• Leslie’s, Inc. Announces Second Quarter Fiscal 2024 Financial Results

    Источник: Nasdaq GlobeNewswire / 08 май 2024 16:05:01   America/New_York

    • Sales of $188.7 million
    • Net Loss of $34.6 million
    • Adjusted EBITDA of $(19.3) million
    • Diluted earnings per share of $(0.19); Adjusted diluted earnings per share of $(0.17)
    • Company reaffirms fiscal 2024 outlook

    PHOENIX, May 08, 2024 (GLOBE NEWSWIRE) -- Leslie’s, Inc. (“Leslie’s”, “we”, “our”, “its”, or “Company”; NASDAQ: LESL), the largest and most trusted direct-to-consumer brand in the U.S. pool and spa care industry, today announced its financial results for the second quarter of fiscal 2024.

    Mike Egeck, Chief Executive Officer, said, “Our bottom-line financial performance in the second quarter was largely in-line with our expectations. Top-line sales were impacted by cool and wet weather in our seasonal and non-seasonal markets, as well as a pool and spa consumer that continues to normalize their post-pandemic spending. In the quarter, we saw improved conversion from healthy in-stock levels and competitive price positioning across our channels. I am pleased with our team’s performance as they delivered on our inventory goals while providing superior customer service and disciplined expense management.”

    “The seasonally important second half of the year is when we generate the majority of our sales and all of our profit. We believe we are set up to win in pool season with an unmatched set of capabilities to serve our customers. We are focused on superior execution and remain confident in our long-term prospects for growth and profitability,”  Mr. Egeck added.

    Three Months Ended March 30, 2024 Highlights

    • Sales were $188.7 million, a decrease of 11.4%, compared to $212.8 million in the prior year period. Comparable sales decreased 12.1% compared to the prior year period. Non-comparable sales from acquisitions and new stores contributed $1.5 million in the period.
    • Gross profit was $54.3 million, a decrease of 23.7%, compared to $71.2 million in the prior year period. Gross margin was 28.8% compared to 33.4% in the prior year period.
    • Selling, general and administrative expenses (“SG&A”) were $84.9 million, a decrease of 11.9%, compared to $96.4 million in the prior year period.
    • Operating loss was $30.5 million compared to an operating loss of $25.2 million in the prior year period.
    • Interest expense increased $1.0 million to $18.2 million compared to $17.2 million in the prior year period.
    • Net loss was $34.6 million compared to a net loss of $31.5 million in the prior year period.
    • Adjusted net loss was $32.0 million compared to adjusted net loss of $25.7 million in the prior year period.
    • Diluted earnings per share was $(0.19) compared to $(0.17) in the prior year period. Adjusted diluted earnings per share was $(0.17) compared to $(0.14) in the prior year period.
    • Adjusted EBITDA was $(19.3) million compared to $(8.4) million in the prior year period.

    Balance Sheet and Cash Flow Highlights

    • Cash and cash equivalents totaled $8.4 million as of March 30, 2024, a decrease of $0.3 million, compared to $8.7 million as of April 1, 2023.
    • Inventories totaled $379.1 million as of March 30, 2024, a decrease of $113.2 million or 23%, compared to $492.3 million as of April 1, 2023.
    • Funded debt totaled $882.7 million as of March 30, 2024 compared to $965.8 million as of April 1, 2023. As of March 30, 2024 there was $97.0 million outstanding on our revolving credit facility compared to $172.0 million as of April 1, 2023.
    • The effective rate on our term loan during the second quarter of fiscal 2024 was 8.2% compared to 7.3% during the second quarter of fiscal 2023.
    • Net cash used in operating activities totaled $115.1 million in the second quarter of fiscal 2024 compared to $246.0 million in the second quarter of fiscal 2023.
    • Capital expenditures totaled $24.0 million in the second quarter of fiscal 2024 compared to $14.8 million in the second quarter of fiscal 2023.
    • As of March 30, 2024, approximately $147.7 million remained available for future share repurchases under the Company’s existing share repurchase program.

    Fiscal 2024 Outlook

    The Company reaffirmed its outlook for the full year of fiscal 2024:

    Sales $1,410 to $1,470 million
    Gross profit $550 to $573 million
    Net income $32 to $46 million
    Adjusted net income $46 to $60 million
    Adjusted EBITDA $170 to $190 million
    Adjusted diluted earnings per share $0.25 to $0.33
    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 second quarter of fiscal 2024 is scheduled for today, Wednesday, May 8, 2024 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 quarterly earnings presentation and 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, along with the associated slides, 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-consumer brand in the U.S. pool and spa care industry. 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 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, management fees, equity-based compensation expense, loss (gain) on debt extinguishment, loss (gain) on asset and contract dispositions, executive transition costs, severance, costs related to equity offerings, 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 compare our performance against that of other companies using similar measures.

