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]

Core Insights - Leslie's, Inc. reported a net loss of $9.9 million in Q4 and $23.4 million for fiscal 2024, with sales decreasing by 8.0% in Q4 and 8.3% for the fiscal year [1][4][3] - The company experienced a decline in gross profit and adjusted EBITDA, primarily due to lower sales volume and increased costs [3][5] Financial Performance - Q4 sales were $397.9 million, down from $432.4 million year-over-year, with comparable sales decreasing by 8.3% [3] - Fiscal 2024 sales totaled $1,330.1 million, a decrease from $1,451.2 million in the previous year [4] - Gross profit for Q4 was $143.2 million, a decline of 10.6% compared to the prior year, resulting in a gross margin of 36.0% [3] - For fiscal 2024, gross profit decreased by 13.0% to $476.8 million, with a gross margin of 35.8% [4][5] Profitability Metrics - Adjusted EBITDA for Q4 was $43.0 million, down from $59.5 million in the prior year [3] - Fiscal 2024 adjusted EBITDA was $108.7 million, compared to $168.1 million in the previous year [5] - Diluted earnings per share for Q4 were $(0.05), compared to $0.09 in the prior year [3] - Adjusted diluted earnings per share for Q4 were $0.02, down from $0.14 in the previous year [3] Operational Highlights - Selling, general and administrative expenses (SG&A) decreased by 4.0% in Q4 to $116.8 million [3] - For fiscal 2024, SG&A expenses decreased by $26.4 million to $419.7 million [5] - The company established a valuation allowance of approximately $11 million against deferred tax assets [3] Balance Sheet and Cash Flow - Cash and cash equivalents increased to $108.5 million as of September 28, 2024, from $55.4 million a year earlier [7] - Inventories decreased by 24.9% to $234.3 million [7] - Funded debt was $783.7 million, slightly down from $789.8 million [7] Future Outlook - The company anticipates a dynamic environment but sees opportunities for growth and plans to detail its strategic roadmap in upcoming quarters [2]

Core Viewpoint - The article highlights the stock Leslies (LESL) as a strong value investment opportunity, supported by various financial metrics indicating it is undervalued compared to its industry peers [4][8]. Financial Metrics - Leslies (LESL) has a Zacks Rank of 2 (Buy) and an A grade for Value, indicating strong potential for value investors [4]. - The stock's P/E ratio is 14.99, significantly lower than the industry average of 20.89, suggesting it is undervalued [4]. - LESL's Forward P/E has fluctuated between 7.49 and 34.62 over the past year, with a median of 15.48 [4]. - The PEG ratio for LESL is 1.40, compared to the industry average of 1.99, indicating favorable growth expectations relative to its valuation [5]. - The P/S ratio for LESL is 0.37, which is lower than the industry average of 0.74, further supporting its undervaluation [6]. - LESL's P/CF ratio stands at 13.93, well below the industry average of 30.92, highlighting its attractive cash flow position [7]. Investment Outlook - The combination of favorable financial metrics and a strong earnings outlook positions Leslies as an impressive value stock in the current market [8].

Core Viewpoint - The article emphasizes the importance of value investing and highlights Leslies (LESL) as a strong value stock currently being undervalued in the market [2][8]. Company Analysis - Leslies (LESL) holds a Zacks Rank of 2 (Buy) and a Value grade of A, indicating strong potential for value investors [4]. - The stock has a Forward P/E ratio of 14.06, significantly lower than its industry's average Forward P/E of 18.37, suggesting it is undervalued [4]. - Over the past year, LESL's Forward P/E has fluctuated between 34.62 and 7.49, with a median of 15.17, indicating volatility but also potential for recovery [4]. Valuation Metrics - LESL has a PEG ratio of 1.61, which is lower than the industry average PEG of 2.03, indicating favorable growth expectations relative to its price [5]. - The stock's P/S ratio is 0.36, compared to the industry's average P/S of 0.69, further supporting the notion of undervaluation [6]. - LESL's P/CF ratio stands at 12.82, which is attractive compared to the industry's average P/CF of 21.13, highlighting strong cash flow relative to its price [7]. Investment Outlook - The combination of favorable valuation metrics and a strong earnings outlook positions LESL as an impressive value stock at present [8].

Core Points - Jason McDonell has been appointed as the new CEO of Leslie's, effective September 9, 2024, and will also join the Board of Directors at that time [1][3] - John Strain, the Chairman of the Board, will serve as Interim CEO until McDonell's arrival, following the departure of Michael Egeck [2][4] - The company has reaffirmed its fiscal 2024 outlook, consistent with previous guidance provided on August 7, 2024 [4] Company Overview - Leslie's, Inc. is the largest direct-to-consumer brand in the U.S. pool and spa care industry, founded in 1963 [5] - The company operates over 1,000 physical locations and a robust digital platform, catering to both residential and professional consumers [5] - Leslie's offers an extensive assortment of essential pool and spa care products, supported by a dedicated team of experts [5] Leadership Background - Jason McDonell brings nearly 30 years of experience in retail and consumer products, previously serving as Executive Vice President at Advance Auto Parts, managing a $11 billion portfolio [3] - His prior experience includes 21 years at PepsiCo, culminating in his role as Canada President for a $2.5 billion business [3] - McDonell has a strong background in brand management, having started his career at Procter & Gamble, and holds a bachelor's degree in Business Administration [3]

