Financial Data and Key Metrics Changes - Sales for Q2 2025 were $177.1 million, down from $188.7 million in Q2 2024, reflecting a decline of 6% year over year due to weaker foot traffic [24] - Gross profit decreased to $43.9 million from $54.3 million, with gross margin dropping to 24.8% from 28.8% in the prior year [24][25] - Adjusted EBITDA was reported at a loss of $36 million, aligning with guidance despite top-line softness [9][10] Business Line Data and Key Metrics Changes - Pro Pool sales were down 2%, while Residential Pool sales declined by 9%, and Hot Tub sales increased by 4% year over year [8] - Conversion rates improved by 174 basis points year over year, with significant increases observed after water tests using proprietary technology [9][48] Market Data and Key Metrics Changes - The company experienced weaker foot traffic in February due to colder temperatures, impacting overall sales performance [8] - The introduction of Local Fulfillment Centers (LFCs) has begun to positively impact customer service and inventory management [10][11] Company Strategy and Development Direction - The company is focused on a transformation journey centered around customer centricity, convenience, and asset utilization, with a new pillar of cost optimization introduced [6][29] - Strategic initiatives include optimizing inventory, enhancing the Pro customer segment, and improving DIY omnichannel capabilities [10][12][14] - The launch of a new loyalty program, Pool Perks, aims to increase customer engagement and retention [17][18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by weather conditions but expressed confidence in the team's ability to meet guidance for the remainder of the year [28][31] - The company is committed to reducing debt and improving working capital through inventory optimization and cost-saving measures [26][29] Other Important Information - The company has reduced borrowings on its secured term loan by $27 million, with plans to repay its revolving credit facility in full during Q3 [27] - The introduction of same-day delivery services in partnership with Uber is expected to enhance customer convenience and operational efficiency [21][22] Q&A Session Summary Question: Competitive landscape and comp sales performance - Management noted that weather impacted sales but expressed confidence in gaining market share, particularly in the Pro segment [33][35][36] Question: Underlying fundamentals related to comp weakness - Management indicated that weather was a significant factor, but improvements in conversion rates were promising [45][46][48] Question: Inventory purchases and defensive strategies - Management emphasized a focus on working capital and inventory optimization to mitigate risks and improve cash flow [51][53] Question: Cost optimization and expense ratio - Management discussed ongoing efforts to identify cost savings and optimize the expense ratio through indirect spend and asset utilization [56][59] Question: E-commerce and digitally initiated sales - Management highlighted the importance of speed and convenience in meeting customer needs, which led to the partnership with Uber for same-day delivery [72][74] Question: Top-line guidance and revenue seasonality - Management reiterated confidence in full-year sales outlook, noting that a significant portion of sales is still expected in the peak season [78][80]

