UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q For the quarterly period ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number: 001-39667 LESLIE'S, INC. (Exact Name of Registrant as Specified in its Charter) | Delaware | 20-8397425 | | --- | --- | | (State or other jurisdiction of | (I.R.S. Employer | | incorporation or organization) | Identification No.) ...

UNITED STATES For the fiscal year ended October 1, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number: 001-39667 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 LESLIE'S, INC. (Exact name of Registrant as specified in its Charter) Delaware 20-8397425 (State or other jurisdiction of incorp ...

Q3 2022 Performance - Sales reached $674 million, reflecting a 13% increase[14] - Comparable sales grew by 7%, with a two-year stack of 27%[14] - Gross margin was $304 million, a 7% increase, but the margin rate declined by 45.1% due to business mix, product margin, and distribution center expenses[14, 15] - Adjusted EBITDA was $183 million, a 2% increase, or $4 million more than the previous year[16, 17] YTD Q3 Fiscal 2022 Performance - Sales reached $1.087 billion, a 16% increase[35] - Comparable sales grew by 11%, with a two-year stack of 34%[35] - Gross margin was $457 million, a 12% increase, with a margin rate of 42%[36] - Adjusted EBITDA was $193 million, a 2% increase, with an 18.3% margin[37, 38] Growth Drivers - Residential Pool sales grew by 10% year-to-date[38] - PRO Pool sales grew by 22% year-to-date, representing approximately 15% of last twelve months sales[38] - Residential Hot Tub sales grew by 81% year-to-date, representing approximately 10% of last twelve months sales[38] - Four acquisitions year-to-date added 24 locations and approximately $68 million of run-rate sales[38, 40] Revised Fiscal 2022 Guidance - Sales are projected to be $1.55 billion to $1.57 billion, representing a 15% to 17% increase[61] - Gross profit is expected to be $655 million to $670 million, with a gross margin decline of 165 to 205 basis points[61] - Adjusted EBITDA is projected to be $287 million to $297 million, representing a 6% to 10% increase[61] - Adjusted net income is expected to be $168 million to $178 million, representing a 4% to 10% increase[61] - Adjusted EPS is projected to be $0.90 to $0.96, representing a 6% to 13% increase[61]

[Cautionary Note Regarding Forward-Looking Statements](index=3&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This report contains forward-looking statements involving substantial risks and uncertainties, which may cause actual results to differ materially from those indicated - This report contains forward-looking statements involving substantial risks and uncertainties, which may cause actual results to differ materially from those indicated[7](index=7&type=chunk)[8](index=8&type=chunk) - Key factors that could cause actual results to differ include growth strategies, supply disruptions, supplier relationships, competition, weather, economic conditions, housing market, technology initiatives, personnel retention, regulatory changes, capital access, commodity prices, COVID-19 impacts, cyber incidents, and other risks detailed in SEC filings[7](index=7&type=chunk)[8](index=8&type=chunk)[11](index=11&type=chunk) [PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section presents Leslie's, Inc.'s unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Leslie's, Inc.'s unaudited condensed consolidated financial statements, including the balance sheets, statements of operations, stockholders' deficit, cash flows, and comprehensive notes, for the periods ended July 2, 2022, and July 3, 2021, providing a snapshot of the company's financial position and performance [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This table presents Leslie's, Inc.'s condensed consolidated balance sheets as of July 2, 2022, October 2, 2021, and July 3, 2021, detailing assets, liabilities, and stockholders' deficit Condensed Consolidated Balance Sheets (in thousands) | Metric | July 2, 2022 (Unaudited) | October 2, 2021 (Audited) | July 3, 2021 (Unaudited) | | :-------------------------------- | :----------------------- | :---------------------- | :---------------------- | | **Assets** | | | | | Cash and cash equivalents | $193,130 | $343,498 | $307,395 | | Inventories | $361,391 | $198,789 | $224,526 | | Total current assets | $632,329 | $601,711 | $608,384 | | Total assets | $1,116,991 | $1,042,232 | $996,112 | | **Liabilities & Stockholders' Deficit** | | | | | Accounts payable and accrued expenses | $330,881 | $233,597 | $271,731 | | Total current liabilities | $432,895 | $309,713 | $352,437 | | Long-term debt, net | $781,322 | $786,125 | $787,731 | | Total liabilities | $1,375,760 | $1,259,790 | $1,261,838 | | Total stockholders' deficit | $(258,769) | $(217,558) | $(265,726) | | Total liabilities and stockholders' deficit | $1,116,991 | $1,042,232 | $996,112 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This table presents Leslie's, Inc.'s condensed consolidated statements of operations for the three and nine months ended July 2, 2022, and July 3, 2021, outlining sales, expenses, and net income Condensed Consolidated Statements of Operations (in thousands, except EPS) | Metric | Three Months Ended July 2, 2022 | Three Months Ended July 3, 2021 | Nine Months Ended July 2, 2022 | Nine Months Ended July 3, 2021 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Sales | $673,633 | $596,543 | $1,086,529 | $933,991 | | Cost of merchandise and services sold | $370,026 | $312,845 | $629,977 | $526,895 | | Gross profit | $303,607 | $283,698 | $456,552 | $407,096 | | Selling, general and administrative expenses | $131,469 | $117,264 | $300,872 | $265,127 | | Operating income | $172,138 | $166,434 | $155,680 | $141,969 | | Net income | $122,986 | $118,802 | $101,095 | $82,093 | | Basic EPS | $0.67 | $0.63 | $0.55 | $0.45 | | Diluted EPS | $0.67 | $0.61 | $0.54 | $0.43 | [Condensed Consolidated Statements of Stockholders' Deficit](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Deficit) This table presents Leslie's, Inc.'s condensed consolidated statements of stockholders' deficit, showing changes in equity for the periods ended July 3, 2021, and