Leslie's (LESL) Q3 2024 earnings summary

Executive summary

• Q3 FY2024 sales were $569.6M, down 6.8% year-over-year, impacted by adverse weather, cautious consumer spending, and post-pandemic demand normalization; June saw improved trends and market share gains.

• Net income for the quarter was $60.7M, down from $72.5M prior year; adjusted EBITDA was $109.5M, down from $129.0M.

• Inventory ended the quarter at $302M, a 31% decrease year-over-year, while maintaining high in-stock levels and strong NPS scores.

• The company remains focused on cost control, inventory management, and strategic growth initiatives to drive long-term profitability and shareholder value.

• Outperformed industry sales in June, gaining market share.

Financial highlights

• Q3 sales were $569.6M, down 6.8% year-over-year, with a 230 bps headwind from prior chemical price actions.

• Gross profit was $228.8M, down 9.9% year-over-year; gross margin declined to 40.2% from 41.2%.

• Adjusted EBITDA was $109.5M, and adjusted diluted EPS was $0.34, both down from the prior year.

• SG&A expenses decreased 3.5% to $131.1M for the quarter.

• Cash and cash equivalents were $74.4M at quarter-end.

Outlook and guidance

• FY2024 sales expected at $1,321M–$1,347M; gross profit $483M–$499M; adjusted EBITDA $117M–$131M; adjusted diluted EPS $0.03–$0.09.

• Net income (loss) guidance: $(5)M to $6M; adjusted net income $5M–$16M.

• Q4 sales expected to be down 7% at the midpoint, with gross margin at approximately 39%, up from 37% in the prior year.

• Year-end cash expected in the $75–$80M range, with continued focus on debt reduction and cost management.

• Management expects liquidity from cash, operations, and credit facilities to be sufficient for all needs over the next 12 months and beyond.