    Adjusted EBITDA is not a recognized measure of financial performance under GAAP but is used by some investors to determine a company’s ability to service or incur indebtedness. Adjusted EBITDA is not calculated in the same manner by all companies, and accordingly, is not necessarily comparable to similarly titled measures of other companies and may not be an appropriate measure for performance relative to other companies. Adjusted EBITDA should not be construed as an indicator of a company’s operating performance in isolation from, or as a substitute for, net income (loss), cash flows from operations or cash flow data, all of which are prepared in accordance with GAAP. We have presented Adjusted EBITDA solely as supplemental disclosure because we believe it allows for a more complete analysis of results of operations. Adjusted EBITDA is not intended to represent, and should not be considered more meaningful than, or as an alternative to, measures of operating performance as determined in accordance with GAAP. In the future, we may incur expenses or charges such as those added back to calculate Adjusted EBITDA. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these items.

    Adjusted Net Income (Loss) and Adjusted Earnings per Share

    Adjusted net income (loss) and Adjusted earnings per share are additional key measures used by management and our board of directors to assess our financial performance. Adjusted net income (loss) and Adjusted earnings per share are also frequently used by analysts, investors, and other interested parties to evaluate companies in our industry, when considered alongside other GAAP measures.

    Adjusted net income (loss) is defined as net income (loss) adjusted to exclude management fees, equity-based compensation expense, loss (gain) on debt extinguishment, loss (gain) on asset and contract dispositions, executive transition costs, severance, costs related to equity offerings, strategic project costs, merger and acquisition costs, and other non-recurring, non-cash, or discrete items. Adjusted diluted earnings per share is defined as Adjusted net income (loss) divided by the diluted weighted average number of common shares outstanding.

    Forward-Looking Statements

    This press release contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical fact contained in this press release, including statements regarding our future results of operations or financial condition, business strategy, value proposition, legal proceedings, competitive advantages, market size, growth opportunities, industry expectations, and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would,” or the negative of these words or other similar terms or expressions. Our actual results or outcomes could differ materially from those indicated in these forward-looking statements for a variety of reasons, including, among others:

    • our ability to execute on our growth strategies;
    • supply disruptions;
    • our ability to maintain favorable relationships with suppliers and manufacturers;
    • competition from mass merchants and specialty retailers;
    • impacts on our business from the sensitivity of our business to weather conditions, changes in the economy (including rising interest rates, recession fears, and inflationary pressures), geopolitical events or conflicts, and the housing market;
    • disruptions in the operations of our distribution centers;
    • our ability to implement technology initiatives that deliver the anticipated benefits, without disrupting our operations;
    • our ability to attract and retain senior management and other qualified personnel;
    • regulatory changes and development affecting our current and future products, including evolving legal standards and regulations concerning environmental, social and governance (“ESG”) matters;
    • our ability to obtain additional capital to finance operations;
    • commodity price inflation and deflation;
    • impacts on our business from epidemics, pandemics, or natural disasters;
    • impacts on our business from cyber incidents and other security threats or disruptions;
    • our ability to remediate material weaknesses or other deficiencies in our internal control over financial reporting or to maintain effective disclosure controls and procedures and internal control over financial reporting; and
    • other risks and uncertainties, including those listed in the section titled “Risk Factors” in our filings with the United States Securities and Exchange Commission (“SEC”).

    You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this press release primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended September 30, 2023 and in our other filings with the SEC. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time-to-time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this press release. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results or outcomes could differ materially from those described in the forward-looking statements.

    In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this press release, and while we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

    The forward-looking statements made in this press release are based on events or circumstances as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to reflect new information, changed expectations, the occurrence of unanticipated events or otherwise, except as required by law. We may not actually achieve the plans, intentions, outcomes or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments.