July 2, 2022 Condensed Consolidated Statements of Stockholders' Deficit (in thousands, except shares) | Metric | Balance, April 3, 2021 | Balance, July 3, 2021 | Balance, April 2, 2022 | Balance, July 2, 2022 | | :-------------------------------- | :--------------------- | :-------------------- | :--------------------- | :-------------------- | | Common Stock (Shares) | 186,885 | 189,285 | 182,784 | 183,028 | | Common Stock (Amount) | $187 | $189 | $183 | $183 | | Additional Paid in Capital | $194,605 | $201,085 | $83,074 | $87,050 | | Retained Deficit | $(585,802) | $(467,000) | $(468,988) | $(346,002) | | Total Stockholders' Deficit | $(391,010) | $(265,726) | $(385,731) | $(258,769) | - During the nine months ended July 2, 2022, the company repurchased and retired **7.5 million shares** of common stock, reducing additional paid-in capital by **$127.5 million** and increasing retained deficit by **$24.6 million**[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This table presents Leslie's, Inc.'s condensed consolidated statements of cash flows for the nine months ended July 2, 2022, and July 3, 2021, detailing operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Nine Months Ended July 2, 2022 | Nine Months Ended July 3, 2021 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $72,658 | $117,965 | | Net cash used in investing activities | $(66,183) | $(22,176) | | Net cash (used in) provided by financing activities | $(156,843) | $55,805 | | Net (decrease) increase in cash and cash equivalents | $(150,368) | $151,594 | | Cash and cash equivalents, end of period | $193,130 | $307,395 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and breakdowns for various accounts and transactions presented in the condensed consolidated financial statements, covering business operations, significant accounting policies, business combinations, goodwill and intangibles, receivables, inventories, debt, income taxes, commitments, related party transactions, share repurchases, equity compensation, and earnings per share [Note 1—Business and Operations](index=8&type=section&id=Note%201%E2%80%94Business%20and%20Operations) This note describes Leslie's, Inc.'s core business as a leading direct-to-consumer pool and spa care brand operating across 39 states and online - Leslie's, Inc. is the leading direct-to-consumer pool and spa care brand, marketing and selling supplies and services through **979 company-operated locations** in 39 states and e-commerce websites[24](index=24&type=chunk) [Note 2—Summary of Significant Accounting Policies](index=8&type=section&id=Note%202%E2%80%94Summary%20of%20Significant%20Accounting%20Policies) This note outlines the significant accounting policies used in preparing the interim condensed consolidated financial statements, including fiscal calendar and seasonality - The interim condensed consolidated financial statements are prepared following GAAP and include all normal and recurring adjustments[25](index=25&type=chunk) - The company operates on a fiscal calendar ending on the Saturday closest to September 30th, with 13-week quarters in a 52-week year[26](index=26&type=chunk) - The business is highly seasonal, with sales and earnings highest during the third and fourth fiscal quarters (April through September)[32](index=32&type=chunk) - The company adopted ASU 2019-12 (Income Taxes) as of October 3, 2021, and ASU 2021-08 (Business Combinations) during the second quarter of fiscal 2022, neither of which had a material impact on consolidated financial statements[33](index=33&type=chunk)[34](index=34&type=chunk) [Note 3—Business Combinations](index=9&type=section&id=Note%203%E2%80%94Business%20Combinations) This note details Leslie's, Inc.'s business acquisitions, including purchase consideration, acquired assets, and goodwill recognized for the reported periods - During the nine months ended July 2, 2022, Leslie's acquired three businesses for an aggregate purchase price of **$40.7 million**, expanding its pool and spa footprint with **18 new retail locations**[36](index=36&type=chunk) Business Combinations (in thousands) | Item | Total (in thousands) | | :-------------------------------- | :------------------- | | Total purchase consideration, net of cash acquired | $40,670 | | Inventories acquired | $16,706 | | Finite-lived intangible assets acquired | $4,500 | | Goodwill recognized | $22,482 | - In fiscal 2021, three businesses were acquired for **$8.9 million**, adding eight locations, with a **$1.7 million** increase in goodwill recorded during the nine months ended July 2, 2022, due to measurement period adjustments[37](index=37&type=chunk) [Note 4—Goodwill and Other Intangibles, Net](index=10&type=section&id=Note%204%E2%80%94Goodwill%20and%20Other%20Intangibles%2C%20Net) This note provides a breakdown of Leslie's, Inc.'s goodwill and other intangible assets, including their carrying amounts and amortization expense Goodwill (in thousands) | Metric | July 2, 2022 | October 2, 2021 | July 3, 2021 | | :-------------------------------- | :------------- | :-------------- | :----------- | | Balance at beginning of the period | $101,114 | $93,295 | $93,295 | | Acquisitions, net of adjustments | $24,160 | $7,819 | $5,374 | | Balance at the end of the period | $125,274 | $101,114 | $98,669 | Intangible Assets (in thousands) | Intangible Asset | Weighted Average Remaining Useful Life (Years) | Net Carrying Amount (July 2, 2022) | | :-------------------------------- | :------------------------------------------- | :--------------------------------- | | Trade name and trademarks (finite life) | 9.5 | $4,935 | | Trade name and trademarks (indefinite life) | Indefinite | $17,750 | | Non-compete agreements | 6.7 | $1,355 | | Consumer relationships | 6.0 | $6,074 | | Other intangibles | 6.4 | $275 | | Total | | $30,389 | - Amortization expense was **$0.7 million** for the three months ended July 2, 2022, and **$2.1 million** for the nine months ended July 2, 2022. No impairment of goodwill or other intangible assets was recorded[39](index=39&type=chunk) [Note 5—Accounts and Other Receivables, Net](index=11&type=section&id=Note%205%E2%80%94Accounts%20and%20Other%20Receivables%2C%20Net) This note details Leslie's, Inc.'s accounts and