SiteOne Landscape Supply, Inc.SITE
SiteOne Landscape Supply, Inc. Income Taxes Disclosure
Income Taxes
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The Company recorded Income tax expense of $45.7 million, $36.0 million, and $49.8 million for the years ended December 28, 2025, December 29, 2024, and December 31, 2023, respectively.
Components of Income before taxes were as follows (in millions):
| For the year December 30, 2024 to December 28, 2025 | For the year January 1, 2024 to December 29, 2024 | For the year January 2, 2023 to December 31, 2023 | ||||||||||||||||||
| U.S. | $ | 202.2 | $ | 163.9 | $ | 221.1 | ||||||||||||||
| Foreign | 0.9 | (3.5) | 2.1 | |||||||||||||||||
| Total | $ | 203.1 | $ | 160.4 | $ | 223.2 | ||||||||||||||
Components of Income tax expense were as follows (in millions):
| For the year December 30, 2024 to December 28, 2025 | For the year January 1, 2024 to December 29, 2024 | For the year January 2, 2023 to December 31, 2023 | ||||||||||||||||||
| Current income tax expense: | ||||||||||||||||||||
| U.S. federal | $ | 29.8 | $ | 37.6 | $ | 49.9 | ||||||||||||||
| U.S. state and local | 11.6 | 9.4 | 13.6 | |||||||||||||||||
| Foreign | 0.5 | — | 0.8 | |||||||||||||||||
| Total current | 41.9 | 47.0 | 64.3 | |||||||||||||||||
| Deferred income tax expense (benefit): | ||||||||||||||||||||
| U.S. federal | 5.1 | (9.0) | (11.6) | |||||||||||||||||
| U.S. state and local | (1.1) | (1.2) | (2.7) | |||||||||||||||||
| Foreign | (0.2) | (0.8) | (0.2) | |||||||||||||||||
| Total deferred | 3.8 | (11.0) | (14.5) | |||||||||||||||||
| Income tax expense | $ | 45.7 | $ | 36.0 | $ | 49.8 | ||||||||||||||
The amounts of cash income taxes (net of refunds) paid by the Company were as follows (in millions):
| For the year December 30, 2024 to December 28, 2025 | For the year January 1, 2024 to December 29, 2024 | For the year January 2, 2023 to December 31, 2023 | ||||||||||||||||||
| Income taxes paid | ||||||||||||||||||||
| U.S. federal | $ | 29.0 | $ | 43.0 | $ | 33.0 | ||||||||||||||
U.S. state and local(a) | 9.2 | 13.8 | 12.0 | |||||||||||||||||
| Foreign | (0.5) | 0.8 | 1.0 | |||||||||||||||||
| Total income taxes paid | $ | 37.7 | $ | 57.6 | $ | 46.0 | ||||||||||||||
(a) Cash income taxes paid (net of refunds) in California was $2.0 million and $2.4 million for the years ended December 28, 2025 and December 31, 2023, respectively. No jurisdiction exceeded the five percent threshold for the year ended December 29, 2024.
The Company’s effective tax rate was 22.5%, 22.4%, and 22.3% for the years ended December 28, 2025, December 29, 2024, and December 31, 2023, respectively. The following table provides a reconciliation of Income tax expense at the statutory U.S. federal tax rate to actual Income tax expense for the periods presented (in millions):
| For the year December 30, 2024 to December 28, 2025 | For the year January 1, 2024 to December 29, 2024 | For the year January 2, 2023 to December 31, 2023 | ||||||||||||||||||||||||||||||||||||
| Total | % | Total | % | Total | % | |||||||||||||||||||||||||||||||||
| Income before taxes | $ | 203.1 | $ | 160.4 | $ | 223.2 | ||||||||||||||||||||||||||||||||
| U.S. federal statutory expense | 42.7 | 21.0 | % | 33.7 | 21.0 | % | 46.9 | 21.0 | % | |||||||||||||||||||||||||||||
| Increases (decreases) in income tax from: | ||||||||||||||||||||||||||||||||||||||
State and local income taxes, net(a)(b) | 8.1 | 4.0 | % | 6.2 | 3.9 | % | 8.1 | 3.6 | % | |||||||||||||||||||||||||||||
| Foreign tax effects | ||||||||||||||||||||||||||||||||||||||
| Canada | — | — | % | (0.1) | (0.1) | % | 0.1 | — | % | |||||||||||||||||||||||||||||
| Tax credits | (0.8) | (0.4) | % | (1.1) | (0.7) | % | (1.4) | (0.6) | % | |||||||||||||||||||||||||||||
| Nontaxable or nondeductible items | ||||||||||||||||||||||||||||||||||||||
| Permanent share-based payment awards | (3.1) | (1.5) | % | (2.9) | (1.8) | % | (5.2) | (2.3) | % | |||||||||||||||||||||||||||||
| Other | 1.1 | 0.5 | % | 2.0 | 1.2 | % | 2.3 | 1.0 | % | |||||||||||||||||||||||||||||
| Other Adjustments | ||||||||||||||||||||||||||||||||||||||
| Investment in partnership | (1.0) | (0.5) | % | (1.9) | (1.2) | % | — | — | % | |||||||||||||||||||||||||||||
| Other | (1.3) | (0.6) | % | 0.1 | 0.1 | % | (1.0) | (0.4) | % | |||||||||||||||||||||||||||||
| Income tax expense | $ | 45.7 | 22.5 | % | $ | 36.0 | 22.4 | % | $ | 49.8 | 22.3 | % | ||||||||||||||||||||||||||
(a) For the year ended December 28, 2025 state taxes in California, Florida, Texas, New Jersey, and Massachusetts made up the majority (greater than 50%) of the tax effect in this category. For the year ended December 29, 2024, state taxes in California, Florida, and Texas made up the majority (greater than 50%) of the tax effect in this category. For the year ended December 31, 2023 state taxes in California, Florida, Massachusetts, and New Jersey made up the majority (greater than 50%) of the tax effect in this category.
