (3) the types of customers we sell to, and (4) the distribution methods utilized.

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 and 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 taxes.

Non-GAAP Organic Sales. In managing our business, we consider all growth, including the opening of new greenfield branches, to be organic growth unless it results from an acquisition. When we refer to Organic Sales growth, we include increases in growth from newly-opened greenfield branches and decreases in growth from closing existing branches, but exclude increases in growth from acquired branches until they have been under our ownership for at least four full fiscal quarters at the start of the fiscal reporting period.

Non-GAAP Selling Days. Selling Days are defined as business days, excluding Saturdays, Sundays and holidays, that our branches are open during the year. Depending upon the location and the season, our branches may be open on Saturdays and Sundays; however, for consistency, those days have been excluded from the calculation of Selling Days.

Non-GAAP Organic Daily Sales. We define Organic Daily Sales as Organic Sales divided by the number of Selling Days in the relevant reporting period. We believe Organic Sales growth and Organic Daily Sales growth are useful measures for evaluating our performance as we may choose to open or close branches in any given market depending upon the needs of our customers or our strategic growth opportunities. Refer to “Results of Operations—Quarterly Results of Operations Data” for a reconciliation of Organic Daily Sales to Net sales.

Cost of goods sold. Our Cost of goods sold includes all inventory costs, such as purchase price paid to suppliers, net of any volume-based incentives, as well as inbound freight and handling, and other costs associated with inventory. Our Cost of goods sold

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excludes the cost to deliver the products to our customers through our branches, which is included in Selling, general and administrative expenses. 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-based compensation and bonuses), rent, fuel, vehicle maintenance costs, insurance, utilities, repairs and maintenance, and professional fees. Operating expenses also include depreciation and amortization.

Non-GAAP Adjusted EBITDA. In addition to the metrics discussed above, we believe that Adjusted EBITDA is useful for evaluating the operating performance and efficiency of our business. EBITDA represents our Net income (loss) plus the sum of income tax (benefit) expense, interest expense, net of interest income, and depreciation and amortization. Adjusted EBITDA represents EBITDA as further adjusted for items such as stock-based compensation expense, (gain) loss on sale of assets not in the ordinary course of business, other non-cash items, financing fees, other fees and expenses related to acquisitions and other non-recurring (income) loss. Refer to “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. Historically, 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 historically incurred net losses in these quarters. Seasonal variations in operating results may also be significantly impacted by inclement weather conditions, such as snow storms, wet weather, and hurricanes, which not only impact the demand for certain products like fertilizer and ice melt, but also may delay construction projects where our products are used.

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 also tends to fluctuate. The landscape supply industry also includes a significant amount of agronomics products such as 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.

Popular Consumer Trends

Preferences in housing, lifestyle, and environmental awareness can also impact the overall level of demand and mix for the products we offer. Examples of current trends we believe are important to our business include a heightened interest in professional landscape services inspired by the popularity of home and garden television shows and magazines, the increasingly popular concept of “outdoor living,” which has been a key driver of sales growth for our hardscapes and outdoor lighting products, and the social focus on eco-friendly products that promote water conservation, energy efficiency, and the adoption of “green” standards.

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 are reflected in

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our financial statements from the date of acquisition forward. Additionally, we incur transaction costs in connection with identifying and completing acquisitions as well as ongoing integration costs as we integrate acquired companies and seek to achieve synergies. We completed the following acquisitions since the start of the 2019 fiscal year:


•	In March 2020, we acquired the assets and assumed the liabilities of Big Rock Natural Stone and Hardscapes, Inc. (“Big Rock”). With one location in the greater Greenville, South Carolina market, Big Rock is a distributor of hardscapes and landscape supplies to landscape professionals.


•	In January 2020, we acquired the assets and assumed the liabilities of The Garden Dept. Corp. (“Garden Dept.”). With three locations in the greater Long Island, New York market, Garden Dept. is a distributor of nursery and landscape supplies to landscape professionals.


•	In January 2020, we acquired the assets and assumed the liabilities of Empire Supplies (“Empire”). With three locations in the greater Newark-Union, New Jersey market, Empire is a distributor of hardscapes and landscape supplies to landscape professionals.


•	In January 2020, we acquired the assets and assumed the liabilities of Wittkopf Landscape Supply (“Wittkopf”). With two locations in the Spokane Valley, Washington market, Wittkopf is a distributor of hardscapes and landscape supplies to landscape professionals.


•	In December 2019, we acquired the assets and assumed the liabilities of Daniel Stone & Landscaping Supplies, Inc. (“Daniel Stone”). With one location in the greater Austin, Texas market, Daniel Stone is a distributor of hardscapes and landscape supplies to landscape professionals.


•	In December 2019, we acquired all of the members’ interests of Dirt Doctors, Inc. (“Dirt Doctors”). With three locations in the greater New England market, Dirt Doctors is a distributor of hardscapes and landscape supplies to landscape professionals.


•	In September 2019, we acquired the assets and assumed the liabilities of Design Outdoor, Inc. (“Design Outdoor”). With one location in the greater Reno/Lake Tahoe, Nevada area, Design Outdoor is a distributor of hardscapes products to landscape professionals.


•	In August 2019, we acquired the assets and assumed the liabilities of Trendset Concrete Products, Inc. (“Trendset”). With one location in the greater Seattle, Washington market, Trendset is a distributor of hardscapes products to landscape professionals.


•	In July 2019, we acquired the assets and assumed the liabilities of L.H. Voss Materials Dublin and its affiliates, Mt. Diablo Landscape Centers and Clark’s Home & Garden (collectively, “Voss”). With five locations across the East Bay in Northern California, Voss is a distributor of hardscapes and landscape supplies to landscape professionals.


•	In May 2019, we acquired the assets and assumed the liabilities of Stone and Soil Depot, Inc. (“Stone and Soil”). With three locations in the greater San Antonio, Texas market, Stone and Soil is a market leader in the distribution of hardscapes and landscape supplies to landscape professionals.


•	In April 2019, we acquired the assets and assumed the liabilities of Fisher’s Landscape Depot (“Fisher’s”). With two locations in Western Ontario, Canada, Fisher’s is a market leader in the distribution of hardscapes and landscape supplies to landscape professionals.


•	In April 2019, we acquired the assets and assumed the liabilities of Landscape Depot, Inc. (“Landscape Depot”). With three locations in the greater Boston, Massachusetts market, Landscape Depot is a market leader in the distribution of hardscapes and landscape supplies to landscape professionals.


•	In February 2019, we acquired the assets and assumed the liabilities of All Pro Horticulture, Inc. (“All Pro”). With one location in Long Island, New York, All Pro is a market leader in the distribution of agronomics and erosion control products to landscape professionals.


•	In January 2019, we acquired the assets and assumed the liabilities of Cutting Edge Curbing Sand & Rock (“Cutting Edge”). With one location in Phoenix, Arizona, Cutting Edge is a market leader in the distribution of hardscapes and landscape supplies to landscape professionals.

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Volume-Based Pricing

We generally procure our products through purchase orders rather than under long-term contracts with firm commitments. We work to develop strong relationships with a select group of suppliers that we target based on a number of factors, including brand and market recognition, price, quality, product support, service levels, delivery terms, and strategic positioning. We typically have annual supplier agreements, and while they generally do not provide for specific product pricing, many include volume-based financial incentives that we earn by meeting or exceeding purchase volume targets. Our ability to earn these volume-based incentives is an important factor in our financial results. In certain cases, we have entered into supply contracts with terms that exceed one year for the manufacture of our LESCO^® branded fertilizer, some nursery goods, and grass seed, which may require us to purchase products in the future.

Strategic Initiatives

We continue to undertake operational initiatives, utilizing our scale to improve our profitability, enhance supply chain efficiency, strengthen our pricing and category management capabilities, streamline and refine our marketing process, and invest in more sophisticated information technology systems and data analytics. We are focusing on our procurement and supply chain management initiatives to better serve our customers and reduce sourcing costs. We are also implementing new inventory planning and stocking system functionalities and new transportation management systems in an effort to reduce costs as well as improve our reliability and level of service. In addition, we continue to enhance our website and B2B e-Commerce platform, which we believe provides the convenience of an online sales channel, enhanced account management functionality, and industry specific productivity tools for our customers. We also work closely with our local branches to improve sales, delivery, and branch productivity. We believe we will continue to benefit from the following initiatives, among others:

Pricing initiatives, including the development of a centralized pricing and discounting strategy and the implementation of data analytics to aid special pricing and bidding, were initiated beginning in the second quarter of 2015 and are expected to continue through 2021.

Category management initiatives, including the implementation of organic growth strategies, the development of our private label product strategy, the expansion of product lines, and the reorganization of brands and products by preferred suppliers, were initiated beginning in the first quarter of 2015 and are expected to continue through 2022.

Supply chain initiatives, including the implementation of new inventory planning and stocking systems, the installation of new distribution centers, local hubs in large markets, and local fleet utilization and cost improvement, were initiated in the fourth quarter of 2016 and are expected to continue through 2022.

Sales force performance initiatives, including the implementation of new compensation plans, the restructuring of our sales force, the formal sales and product training for sales force and management, and the implementation of a comprehensive CRM, were initiated beginning in the third quarter of 2015 and are expected to continue through 2022.

Marketing initiatives, including a relaunch of the Partners Program and implementation of a digital marketing strategy, were initiated beginning in the third quarter of 2015 and are expected to continue through 2022.

E-Commerce initiatives, including the relaunch of our website and the implementation of a B2B e-Commerce platform, which provides the convenience of an online sales channel, enhanced account management functionality, and industry specific productivity tools for our customers, are expected to continue through 2022.

Operational excellence initiatives, including the implementation of best practices in branch operations which encompasses safety, merchandising, stocking and assortment, customer engagement, delivery, labor management, as well as branch systems automation and enhancement including the rollout of barcoding, are expected to continue through 2022.

Working Capital

In addition to affecting our Net sales, fluctuations in prices of supplies tend to result in changes in our reported inventories, trade receivables, and trade payables, even when our sales volumes and our rate of turnover of these working capital items remain relatively constant. Our business is characterized by a relatively high level of reported working capital, the effects of which can be compounded by changes in prices. Our working capital needs are exposed to these price fluctuations, as well as to fluctuations in our cost for transportation and distribution. We might not always be able to reflect these increases in our pricing. The strategic initiatives described above are designed to reduce our exposure to these fluctuations and maintain and improve our efficiency.

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Results of Operations

In the following discussion of our results of operations, we make comparisons between the three months ended March 29, 2020 and March 31, 2019.



(In millions)
Consolidated Statements of Operations

	Three Months Ended
	March 29, 2020					March 31, 2019
Net sales	$	459.8		100.0	%	$	417.3		100.0	%
Cost of goods sold	317.0			68.9	%	287.3			68.8	%
Gross profit	142.8			31.1	%	130.0			31.2	%
Selling, general and administrative expenses	167.1			36.3	%	155.8			37.3	%
Other income	1.0			0.2	%	1.1			0.3	%
Operating loss	(23.3		)	(5.1	)%	(24.7		)	(5.9	)%
Interest and other non-operating expenses, net	7.7			1.7	%	9.0			2.2	%
Income tax benefit	(13.5		)	(2.9	)%	(9.6		)	(2.3	)%
Net loss	$	(17.5	)	(3.8	)%	$	(24.1	)	(5.8	)%

Net sales

Net sales increased 10% to $459.8 million for the three months ended March 29, 2020 compared to $417.3 million for the three months ended March 31, 2019. Organic Daily Sales increased 5% in the first quarter of 2020 compared to the prior year period. Organic Daily Sales for landscaping products (irrigation, nursery, hardscapes, outdoor lighting, and landscape accessories) grew 9% in the first quarter of 2020 compared to the prior year period due to favorable weather and strong demand in our end markets. Organic Daily Sales for agronomics products (fertilizer, control products, ice melt, and equipment) decreased 1% in the first quarter of 2020 compared to the prior year period due to a decline in the sales of ice melt and associated equipment attributable to a warmer winter. Acquisitions contributed $20.7 million, or 5%, to the first quarter 2020 Net sales growth.

Cost of goods sold

Cost of goods sold increased 10% to $317.0 million for the three months ended March 29, 2020 compared to $287.3 million for the three months ended March 31, 2019. The increase in Cost of goods sold for the first quarter of 2020 was primarily attributable to Net sales growth, including acquisitions.

Gross profit and gross margin

Gross profit increased 10% to $142.8 million for the three months ended March 29, 2020 compared to $130.0 million for the three months ended March 31, 2019. Gross profit growth for the first quarter of 2020 was driven by Net sales growth, including acquisitions. Gross margin decreased 10 basis points to 31.1% for the first quarter of 2020 as compared to 31.2% for the first quarter of 2019. Gross margin in the first quarter of 2019 compared to the first quarter of 2020 benefitted from the strategic inventory buys ahead of price increases.