other receivables, including vendor rebates, customer receivables, and the allowance for doubtful accounts Accounts and Other Receivables, Net (in thousands) | Receivable Type | July 2, 2022 | October 2, 2021 | July 3, 2021 | | :-------------------------------- | :------------- | :-------------- | :----------- | | Vendor and other rebates receivable | $27,936 | $23,222 | $30,696 | | Customer receivables | $17,470 | $13,473 | $14,493 | | Other receivables | $2,985 | $4,621 | $3,236 | | Allowance for doubtful accounts | $(1,125) | $(2,456) | $(577) | | Total | $47,266 | $38,860 | $47,848 | [Note 6—Inventories](index=11&type=section&id=Note%206%E2%80%94Inventories) This note provides a breakdown of Leslie's, Inc.'s inventories, distinguishing between raw materials and finished goods Inventories (in thousands) | Inventory Type | July 2, 2022 | October 2, 2021 | July 3, 2021 | | :-------------------------------- | :------------- | :-------------- | :----------- | | Raw materials | $9,927 | $4,244 | $5,382 | | Finished goods | $351,464 | $194,545 | $219,144 | | Total | $361,391 | $198,789 | $224,526 | [Note 7—Prepaid Expenses and Other Current Assets](index=11&type=section&id=Note%207%E2%80%94Prepaid%20Expenses%20and%20Other%20Current%20Assets) This note details Leslie's, Inc.'s prepaid expenses and other current assets as of the reported balance sheet dates Prepaid Expenses and Other Current Assets (in thousands) | Asset Type | July 2, 2022 | October 2, 2021 | July 3, 2021 | | :-------------------------------- | :------------- | :-------------- | :----------- | | Prepaid expenses | $19,764 | $12,814 | $18,772 | | Other current assets | $10,778 | $7,750 | $9,843 | | Total | $30,542 | $20,564 | $28,615 | [Note 8—Accounts Payable and Accrued Expenses](index=12&type=section&id=Note%208%E2%80%94Accounts%20Payable%20and%20Accrued%20Expenses) This note provides a breakdown of Leslie's, Inc.'s accounts payable and accrued expenses, including various liabilities such as payroll, customer deposits, and taxes Accounts Payable and Accrued Expenses (in thousands) | Liability Type | July 2, 2022 | October 2, 2021 | July 3, 2021 | | :-------------------------------- | :------------- | :-------------- | :----------- | | Accounts payable | $218,953 | $100,960 | $155,525 | | Accrued payroll and employee benefits | $18,258 | $40,071 | $27,581 | | Customer deposits | $15,134 | $19,861 | $17,593 | | Interest | $4,496 | $4,898 | $4,919 | | Inventory related accruals | $21,791 | $12,444 | $14,492 | | Loyalty and deferred revenue | $6,392 | $6,685 | $5,897 | | Sales taxes | $16,037 | $13,975 | $18,922 | | Self-insurance reserves | $11,566 | $7,679 | $6,340 | | Other accrued liabilities | $18,254 | $27,024 | $20,462 | | Total | $330,881 | $233,597 | $271,731 | [Note 9—Long-Term Debt, Net](index=12&type=section&id=Note%209%E2%80%94Long-Term%20Debt%2C%20Net) This note details Leslie's, Inc.'s long-term debt, including the Term Loan and Revolving Credit Facility, their interest rates, and maturity schedules Long-Term Debt, Net (in thousands) | Debt Type | Effective Interest Rate (July 2, 2022) | July 2, 2022 | October 2, 2021 | July 3, 2021 | | :-------------------------------- | :------------------------------------- | :------------- | :-------------- | :----------- | | Term Loan—due on March 9, 2028 | 3.02% | $799,875 | $805,950 | $807,975 | | Revolving Credit Facility | 1.25% | — | — | — | | Total long-term debt, net | | $781,322 | $786,125 | $787,731 | - The Term Loan carries interest at a specified margin over LIBOR (**2.50% to 2.75%**) with a minimum LIBOR of **0.50%**[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk) - The Revolving Credit Facility has a LIBOR floor of **0%** and applicable margins between **1.25% and 1.75%** for Eurodollar Rate loans[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk) - As of July 2, 2022, no amounts were outstanding on the Revolving Credit Facility, and the company was in compliance with all debt covenants[50](index=50&type=chunk)[52](index=52&type=chunk) Long-Term Debt Maturity Schedule (in thousands) | Fiscal Year | Amount (in thousands) | | :-------------------------------- | :-------------------- | | Remainder of fiscal 2022 | $2,025 | | 2023 | $8,100 | | 2024 | $6,075 | | 2025 | $10,125 | | 2026 | $8,100 | | Thereafter | $765,450 | | Total | $799,875 | [Note 10—Income Taxes](index=13&type=section&id=Note%2010%E2%80%94Income%20Taxes) This note explains Leslie's, Inc.'s effective income tax rates and the primary factors contributing to their changes for the reported periods - The effective income tax rate was **24.9%** for the nine months ended July 2, 2022, compared to **20.9%** for the nine months ended July 3, 2021[54](index=54&type=chunk) - The difference in effective tax rates was primarily due to state taxes in 2022 and a reduction in valuation allowance for interest limitation carryforward and equity-based compensation benefits in 2021[54](index=54&type=chunk) [Note 11—Commitments & Contingencies](index=13&type=section&id=Note%2011%E2%80%94Commitments%20%26%20Contingencies) This note outlines Leslie's, Inc.'s routine legal proceedings, claims, and self-insurance retention features, and their potential financial impact - The company is involved in routine lawsuits and claims, with estimated losses recorded when probable and estimable, but no material effect on financial position or results of operations is expected[55](index=55&type=chunk) - Self-insurance retention features for workers' compensation, general liability, and employee medical plans are up to **$0.4 million** per event, secured by **$10.0 million** in standby letters of credit as of July 2, 2022[56](index=56&type=chunk) [Note 12—Related Party Transactions](index=14&type=section&id=Note%2012%E2%80%94Related%20Party%20Transactions) This note details Leslie's, Inc.'s transactions with related parties, including the termination of a management services agreement and common stock repurchases - A management services agreement with private equity sponsors, which incurred **$0.4 million** in fees during the nine months ended July 3, 2021, terminated in October 2020 upon the company's IPO[58](index=58&type=chunk) - On December 14, 2021, the company repurchased **7.5 