(b) Includes excess tax benefits of $(0.7) million, $(0.6) million, and $(1.1) million for the years ended December 28, 2025, December 29, 2024, and December 31, 2023, respectively.
Undistributed earnings of the Company’s foreign subsidiaries are approximately $24.6 million as of December 28, 2025. Those earnings are considered indefinitely reinvested; accordingly, no provision for U.S. federal and state income taxes has been provided thereon. Upon repatriation of those earnings, in the form of dividends or otherwise, the Company may be subject to U.S. income taxes, state and local income taxes, and withholding taxes payable to the foreign country. From a U.S. income tax perspective, however, the Company expects to claim a 100% dividends received deduction to offset any U.S. federal income tax liability on the undistributed earnings. Determination of the amount of unrecognized state and local tax liability is not practicable due to the complexities associated with its hypothetical calculation. Withholding taxes of approximately $1.2 million may be payable upon remittance of all previously unremitted earnings as of December 28, 2025.
Deferred income taxes reflect the expected future tax consequences of temporary differences between the financial statement carrying amount of the Company’s assets and liabilities, tax credits, and loss carryforwards. The significant components of deferred income taxes are as follows (in millions):
| December 28, 2025 | December 29, 2024 | |||||||||||||
| Deferred tax assets: | ||||||||||||||
| Net operating losses | $ | 2.0 | $ | 2.0 | ||||||||||
| Allowance for uncollectible accounts | 18.3 | 14.3 | ||||||||||||
| Inventory | 6.6 | 7.3 | ||||||||||||
| Intangible assets | 26.9 | 21.0 | ||||||||||||
| Investments in partnerships | 0.8 | — | ||||||||||||
| Accrued compensation | 5.2 | 4.7 | ||||||||||||
| Stock compensation | 12.4 | 10.8 | ||||||||||||
| Environmental reserve | — | 0.6 | ||||||||||||
| Deferred transaction costs | 2.9 | 3.3 | ||||||||||||
| Operating lease liabilities | 114.0 | 106.5 | ||||||||||||
| Capitalized research and development expenditures | 2.6 | 12.3 | ||||||||||||
| Other | 5.3 | 4.4 | ||||||||||||
| Total gross deferred tax assets | 197.0 | 187.2 | ||||||||||||
| Valuation allowance | (2.0) | (1.5) | ||||||||||||
| Total net deferred tax assets | 195.0 | 185.7 | ||||||||||||
| Deferred tax liabilities: | ||||||||||||||
| Fixed assets and land | (42.2) | (40.0) | ||||||||||||
| Goodwill | (30.9) | (23.6) | ||||||||||||
| Operating lease right-of-use assets | (106.0) | (99.5) | ||||||||||||
| Interest rate swaps | — | (0.4) | ||||||||||||
| Investments in partnerships | — | (2.5) | ||||||||||||
| Other | (1.2) | (1.2) | ||||||||||||
| Total deferred tax liabilities | (180.3) | (167.2) | ||||||||||||
| Net deferred tax assets | $ | 14.7 | $ | 18.5 | ||||||||||
Deferred taxes are recorded as follows in the Consolidated Balance Sheets (in millions):
| December 28, 2025 | December 29, 2024 | |||||||||||||
| U.S. federal net deferred tax assets | $ | 5.8 | $ | 10.6 | ||||||||||
| U.S. state and local net deferred tax assets | 7.4 | 6.3 | ||||||||||||
| Foreign net deferred tax assets | 1.5 | 1.6 | ||||||||||||
| U.S. federal, state and local, and foreign net deferred tax assets | 14.7 | 18.5 | ||||||||||||
| Net deferred tax assets | $ | 14.7 | $ | 18.5 | ||||||||||
The Company evaluates its deferred tax assets to determine the need for a valuation allowance, and to conclude whether it is more likely than not that those deferred income tax assets will be realized. Management assesses the available positive and negative evidence to establish whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. On the basis of this evaluation, as of December 28, 2025 and December 29, 2024, a valuation allowance of $2.0 million and $1.5 million, respectively, was recorded against deferred tax assets related primarily to state net operating loss carryforwards the Company believes are more likely than not to expire unused. Activity within the tax valuation allowance for the periods was as follows (in millions):
| For the year December 30, 2024 to December 28, 2025 | For the year January 1, 2024 to December 29, 2024 | For the year January 2, 2023 to December 31, 2023 | ||||||||||||||||||
| Beginning balance | $ | 1.5 | $ | 2.7 | $ | 3.4 | ||||||||||||||
| Increase in valuation allowance | 0.5 | — | — | |||||||||||||||||
| Decrease in valuation allowance | — | (1.2) | (0.7) | |||||||||||||||||
| Ending balance | $ | 2.0 | $ | 1.5 | $ | 2.7 | ||||||||||||||
As of December 28, 2025, the Company had available tax-effected state net operating loss carryforwards of $2.0 million that generally expire at various dates through 2037 and 2044, respectively, if not utilized.