Selling, general and administrative expenses

Selling, general and administrative expenses (“SG&A”) increased 7% to $167.1 million for the three months ended March 29, 2020 compared to $155.8 million for the three months ended March 31, 2019. The increase in the first quarter of 2020 was primarily due to the additional operating expenses from acquisitions. SG&A as a percentage of Net sales decreased 100 basis points to 36.3% for the three months ended March 29, 2020 compared to 37.3% for the three months ended March 31, 2019. The decrease in SG&A as a percentage of Net sales was primarily attributable to solid Organic Sales growth combined with good expense management. Depreciation and amortization expense increased $0.9 million to $16.3 million for the three months ended March 29, 2020 compared

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to $15.4 million for the three months ended March 31, 2019. The increase in depreciation and amortization in the first quarter of 2020 was primarily attributable to acquisitions.

Interest and other non-operating expenses, net

Interest and other non-operating expenses, net decreased $1.3 million to $7.7 million for the three months ended March 29, 2020 compared to $9.0 million for the three months ended March 31, 2019. The decrease in interest expense in the quarter primarily reflected a lower interest rate and lower average outstanding debt balance over the first three months of 2020 compared to the same period of 2019.

Income tax benefit

Income tax benefit was $13.5 million for the three months ended March 29, 2020 compared to $9.6 million for the three months ended March 31, 2019. The effective tax rate was 43.5% for the three months ended March 29, 2020 compared to 28.5% for the three months ended March 31, 2019. The beneficial change in the effective rate was due primarily to an increase in the amount of excess tax benefits from stock-based compensation recognized as a component of Income tax benefit in the Consolidated Statements of Operations. Excess tax benefits of $5.5 million were recognized for the three months ended March 29, 2020 compared to $0.8 million for the three months ended March 31, 2019.

Net loss

Net loss decreased $6.6 million to $17.5 million for the three months ended March 29, 2020 compared to $24.1 million for the three months ended March 31, 2019. The decrease in Net loss was primarily attributable to solid sales growth and the increased Income tax benefit discussed above.

Quarterly Results of Operations Data

The following tables set forth certain financial data for each of the most recent eight fiscal quarters including our unaudited Net sales, Cost of goods sold, Gross profit, Selling, general and administrative expenses, Net income (loss), and Adjusted EBITDA data (including a reconciliation of Adjusted EBITDA to Net income (loss)). We have prepared the quarterly data on a basis that is consistent with the financial statements included in this Quarterly Report on Form 10-Q. 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 Quarterly Report on Form 10-Q. The results of historical periods are not necessarily indicative of the results of operations for a full year or any future period.

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(In millions, except per share information and percentages)
	2020			2019												2018
	Qtr 1			Qtr 4			Qtr 3			Qtr 2			Qtr 1			Qtr 4			Qtr 3			Qtr 2

Net sales	$	459.8		$	535.0		$	652.8		$	752.4		$	417.3		$	474.6		$	578.5		$	687.8
Cost of goods sold	317.0			365.0			437.6			494.4			287.3			325.9			387.5			457.9
Gross profit	142.8			170.0			215.2			258.0			130.0			148.7			191.0			229.9
Selling, general and administrative expenses	167.1			166.8			165.0			166.7			155.8			150.1			151.8			145.2
Other income	1.0			1.2			2.3			1.4			1.1			2.0			2.3			1.1
Operating income (loss)	(23.3		)	4.4			52.5			92.7			(24.7		)	0.6			41.5			85.8
Interest and other non-operating expenses	7.7			7.5			8.2			8.7			9.0			8.3			9.2			8.0
Income tax (benefit) expense	(13.5		)	(5.6		)	9.7			19.3			(9.6		)	(5.6		)	2.4			14.7
Net income (loss)	$	(17.5	)	$	2.5		$	34.6		$	64.7		$	(24.1	)	$	(2.1	)	$	29.9		$	63.1
Net income (loss) per common share:
Basic	$	(0.42	)	$	0.06		$	0.84		$	1.57		$	(0.59	)	$	(0.05	)	$	0.74		$	1.56
Diluted	$	(0.42	)	$	0.06		$	0.81		$	1.52		$	(0.59	)	$	(0.05	)	$	0.70		$	1.48
Adjusted EBITDA⁽¹⁾	$	(3.6	)	$	22.2		$	70.5		$	114.3		$	(5.9	)	$	18.1		$	60.0		$	103.0
Net sales as a percentage of annual Net sales				22.7		%	27.7		%	31.9		%	17.7		%	22.4		%	27.4		%	32.6		%
Gross profit as a percentage of annual Gross profit				22.0		%	27.8		%	33.4		%	16.8		%	21.9		%	28.2		%	33.9		%
Adjusted EBITDA as a percentage of annual Adjusted EBITDA				11.0		%	35.1		%	56.8		%	(2.9		)%	10.3		%	34.1		%	58.5		%

_____________________________________

(1)

In addition to our Net income (loss) determined in accordance with GAAP, we present Adjusted EBITDA in this Quarterly Report on Form 10-Q to evaluate the operating performance and efficiency of our business. EBITDA represents our Net income (loss) plus the sum of income tax (benefit) expense, interest expense, net of interest income, and depreciation and amortization. Adjusted EBITDA is further adjusted for stock-based compensation expense, (gain) loss on sale of assets, other non-cash items, financing fees, other fees, and expenses related to acquisitions and other non-recurring (income) loss. 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 long-term debt agreements;


•	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;

•

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, this measure:


•	does not reflect changes in, or cash requirements for, our working capital needs;


•	does not reflect our interest expense, or the cash requirements necessary to service interest or principal payments, on our debt;

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•	does not reflect our Income tax (benefit) expense or the cash requirements to pay our income taxes;


•	does 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 does not reflect any cash requirements for such replacements.

Management compensates for these limitations by relying primarily on the 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):



(In millions)
		2020			2019										2018
		Qtr 1			Qtr 4			Qtr 3		Qtr 2		Qtr 1			Qtr 4			Qtr 3			Qtr 2
Reported Net income (loss)		$	(17.5	)	$	2.5		$	34.6	$	64.7	$	(24.1	)	$	(2.1	)	$	29.9		$	63.1
	Income tax (benefit) expense	(13.5		)	(5.6		)	9.7		19.3		(9.6		)	(5.6		)	2.4			14.7
	Interest expense, net	7.7			7.5			8.2		8.7		9.0			8.3			9.2			8.0
	Depreciation and amortization	16.3			14.8			14.6		14.7		15.4			14.0			14.1			12.5
EBITDA		(7.0		)	19.2			67.1		107.4		(9.3		)	14.6			55.6			98.3
	Stock-based compensation^(a)	2.5			2.0			2.5		5.4		1.8			1.8			1.9			2.1
	(Gain) loss on sale of assets^(b)	0.1			0.1			0.1		—		0.1			(0.1		)	(0.3		)	0.1
	Financing fees^(c)	—			—			—		—		—			0.1			0.7			—
	Acquisitions and other adjustments^(d)	0.8			0.9			0.8		1.5		1.5			1.7			2.1			2.5
Adjusted EBITDA^(e)		$	(3.6	)	$	22.2		$	70.5	$	114.3	$	(5.9	)	$	18.1		$	60.0		$	103.0

_____________________________________


(a)	Represents stock-based compensation expense recorded during the period.


(b)	Represents any gain or loss associated with the sale of assets not in the ordinary course of business.


(c)	Represents fees associated with our debt refinancing and debt amendments.

(d)

Represents professional fees, retention and severance payments, and performance bonuses related to historical acquisitions. Although we have incurred professional fees, retention and severance payments, and performance bonuses related to acquisitions in several historical periods and expect to incur such fees and payments for any future acquisitions, we cannot predict the timing or amount of any such fees or payments.


(e)	Adjusted EBITDA excludes any earnings or loss of acquisitions prior to their respective acquisition dates for all periods presented.

The following table presents a reconciliation of Organic Daily Sales to Net sales:




		2020		2019
		Qtr 1		Qtr 1
Reported Net sales		$	459.8	$	417.3
	Organic Sales^(a)	434.8		413.0
	Acquisition contribution^(b)	25.0		4.3
Selling Days		64		64
Organic Daily Sales		$	6.8	$	6.5

_____________________________________


(a)	Organic Sales equal Net sales less Net sales from branches acquired in 2019 and 2020.

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(b)	Represents Net sales from acquired branches that have not been under our ownership for at least four full fiscal quarters at the start of the 2020 Fiscal Year. Includes Net sales from branches acquired in 2019 and 2020.

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 $155.0 million as of March 29, 2020, after giving effect to approximately $213.1 million of revolving credit loans under the ABL Facility, an increase of $120.3 million from $92.8 million of revolving credit loans as of December 29, 2019. As of March 29, 2020, we had total cash and cash equivalents of $22.0 million, total gross long-term debt of $653.8 million and finance leases of $27.6 million.

Working capital was $520.8 million as of March 29, 2020, an increase of $65.8 million as compared to $455.0 million as of December 29, 2019. The change in working capital reflects an increase in inventory and accounts receivable due to seasonal fluctuations of our business and additions from new acquisitions.

Information about our cash flows, by category, is presented in our statements of cash flows and is summarized below:



(In millions)
	Three Months Ended
	March 29, 2020			March 31, 2019
Net cash provided by (used in):
Operating activities	$	(65.6	)	$	(48.5	)
Investing activities	$	(50.7	)	$	(19.2	)
Financing activities	$	119.6		$	71.4

Cash flow used in operating activities

Net cash used in operating activities for the three months ended March 29, 2020 was $65.6 million compared to net cash used in operating activities of $48.5 million for the three months ended March 31, 2019. The increase was primarily due to the working capital build in preparation for our spring selling season.

Cash flow used in investing activities

Net cash used in investing activities was $50.7 million for the three months ended March 29, 2020 compared to $19.2 million for the three months ended March 31, 2019. The increase reflected higher acquisition investment during the first three months of 2020 compared to the same period of 2019.

Capital expenditures were $4.6 million for the first three months of 2020, compared to $6.4 million for the first three months of 2019 due to lower investment in expenditures for material handling equipment used at our branches.

Cash flow provided by financing activities

Net cash provided by financing activities was $119.6 million for the three months ended March 29, 2020 compared to $71.4 million for the three months ended March 31, 2019. The increase primarily reflected higher borrowings to fund investments in acquisitions and lower operating cash flows during the three months ended March 29, 2020 compared to the same period of 2019.

Off Balance Sheet Arrangement

None.

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External Financing

Term Loan Facility

Landscape Holding and Landscape (collectively, the “Term Loan Borrower”) are parties to the Amended and Restated Term Loan Credit Agreement dated April 29, 2016, which was amended on November 23, 2016, May 24, 2017, December 12, 2017, and August 14, 2018, providing for a senior secured term loan facility (the “Term Loan Facility”), with UBS AG, Stamford Branch as administrative agent and collateral agent, and the other financial institutions and lenders from time to time party thereto. In connection with the amendment on August 14, 2018, the final maturity date of the Term Loan Facility was extended to October 29, 2024.

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 Landscape Holding 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 Term Loan Facility may be increased (or a new term loan facility, revolving credit facility, or letter of credit facility added) by up to (i) the greater of (a) $175.0 million and (b) 100% of Consolidated EBITDA (as defined in the Amended and Restated Term Loan Credit Agreement) for the trailing 12-month period plus (ii) an additional amount that will not cause the net secured leverage ratio after giving effect to the incurrence of such additional amount and any use of proceeds thereof to exceed 3.50 to 1.00.

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

Term Loan Facility Amendments

The Term Loan Facility contains customary representations and warranties and customary affirmative and negative covenants. The negative covenants limit the ability of Landscape Holding and Landscape to:


•	incur additional indebtedness;


•	pay dividends, redeem stock, or make other distributions;


•	repurchase, prepay, or redeem subordinated indebtedness;


•	make investments;


•	create restrictions on the ability of Landscape Holding’s restricted subsidiaries to pay dividends or make other intercompany transfers;


•	create liens;


•	transfer or sell assets;


•	make negative pledges;


•	consolidate, merge, sell, or otherwise dispose of all or substantially all of Landscape Holding’s assets;


•	conduct, transact, or otherwise engage in businesses or operations at Landscape Holding other than certain specified exceptions relating to its role as a holding company of Landscape and its subsidiaries;


•	enter into certain transactions with affiliates; and


•	designate subsidiaries as unrestricted subsidiaries.

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ABL Facility

Landscape Holding and Landscape (collectively, the “ABL Borrower”) are parties to the credit agreement dated December 23, 2013 (as amended by the First Amendment to the Credit Agreement, dated June 13, 2014, the Second Amendment to the Credit Agreement, dated January 26, 2015, the Third Amendment to the Credit Agreement, dated February 13, 2015, the Fourth Amendment to the Credit Agreement, dated October 20, 2015, the Omnibus Amendment to the Credit Agreement, dated May 24, 2017, and the Sixth Amendment to the Credit Agreement, dated February 1, 2019, providing for an ABL Facility in the amount of up to $375.0 million. The ABL Facility is secured by a first lien on the inventory and receivables of the Borrowers. The ABL Facility is guaranteed by SiteOne Landscape Supply Bidco, Inc. (“Bidco”), an indirect wholly-owned subsidiary of the Company, and each direct and indirect wholly-owned U.S. restricted subsidiary of Landscape. Availability is determined using borrowing base calculations of eligible inventory and receivable balances. The interest rate on the ABL Facility is LIBOR (as defined in the ABL Credit Agreement) plus an applicable margin ranging from 1.25% to 1.75% or an alternate base rate for U.S. denominated borrowings plus an applicable margin ranging from 0.25% to 0.75%. The interest rates on outstanding balances ranged from 2.86% to 3.50% as of March 29, 2020 and was 3.21% as of December 29, 2019, respectively. Additionally, the Borrowers paid a commitment fee of 0.25% and 0.25% on the unfunded amount as of March 29, 2020 and December 29, 2019, respectively. As of March 29, 2020, the outstanding balance on the ABL Facility was $213.1 million with a maturity date of February 1, 2024.