million shares** of common stock from selling stockholders (greater than 5% beneficial owners) at **$20.25 per share**, totaling **$151.9 million**[59](index=59&type=chunk)[61](index=61&type=chunk) [Note 13—Share Repurchase Program](index=14&type=section&id=Note%2013%E2%80%94Share%20Repurchase%20Program) This note describes Leslie's, Inc.'s Board-authorized share repurchase program and the remaining available capacity for future purchases - The Board of Directors authorized a **$300 million** share repurchase program on December 3, 2021, for outstanding common stock over three years[60](index=60&type=chunk) - As of July 2, 2022, **$148.1 million** remained available for future purchases under the program, following the repurchase and retirement of **7.5 million shares** for **$151.9 million** on December 16, 2021[61](index=61&type=chunk) [Note 14—Equity-Based Compensation](index=14&type=section&id=Note%2014%E2%80%94Equity-Based%20Compensation) This note details Leslie's, Inc.'s equity-based compensation plans, including stock option and RSU activity, and associated compensation expense - The 2020 Omnibus Incentive Plan allows for grants of stock options and restricted stock units (RSUs) to directors, executives, and eligible employees, with approximately **7.5 million shares** available for future grants as of July 2, 2022[63](index=63&type=chunk) Stock Option Activity (Nine Months Ended July 2, 2022) | Stock Option Activity (Nine Months Ended July 2, 2022) | Number of Options (thousands) | Weighted Average Exercise Price | | :------------------------------------------------------- | :---------------------------- | :------------------------------ | | Outstanding, Beginning | 4,877 | $18.22 | | Exercised | (81) | $17.00 | | Forfeited/Expired | (414) | $18.20 | | Balance, Ending | 4,382 | $18.24 | | Vested as of July 2, 2022 | 1,346 | $18.16 | RSU Activity (Nine Months Ended July 2, 2022) | RSU Activity (Nine Months Ended July 2, 2022) | Number of RSUs (thousands) | Weighted Average Grant Date Fair Value | | :---------------------------------------------- | :------------------------- | :------------------------------------- | | Outstanding, Beginning | 3,135 | $6.90 | | Granted | 504 | $19.73 | | Vested | (626) | $8.35 | | Forfeited | (317) | $8.82 | | Balance, Ending | 2,696 | $8.74 | - Total unamortized value of outstanding equity-based compensation awards was approximately **$31.5 million** as of July 2, 2022, expected to be recognized over **2.6 years**[64](index=64&type=chunk) - Equity-based compensation expense was **$2.9 million** for the three months and **$8.5 million** for the nine months ended July 2, 2022, a decrease from the prior year due to the vesting of performance-based equity units related to the IPO in 2021[67](index=67&type=chunk) [Note 15—Earnings Per Share](index=16&type=section&id=Note%2015%E2%80%94Earnings%20Per%20Share) This note presents Leslie's, Inc.'s basic and diluted earnings per share calculations, including the weighted average shares outstanding and antidilutive shares Earnings Per Share (in thousands, except EPS) | Metric | Three Months Ended July 2, 2022 | Three Months Ended July 3, 2021 | Nine Months Ended July 2, 2022 | Nine Months Ended July 3, 2021 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income | $122,986 | $118,802 | $101,095 | $82,093 | | Weighted average shares outstanding - basic | 182,937 | 188,264 | 184,707 | 184,021 | | Weighted average shares outstanding - diluted | 184,721 | 194,200 | 186,695 | 189,603 | | Basic earnings per share | $0.67 | $0.63 | $0.55 | $0.45 | | Diluted earnings per share | $0.67 | $0.61 | $0.54 | $0.43 | Antidilutive Shares (in thousands) | Antidilutive Shares (thousands) | Three Months Ended July 2, 2022 | Three Months Ended July 3, 2021 | Nine Months Ended July 2, 2022 | Nine Months Ended July 3, 2021 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Stock options | 3,967 | 290 | 1,742 | 218 | | RSUs | 563 | — | 551 | 116 | | Total | 4,530 | 290 | 2,293 | 334 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a comprehensive discussion and analysis of Leslie's, Inc.'s financial condition, results of operations, and key performance indicators for the reported periods. It covers the company's business overview, key evaluation measures, factors affecting comparability, detailed financial results, seasonality, and liquidity and capital resources [Our Company](index=17&type=section&id=Our%20Company) This section describes Leslie's, Inc. as the largest direct-to-consumer brand in the U.S. pool and spa care industry, highlighting its products, services, and recurring revenue model - Leslie's is the largest direct-to-consumer brand in the **$14 billion** U.S. pool and spa care industry, operating **979 branded locations** and a robust digital platform[73](index=73&type=chunk) - The company offers professional-grade products (**80% non-discretionary**), certified installation/repair services, and complimentary in-store water testing via its proprietary AccuBlue® system[73](index=73&type=chunk)[74](index=74&type=chunk) - Leslie's has a highly predictable, recurring revenue model with **58 consecutive years of sales growth**, demonstrating resilience across various market environments[74](index=74&type=chunk) [Key Factors and Measures We Use to Evaluate Our Business](index=17&type=section&id=Key%20Factors%20and%20Measures%20We%20Use%20to%20Evaluate%20Our%20Business) This section outlines the key GAAP and non-GAAP financial and operating measures Leslie's, Inc. uses to evaluate its business performance, including comparable sales and Adjusted EBITDA - Key GAAP measures include sales, gross profit and gross margin, selling, general and administrative (SG&A) expenses, and operating income (loss)[77](index=77&type=chunk) - Key non-GAAP measures and other operating measures include comparable sales, comparable sales growth, Adjusted EBITDA, Adjusted net income (loss), and Adjusted earnings per share[77](index=77&type=chunk) - Comparable sales growth is measured as the increase or decrease in sales from the comparable base, including retail locations, e-commerce, and third-party marketplaces, for locations open for at least **52 weeks**[80](index=80&type=chunk)[81](index=81&type=chunk) - Gross