Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $175 million, an increase of 0.7% compared to Q1 2024, reaching the top end of guidance [10][49] - Adjusted EBITDA was a loss of $29 million, at the bottom end of guidance, compared to a loss of $24 million in the same period last year [11][52] - Gross profit was $48 million, down from $50 million year-over-year, with a gross margin rate decrease of 180 basis points to 27.2% [51] - Adjusted net loss was $41 million, compared to a loss of $37 million in the same period last year, with adjusted diluted loss per share at $0.22 [53] Business Line Data and Key Metrics Changes - Pro Pool sales increased by 9%, while residential pool sales declined by 1% and residential hot tub sales declined by 5% [11][49] - Core chemical sales were up approximately 4%, driven by improved in-stock positions and supply chain focus [50][51] - Equipment sales stabilized, down 4% compared to a decline of 18% a year ago [17] Market Data and Key Metrics Changes - Traffic improved to flat compared to a decline in mid-single digits a year ago [13] - Conversion rate increased by over 160 basis points year-over-year, attributed to improved customer service [14] Company Strategy and Development Direction - The company is focused on three strategic themes: customer centricity, convenience, and asset utilization [22][43] - Initiatives include establishing local fulfillment centers (LFCs) to improve inventory management and customer service [24][30] - The company aims to leverage its national omnichannel capabilities to drive same-store sales growth [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the pool and spa industry's future potential and emphasized the importance of inventory reliability [9][80] - The company expects to see the benefits of its initiatives more prominently during the peak pool season in Q3 and Q4 [77][84] - The financial focus remains on executing strategic initiatives to support sustainable revenue growth and margin expansion [62] Other Important Information - The company paid down $27 million of debt in the quarter and ended with cash and cash equivalents of $12 million [54] - Inventory levels decreased by $63 million or 19% year-over-year, while in-stock positions improved significantly [16][55] Q&A Session Summary Question: Early signs of progress from transformation initiatives - Management noted improvements in asset utilization and inventory efficiency, particularly with local fulfillment centers [70][75] Question: Size of out-of-stock issues - Management emphasized the importance of inventory reliability and mentioned that LFCs would help maintain necessary stock levels [80][82] Question: Revenue outlook assumptions - Management provided context on Q2 being a smaller quarter and discussed the cautious approach to forecasting due to the timing of initiatives [88][90] Question: Impact of tariffs on chemicals - Management indicated minimal exposure to tariffs due to domestic sourcing [94] Question: Gross margin outlook - Management acknowledged the challenges in gross margins but expressed optimism for improvement in the second half of the year [101][102] Question: Breakdown of pro business growth - The growth in pro business was primarily driven by an increase in transactions, with a focus on improving inventory availability [120] Question: Transformational expenses impact - Management indicated that transformational expenses would dissipate in the back half of the year, setting a new normal for future EBITDA [123][125] Question: Wage growth considerations - Management noted moderate wage growth and the impact of minimum wage increases in certain states [131] Question: Store closure considerations - Management has not considered a store closure program but is monitoring underperforming locations [132]

Core Viewpoint - Leslie's, Inc. reported a quarterly loss of $0.22 per share, slightly worse than the Zacks Consensus Estimate of a loss of $0.21, and compared to a loss of $0.20 per share a year ago, indicating a negative earnings surprise of -4.76% [1] Financial Performance - The company posted revenues of $175.23 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 1.68%, and showing a year-over-year increase from $173.96 million [2] - Over the last four quarters, Leslie's has only surpassed consensus EPS estimates once [2] Stock Performance and Outlook - Leslie's shares have declined approximately 0.5% since the beginning of the year, while the S&P 500 has gained 3.1% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.17 on revenues of $190.42 million, and for the current fiscal year, it is $0.12 on revenues of $1.37 billion [7] Industry Context - The Consumer Products - Staples industry, to which Leslie's belongs, is currently ranked in the bottom 32% of over 250 Zacks industries, indicating potential underperformance compared to higher-ranked industries [8]