The ABL Facility contains customary representations and warranties and customary affirmative and negative covenants. The negative covenants are limited to the following: limitations on indebtedness, dividends, distributions and other restricted payments, investments, acquisitions, prepayments or redemptions of indebtedness under the Term Loan Facility, amendments of the Term Loan Facility, transactions with affiliates, asset sales, mergers, consolidations, and sales of all or substantially all assets, liens, negative pledge clauses, changes in fiscal periods, changes in line of business, and hedging transactions. The negative covenants are subject to customary exceptions and also permit the payment of dividends and distributions, investments, permitted acquisitions, payments or redemptions of indebtedness under the Term Loan Facility, asset sales and mergers, consolidations, and sales of all or substantially all assets involving subsidiaries upon satisfaction of a “payment condition.” The payment condition is deemed satisfied upon 30-day specified excess availability and specified availability exceeding agreed upon thresholds and, in certain cases, the absence of specified events of default or known events of default and pro forma compliance with a consolidated fixed charge coverage ratio of 1.00 to 1.00.

Subject to certain conditions, without the consent of the then existing lenders (but subject to the receipt of commitments), the ABL Facility may be increased (or a new term loan facility added) by up to (i) the greater of (a) $175.0 million and (b) 100% of Consolidated EBITDA (as defined in the Amended and Restated Term Loan Credit Agreement) for the trailing 12-month period plus (ii) an additional amount that will not cause the net secured leverage ratio after giving effect to the incurrence of such additional amount and any use of proceeds thereof to exceed 5.00 to 1.00.

There are no financial covenants included in the ABL Credit Agreement, other than a springing minimum consolidated fixed charge coverage ratio of at least 1.00 to 1.00, which is tested only when specified availability is less than 10.0% of the lesser of (x) the then applicable borrowing base and (y) the then aggregate effective commitments under the ABL Facility, and continuing until such time as specified availability has been in excess of such threshold for a period of 30 consecutive calendar days.

Failure to comply with the covenants and other provisions included in the ABL Credit Agreement 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 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.

Subsequent Events

As previously discussed, on April 1, 2020, we borrowed approximately $100 million under the ABL Facility, resulting in approximately $319 million outstanding. We have approximately $47 million in available capacity under the ABL Facility and approximately $122 million of cash on hand as of April 27, 2020. We elected to borrow such amount as a precautionary measure in order to increase our cash position and preserve financial flexibility in light of uncertainty in the global markets resulting from the COVID-19 pandemic. We currently do not have plans to deploy these new funds other than seasonal investments in working capital.

Limitations on Distributions and Dividends by Subsidiaries

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The ability of our subsidiaries to make distributions and dividends to us depends on their operating results, cash requirements, financial condition, and general business conditions, as well as restrictions under the laws of our subsidiaries’ jurisdictions.

The agreements governing the Term Loan Facility and the ABL Facility 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 Term Loan Facility and the ABL Facility 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.

Interest Rate Swaps

We are subject to interest rate risk with regard to existing and future issuances of debt. We utilize interest rate swap contracts to reduce our exposure to fluctuations in variable interest rates for future interest payments on existing debt. We entered into various forward-starting interest rate swap contracts to convert the variable interest rate to a fixed interest rate on portions of the borrowings under the Term Loan Facility. For additional information refer to “Note 4. Fair Value Measurement and Interest Rate Swaps” in the notes to the consolidated financial statements.

We recognize any differences between the variable interest rate payments and the fixed interest rate settlements from the swap counterparties as an adjustment to interest expense over the life of the swaps. We have designated these swaps as cash flow hedges and record the changes in the estimated fair value of the swaps to Accumulated other comprehensive income (loss) on our Consolidated Balance Sheets. To the extent the interest rate swaps are determined to be ineffective, we recognize the changes in the estimated fair value of the swaps in earnings.

Failure of the swap counterparties would result in the loss of any potential benefit to us under the swap agreements. In this case, we would still be obligated to pay the variable interest payments underlying the debt agreements. Additionally, failure of the swap counterparties would not eliminate our obligation to continue to make payments under the existing swap agreements if it continues to be in a net pay position.

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Contractual Obligations and Commitments

The following table presents our contractual obligations as of March 29, 2020, related to our long-term debt. The changes during the three months ended March 29, 2020 as compared to December 29, 2019 reflected increased borrowings and decreased interest rates. The table does not include the borrowing under the ABL Facility on April 1, 2020.



(In millions)
	Payments Due by Period
			Less than						More than
	Total		1 Year		1-3 Years		3-5 Years		5 Years

Long-term debt, including current maturities⁽¹⁾	$	653.8	$	5.6	$	8.9	$	639.3	$	—
Interest on long-term debt⁽²⁾	123.4		29.7		57.0		36.7		—

___________________________________


(1)	For additional information refer to “Note 9. Long-Term Debt” in the notes to the consolidated financial statements. In addition, the table excludes the debt issuance costs and debt discounts of $9.2 million.

(2)

The interest on long-term debt includes payments for agent administration fees. Interest payments on debt are calculated for future periods using interest rates in effect as of March 29, 2020. Certain of these projected interest payments may differ in the future based on changes in floating interest rates or other factors and events, including our entry into the Term Loan Facility Amendments. The projected interest payments only pertain to obligations and agreements outstanding as of March 29, 2020. Refer to “Note 4. Fair Value Measurement and Interest Rate Swaps” and “Note 9. Long-Term Debt” in the notes to the consolidated financial statements for further information regarding our debt instruments.

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Critical Accounting Policies and Estimates

The accounting policies and estimates that we believe to be most dependent upon the use of estimates and assumptions are: revenue recognition, sales incentives, inventory valuation, acquisitions, and goodwill and other indefinite-lived intangible assets, lease recognition, and stock-based compensation. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 29, 2019 for additional detail and discussion of these critical accounting policies and estimates. There have been no material changes in critical accounting policies and estimates as described in our most recent Annual Report.

Recently Issued and Adopted Accounting Pronouncements

Refer to “Note 1. Nature of Business and Significant Accounting Policies” in the notes to the consolidated financial statements.

Accounting Pronouncements Issued But Not Yet Adopted

Refer to “Note 1. Nature of Business and Significant Accounting Policies” in the notes to the consolidated financial statements.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes from the information provided in our Annual Report on Form 10-K for the fiscal year ended December 29, 2019.

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 Quarterly Report on Form 10-Q. Based on that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q.

Changes in Internal Control over Financial Reporting

There were no significant changes in our internal control over financial reporting during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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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, or cash flows.

Item 1A. Risk Factors

The significant factors known to us that could materially adversely affect our business, financial condition, or operating results are disclosed in our Annual Report on Form 10-K for the fiscal year ended December 29, 2019, except for the addition of the following risk factor.

The COVID-19 pandemic has had, and may continue to have, negative impacts on our business and the business of our customers and suppliers.

The COVID-19 pandemic has significantly impacted worldwide economic conditions and could have a material adverse effect on our operations and business and those of our customers and suppliers. The present COVID-19 pandemic began to impact our operations late in the first quarter of 2020 and is likely to continue to affect our business, including as government authorities impose mandatory business closures, “stay-at-home” or “shelter-in-place” orders, and social distancing protocols, and seek voluntary facility closures or impose other restrictions. These actions could materially adversely affect our ability to adequately staff, manage, and maintain our operations, impair our ability to sustain sufficient financial liquidity, and impact our financial results. The effects of the COVID-19 pandemic may also include the disruption or closure of our customers’ and/or suppliers’ facilities and supply chains, which could materially and adversely impact demand for our products, our ability to obtain or deliver inventory and our ability to collect accounts receivable as customers and suppliers face higher liquidity and solvency risks. While our branches and other facilities have been able to continue to operate under applicable federal, state, and local orders, government mandates in certain jurisdictions have prohibited or limited our customers’ operations, negatively impacting sales at the end of the first quarter of fiscal 2020 and may negatively impact sales until the COVID-19 pandemic moderates. As we cannot predict the duration or scope of the COVID-19 pandemic, the anticipated negative financial impact to our operating results cannot be reasonably estimated but could be material and last for an extended period of time.

Our business could also be negatively impacted over the medium-to-longer term if the disruptions related to COVID-19, among other things: limit the ability of our suppliers to manufacture, or procure from manufacturers, the products we sell, or to meet delivery requirements and commitments; limit the ability of our employees to perform their work due to impacts caused by the pandemic or local, state, or federal orders that restrict our operations or the operations of our customers; limit the ability of carriers to deliver our products to our branches and customers; limit the ability of our customers to conduct their business and purchase our products and services; decrease demand for our customers’ services; limit the ability of our customers to pay us on a timely basis; precipitate a prolonged economic downturn and/or an extended rise in unemployment or tempering of wage growth, any of which could lower demand for our products; impair our ability to operate in a typical manner or at all, generate revenues and cash flows, and/or access the capital or lending markets (or significantly increase the costs of doing so), as may be necessary to sustain our business.

The inherent uncertainty surrounding COVID-19, due in part to rapidly changing governmental directives, public health challenges and progress, and market reactions thereto, also makes it more challenging for our management to estimate the potential impact and the future performance of our business. Accordingly, the anticipated negative financial impact to our operating results cannot be reasonably estimated at this time, but could be material and last for an extended period of time.

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Item 6. Exhibits.



Exhibit Number		Description

10.1†		Form of Employee Stock Option Agreement under the SiteOne Landscape Supply, Inc. 2016 Omnibus Equity Incentive Plan

10.2†		Form of Employee Restricted Stock Unit Agreement under the SiteOne Landscape Supply, Inc. 2016 Omnibus Equity Incentive Plan

10.3†		Form of Performance Stock Unit Agreement under the SiteOne Landscape Supply, Inc. 2016 Omnibus Equity Incentive Plan

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

104		Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101)

______________

† Denotes management contract or compensatory plan or arrangement.

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SIGNATURE

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:	April 29, 2020	By:	/s/ John T. Guthrie
			John T. Guthrie
			Executive Vice President, Chief Financial Officer and Assistant Secretary
			(Principal Financial and Principal Accounting Officer)

Exhibit 10.1

SiteOne Landscape Supply, Inc.

Employee Stock Option Agreement

This Employee Stock Option Agreement (the “Agreement”), by and between SiteOne Landscape Supply, Inc., a Delaware corporation (the “Company”), and the Employee whose name is set forth on Exhibit A hereto, is being entered into pursuant to the SiteOne Landscape Supply, Inc. 2016 Omnibus Equity Incentive Plan (the “Plan”) and is dated as of the date it is accepted and agreed to by the Employee in accordance with Section 7(p). Capitalized terms that are used but not defined herein shall have the respective meanings given to them in the Plan.

The Company and the Employee hereby agree as follows:

Section 1.Grant of Options

(a)Confirmation of Grant. The Company hereby evidences and confirms, effective as of the date set forth on Exhibit A hereto (the “Grant Date”), its grant to the Employee of the number of options to purchase Shares as set forth on Exhibit A hereto (the “Options”), subject to adjustment pursuant to the Plan. The Options are not intended to be incentive stock options under the Code. This Agreement is entered into pursuant to, and the terms of the Options are subject to, the terms of the Plan. In consideration of the receipt of this Award, Participant agrees to be bound by the covenants set forth in Exhibit B governing Competitive Activity.

(b)Option Price. The Option Price for each Share covered by the Options is the price set forth on Exhibit A hereto.

Section 2.Vesting and Exercisability

(a)Vesting. Except as otherwise provided in Section 5 or Sections 2.b)-(e), the Options shall become vested, if at all, in the percentage(s), and on the vesting date(s) set forth on Exhibit A hereto (each, a “Vesting Date”), subject to the continued employment of the Employee by the Company or any Subsidiary through such date. For purposes of this Section 2 and Section 3, a termination of the Employee’s employment shall be determined without regard to any statutory or deemed or express contractual notice period.

(b)Death or Disability. If the Employee’s employment with the Company or the Subsidiaries is terminated by reason of a Special Termination (i.e., death or Disability), all then outstanding Options shall then become vested.

(c)Retirement. If the Employee’s employment with the Company terminates due to Retirement, then as long as the Employee does not violate any of the terms set forth in Exhibit B, the Options that would have vested within the two-year period immediately following the effective date of the Employee’s Retirement had the Employee then been employed (the “Retirement Options”) will become vested on the Vesting Dates within such two-year period.

(d)Termination without Cause. If the Employee’s employment with the Company or the Subsidiaries is terminated by the Company without Cause, a number of Options shall then vest equal to the number of Options that would have vested on the next scheduled Vesting Date, had the Employee remained employed through such Vesting Date, multiplied by a fraction, (x) the numerator of which is the number of days from the immediately preceding Vesting Date (or the Grant Date, if the termination of employment occurs prior to the first Vesting Date) and (y) the denominator is the number of days from the immediately preceding Vesting Date (or the Grant Date, if the termination of employment occurs prior to the first Vesting Date) through such next Vesting Date.