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[81]. - The company operates over 1,000 locations across 39 states, with a mix of owned and leased properties[90]. - More than 80% of the company's product assortment consists of non-discretionary items essential for pool and spa maintenance[82]. - The company evaluates new market opportunities based on the number of pools and spas, competition, and real estate costs[90]. Financial Performance - Sales for the three months ended March 29, 2025 were $177.1 million, a decrease of $11.5 million, or 6.1%, compared to $188.7 million in the prior year period[111]. - Gross profit for the three months ended March 29, 2025 was $43.9 million, a decrease of $10.4 million, or 19.1%, with a gross margin of 24.8% compared to 28.8% in the prior year[114]. - SG&A expenses for the three months ended March 29, 2025 were $92.3 million, an increase of $7.5 million, or 8.8%, primarily due to increased compensation expenses[116]. - Net loss for the three months ended March 29, 2025 was $51.3 million, an increase of $16.8 million compared to $34.6 million in the prior year period[121]. - Adjusted net loss for the three months ended March 29, 2025 was $46.5 million, an increase of $14.5 million compared to $32.0 million in the prior year period[123]. - Comparable sales growth for the three months ended March 29, 2025 was down 6.7% compared to the prior year period[112]. - Adjusted EBITDA for the three months ended March 29, 2025 was $(36.1) million, a decrease of $16.8 million from $(19.3) million in the prior year period[124]. - Adjusted EBITDA for the six months ended March 29, 2025 was $(65.4) million, a decrease of $21.7 million from $(43.7) million in the prior year period[124]. Cash Flow and Liquidity - Net cash used in operating activities was $154.3 million for the six months ended March 29, 2025, an increase of $39.2 million from $115.1 million in the prior year period[139]. - Cash and cash equivalents totaled $17.3 million as of March 29, 2025, down from $108.5 million as of September 28, 2024[132]. - Net cash used in investing activities was $11.1 million for the six months ended March 29, 2025, a decrease of $12.9 million from $24.0 million in the prior year period[140]. - Net cash provided by financing activities was $74.2 million for the six months ended March 29, 2025, a decrease of $17.9 million from $92.1 million in the prior year period[141]. - As of March 29, 2025, outstanding standby letters of credit totaled $11.9 million, with $136.6 million of available borrowing capacity under the Revolving Credit Facility[136]. - The company expects its cash and cash equivalents position, net cash provided by operating activities, and borrowing availability will be adequate to finance working capital requirements and planned capital expenditures over the next 12 months[135]. Challenges and Market Conditions - The company has faced macroeconomic challenges, including inflation and supply chain disruptions, impacting financial performance[102]. - The company’s revenue may fluctuate due to consumer purchasing patterns, particularly related to stockpiling of chemicals[103]. - The company’s gross margin is influenced by merchandise costs, pricing strategies, and service costs, which are expected to rise with growth[92]. - The company typically experiences a build-up of inventory and accounts payable during the first and second fiscal quarters in anticipation of the peak swimming pool supply selling season[127]. - The effective income tax rate for the three months ended March 29, 2025 was 20.2%, compared to 29.0% for the same period in the prior year[120]. - Interest expense for the three months ended March 29, 2025 was $15.9 million, a decrease of $2.3 million compared to $18.2 million in the prior year period[118]. - The company received downgraded credit ratings from S&P Global Ratings (B from B+) and Moody's (Caa1 from B2) during the quarter ended March 29, 2025[137]. Strategic Initiatives - The company has pioneered in-store water testing services, enhancing consumer engagement and loyalty[82]. - The company’s sales growth is primarily driven by comparable sales growth and the expansion of locations in new markets[86].

Financial Performance - Sales for the second quarter of fiscal 2025 were $177.1 million, a decrease of 6.1% compared to $188.7 million in the prior year period[4] - Gross profit was $43.9 million, down 19.1% from $54.3 million in the prior year, with a gross margin of 24.8% compared to 28.8% in the prior year[4] - The operating loss for the quarter was $48.4 million, compared to a loss of $30.5 million in the prior year period[4] - Net loss was $51.3 million, an increase from a loss of $34.6 million in the prior year[4] - Adjusted EBITDA was $(36.1) million, compared to $(19.3) million in the prior year[4] - Sales for the three months ended March 29, 2025, were $177.134 million, a decrease of 6.9% compared to $188.664 million for the same period in 2024[22] - Gross profit for the six months ended March 29, 2025, was $91.663 million, down 12.5% from $104.736 million in the prior year[22] - The net loss for the three months ended March 29, 2025, was $51.320 million, compared to a net loss of $34.553 million for the same period in 2024, representing a 48.5% increase in losses[22] - Adjusted EBITDA for the six months ended March 29, 2025, was $(65.379) million, worsening from $(43.698) million in the same period of 2024[24] - The company reported an adjusted net loss of $46.525 million for the three months ended March 29, 2025, compared to $31.998 million for the same period in 2024[24] - Basic earnings per share for the three months ended March 29, 2025, were $(0.28), compared to $(0.19) for the same period in 2024[22] Cash and Liquidity - Cash and cash equivalents totaled $17.3 million as of March 29, 2025, an increase of $8.9 million from $8.4 million as of March 30, 2024[4] - Cash and cash equivalents decreased to $17.252 million as of March 29, 2025, from $108.505 million at the end of September 2024[26] Inventory and Liabilities - Inventories decreased by $44.0 million or 11.6% to $335.1 million as of March 29, 2025, compared to $379.1 million as of March 30, 2024[4] - Total liabilities increased to $1.312 billion as of March 29, 2025, compared to $1.227 billion as of March 30, 2024[26] Guidance and Outlook - The company reiterated its full year fiscal 2025 sales outlook of $1,304 million to $1,370 million[5] - Adjusted EBITDA guidance for the full year is projected to be between $96 million and $116 million[5] Strategic Focus - The company is focused on strategic themes including customer centricity, convenience, and asset utilization to drive long-term value[3] Other Financial Information - The company incurred interest expenses of $15.897 million for the three months ended March 29, 2025, down from $18.153 million in the same period of 2024[22] - The weighted average shares outstanding for the three months ended March 29, 2025, were 185.256 million, slightly up from 184.625 million in the same period of 2024[22] - The company incurred costs related to senior executive transitions and severance due to corporate restructuring activities[33] - Non-cash changes in valuation allowance for deferred taxes were reported, which management does not consider indicative of ongoing operations[34] - The tax effect of total adjustments was based on combined U.S. federal and state statutory tax rates, impacting income tax benefit[34]