Market Position and Operations - The company holds a market-leading share of approximately 15% in the $15 billion U.S. pool and spa care industry as of 2023[80]. - The company operates over 1,000 locations across 39 states, with a mix of owned and leased properties[89]. - More than 80% of the company's product assortment consists of non-discretionary items essential for pool and spa maintenance[81]. - The company has a significant digital sales presence, estimated to be over five times larger than its largest digital competitor[80]. - Number of locations open at end of period increased to 1,021 compared to 1,007 in the prior year[111]. Financial Performance - Sales increased to $175.2 million for the three months ended December 28, 2024, from $173.9 million in the prior year period, an increase of $1.3 million, or 0.7%[111]. - Gross profit decreased to $47.7 million for the three months ended December 28, 2024, from $50.4 million in the prior year period, a decrease of $2.7 million, or 5.3%[112]. - Gross margin decreased to 27.2% compared to 29.0% in the prior year period, representing a decrease of 180 basis points[112]. - Net loss increased to $44.6 million for the three months ended December 28, 2024, compared to $39.6 million in the prior year period, an increase of $5.0 million[117]. - Adjusted net loss increased to $41.3 million for the three months ended December 28, 2024, compared to $36.8 million in the prior year period, an increase of $4.5 million[118]. - Adjusted EBITDA decreased to $(29.3) million for the three months ended December 28, 2024, compared to $(24.4) million in the prior year period, a decrease of $4.9 million[119]. - Net cash used in operating activities was $105.1 million for the three months ended December 28, 2024, compared to $71.9 million in the prior year period, an increase of $33.2 million[133]. - Interest expense decreased to $15.8 million for the three months ended December 28, 2024, from $17.1 million in the prior year period, a decrease of $1.3 million[114]. - Income tax benefit decreased to $10.9 million for the three months ended December 28, 2024, compared to $14.0 million in the prior year period, a decrease of $3.1 million[115]. - Net cash used in investing activities decreased to $4.6 million for the three months ended December 28, 2024, down from $10.7 million in the prior year, a reduction of $6.1 million[134]. - Net cash provided by financing activities was $12.8 million for the three months ended December 28, 2024, compared to $35.5 million in the prior year, a decrease of $22.7 million[135]. - As of December 28, 2024, approximately $147.7 million remained available for future purchases under the share repurchase program, which had an aggregate authorization of $300 million[136]. Internal Controls and Risk Management - Management's evaluation concluded that the design and operation of disclosure controls and procedures were ineffective as of December 28, 2024, due to unresolved material weaknesses in internal control over financial reporting[147]. - The company is in the process of implementing a plan to address material weaknesses in internal control over financial reporting, with remediation activities anticipated to be completed during fiscal year 2025[150]. - The company is enhancing existing inventory controls and creating new controls regarding vendor rebates[150]. - There have been no material changes in primary risk exposures or management of market risks from those disclosed in the Annual Report for the fiscal year ended September 28, 2024[144]. - The company is committed to improving internal control processes and may take additional measures to address control deficiencies[150]. - There have been no material changes to contractual obligations and other commitments during the three months ended December 28, 2024[138]. - There have been no material changes to critical accounting estimates during the three months ended December 28, 2024[141]. Management and Strategy - The company measures comparable sales growth as the increase or decrease in sales from the same locations in different reporting periods[86]. - Adjusted EBITDA is a key performance measure used by management, reflecting earnings before interest, taxes, depreciation, and other non-recurring items[95]. - The company’s gross margin is influenced by merchandise costs, pricing, product mix, and distribution costs[91]. - The company’s SG&A expenses include costs related to retail operations, corporate functions, and marketing, which generally vary with sales[93]. - The company has a legacy of innovation, having introduced various services and products that enhance customer engagement and loyalty[82]. - The company’s financial performance is impacted by macroeconomic factors such as inflation and consumer purchasing patterns[101].

Exhibit 99.1 Leslie's, Inc. Announces First Quarter Fiscal 2025 Financial Results; Provides Second Quarter and Full Year Fiscal 2025 Outlook PHOENIX, AZ – February 6, 2025 – Leslie's, Inc. ("Leslie's", "we", "our", "its", or "Company"; NASDAQ: LESL), the largest and most trusted direct-to-customer brand in the U.S. pool and spa care industry serving residential customers and pool professionals nationwide, today announced its financial results for the first quarter of fiscal 2025. Jason McDonell, Chief Execu ...