margin is impacted by merchandise costs, pricing, product mix, inflation, service costs, and distribution/occupancy costs, with proprietary brands and vertical integration providing cost savings[85](index=85&type=chunk) - Adjusted EBITDA and Adjusted net income (loss) are non-GAAP measures used to assess financial performance, excluding items like interest, taxes, depreciation, amortization, equity-based compensation, and non-recurring costs[90](index=90&type=chunk)[93](index=93&type=chunk) [Factors Affecting the Comparability of our Results of Operations](index=20&type=section&id=Factors%20Affecting%20the%20Comparability%20of%20our%20Results%20of%20Operations) This section discusses factors impacting the comparability of Leslie's, Inc.'s financial results, such as COVID-19, business acquisitions, and public company expenses - COVID-19 did not materially impact performance for the 13-week periods ended July 2, 2022, and July 3, 2021, but the full impact remains uncertain due to potential supply chain disruptions and operational restrictions[97](index=97&type=chunk)[99](index=99&type=chunk) - Business acquisitions did not have a material impact on financial position or results of operations[100](index=100&type=chunk) - As a public company, Leslie's incurs significant ongoing expenses related to director compensation, D&O insurance, accounting, auditing, Sarbanes-Oxley compliance, legal, and investor relations, primarily included in SG&A[101](index=101&type=chunk)[102](index=102&type=chunk) [Results of Operations](index=21&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of Leslie's, Inc.'s sales, gross profit, SG&A expenses, operating income, and net income for the reported periods Results of Operations (in thousands, except percentages and EPS) | Metric | Three Months Ended July 2, 2022 | Three Months Ended July 3, 2021 | Nine Months Ended July 2, 2022 | Nine Months Ended July 3, 2021 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Sales | $673,633 (12.9% YoY) | $596,543 | $1,086,529 (16.3% YoY) | $933,991 | | Gross profit | $303,607 (7.0% YoY) | $283,698 | $456,552 (12.1% YoY) | $407,096 | | Gross margin | 45.1% (-250 bps) | 47.6% | 42.0% (-160 bps) | 43.6% | | SG&A expenses | $131,469 (12.1% YoY) | $117,264 | $300,872 (13.5% YoY) | $265,127 | | Operating income | $172,138 (3.4% YoY) | $166,434 | $155,680 (9.7% YoY) | $141,969 | | Net income | $122,986 (3.5% YoY) | $118,802 | $101,095 (23.1% YoY) | $82,093 | | Diluted EPS | $0.67 (9.8% YoY) | $0.61 | $0.54 (25.6% YoY) | $0.43 | | Comparable sales growth | 7.4% | 23.9% | 10.7% | 27.2% | | Adjusted EBITDA | $182,942 (2.0% YoY) | $179,346 | $192,734 (2.2% YoY) | $188,631 | | Adjusted diluted EPS | $0.68 (6.3% YoY) | $0.64 | $0.60 (1.7% YoY) | $0.59 | - Sales increases were driven by higher comparable sales growth and non-comparable sales from acquisitions and new locations[115](index=115&type=chunk)[116](index=116&type=chunk) - Gross margin decreased due to shifts in business mix, promotional activities, higher product costs, and increased distribution expenses, partially offset by occupancy leverage[117](index=117&type=chunk)[118](index=118&type=chunk) - SG&A increased primarily due to higher sales, acquisitions, and growth investments, partially offset by lower non-cash equity-based compensation expense[119](index=119&type=chunk)[120](index=120&type=chunk) - Total other expenses decreased due to lower interest expense and the absence of prior year's loss on debt extinguishment and follow-on offering costs[121](index=121&type=chunk)[122](index=122&type=chunk) [Seasonality and Quarterly Fluctuations](index=24&type=section&id=Seasonality%20and%20Quarterly%20Fluctuations) This section explains the highly seasonal nature of Leslie's, Inc.'s business, with peak sales and earnings occurring in the third and fourth fiscal quarters - The business is highly seasonal, with sales and earnings highest during the third and fourth fiscal quarters (April-September), which account for **75% of sales** and **97% of Adjusted EBITDA** in fiscal 2021[132](index=132&type=chunk) - Inventory and accounts payable typically build up during the first and second fiscal quarters in anticipation of the peak selling season[133](index=133&type=chunk) - Weather is a principal external factor, with hot weather increasing purchases and services, while cool or rainy weather can reduce consumption and sales[134](index=134&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses Leslie's, Inc.'s primary sources of liquidity, including operating cash flow and borrowing capacity, and changes in cash flow activities - Primary liquidity sources are net cash from operating activities and borrowing availability under the Revolving Credit Facility[137](index=137&type=chunk) Cash Flow Activity (in thousands) | Cash Flow Activity | Nine Months Ended July 2, 2022 | Nine Months Ended July 3, 2021 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $72,658 (Decrease of $45.3M) | $117,965 | | Net cash used in investing activities | $(66,183) (Increase of $44.0M) | $(22,176) | | Net cash (used in) provided by financing activities | $(156,843) (Shift from provided) | $55,805 | | Cash and cash equivalents, end of period | $193,130 | $307,395 | - The decrease in operating cash flow was primarily due to strategic investment in product inventories[144](index=144&type=chunk) - The increase in investing cash used was driven by business acquisitions and property/equipment investments[145](index=145&type=chunk) - Financing activities shifted from providing cash to using cash, primarily due to **$152.1 million** in common stock repurchases in 2022, compared to **$458.6 million** IPO proceeds in 2021[146](index=146&type=chunk)[147](index=147&type=chunk) - As of July 2, 2022, the company had **$190.0 million** of available borrowing capacity under the Revolving Credit Facility, after accounting for **$10.0 million** in standby letters of credit[142](index=142&type=chunk) [Contractual Obligations and Other Commitments](index=26&type=section&id=Contractual%20Obligations%20and%20Other%20Commitments) This section states that there were no material changes to Leslie's, Inc.'s contractual obligations during the reported periods - There were