Core Viewpoint - Leslie's, Inc. reported a decrease in sales and significant net losses for the second quarter of fiscal 2025, while emphasizing a commitment to strategic transformation and operational improvements [2][4][5]. Financial Results - Sales for the second quarter were $177.1 million, down 6.1% from $188.7 million in the same period last year [5]. - Comparable sales decreased by 6.7%, with new stores contributing $0.9 million [5]. - Gross profit was $43.9 million, a decrease of 19.1% compared to $54.3 million in the prior year, resulting in a gross margin of 24.8% [5]. - Selling, general and administrative expenses increased to $92.3 million from $84.9 million [5]. - The operating loss was $48.4 million, compared to a loss of $30.5 million in the prior year [5]. - Net loss for the quarter was $51.3 million, compared to a loss of $34.6 million in the prior year [5]. - Adjusted EBITDA was $(36.1) million, worsening from $(19.3) million in the prior year [5]. Full Year Fiscal 2025 Outlook - The company reiterated its full-year fiscal 2025 outlook, projecting sales between $1,304 million and $1,370 million, and adjusted EBITDA between $96 million and $116 million [4]. - Expected adjusted net loss ranges from $(2) million to $13 million, with adjusted diluted loss per share between $(0.01) and $0.07 [4]. Cash and Inventory Management - Cash and cash equivalents increased to $17.3 million as of March 29, 2025, from $8.4 million a year earlier [5]. - Inventories decreased by 11.6% to $335.1 million compared to $379.1 million as of March 30, 2024 [5]. Strategic Focus - The CEO highlighted a focus on customer centricity, convenience, and asset utilization, with early indicators of progress being observed [2]. - The company is committed to maximizing cash flow, reducing leverage, and driving long-term value for stakeholders [2].

Core Insights - Leslie's, Inc. is set to release its fiscal 2025 second quarter financial results on May 8, 2025, after market close [1] - A conference call will be held on the same day at 5:30 p.m. Eastern time to discuss the financial results and the company's strategic transformation initiatives [2] Company Overview - Founded in 1963, Leslie's is the largest direct-to-customer brand in the U.S. pool and spa care industry, serving both residential customers and pool professionals [3] - The company offers a wide range of essential pool and spa care products through over 1,000 physical locations and a robust digital platform, catering to the aftermarket needs of its consumers [3] - Leslie's employs a dedicated team of associates and experts to empower consumers with the knowledge and solutions necessary for pool and spa maintenance [3]

Core Viewpoint - Leslie's, Inc. is undergoing a transformation with significant leadership changes aimed at enhancing long-term value creation and operational efficiency [1][3]. Leadership Changes - Tony Iskander has been appointed as Interim Chief Financial Officer (CFO) and Treasurer, effective March 14, 2025, bringing nearly 30 years of experience in corporate finance and operational leadership [2][5]. - Scott Bowman, the previous CFO since 2023, has left the company concurrently with Iskander's appointment, with no reported disagreements regarding company operations [3][4]. - Naomi Cramer has been promoted to Chief Retail Operations and Talent Officer, leveraging her 28 years of retail experience, including significant roles at Target [4][6]. Strategic Focus - The company emphasizes a commitment to debt reduction and balance sheet optimization as part of its strategic plan, with Iskander playing a critical role in these efforts [3][4]. - The leadership changes are intended to enhance retail execution fundamentals and drive long-term growth [4][6]. Company Background - Founded in 1963, Leslie's is the largest direct-to-customer brand in the U.S. pool and spa care industry, serving both residential customers and pool professionals [10]. - The company operates over 1,000 physical locations and a robust digital platform, providing a wide range of essential pool and spa care products [10].

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 ...