The Company recognizes the tax effects of uncertain tax positions only if such positions are more likely than not to be sustained based solely upon its technical merits at the reporting date. The Company refers to the difference between the tax benefit recognized in its financial statements and the tax benefit claimed in the income tax return as an unrecognized tax benefit. There was no expense or liability recorded for unrecognized tax benefits for each period presented. The Company does not expect that the unrecognized tax benefit will materially change over the next 12 months.
The Company’s policy for recording interest and penalties, if any, associated with uncertain tax positions is to recognize interest within Interest and other non-operating expenses, and to recognize penalties as a component of Selling, general and administrative expenses in the Company’s Consolidated Statements of Operations. For each period presented, the Company had no accrued interest or penalties related to uncertain tax positions.
The Company is subject to U.S. federal income tax, income tax in multiple state jurisdictions, and Canadian federal and provincial income tax with respect to its foreign subsidiaries. With limited exceptions, years prior to the 2022 Fiscal Year are no longer open to U.S. federal, state, and local examination by the taxing authorities.
Tax Equity Investment:
In November 2025 and 2024, the Company entered into agreements to become a limited partner in a tax-advantaged limited partnership investing in approved qualified renewable energy projects. The Company’s tax equity investments qualify for the application of PAM, under which, the Company amortized the initial cost of the investments, inclusive of the delayed equity contributions, in proportion to the income tax credits and other income tax benefits that were allocated to the Company. The net benefits of these investments, which are comprised of income tax credits and operating loss income tax benefits, net of investment amortization, were recognized in the Consolidated Statements of Operations as a component of Income tax expense. The carrying value of the tax equity investments was $3.0 million and $0.5 million for the years ended December 28, 2025 and December 29, 2024, respectively, and was recorded in on the Consolidated Balance Sheets.
The following table presents the amounts recognized under PAM for income tax credits and other income tax benefits, as well as amortization of investment, the net effect of which is presented as a component of in the Consolidated Statements of Operations, and in the Consolidated Statements of Cash Flows, for the years ended December 28, 2025 and December 29, 2024 (in millions):
| December 28, 2025 | December 29, 2024 | ||||||||||
| Tax credits and other benefits recognized | $ | (14.5) | $ | (11.4) | |||||||
| Amortization of investment | $ | 13.3 | $ | 9.5 | |||||||
During the years ended December 28, 2025 and December 29, 2024, the Company recorded an immaterial amount of non-income tax-related income associated with the tax equity investments. There was no impairment of the Company’s tax equity investments during the years ended December 28, 2025 and December 29, 2024.
Refer to “Note 1. Nature of Business and Significant Accounting Policies” for additional information regarding tax equity investments.
One Big Beautiful Bill Act
On July 4, 2025, the U.S. enacted new tax legislation commonly referred to as the One Big Beautiful Bill Act, which included changes in tax laws that affected the Company’s deferred tax and income tax receivable as a result of reinstating the 100% bonus depreciation provision for assets placed in service after January 19, 2025, and restoring the full expensing of qualifying domestic research and development expenditures. The Company does not expect any material changes to the consolidated financial statements or ongoing tax rate as a result of this legislation.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 23, 2023 | |
| 2022 | Feb 24, 2022 | |
| 2021 | Mar 3, 2021 | |
| 2019 | Feb 26, 2020 | |
| 2018 | Feb 27, 2019 | |
| 2017 | Feb 28, 2018 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.