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]

Sales of $397.9 million in the fourth quarter and $1,330.1 million in fiscal 2024Net loss of $9.9 million in the fourth quarter and $23.4 million in fiscal 2024Adjusted EBITDA of $43.0 million in the fourth quarter and $108.7 million in fiscal 2024Diluted earnings per share of $(0.05) in the fourth quarter and $(0.13) in fiscal 2024Adjusted diluted earnings per share of $0.02 in the fourth quarter and $(0.01) in fiscal 2024 PHOENIX, Nov. 25, 2024 (GLOBE NEWSWIRE) -- Leslie’s, Inc. (“Leslie’s”, “we”, “our”, ...

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Jason McDonell Appointed CEO; Joining Company on September 9, 2024 Mike Egeck Departs Leslie's; Chairman John Strain to Serve as Interim CEO Until Mr. McDonell Joins Company Reaffirms Fiscal 2024 Outlook PHOENIX, Aug. 26, 2024 (GLOBE NEWSWIRE) -- Leslie's, Inc. ("Leslie's" or the "Company"; NASDAQ: LESL), the largest and most trusted direct-to-consumer brand in the U.S. pool and spa care industry, today announced the appointment of Jason McDonell as Chief Executive Officer, effective September 9, 2024. Mr. ...