Core Insights - Leslie's, Inc. reported financial results for the first quarter of fiscal 2025, highlighting a focus on customer-centric transformation and strategic initiatives aimed at improving performance [2][5][6]. Financial Performance - Sales reached $175 million, an increase of 0.7% compared to $174 million in the prior year [5][6]. - The company experienced a net loss of $44.6 million, compared to a loss of $39.6 million in the prior year [6][25]. - Adjusted EBITDA was $(29.3) million, reflecting transformational expenses and at the lower end of guidance [5][6]. - Diluted earnings per share were $(0.24), compared to $(0.21) in the prior year [6][25]. Operational Highlights - Comparable store sales increased by 0.2%, marking the first gain in two years [2][5]. - Gross profit was $47.7 million, a decrease of 5.4% from $50.4 million in the prior year, with a gross margin of 27.2% [6][25]. - Selling, general and administrative expenses were $87.4 million, slightly up from $86.9 million in the prior year [6][25]. Balance Sheet and Cash Flow - Cash and cash equivalents totaled $11.6 million, an increase of $3.2 million from $8.4 million as of December 30, 2023 [4][11]. - Inventories decreased by 18.8% to $271.1 million compared to $334 million in the prior year [11][29]. - Funded debt was $796.7 million, down from $825.7 million as of December 30, 2023 [11][29]. Future Outlook - For the second quarter of fiscal 2025, the company expects sales between $179 million and $189 million, with a net loss projected between $(47) million and $(44) million [7]. - The full year outlook anticipates sales of $1,304 million to $1,370 million, with an expected net loss ranging from $(10) million to $5 million [8].

Core Viewpoint - Leslie's, Inc. will release its financial results for the first quarter of fiscal 2025 on February 6, 2025, and will host a conference call to discuss these results [1] Group 1: Company Overview - Leslie's, Inc. is the largest and most trusted direct-to-consumer brand in the U.S. pool and spa care industry, serving both residential customers and pool professionals nationwide [3] - The company was founded in 1963 and operates over 1,000 physical locations along with a robust digital platform, providing an extensive assortment of essential pool and spa care products [3] - Leslie's aims to empower consumers with knowledge, products, and solutions necessary for maintaining and enjoying their pools and spas through a dedicated team of associates and service technicians [3] Group 2: Financial Communication - The financial results will be released after market close on February 6, 2025, followed by a conference call at 4:30 p.m. Eastern Time [1] - Investors and analysts can participate in the call by dialing specific numbers provided, and a live audio webcast will be available online [2] - A recorded replay of the conference call will be accessible online for 180 days after the event [2]

