No App Can Replace This: Meet SITE

SITE 0.00%↑ is the largest and only national wholesale distributor of landscape supplies in the United States. Think irrigation systems, fertilizers, pest control, nursery plants, hardscape materials, outdoor lighting, turf products, all the stuff your landscaper uses, $SITE supplies it.

They serve a fragmented customer base of local landscape contractors, property managers, and golf courses through over 700 branches across 45 states and 6 Canadian provinces. No one else offers the same product breadth at scale.

What makes the business compelling is that it’s boring, recurring, and deeply embedded in local economies. 65% of revenue comes from repair, maintenance, and upgrade, steady demand that holds up even in a slower construction market.

The model is roll up plus local dominance. $SITE acquires smaller, family run distributors and integrates them into its network while keeping local relationships intact. In a market with 4,000+ independent distributors, there’s a long runway of tuck-in M&A.

Despite being a distributor, $SITE earns attractive gross margins around 30% and EBITDA margins of 10%–11%. They add value through product selection, logistics, vendor relationships, and credit terms, making them more than just a middleman.

This isn’t about selling commodity mulch. Customers value availability, speed, and reliability, and $SITE delivers all three. Contractors are on tight schedules. When you’re installing an irrigation system in July, you don’t have time for backorders.

Scale gives $SITE strong vendor terms and purchasing power. It also improves working capital efficiency. Inventory turns are healthy, and the business converts earnings into cash with low capex requirements.

In 2023, $SITE generated $4.5 billion in revenue and $173 million in net income. EPS has grown steadily over the past decade, with revenue compounding at roughly 15% annually since 2014.

Return on invested capital sits around 15%, even with ongoing acquisition activity. They’ve shown discipline by avoiding overpaying for targets and integrating acquired firms smoothly into the branch network.

The balance sheet is sound. Leverage is under 2.5x EBITDA, with ample liquidity for further M&A. They don’t burn cash and they’re not chasing moonshots, this is a methodical compounder with steady reinvestment.

Insider ownership is solid at around 4% and leadership is experienced. CEO Doug Black has led the company since its spin off from Deere and maintains a culture of operational discipline and capital efficiency.

$SITE benefits from network effects and local scale. As they grow in each region, they become the one stop shop for contractors easier to deal with, faster to deliver, better stocked than mom and pop suppliers.

There’s also a natural flywheel: bigger volume attracts better vendor terms, which improves pricing power, which wins more business, which increases volume. It’s a classic consolidation story in a sleepy industry.

Risks are cyclical exposure to housing and construction, as well as weather. A wet spring or frozen ground can delay installs. But the maintenance heavy revenue mix helps smooth this over the long term.

There’s also the risk that they eventually exhaust M&A targets, but with less than 15% market share, they still have plenty of ground to cover and organic growth remains strong.

International expansion, particularly in Canada and potentially Latin America, offers upside. Their model is replicable wherever landscaping and irrigation are recurring services.

The valuation is reasonable for a company of this quality. Trading at roughly 25x earnings, $SITE isn’t cheap but it reflects a steady compounder with strong cash generation, local moats, and a long consolidation runway.

If they can grow revenue at 10%–12% and expand margins modestly, net income could reach $300m–$350m in 5 years, and possibly double again within a decade.

With stable share count and improving efficiency, EPS could compound at 12%–15% annually, and that’s without assuming any major M&A windfall.

This is a straightforward, high quality distributor with recurring revenue, pricing power, and local scale advantages. It doesn’t rely on hype, venture funding, or unprofitable tech to grow.

It’s not glamorous, you’re not launching satellites, but it’s reliable, cash generative, and deeply embedded in the real economy. In a world where everyone’s chasing shiny objects, $SITE just keeps delivering pallets of mulch and generating cash.

AI and quantum computing won’t disrupt landscaping. Stop mowing your lawn and it turns into a forest. $SITE is a simple business in a slow changing industry with a wide moat. It won’t 10x but it’s the kind of stock you can hold for 20 years and sleep well while making an acceptable rate of return (ie low teens).

I study businesses and thinking through their models, economics, and potential. This post is not investment advice, I don’t recommend you buy shares in any business, and I don’t sell investment subscriptions or services. Just sharing ideas for those who enjoy the process. If you enjoy my content, please consider liking and sharing it. Thank you!