Leslie's: Leslie's, Inc. Announces First Quarter Fiscal 2025 Financial Results; Provides Second Quarter and Full Year Fiscal 2025 Outlook

In This Article: Leslie's Inc. PHOENIX, Feb. 06, 2025 (GLOBE NEWSWIRE) -- 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 Executive Officer, said, "Our team has been focused to start fiscal 2025 as we undertake our customer-centric transformation journey. I'm inspired by the progress from the Leslie's team in these early days of executing our strategic plan. As I shared last quarter, this plan is centered around the key strategic themes of Customer Centricity, Convenience, and Asset Utilization, and the actions we are taking are expected to drive positive change. We will share our first set of related initiatives on our first quarter earnings call today. We expect these initiatives will put us in an even better position as we continue to prepare to win the pool season." Mr. McDonell continued, "We met our revenue expectations for our first quarter of fiscal 2025, reporting our first comparable store sales gain in two years. We saw a number of key categories improve both sequentially and year-over-year. The smaller contributing fiscal first quarter results in an associated loss and is typical for our seasonal business. This is a key time as we invest during our offseason and build inventory to prepare to win the pool season and deliver growth during our meaningful third and fourth fiscal quarters. Our profitability in the quarter was largely in-line and incrementally impacted by some strategic transformational expenses, including inventory adjustments and professional fees to facilitate our transformation journey. Our outlook reflects year-to-date performance trends and includes expected higher occupancy costs, payroll and benefits, and the transformational expenses. As we look ahead, our goal remains to produce consistent and positive same store sales and growth in gross profit dollars, translating to Adjusted EPS and Adjusted EBITDA growth. As we execute on our strategic initiatives, we expect the benefits of our activities to be realized as higher seasonal volumes materialize. We feel confident in our ability to create sustainable stakeholder value over time and are looking forward to the journey we are embarking on at Leslie's." First Quarter Highlights Sales were $175.2 million, an increase of 0.7% compared to $174.0 million in the prior year period. Comparable sales increased 0.2%. Non-comparable sales from new stores contributed $0.9 million in the quarter. Gross profit was $47.7 million, a decrease of 5.4% compared to $50.4 million in the prior year period. Gross margin was 27.2% compared to 29.0% in the prior year period, which represents a decrease of 180 basis points. The decline in rate was mainly due to 95 basis points of increase in inventory adjustments as we optimized our inventory and 75 basis points of deleverage on occupancy and distribution costs. Selling, general and administrative expenses ("SG&A") were $87.4 million compared to $86.9 million in the prior year period. Operating loss was $39.7 million compared to a loss of $36.5 million in the prior year period. Interest expense was $15.8 million compared to $17.1 million in the prior year period. Net loss was $44.6 million compared to a loss of $39.6 million in the prior year period. Adjusted net loss was $41.3 million compared to a loss of $36.8 million in the prior year period. Diluted earnings per share was $(0.24) compared to $(0.21) in the prior year period. Adjusted diluted earnings per share was $(0.22) compared to $(0.20) in the prior year period. Adjusted EBITDA was $(29.3) million compared to $(24.4) million in the prior year period. Balance Sheet and Cash Flow Highlights Cash and cash equivalents totaled $11.6 million as of December 28, 2024, an increase of $3.2 million, compared to $8.4 million as of December 30, 2023. Inventories totaled $271.1 million as of December 28, 2024, a decrease of $62.9 million or 18.8%, compared to $334.0 million as of December 30, 2023. Funded debt was $796.7 million as of December 28, 2024 compared to $825.7 million as of December 30, 2023. As of December 28, 2024 there was $40.0 million outstanding on our revolving credit facility compared to $38.0 million as of December 30, 2023. The effective rate on our term loan during the first quarter of fiscal 2025 was 7.6% compared to 8.2% during the first quarter of fiscal 2024. Net cash used by operating activities totaled $105.1 million in the first quarter of fiscal 2025 compared to $71.9 million in the first quarter of fiscal 2024. Capital expenditures totaled $4.7 million in the first quarter of fiscal 2025 compared to $10.7 million in the first quarter of fiscal 2024. Second Quarter Fiscal 2025 Outlook The Company is providing