(e)Discretionary Acceleration. The Administrator, in its sole discretion, may accelerate the vesting or exercisability of all or a portion of the Options, at any time and from time to time.

(f)Exercise. Once vested in accordance with the provisions of this Agreement, the Options may be exercised at any time and from time to time prior to the date such Options terminate pursuant to Section 3, subject to such generally applicable restrictions on exercise as may be imposed by the Administrator (including customary blackout periods during which trading by employees may not occur). Options may only be exercised with respect to whole shares of Company Common Stock and must be exercised in accordance with Section 4.

(g)No Other Accelerated Vesting. The vesting and exercisability provisions set forth in this Section 2 or in Section 5, or expressly set forth in the Plan, shall be the exclusive vesting and exercisability provisions applicable to the Options and shall supersede any other provisions relating to vesting and exercisability, unless such other such provision expressly refers to the Plan by name and this Agreement by name and date.

Section 3.Termination of Options

(a)Normal Termination Date. Unless earlier terminated pursuant to Section 3(b) or Section 5, the Options shall terminate on the tenth anniversary of the Grant Date (the “Normal Termination Date”), if not exercised prior to such date.

(b)Early Termination.

(i) If the Employee’s employment with the Company terminates for any reason, any Options held by the Employee that have not vested before the effective date of such termination of employment or that will not become vested on or after such date in accordance with Section 2 shall terminate immediately upon such termination of employment and, if the Employee’s employment is terminated for Cause or the Employee engages in Competitive Activity or violates the terms of the Non-Compete Agreement, all Options (whether or not then vested or exercisable) shall automatically terminate immediately upon such termination in the case of termination for Cause or the earliest date of Competitive Activity or such violation and the Participant’s termination if the Participant has engaged in Competitive Activity or violated the Non-Compete Agreement.

(ii)All vested Options held by the Employee following the effective date of a termination of employment shall remain exercisable until the first to occur of (A) the 90^th day following the effective date of the Employee’s termination of employment (or 12 months in the case of a Special Termination or, in the case of the Employee’s Retirement if the Employee has entered into a Non-Compete Agreement, (x) two years from the Option’s vesting date in the case of Retirement Options and (y) two years from the effective date of the Employee’s Retirement for any other Options that were vested on the effective date of the Employee’s Retirement), (B) the Normal Termination Date or (C) the cancellation of the Options pursuant to Section 5, and, if not exercised within such period, the Options shall automatically terminate upon the expiration of such period. If on the first date of the applicable period set forth in Section 3(b)(ii)(A) the Option is not exercisable solely due to any of the restrictions set forth in Section 4(b)(A), (B) or (C), the Option will not expire until the earlier of the Normal Termination Date or 90 days following the first date on which exercise of the Option ceases to be barred by any such restriction.

Section 4.Manner of Exercise

(a)General. Subject to such reasonable administrative regulations as the Administrator may adopt from time to time, the exercise of vested Options by the Employee shall be pursuant to procedures contained in the Plan and such other procedures established by the Administrator from time to time and shall include the Employee specifying in writing the proposed date on which the Employee desires to exercise a vested Option (the “Exercise Date”), the number of whole Shares with respect to which the Options are being exercised (the “Exercise Shares”) and the aggregate Option Price for such Exercise Shares (the “Exercise Price”), or such other or different requirements as may be specified by the Administrator. Unless otherwise determined by the Administrator, (i) on or before the Exercise Date the Employee shall deliver to the Company full payment for the Exercise Shares in such manner as is permitted under the Plan (including, if available, pursuant to a broker-assisted cashless exercise program established by the Company), in an amount equal to the Exercise Price plus any required withholding taxes or other similar taxes, charges or fees, and (ii) on the Exercise Date, the Company shall register the issuance of the Exercise Shares on its records (or direct such issuance to be registered by the Company’s transfer agent). The Administrator may require the Employee to furnish or execute such other documents as the Administrator shall reasonably deem necessary (i) to evidence such exercise or (ii) to comply with or satisfy the requirements of the Securities Act, applicable state or non-U.S. securities laws or any other law.

(b)Restrictions on Exercise. Notwithstanding any other provision of this Agreement, the Options may not be exercised in whole or in part, (A) unless all requisite approvals and consents of any governmental authority of any kind shall have been secured, (B) unless the purchase of the Exercise Shares shall be exempt from registration under applicable U.S. federal and state securities laws, and applicable non-U.S. securities laws, or the Exercise Shares shall have been registered under such laws, (C) at any time that exercise of the Option would violate the Company’s insider trading policy and unless, if applicable, the Employee has obtained pre-trading clearance for the exercise and (D) unless all applicable U.S. federal, state and local and non-U.S. tax withholding requirements shall have been satisfied. The Company shall use its commercially reasonable efforts to obtain any

consents or approvals referred to in clause (A) of the preceding sentence, but shall otherwise have no obligations to take any steps to prevent or remove any impediment to exercise described in such sentence.

Section 5.Change in Control.

(a)Except as set forth in this Section 5 or as otherwise provided by the Administrator, a Change in Control shall not accelerate the vesting or exercisability of the Options.

(b)In the event that the Administrator reasonably determines in good faith, prior to the occurrence of a Change in Control, that no Alternative Awards will be provided upon a Change in Control, each unvested Option shall vest, and shall be canceled in exchange for a payment equal to the excess, if any, of the Change in Control Price over the applicable Option Price.

Section 6.Certain Definitions. As used in this Agreement, capitalized terms that are not defined herein have the respective meaning given in the Plan, and the following additional terms shall have the following meanings:

“Company” means SiteOne Landscape Supply, Inc.; provided that for purposes of determining the status of Employee’s employment with the “Company,” such term shall include the Company and/or any of its Subsidiaries that employ the Employee.

“Employee” means the grantee of the Options, whose name is set forth on Exhibit A hereto; provided that for purposes of Section 4 and Section 7, following such person’s death “Employee” shall be deemed to include such person’s beneficiary or estate and following such Person’s Disability, “Employee” shall be deemed to include such person’s legal representative.

“Option Price” means, with respect to each share of Company Common Stock covered by an Option, the purchase price specified in Section 1(b) for which the Employee may purchase such share of Company Common Stock upon exercise of an Option.

“Retirement” means the Employee’s voluntarily resignation at or after attaining the age of 60, so long as the Employee has provided at least 10 years of service to the Company as an Employee (or, if approved by the Administrator, as a Consultant or Director).

Section 7.Miscellaneous.

(a)Withholding. The Company or one of its Subsidiaries shall require the Employee to satisfy any applicable U.S. federal, state and local and non-U.S. tax withholding or other similar charges or fees that may arise in connection with the grant, vesting, exercise or purchase of the Options.

(b)No Rights as Stockholder; No Voting Rights. The Employee shall have no rights as a stockholder of the Company with respect to any Shares covered by the Options until the exercise of the Options and delivery of the Shares. No adjustment shall be made for dividends or other rights for which the record date is prior to the delivery of such Shares.

(c)No Right to Continued Employment. Nothing in this Agreement shall be deemed to confer on the Employee any right to continue in the employ of the Company or any Subsidiary, or to interfere with or limit in any way the right of the Company or any Subsidiary to terminate such employment at any time.

(d)Nature of Award. This award of Options and any delivery or payment in respect thereof constitutes a special incentive payment to the Employee and shall not be taken into account in computing the amount of salary or compensation of the Employee for the purpose of determining any retirement, death or other benefits under (x) any retirement, bonus, life insurance or other employee benefit plan of the Company, or (y) any agreement between the Company and the Employee, except as such plan or agreement shall otherwise expressly provide.

(e)Non-Transferability of Options. The Options may be exercised only by the Employee, or, following the Employee’s death, by his designated beneficiary or by his estate in the absence of a designated beneficiary. The Options are not assignable or transferable, in whole or in part, and they may not, directly or indirectly, be offered, transferred, sold, pledged, assigned, alienated, hypothecated or otherwise disposed of or encumbered (including, but not limited to, by gift, operation of law or otherwise) other than by will or by the laws of descent and distribution to the estate of the Employee upon the Employee’s death or with the Company’s consent.

(f)Forfeiture of Awards. Except as otherwise set forth in Exhibit B, the Options granted hereunder (and any shares received, gains earned or accrued in connection therewith) shall be subject to potential cancellation, recoupment, rescission, payback or other action in accordance with the terms of the Company’s clawback policy, as it may be amended from time to time (the “Policy”). The Employee hereby appoints the Company as the Employee’s attorney-in-fact to take such actions as may be necessary or appropriate to effectuate the Policy.

(g)Consent to Electronic Delivery. By entering into this Agreement and accepting the Options evidenced hereby, the Employee hereby consents to the delivery of information (including, without limitation, information required to be delivered to the Employee pursuant to applicable securities laws) regarding the Company and its Subsidiaries, the Plan, this Agreement and the Options via Company website or other electronic delivery.

(h)Binding Effect; Benefits. This Agreement shall be binding upon and inure to the benefit of the parties to this Agreement and their respective successors and assigns. Nothing in this Agreement, express or implied, is intended or shall be construed to give any person other than the parties to this Agreement or their respective successors or assigns any legal or equitable right, remedy or claim under or in respect of any agreement or any provision contained herein.

(i)Waiver; Amendment.

(i)Waiver. Any party hereto or beneficiary hereof may by written notice to the other parties (A) extend the time for the performance of any of the obligations or other actions of the other parties under this Agreement, (B) waive compliance with any of the conditions or covenants of the other parties contained in this Agreement and (C) waive or modify performance of any of the obligations of the other parties under this Agreement. Except as provided in the preceding sentence, no action taken pursuant to this Agreement, including, without limitation, any investigation by or on behalf of any party or beneficiary, shall be deemed to constitute a waiver by the party or beneficiary taking such action of compliance with any representations, warranties, covenants or agreements contained herein. The waiver by any party hereto or beneficiary hereof of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any preceding or succeeding breach and no failure by a party or beneficiary to exercise any right or privilege hereunder shall be deemed a waiver of such party’s or beneficiary’s rights or privileges hereunder or shall be deemed a waiver of such party’s or beneficiary’s rights to exercise the same at any subsequent time or times hereunder.

(ii)Amendment. This Agreement may not be amended, modified or supplemented orally, but only by a written instrument executed by the Employee and the Company.

(j)Assignability. Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by the Company or the Employee without the prior written consent of the other party.

(k)Applicable Law. This Agreement shall be governed by and construed in accordance with the law of the State of Delaware regardless of the application of rules of conflict of law that would apply the laws of any other jurisdiction.

(l)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 proceeding arising out of this Agreement or any transaction contemplated hereby. Each party (i) certifies 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 (ii) acknowledges 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.

(m)Lock-Up Periods. If the Company files a registration statement under the Securities Act with respect to an underwritten public offering of any shares of its capital stock, the Employee shall not effect any public sale (including a sale under Rule 144 under the Securities Act or other similar provision of applicable law) or distribution of any Company Common Stock, other than as part of such underwritten public offering, during the 20 days prior to and the 90 days after the effective date of such registration statement (or such other period, not to exceed 180 days, as may be generally applicable to or agreed by the Company with respect to its transactions in its own Shares). If the Company files a prospectus in connection with a takedown from a shelf registration statement, the Associate shall not effect any public sale (including a sale under Rule 144 under the Securities Act or other similar provision of applicable law) or distribution of any Company Common Stock, other than as part of such offering, for 20 days prior to and 90 days after the date the prospectus supplement is filed with the Securities and Exchange Commission.

(n)Trading Policies. The Employee acknowledges and agrees that he or she shall be subject to, and shall comply with, any of the Company's trading policies, as in effect from time to time.

(o)Section and Other Headings, etc. The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. Unless otherwise indicated, section and exhibit references in this Agreement refer to this Agreement.

(p)Acceptance of Options and Agreement. The Employee has indicated his or her consent and

acknowledgement of the terms of this Agreement pursuant to the instructions provided to the Employee by or on behalf of the Company. The Employee acknowledges receipt of the Plan, represents to the Company that he or she has read and understood this Agreement and the Plan, and, as an express condition to the grant of the Options under this Agreement, agrees to be bound by the terms of both this Agreement and the Plan, including, but not limited to, the covenants set forth in Exhibit B governing Competitive Activity. The Employee and the Company each agrees and acknowledges that the use of electronic media (including, without limitation, a clickthrough button or checkbox on a website of the Company or a third-party administrator) to indicate the Employee’s confirmation, consent, signature, agreement and delivery of this Agreement and the Options is legally valid and has the same legal force and effect as if the Employee and the Company signed and executed this Agreement in paper form. The same use of electronic media may be used for any amendment or waiver of this Agreement.

Exhibit A to

Employee Stock Option Agreement



Employee:
Grant Date:	, 202
Options granted hereby:
Option Price:



Vesting Date		Percentage Vesting on such Vesting Date

Exhibit B

Restrictive Covenants

All section references in this Exhibit B shall refer to the designated section(s) of this Exhibit B.