no material changes to contractual obligations outside the ordinary course of business during the three and nine months ended July 2, 2022, from those disclosed in the Annual Report on Form 10-K for fiscal year ended October 2, 2021[150](index=150&type=chunk) [Critical Accounting Policies and Estimates](index=26&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section confirms no material changes to Leslie's, Inc.'s critical accounting policies and estimates during the reported periods - No material changes to critical accounting policies and estimates occurred during the three and nine months ended July 2, 2022, from those disclosed in the Annual Report on Form 10-K for fiscal year ended October 2, 2021[153](index=153&type=chunk) [Recent Accounting Pronouncements](index=26&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 2 for information regarding Leslie's, Inc.'s recent accounting pronouncements - Information regarding recent accounting pronouncements is provided in Note 2—Summary of Significant Accounting Policies[155](index=155&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there have been no material changes in Leslie's, Inc.'s primary risk exposures or management of market risks, including interest rate risk and the impact of inflation and deflation, from those previously disclosed in its Annual Report on Form 10-K - No material changes in primary risk exposures or management of market risks, including interest rate risk, from the Annual Report on Form 10-K[156](index=156&type=chunk) - No material changes in exposure to inflation or deflation from the Annual Report on Form 10-K[157](index=157&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the Chief Executive Officer and Chief Financial Officer, concluded that Leslie's, Inc.'s disclosure controls and procedures were effective as of July 2, 2022. Furthermore, there were no material changes in the company's internal control over financial reporting during the quarter ended July 2, 2022 - Disclosure controls and procedures were evaluated and deemed effective as of July 2, 2022[159](index=159&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended July 2, 2022[160](index=160&type=chunk) [PART II - OTHER INFORMATION](index=28&type=section&id=PART%20II%20OTHER%20INFORMATION) This section provides additional information on legal proceedings, risk factors, equity sales, and other required disclosures for Leslie's, Inc [Item 1. Legal Proceedings](index=28&type=section&id=Item%201.%20Legal%20Proceedings) Leslie's, Inc. is involved in various routine legal proceedings and claims, for which reserves have been established where the potential liability is probable and estimable. The company believes that the ultimate outcome of these matters will not have a material adverse effect on its business, financial position, results of operations, or cash flows - The company is subject to routine legal proceedings and claims in the normal course of business[163](index=163&type=chunk) - Reserves for probable and estimable claims were not significant as of July 2, 2022[163](index=163&type=chunk) - The ultimate liability from these matters is not expected to have a material adverse effect on the company's financial position or results of operations[163](index=163&type=chunk) [Item 1A. Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) This section indicates that there have been no material changes to the risk factors previously disclosed in Leslie's, Inc.'s Annual Report on Form 10-K for the fiscal year ended October 2, 2021 - No material changes from the risk factors disclosed in the Annual Report on Form 10-K for the year ended October 2, 2021[164](index=164&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=28&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Leslie's, Inc. reported no unregistered sales of equity securities and no issuer purchases of equity securities during the period covered by this report - No issuer purchases of equity securities[165](index=165&type=chunk) - No sales of unregistered securities[166](index=166&type=chunk) [Item 3. Defaults Upon Senior Securities](index=28&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Leslie's, Inc. reported no defaults upon senior securities during the period - No defaults upon senior securities[167](index=167&type=chunk) [Item 4. Mine Safety Disclosures](index=28&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Leslie's, Inc - Not applicable[168](index=168&type=chunk) [Item 5. Other Information](index=28&type=section&id=Item%205.%20Other%20Information) Leslie's, Inc. reported no other information required to be disclosed under this item - No other information to report[169](index=169&type=chunk) [Item 6. Exhibits](index=29&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including certifications from the Principal Executive Officer and Principal Financial Officer, as well as various Inline XBRL documents - Includes certifications of Principal Executive Officer (31.1) and Principal Financial Officer (31.2) pursuant to Exchange Act rules[171](index=171&type=chunk) - Includes certifications of Principal Executive Officer (32.1) and Principal Financial Officer (32.2) pursuant to 18 U.S.C. Section 1350[171](index=171&type=chunk) - Includes Inline XBRL Instance Document (101.INS) and related schema, calculation, label, presentation, and definition linkbase documents[171](index=171&type=chunk) [Signatures](index=30&type=section&id=Signatures) The Quarterly Report on Form 10-Q was duly signed on August 5, 2022, by Steven M. Weddell, Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) of Leslie's, Inc - Report signed by Steven M. Weddell, Executive Vice President and Chief Financial Officer[177](index=177&type=chunk) - Date of signature: August 5, 2022[177](index=177&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 02, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-39667 LESLIE'S, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 20-8397425 (State or other jurisdiction of ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 1, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-39667 LESLIE'S, INC. (Exact Name of Registrant as Specified in its Charter) Securities registered pursuant to Section 12(b) of ...