Business Risks - The company faces significant risks related to achieving comparable sales growth, which could materially impact profitability and performance [105]. - Past growth may not be indicative of future growth, as various uncertainties could hinder market share gains and expansion efforts [106]. - Legal proceedings could have a material adverse effect on the company, with uncertainties surrounding insurance coverage for potential claims [113]. - Disruptions from natural or man-made disasters, public health issues, and geopolitical events could negatively impact demand for the company's products [114]. - The company competes in a highly fragmented market against various manufacturers, retailers, and service providers, which could affect market positioning [117]. - The company faces potential competition from new entrants in the swimming pool and spa supply retail market, particularly in high-demand states like Arizona, California, Florida, and Texas, which could significantly impact total sales [119]. - Economic conditions, including consumer discretionary spending, unemployment rates, and inflation, adversely affect demand for swimming pool and spa products, potentially leading to declines in sales during downturns [120]. - Access to consumer credit is critical for purchasing pools and related products; unfavorable economic conditions may tighten credit markets, negatively impacting sales [121]. Operational Challenges - The company is significantly dependent on its ability to meet labor needs, with competition for qualified personnel impacting operational success [112]. - The company may experience fluctuations in operating results due to seasonality and economic conditions, affecting financial performance [91]. - Product supply disruptions and rising raw material costs could adversely affect profitability and operating results [96]. - The company's sales are highly seasonal, with a greater percentage of revenues generated from April to September, making it susceptible to adverse events during peak months [123]. - Adverse weather conditions, such as unseasonably cool weather or significant rainfall, can reduce chemical consumption and consumer purchases, impacting total sales [128]. - The company relies on technology for e-commerce; failures in digital platforms could harm sales and growth in the e-commerce sector [132]. - The company must effectively manage product inventory to avoid adverse impacts on profitability [159]. Financial Condition - The company experienced a decline in sales and profitability between the Fiscal Year ending September 23, 2023, and the Fiscal Year ending September 28, 2024, indicating challenges in maintaining growth [143]. - The company faces substantial debt, which may impair its ability to satisfy obligations and obtain additional financing [180]. - A significant portion of cash flow from operations may be dedicated to debt payments, reducing funds available for operations and capital expenditures [180]. - The company is vulnerable to economic downturns and may have limited flexibility to react to changes in the business environment due to high debt levels [180]. - All debt under the Credit Facilities bears interest at variable rates, increasing risks if rates rise significantly [181]. - The company may need to refinance debt, sell assets, or raise additional capital if unable to generate sufficient cash flow [183]. - Restrictive covenants in the Credit Facilities may limit the company's ability to pursue business strategies and incur additional debt [184]. Compliance and Governance - The company has identified material weaknesses in internal control over financial reporting, which could impact results and investor confidence [103]. - Material weaknesses in internal control over financial reporting have been identified, particularly in inventory management and vendor agreements [205][206]. - The company is committed to remediating identified material weaknesses, but the timeline for completion remains uncertain [206][208]. - Compliance with evolving data privacy and cybersecurity laws may increase operational costs for the company [166]. - The company continues to incur increased costs due to public company responsibilities, including compliance with SEC regulations and corporate governance practices [204]. - Compliance with annual internal control report requirements will involve significant expenditures and complexity as the business grows [211]. Market and Environmental Factors - The demand for pool chemicals may be influenced by consumer attitudes towards environmental and safety concerns, impacting sales [91]. - Consumer attitudes towards environmental safety may affect demand for pool chemicals, and the company must adapt to emerging environmentally friendly alternatives [122]. - The company may experience increased operating costs due to compliance with stricter environmental, health, and safety regulations [169]. - Established ESG goals may expose the company to reputational risks if not achieved or reported accurately, potentially affecting financial performance [144]. - The company faces risks related to evolving ESG standards, which may impact its ability to meet investor expectations and could lead to reputational damage [146]. - The cost of raw materials, particularly granular chlorine compounds, is subject to fluctuations that could adversely affect the company's cost of goods sold and overall financial condition [155]. Legal and Regulatory Issues - The company is exposed to potential product liability claims, which could result in significant legal fees and impact financial performance [164]. - Product recalls or market withdrawals could significantly increase costs and damage the company's reputation [158]. - A class action complaint was filed against the company for alleged violations of federal securities laws, with claims of materially false and misleading statements regarding financial guidance and business operations [223]. Shareholder and Stock Information - As of November 26, 2024, the total borrowings under the Credit Facilities amount to $781.7 million [179]. - As of November 26, 2024, there are 184,969,296 shares of common stock outstanding, all eligible for resale in the public market [195]. - The company does not intend to pay dividends for the foreseeable future, relying on stock price appreciation for shareholder returns [198]. - Anti-takeover provisions in the company's charter may limit stockholder attempts to change management or control, potentially affecting stock price [200]. Infrastructure and Operations - The company has over 1,000 locations across 39 states, including 222 in Texas and 171 in California, with a total of 1,021 locations [221]. - The corporate office spans 92,669 square feet in Phoenix, Arizona, with a lease term through February 28, 2027, and two five-year renewal options [221]. - The company utilizes third-party logistics providers under short-term agreements to support its distribution needs [221]. - Cybersecurity risks are actively managed through a robust program overseen by the audit committee, with regular reviews and incident response plans in place [213][215]. - The company has not identified any material cybersecurity threats in the last fiscal year, but ongoing risks remain [218]. - The effectiveness of internal controls is critical for accurate financial reporting, and any failures could adversely affect investor confidence and stock price [209][210].