Section 1 Confidential Information. Except as otherwise provided in Section 5, Participant agrees not to disclose, divulge, publish, communicate, publicize, disseminate or otherwise reveal, either directly or indirectly, any Confidential Information to any person, natural or legal, except as required in the performance of Participant’s authorized employment duties to the Company. For the avoidance of doubt, Participant’s duty to hold the Confidential Information in confidence as set forth in this Section 1 shall remain in effect until the Confidential Information no longer qualifies as Confidential Information or until the Company provides written notice to Participant releasing Participant from such duty, whichever occurs first. The term “Confidential Information” means all information not generally known to the public in any form relating to the past, present or future business affairs of the Company or any of its Subsidiaries, including without limitation: all business plans and marketing strategies; information concerning existing and prospective markets, suppliers and customers; financial information; information concerning the development of new products and services; and technical and non-technical data related to software programs, design, specifications, compilations, inventions, improvements, patent applications, studies, research, methods, devices, prototypes, processes, procedures and techniques. Such Confidential Information includes all such information of the Company or a person not a party to this Agreement whose information the Company has in its possession under obligations of confidentiality, which is disclosed by the Company to Participant or which is produced or developed while Participant is an employee or director of the Company. “Confidential Information” shall also include trade secrets (as defined under applicable law) as well as information that does not rise to the level of a trade secret and includes information that has been entrusted to the Company by a third party under an obligation of confidentiality. The term “Confidential Information” shall not include any information of the Company which (i) becomes publicly known through no wrongful act of Participant, (ii) is received from a person not a party to this Agreement who is free to disclose it to Participant, or (iii) is lawfully required to be disclosed to any governmental agency or is otherwise required to be disclosed by law, subpoena or court order but only to the extent of such requirement, provided that before making such disclosure Participant shall give the Company an adequate opportunity to interpose an objection or take action to assure confidential handling of such information.

Section 2 Return of Company Property. Participant acknowledges that all tangible items containing any Confidential Information or any other proprietary information of the Company or any of its Subsidiaries, including without limitation memoranda, photographs, records, reports, manuals, drawings, blueprints, prototypes, notes, documents, drawings, specifications, software, media and other materials, including any copies thereof (including electronically recorded copies), are the exclusive property of the Company and its Subsidiaries, and Participant shall deliver to the Company all such material in Participant’s possession or control upon the Company’s request and in any event upon the termination of Participant’s employment with the Company. Participant shall also return any keys, equipment, identification or credit cards, or other property belonging to the Company or its Subsidiaries upon termination of Participant’s employment or the Company’s request.

Section 3 Non-competition and Non-solicitation.

3.1 Participant agrees that during Participant’s employment with the Company, Participant will not, directly or indirectly: (i) as an employee, consultant, owner, officer, director, manager, operator, or controlling person (including indirectly through a debt or equity investment), provide to a Competing Business services of the same or similar type provided by Participant to the Company during Participant’s employment with the Company; (ii) solicit, recruit, aid or induce any employee of the Company or its Subsidiaries to leave his or her employment with the Company or its Subsidiary in order to accept employment with or render services to another person or entity unaffiliated with the Company or its Subsidiaries; (iii) solicit, aid, or induce any customer of the Company or its Subsidiaries to purchase goods or services then sold by the Company or its Subsidiaries from another person or entity, or assist or aid any other person or entity in identifying or soliciting any such customer, or (iv) otherwise interfere with the relationship of the Company or any of its Subsidiaries with any of its employees, customers, agents, representatives or suppliers.

3.2 Participant agrees that during the 18-month period following the date on which Participant’s employment with the Company terminates for any reason (the “Non-compete Period”), Participant will not directly or indirectly, as an employee, consultant, owner, officer, director, manager, operator, or controlling person (including indirectly through a debt or equity investment), provide a Competing Business anywhere in the Territory services of the same or similar type provided by Participant to the Company within 2 years of the termination of Participant’s employment with the Company. Notwithstanding anything to the contrary in the preceding sentence, (i) if Participant’s employment terminates for any reason within the 1-year period following a Change in Control, the Non-compete Period shall be a 12-month period, and (ii) this Section 3.2 shall not apply if Participant’s

employment is terminated by the Company without Cause. The term “Competing Business” means the sale or distribution of landscaping or irrigation products or supplies. The term “Territory” means those states, cities, and other regions of the United States, Canada, and any other country within which Participant had substantial responsibilities while employed by the Company. For the avoidance of doubt, if Participant is a senior officer of the Company, the restriction contained herein shall relate to all of the businesses of the Company and its Subsidiaries.

3.3 Participant agrees that during the 18-month period following the date on which Participant’s employment with the Company terminates for any reason, Participant will not, directly or indirectly, on Participant’s own behalf or on behalf of another, or in assistance or aid of another: (i) solicit, recruit, aid or induce any employee of the Company or its Subsidiaries to leave his or her employment with the Company or its Subsidiaries in order to accept employment with or render services to another person or entity unaffiliated with the Company or its Subsidiaries, (ii) solicit, aid, or induce any customer of the Company or its Subsidiaries, with whom Participant had material contact during the 2-year period prior to the date of termination of Participant’s employment with the Company, to purchase goods or services then sold by the Company or its Subsidiaries from another person or entity, or assist or aid any other person or entity in identifying or soliciting any such customer, or (iii) otherwise interfere with the relationship of the Company or any of its Subsidiaries with any of its employees, customers, agents, representatives or suppliers with whom Participant had material contact during the 2-year period prior to the date of termination of Participant’s employment with the Company.

3.4 For the avoidance of doubt, Participant’s agreement to the covenants set forth in Sections 3.2 and 3.3 of this Exhibit B are not a condition of continued employment with the Company; rather, agreement to these covenants is a condition of Participant’s participation in the Plan. With respect to any Participant who primarily resides or works in California at the time of his or her execution of this Agreement or at the time of his or her termination of employment from the Company, the provisions of Sections 3.2 and 3.3 of this Exhibit B will not apply.

Section 4 Remedies.

4.1 The Company and Participant agree that the provisions of this Exhibit B do not impose an undue hardship on Participant and are not injurious to the public; that these provisions are necessary to protect the business of the Company and its Subsidiaries; that the nature of Participant’s responsibilities with the Company provide and/or will provide Participant with access to Confidential Information that is valuable to the Company and its Subsidiaries; that the Company would not grant this Award to Participant if Participant did not agree to the provisions of this Exhibit B; that the provisions of this Exhibit B are reasonable in terms of length of time and scope; and that adequate consideration supports the provisions of this Exhibit B. In the event that a court determines that any provision of this Exhibit B is unreasonably broad or extensive, Participant agrees that such court should narrow such provision to the extent necessary to make it reasonable and enforce the provisions as narrowed. The Company reserves all rights to seek any and all remedies and damages permitted under law, including, but not limited to, injunctive relief, equitable relief and compensatory damages for any breach of Participant’s obligations under this Exhibit B.

4.2 Without limiting the generality of the remedies available to the Company pursuant to Section 4.1, if Participant, except with the prior written consent of the Company, materially breaches the restrictive covenants contained in this Exhibit B, Participant shall forfeit any Options that vested during the 12-month period prior to the date of termination of Participant’s employment with the Company, and the shares acquired from the exercise of any such Options (and the proceeds from the sale of any such shares) shall be subject to clawback or recoupment by the Company. These rights of forfeiture and recoupment are in addition to any other remedies the Company may have against Participant for Participant’s breach of the restrictive covenants contained in this Exhibit B. Participant’s obligations under this Exhibit B shall be cumulative (but not operate to extend the length of any such obligations) of any similar obligations Participant has under the Plan, the Agreement or any other agreement with the Company or any Affiliate.

Section 5 Protected Rights

5.1 Notwithstanding any other provision of this Agreement, nothing contained in this Agreement limits Participant’s ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (collectively, “Government Agencies”), or prevents Participant from providing truthful information in response to a lawfully issued subpoena or court order. Further, this Agreement does not limit Participant’s ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company.

made solely for the purpose of reporting or investigating a suspected violation of law; or (B) made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal so that it is not made public; and (ii) an individual who pursues a lawsuit for retaliation by an employer for reporting a suspected violation of the law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal, and does not disclose the trade secret, except as permitted by court order.

* * *

Exhibit 10.2

SiteOne Landscape Supply, Inc.

Employee Restricted Stock Unit Agreement

This Employee Restricted Stock Unit Agreement (the “Agreement”), by and between SiteOne Landscape Supply, Inc., a Delaware corporation (the “Company”), and the Employee whose name is set forth on Exhibit A hereto, is being entered into pursuant to the SiteOne Landscape Supply, Inc. 2016 Omnibus Equity Incentive Plan (as amended from time to time, the “Plan”) and is dated as of the date it is accepted and agreed to by the Employee in accordance with Section 6(t). Capitalized terms that are used but not defined herein shall have the respective meanings given to them in the Plan.

Section 1.Grant of Restricted Stock Units. The Company hereby evidences and confirms its grant to the Employee, effective as of the date set forth on Exhibit A hereto (the “Grant Date”), of the number of Restricted Stock Units set forth on Exhibit A hereto (“Restricted Stock Units”), subject to adjustment pursuant to the Plan. Each Restricted Stock Unit that becomes vested in accordance with the terms of this Agreement will entitle the Employee to receive from the Company one share of Company Common Stock (or a cash equivalent) as provided under Section 3 and any dividend equivalents as provided under Section 6(b). This Agreement is entered into pursuant to, and the Restricted Stock Units granted hereunder are subject to, the terms and conditions of the Plan, which are incorporated by reference herein. In consideration of the receipt of this Award, Participant agrees to be bound by the covenants set forth in Exhibit B governing Competitive Activity.

Section 2.Vesting of Restricted Stock Units.

(a)Vesting. Except as otherwise provided in this Section 2, the Restricted Stock Units shall become vested, if at all, in the percentage(s), and on the vesting date(s) set forth on Exhibit A hereto (each, a “Vesting Date”), subject to the continued employment of the Employee by the Company or any Subsidiary thereof through such date. Vested Restricted Stock Units shall be settled as provided in Section 3 of this Agreement.

(b)Effect of Termination of Employment

(i)Termination by the Company without Cause. If the Employee’s employment with the Company is terminated by the Company without Cause (so long as the Employee has not engaged in Competitive Activity), a number of Restricted Stock Units shall vest equal to the number of Restricted Stock Units that would have vested on the next scheduled Vesting Date, had the Employee remained employed through such Vesting Date, multiplied by a fraction, (x) the numerator of which is the number of days from the immediately preceding Vesting Date (or the Grant Date, if the termination of employment occurs prior to the first Vesting Date) and (y) the denominator is the number of days from the immediately preceding Vesting Date (or the Grant Date, if the termination of employment occurs prior to the first Vesting Date) through such next Vesting Date. For purposes of this Section 2, a termination of the Employee’s employment shall be determined without regard to any statutory or deemed or express contractual notice period.

(ii)Death or Disability. If the Employee’s employment with the Company is terminated by reason of a Special Termination (i.e., death or Disability), all then outstanding Restricted Stock Units shall then become vested.

(iii)Retirement. If the Employee’s employment with the Company terminates due to Retirement, then as long as the Employee does not violate any of the terms set forth in Exhibit B, the Restricted Stock Units that would have vested within the two-year period immediately following the effective date of the Employee’s Retirement had the Employee then been employed will become vested on the Vesting Dates within such two-year period. If the Employee violates any of the terms set forth in Exhibit B during the two-year period following the Employee’s Retirement, then all of the outstanding Restricted Stock Units then held by the Employee will immediately be forfeited. As used in this Agreement: “Retirement” means the Employee’s voluntarily resignation at or after attaining the age of 60, so long as the Employee has provided at least 10 years of service to the Company as an Employee (or, if approved by the Administrator, as a Consultant or Director).

(iv)Any Other Reason. Except as provided in Sections 2(b)(i), (ii), or (iii), or Section 2(c), upon termination of the Employee’s employment for any reason (whether initiated by the Company or by the Employee), any unvested Restricted Stock Units shall be forfeited and canceled as of the effective date of such termination.

(c)Effect of a Change in Control.

(i)Except as set forth in this Section 2(c) or as otherwise provided by the Administrator, a Change in Control shall not accelerate the vesting or settlement of the Restricted Stock Units.

(ii)In the event that the Administrator reasonably determines in good faith, prior to the occurrence of a Change in Control, that no Alternative Awards will be provided upon a Change in Control, each unvested Restricted Stock Unit shall vest, and shares of Company Common Stock underlying all Restricted Stock Units that are vested (as provided in this Section 2 or otherwise) shall be issued and released to the Employee holding such Restricted Stock Units, except to the extent that the Administrator has determined to settle such Restricted Stock Units in cash in lieu of shares of Company Common Stock or, in the case of Restricted Stock Units that are subject to Section 409A of the Code, if not permitted by Section 409A of the Code.

(d)Discretionary Acceleration. Notwithstanding anything contained in this Agreement to the contrary, the Administrator, in its sole discretion, may accelerate the vesting with respect to any Restricted Stock Units under this Agreement, at such times and upon such terms and conditions as the Administrator shall determine; provided, that the acceleration of vesting of Restricted Stock Units that are subject to Section 409A of the Code shall not accelerate the Settlement Date thereof unless permitted by Section 409A of the Code.