Financial Data and Key Metrics Changes - Sales for Q1 2022 reached a record $185 million, representing a 27.5% increase compared to Q1 2021 [7][22] - Gross profit increased by 30.2% to $67 million, with a gross margin rate improvement of 70 basis points to 36.4% [8][24] - Adjusted EBITDA turned positive at $1.1 million, a significant improvement from a loss of $0.2 million in Q1 2021 [9][27] - Adjusted net loss remained relatively flat at $10.9 million compared to a net loss of $10.6 million in the prior year [29] Business Line Data and Key Metrics Changes - Residential pool sales grew by 18%, residential hot tub sales surged by 66%, and PRO pool sales increased by 40% [7][22] - Comparable sales increased by 21% for the quarter, with a two-year stack comp of 46% [7][22] Market Data and Key Metrics Changes - Retail price inflation was nearly 12% in the quarter, slightly above expectations, but demand remained strong [11] - The company expects inflation to moderate in the coming quarters, projecting approximately 5% for the full year [11] Company Strategy and Development Direction - The company is focused on six strategic growth initiatives, including enhancing consumer relationships and expanding the PRO business [12][46] - The company is actively pursuing M&A opportunities, having closed the acquisition of B&L Pools and entered into an LOI for another retailer [18] - The company plans to open at least 10 new residential locations in 2022 and is on track with its pro initiatives [16][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong consumer demand driven by macro trends and the ability to pass costs through to consumers [10][44] - The company raised its full-year fiscal 2022 sales outlook to $1,495 million to $1,520 million, reflecting an increase of 11% to 13% compared to the prior year [37][40] - Management noted that Q1 is a small quarter and emphasized the importance of the upcoming peak pool season for assessing future performance [66] Other Important Information - The company completed a $300 million share buyback program, repurchasing 7.5 million shares at an average price of $20.25 [9][33] - The company ended Q1 2022 with cash and cash equivalents of $53 million and total funded debt of $804 million [30][32] Q&A Session Summary Question: Update on gross margin and occupancy costs - Management indicated occupancy costs are running about $25 million per quarter and emphasized their ability to pass on costs to consumers [50][52] Question: Impact of Q1 performance on the rest of the year - Management stated that Q1 is small and emphasized the importance of the peak season for better forecasting [66] Question: Historical performance during rising interest rates - Management noted that the company has historically grown during periods of rising interest rates, averaging double-digit growth [72] Question: Potential impact of chlorine pricing on fiscal 2023 - Management expects stabilized chlorine prices but does not anticipate a return to pre-2020 pricing levels [77] Question: Demand response to higher prices - Management reported no significant drop in demand despite higher prices, with some consumers opting for smaller purchases [90] Question: Performance of loyalty program - Management expressed slight disappointment in a 7% growth in loyalty but noted strong growth in average revenue per consumer [87] Question: M&A environment and margin impact - Management confirmed ongoing M&A activity and the addition of staff to support these efforts [101] Question: Performance in the pro-business segment - Management reported steady growth in the pro segment, with pro partner sales doubling in the quarter [104]

SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) UNITED STATES ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended October 2, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-39667 LESLIE'S, INC. (Exact name of Registrant as specified in its Charter) Delaware 20-8397425 (State or other jurisdiction of incorpo ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Leslie's, Inc.'s unaudited condensed consolidated financial statements, reflecting significant growth and a strengthened balance sheet post-IPO [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$997.8 million**, liabilities decreased, and stockholders' deficit improved to **$(265.7) million** as of July 3, 2021 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | July 3, 2021 | October 3, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $309,077 | $157,072 | | Inventories | $224,526 | $148,966 | | Total current assets | $610,066 | $372,133 | | Total assets | $997,794 | $746,438 | | **Liabilities & Stockholders' Deficit** | | | | Total current liabilities | $354,119 | $258,196 | | Long-term debt, net | $787,731 | $1,179,550 | | Total liabilities | $1,263,520 | $1,573,437 | | Total stockholders' deficit | $(265,726) | $(826,999) | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Sales for Q3 2021 grew **24.3%** to **$596.5 million**, with net income increasing **65.2%** to **$118.8 million** Key Performance Indicators (in thousands, except per share data) | Metric | Q3 2021 | Q3 2020 | YTD 2021 | YTD 2020 | | :--- | :--- | :--- | :--- | :--- | | Sales | $596,543 | $479,929 | $933,991 | $729,285 | | Gross Profit | $283,698 | $210,769 | $407,096 | $291,759 | | Operating Income | $166,434 | $111,604 | $141,969 | $76,826 | | Net Income | $118,802 | $71,934 | $82,093 | $15,921 | | Diluted EPS | $0.61 | $0.46 | $0.43 | $0.10 | [Condensed Consolidated Statements of Stockholders' Deficit](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Deficit) Stockholders' deficit improved from **$(827.0) million** to **$(265.7) million**, driven by IPO proceeds and net income - The company's stockholders' deficit decreased from **$(827.0) million** to **$(265.7) million** during the first nine months of fiscal 2021, primarily due to net proceeds from its IPO and net income earned during the period[20](index=20&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities increased to **$118.4 million**, with a **$152.0 million** net increase in cash and