    Contact

    Investors

    Matthew Skelly
    Vice President, Investor Relations
    Leslie’s, Inc.
    investorrelations@lesl.com

    Farah Soi/Caitlin Churchill
    ICR
    investorrelations@lesl.com

      
    Condensed Consolidated Statements of Operations
    (Amounts in thousands, except per share amounts)
     
      
      Three Months Ended  Six Months Ended 
      March 30, 2024  April 1, 2023  March 30, 2024  April 1, 2023 
      (Unaudited)  (Unaudited)  (Unaudited)  (Audited) 
    Sales $188,664  $212,844  $362,624  $407,948 
    Cost of merchandise and services sold  134,336   141,674   257,888   271,482 
    Gross profit  54,328   71,170   104,736   136,466 
    Selling, general and administrative expenses  84,856   96,357   171,734   188,638 
    Operating loss  (30,528)  (25,187)  (66,998)  (52,172)
    Other expense:            
    Interest expense  18,153   17,247   35,224   30,607 
    Total other expense  18,153   17,247   35,224   30,607 
    Loss before taxes  (48,681)  (42,434)  (102,222)  (82,779)
    Income tax benefit  (14,128)  (10,907)  (28,116)  (20,993)
    Net loss $(34,553) $(31,527) $(74,106) $(61,786)
    Earnings per share:            
    Basic $(0.19) $(0.17) $(0.40) $(0.34)
    Diluted $(0.19) $(0.17) $(0.40) $(0.34)
    Weighted average shares outstanding:            
    Basic  184,625   183,729   184,504   183,621 
    Diluted  184,625   183,729   184,504   183,621 


      
    Other Financial Data (1)
    (Amounts in thousands, except per share amounts)
    (Unaudited)
     
      
      Three Months Ended  Year Ended 
      March 30, 2024  April 1, 2023  March 30, 2024  April 1, 2023 
    Adjusted EBITDA $(19,278) $(8,440) $(43,698) $(20,355)
    Adjusted net loss $(31,998) $(25,659) $(68,761) $(50,992)
    Adjusted diluted earnings per share $(0.17) $(0.14) $(0.37) $(0.28)

    (1) See section titled “GAAP to Non-GAAP Reconciliation.”

      
    Condensed Consolidated Balance Sheets
    (Amounts in thousands, except share and per share amounts)
     
      
      March 30, 2024  September 30, 2023  April 1, 2023 
    Assets (Unaudited)  (Audited)  (Unaudited) 
    Current assets         
    Cash and cash equivalents $8,436  $55,420  $8,701 
    Accounts and other receivables, net  32,693   29,396   37,988 
    Inventories  379,090   311,837   492,328 
    Prepaid expenses and other current assets  33,413   23,633   52,701 
    Total current assets  453,632   420,286   591,718 
    Property and equipment, net  89,820   90,285   80,612 
    Operating lease right-of-use assets  260,221   251,460   231,428 
    Goodwill and other intangibles, net  216,973   218,855   216,594 
    Deferred tax assets  34,297   7,598    
    Other assets  40,305   45,951   42,878 
    Total assets $1,095,248  $1,034,435  $1,163,230 
    Liabilities and stockholders’ deficit         
    Current liabilities         
    Accounts payable $112,441  $58,556  $139,804 
    Accrued expenses and other current liabilities  79,989   90,598   82,900 
    Operating lease liabilities  61,571   62,794   61,587 
    Income taxes payable     5,782    
    Current portion of long-term debt  8,100   8,100   8,100 
    Total current liabilities  262,101   225,830   292,391 
    Deferred tax liabilities        676 
    Operating lease liabilities, noncurrent  193,818   193,222   173,531 
    Revolving Credit Facility  97,000      172,000 
    Long-term debt, net  770,157   773,276   776,542 
    Other long-term liabilities  3,144   3,469   3,055 
    Total liabilities  1,326,220   1,195,797   1,418,195 
    Commitments and contingencies         
    Stockholders’ deficit         
    Common stock, $0.001 par value, 1,000,000,000 shares authorized and 184,742,767, 184,333,670, and 183,843,169 issued and outstanding as of March 30, 2024, September 30, 2023, and April 1, 2023, respectively.  185   184   184 
    Additional paid in capital  103,775   99,280   94,705 
    Retained deficit  (334,932)  (260,826)  (349,854)
    Total stockholders’ deficit  (230,972)  (161,362)  (254,965)
    Total liabilities and stockholders’ deficit $1,095,248  $1,034,435  $1,163,230 


      
    Condensed Consolidated Statements of Cash Flows
    (Amounts in thousands)
     