Group 1 - The core viewpoint is that Leslie's (NASDAQ: LESL) is recommended to hold due to uncertainty about demand outlook and potential to miss FY24 guidance if macro conditions do not improve [1] - The ideal investment is characterized by performing core business in a sector expected to grow structurally above GDP growth over the next 5-10 years, possessing sustainable competitive advantages, and being managed by ethical long-term thinkers [1] - The company should also be valued fairly to be considered an attractive investment opportunity [1]

Financial Data and Key Metrics Changes - For Q4 2024, total sales were $398 million, down 8% year-over-year, consistent with revised guidance [34][38] - Adjusted earnings per share were $0.02 for Q4, compared to $0.14 in the same period last year [45] - Adjusted EBITDA for Q4 was $43 million, down from $59 million year-over-year [44] - For the full year, total sales were $1.33 billion, also down 8% compared to the previous year [46] - Adjusted net income for the full year was a loss of $1 million, compared to income of $51 million in the prior year [50] Business Line Data and Key Metrics Changes - Residential pool sales declined 10% in Q4, while PRO pool sales decreased by 1% [40] - For the full year, residential pool sales were down 9%, PRO pool sales down 4%, and residential hot tub sales down 9% [47] - The PRO consumer group showed relative strength, with a low single-digit sales decline during the peak pool season [41] Market Data and Key Metrics Changes - The installed base of pools and spas in the U.S. is over 14 million, with a total addressable market of approximately $15 billion [14] - The company remains the only national large-scale omnichannel player in aftermarket pool and spa care [16] Company Strategy and Development Direction - The company plans to focus on three strategic themes: customer centricity, convenience, and asset utilization [19][33] - Emphasis on getting back to retail fundamentals to drive long-term profitable growth [15] - The company aims to leverage its competitive advantages, including proximity to customers and strong brand recognition [18][19] Management's Comments on Operating Environment and Future Outlook - Management noted that the macro environment remains dynamic, impacting sales trends [36] - The company expects continued softness in larger ticket and discretionary categories in Q1 2025, with sales guidance of $169 million to $176 million [58][55] - Management is optimistic about improving customer service and leveraging strategic themes to drive growth [56][64] Other Important Information - The company ended Q4 with cash and cash equivalents of $109 million, up from $55 million in the previous year [53] - Inventory decreased by $78 million or 25% year-over-year, indicating improved operational efficiencies [53] Q&A Session Summary Question: Which strategic theme will have the largest impact in the near to medium term? - Management believes asset utilization will have the most significant impact, focusing on optimization and improving same-store sales [70][72] Question: Why is the PRO business showing relative strength? - The PRO business has benefited from targeted promotional activities and an increase in PRO partners, which are now 14% higher than last year [81] Question: Can you break down the negative comps between ticket and traffic? - The decline was primarily driven by traffic, which has been the main driver of comparable sales [86] Question: What is the long-term unit growth outlook? - The company aims to focus on debt paydown before engaging in new store builds or M&A activity, but still sees opportunities for growth in the future [89] Question: What strategies are in place to improve gross margins? - The focus will be on driving top-line growth to leverage fixed costs, rather than solely on cost reductions [95] Question: How is the company addressing inventory management? - There is still room to optimize inventory, particularly through a more precise allocation strategy [99][100] Question: Can you provide insights on the 1Q gross margin pressures? - The first quarter will see pressures from fixed rebates and occupancy costs, but product margins are expected to be slightly favorable [123]

Core Viewpoint - Leslie's, Inc. reported quarterly earnings of $0.02 per share, missing the Zacks Consensus Estimate of $0.11 per share, representing an earnings surprise of -81.82% [1][2] Financial Performance - The company posted revenues of $397.86 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 1.81%, compared to year-ago revenues of $432.37 million [2] - Over the last four quarters, Leslie's has surpassed consensus EPS estimates two times and topped consensus revenue estimates just once [2] Stock Performance - Leslie's shares have lost approximately 53.8% since the beginning of the year, contrasting with the S&P 500's gain of 25.2% [4] - The current consensus EPS estimate for the upcoming quarter is -$0.19 on revenues of $179.36 million, and for the current fiscal year, it is $0.19 on revenues of $1.39 billion [8] Industry Outlook - The Consumer Products - Staples industry, to which Leslie's belongs, is currently in the bottom 43% of over 250 Zacks industries, indicating potential challenges ahead [9] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that the outlook for the industry can significantly impact stock performance [6][9] Future Expectations - The estimate revisions trend for Leslie's is currently favorable, translating into a Zacks Rank 2 (Buy) for the stock, indicating expectations of outperforming the market in the near future [7] - It will be important to monitor how estimates for the coming quarters and the current fiscal year change following the recent earnings report [5][8]