(e)No Other Accelerated Vesting. The vesting provisions set forth in this Section 2 shall be the exclusive vesting and exercisability provisions applicable to the Restricted Stock Units and shall supersede any other provisions relating to vesting, unless such other such provision expressly refers to the Plan by name and this Agreement by name and date.

Section 3.Settlement of Restricted Stock Units.

(a)Timing of Settlement. Subject to Section 6(a), any outstanding Restricted Stock Units that became vested on a Vesting Date shall be settled into an equal number of shares of Company Common Stock on a date selected by the Company that is within 30 days following such Vesting Date (each such date, a “Settlement Date”); provided that, in the case of accelerated vesting of Restricted Stock Units pursuant to Section 2(b)(i), (ii) or (iii) or Section 2.c) (but, for Restricted Stock Units that are subject to Section 409A of the Code, only if permitted by Section 409A of the Code), the Settlement Date shall occur on a date selected by the Company that is within 30 days following the vesting of such Restricted Stock Units.

(b)Mechanics of Settlement. Subject to Section 6(a), on each Settlement Date, the Company shall electronically issue to the Employee one whole share of Company Common Stock for each Restricted Stock Unit that then became vested, and, upon such issuance, the Employee’s rights in respect of such Restricted Stock Unit shall be extinguished. On or before any Settlement Date, at the Company’s request, the Company and the Employee shall enter into any agreements or other documentation, if any, that that establish the rights and obligations of the Company and the Employee relating to the shares of Company Common Stock issued in respect of the Restricted Stock Units, in the form then customarily used by the Company under the Plan for such purpose. In the event that there are any fractional Restricted Stock Units that became vested on such date, such fractional Restricted Stock Units shall be settled through a cash payment equal to such fraction multiplied by the Fair Market Value of the Company Common Stock on such Settlement Date. No fractional shares of Company Common Stock shall be issued in respect of the Restricted Stock Units.

(c)Alternative Settlement in Cash. In lieu of settlement of vested Restricted Stock Units in shares of Company Common Stock, the Company may, in the Administrator’s sole discretion, elect to settle all or a portion of the vested Restricted Stock Units by a cash payment equal to the Fair Market Value as of the Settlement Date of the shares of Company Common Stock that would otherwise have been issued under this Agreement. Any such cash payment will be paid in accordance with the Company’s normal payroll practices or such other means acceptable to the Company.

Section 4.Securities Law Compliance. Notwithstanding any other provision of this Agreement, the Employee may not sell the shares of Company Common Stock acquired upon settlement of the Restricted Stock Units unless such shares are registered under the Securities Act of 1933, as amended (the “Securities Act”), or, if such shares are not then so registered, such sale would be exempt from the registration requirements of the Securities Act. The sale of such shares must also comply with other applicable laws and regulations governing the Company Common Stock, and the Employee may not sell the shares of

Company Common Stock if the Company determines that such sale would not be in material compliance with such laws and regulations.

Section 5.Restriction on Transfer; Non-Transferability of Restricted Stock Units. The Restricted Stock Units are not assignable or transferable, in whole or in part, and they may not, directly or indirectly, be offered, transferred, sold, pledged, assigned, alienated, hypothecated or otherwise disposed of or encumbered (including, but not limited to, by gift, operation of law or otherwise), other than by will or by the laws of descent and distribution to the estate of the Employee upon the Employee’s death or, with the prior approval of the Company’s General Counsel or the Administrator, estate planning transfers. Any purported transfer in violation of this Section 5 shall be void ab initio.

Section 6.Miscellaneous.

(a)Tax Matters.

(i) Withholding. The Company or one of the Subsidiaries shall require the Employee to remit to the Company an amount in cash sufficient to satisfy any applicable U.S. federal, state and local and non-U.S. tax withholding obligations that may arise in connection with the vesting or settlement of the Restricted Stock Units and the related issuance of shares of Company Common Stock. Notwithstanding the preceding sentence, unless previously satisfied, the Company shall retain a number of shares issued in respect of the Restricted Stock Units then vesting that have an aggregate Fair Market Value as of the Settlement Date equal to the amount of such taxes required to be withheld (and the Employee shall thereupon be deemed to have satisfied his or her obligations under this Section 6(a)); provided that the number of such shares retained shall not be in excess of the maximum amount required to satisfy the statutory withholding tax obligations (it being understood that the value of any fractional share of Company Common Stock shall be paid in cash). The number of shares of Company Common Stock to be issued in respect of Restricted Stock Units shall thereupon be reduced by the number of shares of Company Common Stock so retained. The method of withholding set forth in the immediately preceding sentence shall not be available if withholding in this manner would violate any financing instrument of the Company or any of the Subsidiaries. In the event that the Company elects to settle any Restricted Stock Units using cash, the Company shall withhold an amount in cash sufficient to satisfy any applicable U.S. federal, state and local and non-U.S. tax withholding obligations that may arise in connection with the vesting of the Restricted Stock Units and the related cash payment.

(ii) Section 409A of the Code. If the Employee is not eligible for Retirement during the vesting period applicable to the Restricted Stock Units, the Restricted Stock Units are intended not to be subject to Section 409A of the Code. If the Employee is eligible for Retirement during the vesting period applicable to the Restricted Stock Units such that some or all of the Restricted Stock Units are subject to Section 409A, this Agreement and the Restricted Stock Units shall be administered and construed in a manner consistent with Section 409A of the Code.

(b)Dividend Equivalents. In the event that the Company pays any ordinary dividend in cash on a share of Company Common Stock following the Grant Date and prior to an applicable Settlement Date, there shall be credited to the account of the Employee in respect of each outstanding Restricted Stock Unit an amount equal to the amount of such dividend. The amount so credited shall be deferred (without interest, unless the Administrator determines otherwise) until the settlement of such related Restricted Stock Unit and then paid in cash but shall be forfeited upon the forfeiture of such related Restricted Stock Unit.

(c)Authorization to Share Personal Data. The Employee authorizes the Company or any Affiliate of the Company that has or lawfully obtains personal data relating to the Employee to divulge or transfer such personal data to the Company or to a third party, in each case in any jurisdiction, if and to the extent reasonably appropriate in connection with this Agreement or the administration of the Plan.

(d)No Rights as Stockholder; No Voting Rights. The Employee shall have no rights as a stockholder of the Company with respect to any shares of Company Common Stock covered by the Restricted Stock Units prior to the issuance of such shares of Company Common Stock, except for dividend equivalents provided under Section 6(b).

(e)No Right to Awards. The Employee acknowledges and agrees that the grant of any Restricted Stock Units (i) is being made on an exceptional basis and is not intended to be renewed or repeated, (ii) is entirely voluntary on the part of the Company and the Subsidiaries and (iii) should not be construed as creating any obligation on the part of the Company or any of the Subsidiaries to offer any Restricted Stock Units in the future.

(f)No Right to Continued Employment. Nothing in this Agreement shall be deemed to confer on the Employee any right to continue in the employ of the Company or any Subsidiary, or to interfere with or limit in any way the right of the Company or any Subsidiary to terminate such employment at any time.

(g)Nature of Award. This award of Restricted Stock Units and any delivery or payment in respect thereof constitutes a special incentive payment to the Employee and shall not be taken into account in computing the amount of salary or compensation of the Employee for the purpose of determining any retirement, death or other benefits under (x) any retirement, bonus, life insurance or other employee benefit plan of the Company or (y) any agreement between the Company and the Employee, except as such plan or agreement shall otherwise expressly provide.

(h)Interpretation. The Administrator shall have full power and discretion to construe and interpret the Plan (and any rules and regulations issued thereunder) and this Award. Any determination or interpretation by the Administrator under or pursuant to the Plan or this Award shall be final and binding and conclusive on all persons affected hereby.

(i)Forfeiture of Awards. Except as otherwise set forth in Exhibit B, the Restricted Stock Units granted hereunder (and any shares received, and gains earned or accrued in connection therewith) shall be subject to potential cancellation, recoupment, rescission, payback or other action in accordance with the terms of the Company’s clawback policy, as it may be amended from time to time (the “Policy”). The Employee hereby appoints the Company as the Employee’s attorney-in-fact to take such actions as may be necessary or appropriate to effectuate the Policy.

(j)Consent to Electronic Delivery. By entering into this Agreement and accepting the Restricted Stock Units evidenced hereby, the Employee hereby consents to the delivery of information (including, without limitation, information required to be delivered to the Employee pursuant to applicable securities laws) regarding the Company and the Subsidiaries, the Plan, this Agreement and the Restricted Stock Units via Company website or other electronic delivery.

(k)Binding Effect; Benefits. This Agreement shall be binding upon and inure to the benefit of the parties to this Agreement and their respective successors and assigns. No provision of this Agreement, express or implied, is intended or shall be construed to give any person other than the parties to this Agreement or their respective successors or assigns any legal or equitable right, remedy or claim under or in respect of any agreement or any provision contained herein.

(l)Amendment. This Agreement may not be amended, modified or supplemented orally, but only by a written instrument executed by the Employee and the Company.

(m)Assignability. Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by the Company or the Employee without the prior written consent of the other party.

(n)Applicable Law. This Agreement shall be governed in all respects, including, but not limited to, as to validity, interpretation and effect, by the internal laws of the State of Delaware, without reference to principles of conflict of law that would require application of the law of another jurisdiction.

(o)Waiver of Jury Trial. Each party hereby waives, to the fullest extent permitted by applicable law, any right he, she or it may have to a trial by jury in respect of any suit, action or proceeding arising out of this Agreement or any transaction contemplated hereby. Each party (i) certifies 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 (ii) acknowledges that he, she or it and the other party hereto have been induced to enter into the Agreement by, among other things, the mutual waivers and certifications in this section.

(p)Limitations of Actions. No lawsuit relating to this Agreement may be filed before a written claim is filed with the Administrator and is denied or deemed denied as provided in the Plan and any lawsuit must be filed within one year of such denial or deemed denial or be forever barred.

(q)Lock-Up Periods. If the Company files a registration statement under the Securities Act with respect to an underwritten public offering of any shares of its capital stock, the Employee shall not effect any public sale (including a sale under Rule 144 under the Securities Act or other similar provision of applicable law) or distribution of any Company Common Stock, other than as part of such underwritten public offering, during the 20 days prior to and the 90 days after the effective date of such registration statement (or such other period, not to exceed 180 days, as may be generally applicable to or agreed by the Company with respect to its transactions in its own shares). If the Company files a prospectus in connection with a takedown from a shelf registration statement, the Associate shall not effect any public sale (including a sale under Rule 144 under the Securities Act or

other similar provision of applicable law) or distribution of any Company Common Stock, other than as part of such offering, for 20 days prior to and 90 days after the date the prospectus supplement is filed with the Securities and Exchange Commission.

(r)Trading Policies. The Employee acknowledges and agrees that he or she shall be subject to, and shall comply with, any of the Company's trading policies, as in effect from time to time.

(s)Section and Other Headings, etc. The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. Unless otherwise indicated, section and exhibit references in this Agreement refer to this Agreement.

(t)Acceptance of Restricted Stock Units and Agreement. The Employee has indicated his or her consent and acknowledgement of the terms of this Agreement pursuant to the instructions provided to the Employee by or on behalf of the Company. The Employee acknowledges receipt of the Plan, represents to the Company that he or she has read and understood this Agreement and the Plan, and, as an express condition to the grant of the Restricted Stock Units under this Agreement, agrees to be bound by the terms of both this Agreement and the Plan, including, but not limited to, the covenants set forth in Exhibit B governing Competitive Activity. The Employee and the Company each agrees and acknowledges that the use of electronic media (including, without limitation, a clickthrough button or checkbox on a website of the Company or a third-party administrator) to indicate the Employee’s confirmation, consent, signature, agreement and delivery of this Agreement and the Restricted Stock Units is legally valid and has the same legal force and effect as if the Employee and the Company signed and executed this Agreement in paper form. The same use of electronic media may be used for any amendment or waiver of this Agreement.

Exhibit A to

Employee Restricted Stock Unit Agreement



Employee:


Grant Date:	, 202
Restricted Stock Units granted hereby:




Vesting Date		Percentage Vesting on such Vesting Date

Exhibit B

Restrictive Covenants

All section references in this Exhibit B shall refer to the designated section(s) of this Exhibit B.

Section 3 Non-competition and Non-solicitation.

Section 4 Remedies.

4.2 Without limiting the generality of the remedies available to the Company pursuant to Section 4.1, if Participant, except with the prior written consent of the Company, materially breaches the restrictive covenants contained in this Exhibit B, Participant shall forfeit any Restricted Stock Units that vested during the 12-month period prior to the date of termination of Participant’s employment with the Company, and the shares acquired in settlement of such Restricted Stock Units (and the proceeds from the sale of any such shares) shall be subject to clawback or recoupment by the Company. These rights of forfeiture and recoupment are in addition to any other remedies the Company may have against Participant for Participant’s breach of the restrictive covenants contained in this Exhibit B. Participant’s obligations under this Exhibit B shall be cumulative (but not operate to extend the length of any such obligations) of any similar obligations Participant has under the Plan, the Agreement or any other agreement with the Company or any Affiliate.