      
      Six Months Ended 
      March 30, 2024  April 1, 2023 
      (Unaudited)  (Unaudited) 
    Operating Activities      
    Net loss $(74,106) $(61,786)
    Adjustments to reconcile net loss to net cash used in operating activities:      
    Depreciation and amortization  16,173   17,425 
    Equity-based compensation  5,383   6,510 
    Amortization of deferred financing costs and debt discounts  1,116   1,006 
    Provision for doubtful accounts  318   123 
    Deferred income taxes  (26,699)  1,944 
    Loss on asset dispositions  88   118 
    Changes in operating assets and liabilities:      
    Accounts and other receivables  (3,615)  7,919 
    Inventories  (67,253)  (127,365)
    Prepaid expenses and other current assets  (9,780)  (30,897)
    Other assets  5,461   (6,734)
    Accounts payable  53,885   (16,652)
    Accrued expenses and other current liabilities  (9,649)  (25,049)
    Income taxes payable  (5,782)  (12,511)
    Operating lease assets and liabilities, net  (622)  (41)
    Net cash used in operating activities  (115,082)  (245,990)
    Investing Activities      
    Purchases of property and equipment  (24,008)  (14,828)
    Business acquisitions, net of cash acquired     (9,939)
    Proceeds from asset dispositions  44   1,176 
    Net cash used in investing activities  (23,964)  (23,591)
    Financing Activities      
    Borrowings on Revolving Credit Facility  130,500   193,000 
    Payments on Revolving Credit Facility  (33,500)  (21,000)
    Repayment of long-term debt  (4,050)  (4,050)
    Payments of deferred financing costs     (222)
    Payments of employee tax withholdings related to restricted stock vesting  (888)  (1,739)
    Net cash provided by financing activities  92,062   165,989 
    Net decrease in cash and cash equivalents  (46,984)  (103,592)
    Cash and cash equivalents, beginning of period  55,420   112,293 
    Cash and cash equivalents, end of period $8,436  $8,701 
    Supplemental Information:      
    Cash paid for interest $33,517  $28,339 
    Cash paid for income taxes, net of refunds received  6,046   11,932 


      
    GAAP to Non-GAAP Reconciliation
    (Amounts in thousands except per share amounts)
    (Unaudited)
     
      
      Three Months Ended  Six Months Ended 
      March 30, 2024  April 1, 2023  March 30, 2024  April 1, 2023 
    Net loss $(34,553) $(31,527) $(74,106) $(61,786)
    Interest expense  18,153   17,247   35,224   30,607 
    Income tax benefit  (14,128)  (10,907)  (28,116)  (20,993)
    Depreciation and amortization expense(1)  7,843   8,922   16,173   17,425 
    Equity-based compensation expense(2)  2,710   3,662   5,438   6,706 
    Strategic project costs(3)  540   1,294   663   2,014 
    Executive transition costs and other(4)  157   2,869   1,026   5,672 
    Adjusted EBITDA $(19,278) $(8,440) $(43,698) $(20,355)
                 
      Three Months Ended  Six Months Ended 
      March 30, 2024  April 1, 2023  March 30, 2024  April 1, 2023 
    Net loss $(34,553) $(31,527) $(74,106) $(61,786)
    Equity-based compensation expense(2)  2,710   3,662   5,438   6,706 
    Strategic project costs(3)  540   1,294   663   2,014 
    Executive transition costs and other(4)  157   2,869   1,026   5,672 
    Tax effects of these adjustments(5)  (852)  (1,957)  (1,782)  (3,598)
    Adjusted net loss $(31,998) $(25,659) $(68,761) $(50,992)
                 
    Diluted earnings per share $(0.19) $(0.17) $(0.40) $(0.34)
    Adjusted diluted earnings per share $(0.17) $(0.14) $(0.37) $(0.28)
    Weighted average shares outstanding            
    Basic  184,625   183,729   184,504   183,621 
    Diluted  184,625   183,729   184,504   183,621 


    (1)Includes depreciation related to our distribution centers and locations, which is reported in cost of merchandise and services sold in our condensed consolidated statements of operations. 
    (2)Represents charges related to equity-based compensation and our related payroll tax expense, which are reported in SG&A in our condensed consolidated statements of operations.
    (3)Represents non-recurring costs, such as third-party consulting costs related to first-generation technology initiatives, replacements of systems that have been no longer supported by our vendors, investment in and development of new products outside of the course of continuing operations, or other discrete strategic projects that are infrequent or unusual in nature and potentially distortive to continuing operations. These items are reported in SG&A in our condensed consolidated statements of operations.
    (4)Includes certain senior executive transition costs and severance associated with completed corporate restructuring activities across the organization, losses (gains) on asset dispositions, merger and acquisition costs, and other non-recurring, non-cash, or discrete items as determined by management. Amounts are reported in SG&A in our condensed consolidated statements of operations.
    (5)Represents the tax effect of the total adjustments based on our combined U.S. federal and state statutory tax rates. Amounts are reported in income tax benefit in our condensed consolidated statements of operations.

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