Core Viewpoint - Bragar Eagel & Squire, P.C. is investigating potential claims against Leslie's, Inc. due to a class action complaint alleging breaches of fiduciary duties by the board of directors during a specified class period [1] Group 1: Allegations and Class Action Details - The class action alleges that Leslie's misled investors by failing to disclose that its growth was driven by customers over-purchasing products, which inflated revenues and earnings without indicating sustainable demand [2] - It is claimed that the company prolonged inflated customer demand by warning customers about potential future shortages of chemicals, and that any sales slowdown was due to prior excess stockpiling rather than normal seasonal trends [2] Group 2: Financial Impact and Stock Performance - On July 13, 2023, Leslie's announced disappointing preliminary results for its fiscal third quarter, reporting a 9% year-over-year sales decline and a reduction in fiscal 2023 guidance, which shocked analysts and led to multiple downgrades [3] - Following the announcement, Leslie's stock price fell over 29%, from $9.52 per share on July 13, 2023, to $6.70 per share on July 14, 2023, and continued to decline by another $1.24 per share, or over 18%, closing at $5.46 per share on July 17, 2023 [3]

Financial Performance - Sales for the third quarter of 2024 were $570 million, which includes a negative impact of 230 basis points from June 2023 chemical price actions[10] - The company's gross profit was $229 million, but the gross margin rate contracted by 101 basis points compared to the same quarter last year[10] - Adjusted EBITDA was $109 million, a decrease of $20 million compared to the prior year quarter[10] - Adjusted EPS was $034, compared to $041 a year ago[10] Sales Trends - Overall sales decreased by 7%, with comparable sales also down by 7%[10] - PRO Pool sales decreased by 2%, while Residential Pool sales decreased by 8% and Residential Hot Tub sales decreased by 4%[10] - Chemical sales decreased by 1% for the quarter but increased by 5% in June[9] - Non-discretionary sales decreased by 6%, while discretionary sales decreased by 10%[10] Inventory and Customer Metrics - Inventory was reduced by 31%, a decrease of $134 million year-over-year[9, 10] - The customer file remained flat year-over-year[14] - Average revenue per customer decreased by 7%, although loyalty members outperformed with a decrease of 4%[14] Guidance - The company reaffirmed its fiscal year 2024 sales guidance of $1321 million to $1347 million[22]

Financial Data and Key Metrics Changes - Total fiscal third quarter sales were $570 million, down 7% year-over-year, impacted by unfavorable weather and continued weakness in discretionary product sales [10][18] - Gross margin was 40%, down 101 basis points year-over-year, primarily due to chemical price actions and occupancy deleverage [13][20] - Adjusted EBITDA was $109 million, compared to $129 million in the same period last year, with adjusted diluted earnings per share at $0.34, down from $0.41 [21][22] Business Line Data and Key Metrics Changes - Residential pool sales declined 8%, PRO pool sales were down 2%, and residential hot tub sales decreased by 4% [18] - Chemical sales improved to down 1% in the quarter, with a positive year-to-date volume, while equipment sales were down 15% [11][25] - Discretionary product sales were down 10%, showing a sequential improvement from the previous quarter [11][25] Market Data and Key Metrics Changes - Total transactions were down 2% year-over-year, with traffic improving to down 5% in the quarter from down 10% in the second quarter [10][9] - The company outperformed specialty pool retailers in sales growth during the third quarter, indicating a gain in market share [11][12] - Digital traffic share grew during the quarter, reflecting an increase in online engagement [11] Company Strategy and Development Direction - The company aims for long-term sales growth in the mid-single digits, targeting a gross margin of 40% and an adjusted EBITDA margin in the mid-teens [7][14] - Strategic initiatives include enhancing customer loyalty programs, expanding PRO contracts, and pursuing store growth while prioritizing debt reduction [15][16][27] - The company is focused on improving operational efficiency and profitability through cost management and inventory reduction [26][29] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the ongoing normalization of industry demand post-pandemic and the impact of weather on sales [4][28] - There are positive signs emerging, such as improved chemical sales and a return to pre-pandemic equipment unit volumes [25][28] - The company remains cautious about consumer spending due to inflation and high interest rates, which may affect future performance [8][28] Other Important Information - The company ended the quarter with $784 million outstanding on its secured term loan, a decrease from the previous year [22] - Cash and cash equivalents increased to $74 million, up from $19 million in the prior year [23] - Inventory levels decreased by 31% year-over-year, indicating improved supply chain management [23] Q&A Session Summary Question: Understanding the shortfall in 3Q versus prior guidance - Management explained that the shortfall was primarily due to lower transactions and average order value, driven by cautious consumer behavior and weather impacts [31][32] Question: Gross margin outlook and headwinds - Management indicated that the difference in gross margin targets is due to changes in business mix, with lower margins in the growing PRO business [34][35] Question: Performance of loyalty customers - Loyalty customers continue to outperform non-members, and management is focused on increasing loyalty penetration [40][41] Question: Chemical pricing and market dynamics - Management noted that chemical pricing has stabilized, and they do not anticipate significant price deflation in the near future [62][63] Question: Fourth quarter sales outlook - The outlook for Q4 reflects continued cautious consumer behavior and potential weather disruptions, with a projected sales decline of around 7% [57][58]

Leslie's, Inc. (LESL) came out with quarterly earnings of $0.34 per share, beating the Zacks Consensus Estimate of $0.32 per share. This compares to earnings of $0.41 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 6.25%. A quarter ago, it was expected that this company would post a loss of $0.17 per share when it actually produced a loss of $0.17, delivering no surprise. Over the last four quarters, the company has surpassed ...

Investors in Leslie's, Inc. (LESL) need to pay close attention to the stock based on moves in the options market lately. That is because the Aug 16, 2024 $15.00 Call had some of the highest implied volatility of all equity options today. Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event comi ...