Section 5 Protected Rights

that is: (A) made in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and made solely for the purpose of reporting or investigating a suspected violation of law; or (B) made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal so that it is not made public; and (ii) an individual who pursues a lawsuit for retaliation by an employer for reporting a suspected violation of the law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal, and does not disclose the trade secret, except as permitted by court order.

* * *

Exhibit 10.3

SiteOne Landscape Supply, Inc.

Form of Performance Stock Unit Agreement

This Performance Stock Unit Agreement (this "Agreement") is made and entered into as of _________________________(the "Grant Date") by and between SiteOne Landscape Supply, Inc., a Delaware corporation (the "Company") and _____________________________ (the "Participant").

1.Grant of Performance Share Units. Effective as of the Grant Date, the Company hereby grants to Participant an Award of Performance Stock Units (“PSUs”) in the amount of ______________________________PSUs (the “Target Award”), each of which represents the right to receive one share of Company Common Stock (the “Share”) upon vesting of such PSU, subject to and in accordance with the terms, conditions and restrictions set forth in the SiteOne Landscape Supply, Inc. 2016 Omnibus Equity Incentive Plan (as it may be amended from time to time, the “Plan”) and this Agreement. The number of PSUs that Participant may earn hereunder shall range between zero to 200% of the Target Award and shall be determined based on the level of achievement of the performance conditions set forth in Exhibit A attached hereto (the “Performance Goals”) over the Performance Cycle (as defined in Section 2). In consideration of the receipt of this Award, Participant agrees to be bound by the covenants set forth in Exhibit B governing Competitive Activity. Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan.

2.Performance Cycle. For purposes of this Agreement, the term "Performance Cycle" shall mean the period commencing on ______________and ending on_____________.

3.Performance Goals.

3.1 The number of PSUs earned by Participant for the Performance Cycle shall be determined at the end of the Performance Cycle based on the level of achievement of the Performance Goals in accordance with Exhibit A. All determinations of whether Performance Goals have been achieved, the number of PSUs earned by Participant, and all other matters related to this Section 3.1 shall be made by the Administrator in its sole discretion.

3.2 As soon as practicable following completion of the Performance Cycle, but no later than May 31, _________________, the Administrator shall review and certify in writing (a) whether, and to what extent, the Performance Goals for the Performance Cycle have been achieved, and (b) the number of PSUs earned by Participant, if any, subject to satisfaction of the requirements of Section 4 (the “Determination Date”). Such certification shall be final, conclusive and binding on Participant, and on all other persons, to the maximum extent permitted by law.

4.Vesting of PSUs. The PSUs are subject to forfeiture until they vest. Except as otherwise provided in Sections 5 and 6, the PSUs shall vest and become nonforfeitable on the last day of the Performance Period, subject to (a) the achievement of the minimum threshold Performance Goal for payout set forth in Exhibit A, and (b) Participant's continuous employment (“Continuous Service”) from the Grant Date through the last day of the Performance Period (the “Vesting Date”). The number of PSUs that vest and become payable under this Agreement shall be determined by the Administrator based on the level of achievement of the Performance Goals set forth in Exhibit A and shall be rounded down to the nearest whole PSU.

5.Termination of Continuous Service.

5.1 Except as otherwise provided in Sections 5.2, 5.3, 5.4 and 6, if Participant's Continuous Service terminates for any reason at any time before the Vesting Date, Participant's unvested PSUs shall be automatically forfeited upon such termination of Continuous Service and neither the Company nor any Affiliate shall have any further obligations to Participant under this Agreement.

5.2 If Participant’s Continuous Service is terminated by the Company without Cause (provided Participant has not engaged in any Competitive Activity), Participant shall vest in the number of PSUs that would otherwise have vested (if any) based on actual performance level at the end of the Performance Cycle, determined by multiplying such number of PSUs by a fraction, the numerator of which equals the number of completed months that Participant was employed with the Company during the Performance Cycle and the denominator of which equals 36 months, provided, however, that the payout of such PSUs shall remain subject to all other terms and conditions of this Agreement, including the payment date described in Section 7 and the

opportunity to earn a greater or lesser number of PSUs (subject to pro-ration as provided in this Section) as provided in Exhibit A.

5.3 If Participant's Continuous Service terminates during the Performance Cycle as a result of Participant's death or Disability, Participant shall vest on such date in a portion of the Target Award (based on target level performance), determined by multiplying the Target Award by a fraction, the numerator of which equals the number of completed months that Participant was employed with the Company during the Performance Cycle and the denominator of which equals 36 months, provided, however, the payout of such prorated Target Award shall remain subject to all other terms and conditions of this Agreement, including the payment dates described in Section 7.

5.4 In the event Participant’s Continuous Service terminates due to Retirement and Participant has not violated any of the terms set forth in Exhibit B, Participant shall vest in a pro-rated number of PSUs that would otherwise have vested (if any) based on actual performance level at the end of the Performance Cycle determined based on the following schedule:



Retirement Occurs During	Pro-Ration Factor
Year 1 of Performance Cycle	33%
Year 2 of Performance Cycle	67%
Year 3 of Performance Cycle	100%

provided, however, that such PSUs shall remain subject to all other terms and conditions of this Agreement, including the payment date described in Section 7 and the opportunity to earn a greater or lesser number of PSUs (subject to pro-ration as provided in this Section) as provided in Exhibit A.

As used in this Agreement: “Retirement” means Participant’s voluntarily resignation (a) at or after attaining the age of 60, (b) after providing at least 10 years of service to the Company as an Employee (or, if approved by the Administrator, as a Consultant or Director), and (c) after providing Continuous Service for 6 or more months during the Performance Cycle.

6.Effect of a Change in Control. In the event of a Change in Control during the Performance Cycle, the PSUs subject to this Agreement shall convert into one Restricted Stock Unit (the “Conversion Ratio”) and vest at the end of the Performance Cycle as follows: (a) if the Change in Control occurs prior to the completion of 2-years of the Performance Cycle, the Conversion Ratio shall be based on PSUs at target level performance, or (b) if the Change in Control occurs after completion of 2-years of the Performance Cycle, the Conversion Ratio shall be based on PSUs at performance-to-date level if reasonably measurable or target performance level if performance-to-date level shall not be reasonably measurable, as determined in the sole discretion of the Administrator. Provided, however, such Restricted Stock Units shall vest immediately if the (x) the continuing entity fails to provide an Alternative Award at the time of the Change in Control, or (y) the Company terminates Participant’s employment without Cause or Participant terminates Participant’s employment for Good Reason within the 12-month period following the Change in Control; provided, further, that the payout of such Restricted Stock Units shall remain subject to all other terms and conditions of this Agreement, including the payment date described in Section 7.

7.Payment of PSUs. Payment in respect of the PSUs earned for the Performance Cycle shall be made in Shares and shall be issued to Participant as soon as practicable following the end of the Performance Cycle, but no later than May 31, _________. The Company shall (a) issue and deliver to Participant the number of Shares equal to the number of vested PSUs, and (b) enter Participant's name on the books of the Company as the shareholder of record with respect to the Shares delivered to Participant. Notwithstanding anything herein to the contrary, payment in respect of any PSUs vested as a result of Participant’s death pursuant to Section 5.3 shall be made as soon as practical, but no later than 30 days following the date of Participant’s death.

8.Transferability. Subject to any exceptions set forth in this Agreement or the Plan, the PSUs or the rights relating thereto may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by Participant, except by will or the laws of descent and distribution, and upon any such transfer by will or the laws of descent and distribution, the transferee shall hold such PSUs subject to all of the terms and conditions that were applicable to Participant immediately prior to such transfer.

9.Rights as Shareholder; Dividend Equivalents.

9.1Participant shall not have any rights of a shareholder with respect to the Shares underlying the PSUs, including, but not limited to, voting rights and the right to receive or accrue dividends or dividend equivalents.

9.2 Upon and following the vesting of the PSUs and the issuance of Shares, Participant shall be the record owner of such Shares unless and until such Shares are sold or otherwise disposed of, and as record owner shall be entitled to all rights of a shareholder of the Company (including voting and dividend rights).

10.No Right to Continued Service. Neither the Plan nor this Agreement shall confer upon Participant any right to be retained in any position, as a Service Provider. Further, nothing in the Plan or this Agreement shall be construed to limit the discretion of the Company to terminate Participant's Continuous Service at any time, with or without Cause.

11.Adjustments. If any change is made to the outstanding Common Stock or the capital structure of the Company, if required, this Award shall be adjusted or terminated in any manner as contemplated by Section 4.3 of the Plan.

12.Tax Liability and Withholding.

12.1 Participant shall be required to pay to the Company, and the Company shall have the right to deduct from any compensation paid to Participant pursuant to the Plan, the amount of any required withholding taxes in respect of the PSUs and to take all such other action as the Administrator deems necessary to satisfy all obligations for the payment of such withholding taxes. Notwithstanding the preceding sentence, unless previously satisfied, the Company shall retain a number of Shares issued in respect of the vested PSU that have an aggregate Fair Market Value as of the Settlement Date equal to the amount of such taxes required to be withheld; provided that the number of such Shares retained shall not be in excess of the maximum amount required to satisfy the statutory withholding tax obligations. The number of Shares to be issued in respect of PSUs shall thereupon be reduced by the number of Shares so retained. The method of withholding set forth in the immediately preceding sentence shall not be available if withholding in this manner would violate any financing instrument of the Company or any of the Subsidiaries or result in material adverse accounting treatment for the Company as determined by the Administrator in its sole discretion.

12.2 Notwithstanding any action the Company takes with respect to any or all income tax, social insurance, payroll tax, or other tax-related withholding ("Tax-Related Items"), the ultimate liability for all Tax-Related Items is and remains Participant's sole responsibility and the Company (a) makes no representation or undertakings regarding the treatment of any Tax-Related Items in connection with this Award, vesting or settlement of the PSUs or the subsequent sale of any Shares, and (b) does not commit to structure the PSUs to reduce or eliminate Participant's liability for Tax-Related Items.

13.Compliance with Law. The issuance and transfer of Shares in connection with the PSUs shall be subject to compliance by the Company and Participant with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange on which the Shares may be listed. No Shares of Common Stock shall be issued or transferred unless and until any then applicable requirements of state and federal laws and regulatory agencies have been fully complied with to the satisfaction of the Company and its counsel.

14.Authorization to Share Personal Data. Participant authorizes the Company or any Affiliate of the Company that has or lawfully obtains personal data relating to Participant to divulge or transfer such personal data to the Company or to a third party, in each case in any jurisdiction, if and to the extent reasonably appropriate in connection with this Agreement or the administration of the Plan.

15.PSUs Subject to Plan. This Agreement is subject to the Plan. The terms and provisions of the Plan as it may be amended from time to time are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.

16.Successors and Assigns. The Company may assign any of its rights under this Agreement. This Agreement will be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement will be binding upon Participant and Participant's beneficiaries, executors, administrators and the person(s) to whom the PSUs may be transferred by will or the laws of descent or distribution.

17.Severability. The invalidity or unenforceability of any provision of the Plan or this Agreement shall not affect the validity or enforceability of any other provision of the Plan or this Agreement, and each provision of the Plan and this Agreement shall be severable and enforceable to the extent permitted by law.

18.Discretionary Nature of Plan. The Plan is discretionary and may be amended, cancelled or terminated by the Company at any time, in its discretion. The grant of the PSUs in this Agreement does not create any contractual right or other right to receive any PSUs or other Awards in the future. Future Awards, if any, will be at the sole discretion of the Company. Any

amendment, modification, or termination of the Plan shall not constitute a change or impairment of the terms and conditions of Participant's employment with the Company.

19.Amendment. The Administrator has the right to amend, alter, suspend, discontinue or cancel the PSUs, prospectively or retroactively; provided, however, that, no such amendment shall adversely affect Participant's material rights under this Agreement without Participant's consent.

20.Section 409A. This Agreement is intended to comply with Section 409A of the Code or an exemption thereunder and shall be construed and interpreted in a manner that is consistent with the requirements for avoiding additional taxes or penalties under Section 409A of the Code. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A of the Code and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by Participant on account of non-compliance with Section 409A of the Code.

21.No Impact on Other Benefits. The value of Participant's PSUs is not part of Participant’s normal or expected compensation for purposes of calculating any severance, retirement, welfare, insurance or similar employee benefit.

22.Acknowledgments. Participant hereby acknowledges receipt of a copy of the Plan and this Agreement. Participant has read and understands the terms and provisions thereof and accepts this Award subject to all of the terms and conditions of the Plan and this Agreement, including, but not limited to, the covenants set forth in Exhibit B governing Competitive Activity. Participant acknowledges that there may be adverse tax consequences upon the vesting or settlement of the PSUs or disposition of the underlying Shares and that Participant has been advised to consult a tax advisor prior to such vesting, settlement or disposition.

23.Interpretation. The Administrator shall have full power and discretion to construe and interpret the Plan (and any rules and regulations issued thereunder) and this Award. Any determination or interpretation by the Administrator under or pursuant to the Plan or this Award shall be final and binding and conclusive on all persons affected hereby.

24.Waiver of Jury Trial. The Company and Participant each hereby waives, to the fullest extent permitted by applicable law, any right the Company or Participant may have to a trial by jury in respect of any suit, action or proceeding arising out of this Agreement or any transaction contemplated hereby. The Company and Participant each (a) certifies 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 each party has been induced to enter into the Agreement by, among other things, the mutual waivers and certifications in this section.