cash equivalents Summary of Cash Flows (Nine Months Ended, in thousands) | Cash Flow Category | July 3, 2021 | June 27, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $118,376 | $85,921 | | Net cash used in investing activities | $(22,176) | $(21,664) | | Net cash provided by (used in) financing activities | $55,805 | $(6,255) | | **Net increase in cash and cash equivalents** | **$152,005** | **$58,002** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, the **November 2020 IPO** proceeds used for debt repayment, debt amendments, and the business's highly seasonal nature - In November 2020, the company completed an IPO of 30.0 million shares, raising net proceeds of **$458.6 million**. These proceeds were used to repay the entire **$390.0 million** of its Senior Unsecured Notes[27](index=27&type=chunk) - In March 2021, the company amended its term loan, resulting in an **$810.0 million** secured facility with a maturity date extended to March 2028 and decreased pricing by **75 basis points**[50](index=50&type=chunk) - The company's business is highly seasonal, with the majority of sales and earnings occurring during the fiscal third and fourth quarters (April through September)[38](index=38&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=15&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Strong performance driven by increased consumer demand and price inflation, with **Q3 2021 sales up 24.3%** and robust liquidity Financial Performance Summary (Q3 2021 vs Q3 2020) | Metric | Q3 2021 | Q3 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Sales | $596.5M | $479.9M | +24.3% | | Gross Profit | $283.7M | $210.8M | +34.6% | | Gross Margin | 47.6% | 43.9% | +364 bps | | Net Income | $118.8M | $71.9M | +65.2% | | Comparable Sales Growth | 23.9% | 19.4% | N/A | | Adjusted EBITDA | $179.3M | $119.8M | +49.7% | - Sales growth was driven by a **23.9%** increase in comparable sales for the quarter, fueled by heightened consumer demand and retail price inflation in core product categories like sanitizers and equipment[111](index=111&type=chunk) - The company's liquidity position is robust, with cash and cash equivalents of **$309.1 million** and available borrowing capacity of **$190.8 million** under its ABL Credit Facility as of July 3, 2021[131](index=131&type=chunk)[135](index=135&type=chunk) Reconciliation of Net Income to Adjusted EBITDA (Q3, in thousands) | Line Item | Q3 2021 | Q3 2020 | | :--- | :--- | :--- | | Net income | $118,802 | $71,934 | | Interest expense | 7,399 | 19,472 | | Income tax expense | 39,372 | 19,613 | | Depreciation and amortization | 6,347 | 6,374 | | Equity-based compensation | 6,480 | 597 | | Other adjustments | 863 | 1,810 | | **Adjusted EBITDA** | **$179,346** | **$119,800** | [Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risk is interest rate fluctuations on **$808.0 million** variable-rate debt, with active management of inflation risk - The company is exposed to interest rate risk on its **$808.0 million** Term Loan. A **1%** increase or decrease in the effective interest rate would impact annual interest cost by approximately **$8.1 million**[151](index=151&type=chunk) - The company's interest rate cap agreements, which previously hedged against rising rates on a notional amount of **$750 million**, expired in March 2021[151](index=151&type=chunk) - Management believes it can substantially mitigate the negative impacts of inflation through strong supplier relationships, negotiation, and strategic inventory investments[152](index=152&type=chunk) [Controls and Procedures](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of July 3, 2021, with no changes in internal control reported due to transition rules - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of the period[153](index=153&type=chunk) - No changes in internal control over financial reporting were disclosed, consistent with the transition period rules for newly public companies[154](index=154&type=chunk) [PART II. OTHER INFORMATION](index=26&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=26&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to routine legal proceedings, not expected to materially impact financial position or operations - The company faces litigation and claims in the normal course of business but does not expect them to have a material adverse effect[157](index=157&type=chunk) [Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) A new risk factor identified is the potential stock price decline from future sales by existing stockholders post-lock-up expiration - A new risk factor has been identified concerning the potential for the stock price to decline if existing stockholders sell substantial amounts of common stock after lock-up agreements expire[159](index=159&type=chunk) - Key lock-up periods for various stockholder groups are set to expire on August 8, 2021, September 7, 2021, and October 18, 2022[159](index=159&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=26&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported for the period - None[160](index=160&type=chunk) [Defaults Upon Senior Securities](index=26&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities occurred during the reporting period - None[161](index=161&type=chunk) [Mine Safety Disclosures](index=26&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Not applicable[162](index=162&type=chunk) [Other Information](index=26&type=section&id=Item%205.%20Other%20Information) No other information to report for the period - None[163](index=163&type=chunk) [Exhibits](index=27&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including corporate documents, agreement amendments, and officer certifications - Exhibits filed include corporate governance documents, amendments to key agreements, and required officer certifications (Rule 13a-14(a) and 18 U.S.C. Section 1350)[164](index=164&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 3, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-39667 LESLIE'S, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 20-8397425 (State or other jurisdiction of in ...