the following outlook for the second quarter of fiscal 2025: Sales $179 million to $189 million Gross profit $44 million to $48 million Net loss $(47) million to $(44) million Adjusted net loss $(46) million to $(42) million Adjusted EBITDA $(38) million to $(33) million Adjusted diluted loss per share $(0.25) to $(0.23) Diluted weighted average shares outstanding 185 million Full Year Fiscal 2025 Outlook The Company is providing the following outlook for the full year of fiscal 2025: Sales $1,304 million to $1,370 million Gross profit $473 million to $505 million Net (loss) income $(10) million to $5 million Adjusted net (loss) income $(2) million to $13 million Adjusted EBITDA $96 million to $116 million Adjusted diluted (loss) earnings per share $(0.01) to $0.07 Diluted weighted average shares outstanding 185 million *Note: A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty of expenses that may be incurred in the future, although it is important to note that these factors could be material to our results computed in accordance with GAAP. Conference Call Details A conference call to discuss the Company's financial results for the first quarter of fiscal 2025 is scheduled for today, Thursday, February 6, 2025 at 4:30 p.m. Eastern Time. Investors and analysts interested in participating in the call are invited to dial 877-407-0784 (international callers please dial 1-201-689-8560) approximately 10 minutes prior to the start of the call. A live audio webcast of the conference call will be available online at https://ir.lesliespool.com/ . A recorded replay of the conference call will be available within approximately three hours of the conclusion of the call and can be accessed online at https://ir.lesliespool.com/ for 90 days. About Leslie's Founded in 1963, Leslie's is 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. The Company serves the aftermarket needs of residential and professional consumers with an extensive and largely exclusive assortment of essential pool and spa care products. The Company operates an integrated ecosystem of over 1,000 physical locations and a robust digital platform, enabling consumers to engage with Leslie's whenever, wherever, and however they prefer to shop. Its dedicated team of associates, pool and spa care experts, and experienced service technicians are passionate about empowering Leslie's consumers with the knowledge, products, and solutions necessary to confidently maintain and enjoy their pools and spas. Use of Non-GAAP Financial Measures and Other Operating Measures In addition to reporting financial results in accordance with accounting principles generally accepted in the United States ("GAAP"), we use certain non-GAAP financial measures and other operating measures, including comparable sales growth, Adjusted EBITDA, Adjusted net income (loss), and Adjusted diluted earnings per share, to evaluate the effectiveness of our business strategies, to make budgeting decisions, and to compare our performance against that of other peer companies using similar measures. These non-GAAP financial measures and other operating measures should not be considered in isolation or as substitutes for our results as reported under GAAP. In addition, these non-GAAP financial measures and other operating measures are not calculated in the same manner by all companies, and accordingly, are not necessarily comparable to similarly titled measures of other companies and may not be appropriate measures for performance relative to other companies. Comparable Sales Growth We measure comparable sales growth as the increase or decrease in sales recorded by the comparable base in any reporting period, compared to sales recorded by the comparable base in the prior reporting period. The comparable base includes sales through our locations and through our e-commerce websites and third-party marketplaces. Comparable sales growth is a key measure used by management and our board of directors to assess our financial performance. Adjusted EBITDA Adjusted EBITDA is defined as earnings before interest (including amortization of debt issuance costs), taxes, depreciation and amortization, equity-based compensation expense, executive transition costs, severance, strategic project costs, merger and acquisition costs, and other non-recurring, non-cash or discrete items. Adjusted EBITDA is a key measure used by management and our board of directors to assess our financial performance. Adjusted EBITDA is also frequently used by analysts, investors, and other interested parties to evaluate companies in our industry, when considered alongside other GAAP measures. We use Adjusted EBITDA to supplement GAAP measures of performance to evaluate the effectiveness of our business strategies, to make budgeting decisions, and to compar