25.Forfeiture. Except as otherwise set forth in Exhibit B, the PSUs granted hereunder (and any Shares received, and gains earned or accrued in connection therewith) shall be subject to potential cancellation, recoupment, rescission, payback or other action in accordance with the terms of the Company’s clawback policy, as it may be amended from time to time (the “Policy”). The Participant hereby appoints the Company as the Participant’s attorney-in-fact to take such actions as may be necessary or appropriate to effectuate the Policy.

26.Acceptance of Agreement. Participant has indicated Participant’s consent and acknowledgement of the terms of this Agreement pursuant to the instructions provided to Participant by or on behalf of the Company. Participant acknowledges receipt of the Plan, represents to the Company that Participant has read and understood this Agreement and the Plan, and, as an express condition to the grant of the PSUs under this Agreement, agrees to be bound by the terms of both this Agreement (including, but not limited to, the covenants set forth in Exhibit B governing Competitive Activity) and the Plan. Participant and the Company each agrees and acknowledges that the use of electronic media (including, without limitation, a clickthrough button or checkbox on a website of the Company or a third-party administrator) to indicate Participant’s confirmation, consent, signature, agreement and delivery of this Agreement and the PSUs is legally valid and has the same legal force and effect as if Participant and the Company signed and executed this Agreement in paper form. The same use of electronic media may be used for any amendment or waiver of any provision of this Agreement.

* * *

SiteOne Landscape Supply, Inc.

Form of Performance Stock Unit Agreement

EXHIBIT A

PERFORMANCE GOALS

PSUs shall be earned based on 3-year relative EBTA growth and absolute ROIC. The Company’s EBTA shall be measured relative to the Peers plus the BICs. Relative performance shall be measured using the 12 most recent quarters reported as of the end of the Performance Cycle (as reported after all Form 10-K Annual Reports have been filed by the Peers reporting theirs results for such period). Absolute ROIC performance shall be measured over the Performance Cycle. Actual PSUs earned, if any, shall range from 0% to 200% of the Target Award based upon performance relative the Performance Goals. One hundred percent (100%) of the Company’s EBTA growth shall be measured relative to the Peers plus BIC. The 3-year average ROIC shall modify (plus/minus 20%) the PSUs earned for EBTA growth for performance above or below the range set forth in this Exhibit. Performance within the target range for ROIC set forth in this Exhibit shall have zero impact on PSUs earned for EBTA growth. Earned PSUs on EBTA growth shall be capped at 100% of the Target Award if absolute EBTA growth is negative. The ROIC modifier shall not result in a payout which exceeds 200% of the Target Award.

For purposes of this Award, the following terms shall have the following meanings:

“BICs” shall mean the five best-in-class distributors set forth in Schedule 1 to this Exhibit.

“EBTA” shall mean the generally accepted accounting principles (GAAP) pre-tax income, adjusted to exclude unusual and infrequent non-operating items, including, but not limited to, merger and related restructuring charges, goodwill impairments, gain/loss on sale of assets, gain/loss on sale of investments, insurance settlements and legal settlements, as reported in the financial statements, plus amortization. In determining the magnitude and appropriateness of such adjustments, the Administrator may utilize data sourced from a third-party financial data vendor for both the Company’s performance and the performance of the Peers.

“Peers” shall mean the 17 benchmarking peers set forth in Schedule 1 to this Exhibit.

“ROIC” shall mean the annual percentage return on invested capital calculated as follows:

ROIC = (Annual EBITA) / (Average Net Assets for the year)

EBITA = earnings before interest, taxes and amortization

Net Assets = Shareholder Equity + Net Debt (Net Debt = Debt + Capital Leases - Cash)

Average is the average for the 4-reporting quarter that fiscal year.


•	Annual ROIC shall be independently calculated for each of the three years during the Performance Cycle.


•	Three annual ROIC values shall then be averaged to calculate average ROIC over the Performance Cycle to determine if the modifier shall have an impact.

“Performance goals” shall mean:



Perf. Level	Relative EBTA Growth	% Target Award	Perf. Level	Avg. ROIC	Modifier to PSUs Earned based on Relative EBTA Growth*
Maximum	>=75^th percentile	200%	Above Target	>20%	+20%
Target	50^th percentile	100%	Target	12%-20%	0%
Threshold	25^th percentile	50%	Below Target	<12%	-20%
<Threshold	<25^th percentile	0%


•	Payout on EBTA growth performance capped at 100% of target if Company’s absolute EBTA growth is negative.


•	Payout for performance between levels noted above shall be determined using straight-line interpolation.


•	Total payout shall be capped at 200% of target.

Footnotes (for EBTA calculations):


1.	Source: Standard & Poor's Capital IQ or other third-party financial database


2.	Growth rates calculated as a 3-year cumulative compound annual growth rate (CAGR) such that growing the base year by the CAGR for each of the three years results in the sum of 3-year cumulative performance (i.e., all three years are included, not just the base and ending year)


3.	Cumulative negative actual performance off of a positive base year shown as -100%

Any Peer or BIC company that (a) does not have 4-years of data or growth is not calculable due to a negative base year, shall be excluded from the percentile calculations, (b) is acquired by another company, including through a management buy-out or going-private transaction, will no longer be considered a Peer or BIC company for the Performance Cycle, (c) files a petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code or liquidation under Chapter 7 of the U.S. Bankruptcy Code will remain a Peer or BIC company but EBTA for such company will be deemed to be -100% growth, and (d) does not file its Form 10-K or 10-Q, as applicable, within three months of the Company’s fiscal year end will no longer be considered a Peer or BIC company for the Performance Cycle.

* * *

SiteOne Landscape Supply, Inc.

Form of Performance Stock Unit Agreement

EXHIBIT A

PERFORMANCE GOALS

SCHEDULE 1

PEERS AND BIC

Advanced Drainage Systems, Inc.

Applied Industrial Technologies, Inc.

Beacon Roofing Supply, Inc.

BMC Stock Holdings, Inc.

Central Garden & Pet Company

DXP Enterprises, Inc.

Eagle Materials Inc.

Fastenal Company*

GMS Inc.

H&E Equipment Services, Inc.

HD Supply Holdings, Inc.*

Installed Building Products, Inc.

Kaman Corporation

MSC Industrial Direct Co., Inc.

Pool Corporation

Summit Materials, Inc.

The Scotts Miracle-Gro Company

TopBuild Corp.

Univar Inc.*

W.W. Grainger, Inc.*

Watsco, Inc.

WESCO International, Inc.*

______________________________________________________________________________

*BICs.

SiteOne Landscape Supply, Inc.

Form of Performance Stock Unit Agreement

EXHIBIT B

RESTRICTIVE COVENANTS

All section references in this Exhibit B shall refer to the designated section(s) of this Exhibit B.

Section 3 Non-competition and Non-solicitation.

1.Participant agrees that during Participant’s employment with the Company, Participant will not, directly or indirectly: (i) as an employee, consultant, owner, officer, director, manager, operator, or controlling person (including indirectly through a debt or equity investment), provide to a Competing Business services of the same or similar type provided by Participant to the Company during Participant’s employment with the Company; (ii) solicit, recruit, aid or induce any employee of the Company or its Subsidiaries to leave his or her employment with the Company or its Subsidiary in order to accept employment with or render services to another person or entity unaffiliated with the Company or its Subsidiaries; (iii) solicit, aid, or induce any customer of the Company or its Subsidiaries to purchase goods or services then sold by the Company or its Subsidiaries from another person or entity, or assist or aid any other person or entity in identifying or soliciting any such customer, or (iv) otherwise interfere with the relationship of the Company or any of its Subsidiaries with any of its employees, customers, agents, representatives or suppliers.

2.Participant agrees that during the 18-month period following the date on which Participant’s employment with the Company terminates for any reason (the “Non-compete Period”), Participant will not directly or indirectly, as an employee, consultant, owner, officer, director, manager, operator, or controlling person (including indirectly through a debt or equity investment), provide a Competing Business anywhere in the Territory services of the same or similar type provided by Participant to the Company within 2 years of the termination of Participant’s employment with the Company. Notwithstanding anything to the contrary in the preceding sentence, (i) if Participant’s employment terminates for any reason within the 1-year period following a Change in Control, the Non-compete Period shall be a 12-month period, and (ii) this Section 3.2 shall not apply if Participant’s employment is terminated by the Company without Cause. The term “Competing Business” means the sale or distribution of landscaping or irrigation products or supplies. The term “Territory” means those states, cities, and other regions of the United States, Canada, and any other country within which Participant had substantial responsibilities while employed by the Company.

For the avoidance of doubt, if Participant is a senior officer of the Company, the restriction contained herein shall relate to all of the businesses of the Company and its Subsidiaries.

3.Participant agrees that during the 18-month period following the date on which Participant’s employment with the Company terminates for any reason, Participant will not, directly or indirectly, on Participant’s own behalf or on behalf of another, or in assistance or aid of another: (i) solicit, recruit, aid or induce any employee of the Company or its Subsidiaries to leave his or her employment with the Company or its Subsidiaries in order to accept employment with or render services to another person or entity unaffiliated with the Company or its Subsidiaries, (ii) solicit, aid, or induce any customer of the Company or its Subsidiaries, with whom Participant had material contact during the 2-year period prior to the date of termination of Participant’s employment with the Company, to purchase goods or services then sold by the Company or its Subsidiaries from another person or entity, or assist or aid any other person or entity in identifying or soliciting any such customer, or (iii) otherwise interfere with the relationship of the Company or any of its Subsidiaries with any of its employees, customers, agents, representatives or suppliers with whom Participant had material contact during the 2-year period prior to the date of termination of Participant’s employment with the Company.

4.For the avoidance of doubt, Participant’s agreement to the covenants set forth in Sections 3.2 and 3.3 of this Exhibit B are not a condition of continued employment with the Company; rather, agreement to these covenants is a condition of Participant’s participation in the Plan. With respect to any Participant who primarily resides or works in California at the time of his or her execution of this Agreement or at the time of his or her termination of employment from the Company, the provisions of Sections 3.2 and 3.3 of this Exhibit B will not apply.

Section 4 Remedies.

1.The Company and Participant agree that the provisions of this Exhibit B do not impose an undue hardship on Participant and are not injurious to the public; that these provisions are necessary to protect the business of the Company and its Subsidiaries; that the nature of Participant’s responsibilities with the Company provide and/or will provide Participant with access to Confidential Information that is valuable to the Company and its Subsidiaries; that the Company would not grant this Award to Participant if Participant did not agree to the provisions of this Exhibit B; that the provisions of this Exhibit B are reasonable in terms of length of time and scope; and that adequate consideration supports the provisions of this Exhibit B. In the event that a court determines that any provision of this Exhibit B is unreasonably broad or extensive, Participant agrees that such court should narrow such provision to the extent necessary to make it reasonable and enforce the provisions as narrowed. The Company reserves all rights to seek any and all remedies and damages permitted under law, including, but not limited to, injunctive relief, equitable relief and compensatory damages for any breach of Participant’s obligations under this Exhibit B.

2.Without limiting the generality of the remedies available to the Company pursuant to Section 4.1, if Participant, except with the prior written consent of the Company, materially breaches the restrictive covenants contained in this Exhibit B, Participant shall forfeit any PSU’s that vested during the 12-month period prior to the date of termination of Participant’s employment with the Company, and any Shares acquired on settlement of such PSU’s (including the proceeds from the sale of any such Shares) shall be subject to clawback or recoupment by the Company. These rights of forfeiture and recoupment are in addition to any other remedies the Company may have against Participant for Participant’s breach of the restrictive covenants contained in this Exhibit B. Participant’s obligations under this Exhibit B shall be cumulative (but not operate to extend the length of any such obligations) of any similar obligations Participant has under the Plan, the Agreement or any other agreement with the Company or any Affiliate.

Section 5 Protected Rights

5.2 Participant is hereby notified that under the Defend Trade Secrets Act: (i) no individual will be held criminally or civilly liable under federal or state trade secret law for disclosure of a trade secret (as defined in the Economic Espionage Act) that is: (A) made in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and made solely for the purpose of reporting or investigating a suspected violation of law; or (B) made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal so that it is not made public; and (ii) an individual who pursues a lawsuit for retaliation by an employer for reporting a suspected violation of the law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal, and does not disclose the trade secret, except as permitted by court order.

* * *

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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(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: April 29, 2020

/s/ Doug Black

Doug Black

Chairman and 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.;

(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: April 29, 2020

/s/ John T. Guthrie

John T. Guthrie

Executive Vice President, Chief Financial Officer and Assistant Secretary

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

In connection with the Quarterly Report of SiteOne Landscape Supply, Inc. (the “Company”) on Form 10-Q for the quarter ended March 29, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Doug Black, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(i) the Report 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 the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: April 29, 2020

/s/ Doug Black

Doug Black

Chairman and Chief Executive Officer

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

In connection with the Quarterly Report of SiteOne Landscape Supply, Inc. (the “Company”) on Form 10-Q for the quarter ended March 29, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John T. Guthrie, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(i) the Report 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 the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: April 29, 2020

/s/ John T. Guthrie

John T. Guthrie

Executive Vice President, Chief Financial Officer and Assistant Secretary