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Leslie's (LESL)
NASDAQ:LESL
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Leslie's
(NASDAQ:LESL)
47Neutral
Positive Factors
Inventory Management
Inventory management is being improved by increasing in-stocks and optimizing current levels, leading to increased conversion rates.
Leadership and Operations
New senior leadership is taking the initial steps to re-work internal operations and clean up retail fundamentals.
Negative Factors
Earnings and Guidance
The adjusted EBITDA guidance for fiscal year 2025 is notably below previous expectations.
Financial Performance
Limited free cash flow generation is restricting Leslie's, Inc.'s ability to reduce its debt.
Market Dynamics
There are concerns on market share due to competitive dynamics, such as increased ecommerce penetration and the shift to other mass channels.
Leslie's (LESL) vs. S&P 500 (SPY)
Market Cap
$145.18M
Dividend YieldN/A
Average Volume (3M)8.36M
Price to Earnings (P/E)―
Beta (1Y)1.00
Revenue Growth-6.90%
EPS Growth-256.95%
CountryUS
Employees3,850
SectorConsumer Cyclical
Sector Strength54
IndustryHome Improvement
Share Statistics
EPS (TTM)-0.15
Shares Outstanding185,227,360
10 Day Avg. Volume5,203,427
30 Day Avg. Volume8,359,535
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.11
Price to Cash Flow (P/CF)-0.40
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$2.31Price Target Upside181.71% Upside
Rating ConsensusModerate Sell
Number of Analyst Covering7
Leslie's Business Overview & Revenue Model
Company DescriptionLeslie's, Inc. operates as a direct-to-consumer pool and spa care brand in the United States. The company markets and sells pool and spa supplies and related products and services. It offers pool chemicals consisting of chlorine, sanitizers, water balancers, specialty chemicals, and algae control; pool covers, including winter, solar and safety covers, leaf nets, cover reels, and cover alternatives; pool equipment, which comprise pool cleaners, pool pumps, pool filters, pool heating, and lighting; and pools, such as above ground pools, soft side pools, above ground pools liners and equipment, ladders and rails, and diving boards. The company also provides pool maintenance products, including pool closing and opening supplies, filter catridges, chlorine floaters, backwash and vacuum hoses, and cleaning attachments; parts, such as automatic pool cleaner parts, pool filter and pump parts, and pool heater and heat pump parts; and safety, recreational, and fitness-related products. In addition, it provides pool equipment and repair services. The company markets its products through 952 company operated locations in 38 states and e-commerce websites. It serves the residential, professional, and commercial consumers. The company was founded in 1963 and is headquartered in Phoenix, Arizona.
How the Company Makes MoneyLeslie's generates revenue primarily through the sale of swimming pool supplies and related products via its extensive network of retail stores and e-commerce platform. A significant portion of its income comes from the sale of chemicals, which are essential for pool maintenance and require regular replenishment, ensuring repeat business. Additionally, Leslie's earns money through the provision of installation and repair services, which complement its product offerings and enhance customer loyalty. The company benefits from strategic partnerships with manufacturers and exclusive product lines, allowing it to offer unique or proprietary items that can drive higher margins. Seasonal demand, particularly during warmer months, and a large installed base of residential and commercial pools in the U.S. also contribute to Leslie's revenue generation.
Leslie's Financial Statement Overview
Summary
Leslie's faces significant financial challenges with declining revenue, negative net income, and negative equity. Positive cash flow from operations suggests some resilience, but high leverage and inability to generate profits are considerable risks.Income Statement
Leslie's has seen a decline in total revenue from previous years, with the TTM showing $1.33 billion compared to $1.56 billion in 2022. The gross profit margin for the TTM is approximately 35.6%, which is decent but has decreased compared to previous periods. The company is currently operating at a net loss, reflected by a negative net profit margin for the TTM at -2.1%. The EBIT margin has also declined to about 4.0%, indicating pressure on operational efficiency.55
Neutral
Balance Sheet
The balance sheet shows a concerning negative stockholders' equity of -$220 million in the TTM, indicating significant leverage. The debt-to-equity ratio is not applicable due to negative equity, suggesting financial instability. The equity ratio is also negative, reflecting a total liabilities greater than total assets situation. ROE is not meaningful due to negative equity and net losses.40
Negative
Cash Flow
Operating cash flow remains positive at $74 million for the TTM, suggesting some operational resilience despite financial challenges. The free cash flow improved to $33 million from a previous negative flow, showing better cash management. However, the free cash flow growth rate has been volatile, and the free cash flow to net income ratio is not favorable due to net losses.60
Neutral
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 1.33B | 1.33B | 1.45B | 1.56B | 1.34B | 1.11B | Gross Profit |
| 474.10M | 476.79M | 548.22M | 673.74M | 595.16M | 460.71M | EBIT |
| 53.89M | 57.12M | 102.18M | 238.75M | 209.09M | 146.38M | EBITDA |
| 69.98M | 57.12M | 136.32M | 269.13M | 224.09M | 176.81M | Net Income Common Stockholders |
| -28.39M | -23.38M | 27.24M | 159.03M | 126.63M | 58.56M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 11.62M | 108.50M | 55.42M | 112.29M | 345.06M | 157.07M | Total Assets |
| 966.99M | 1.05B | 1.03B | 1.11B | 1.04B | 746.44M | Total Debt |
| 262.92M | 280.52M | 1.04B | 1.03B | 1.02B | 1.37B | Net Debt |
| 251.30M | 172.02M | 981.97M | 915.74M | 670.28M | 1.22B | Total Liabilities |
| 1.19B | 1.23B | 1.20B | 1.31B | 1.26B | 1.57B | Stockholders Equity |
| -220.04M | -177.15M | -161.36M | -197.95M | -217.56M | -827.00M |
| Cash Flow | Free Cash Flow | ||||
| 33.08M | 60.22M | -32.11M | 34.92M | 140.63M | 82.78M | Operating Cash Flow |
| 74.26M | 107.47M | 6.47M | 66.64M | 169.56M | 103.41M | Investing Cash Flow |
| -41.11M | -47.16M | -52.54M | -138.98M | -35.35M | -26.81M | Financing Cash Flow |
| -29.93M | -7.22M | -10.80M | -158.87M | 53.78M | -10.43M |
Leslie's Technical Analysis
Negative
0.82
Price Trends
1.53
Negative
2.06
Negative
2.67
Negative
Market Momentum
-0.21
Negative
29.05
Positive
21.46
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LESL, the sentiment is Negative. The current price of 0.82 is below the 20-day moving average (MA) of 0.93, below the 50-day MA of 1.53, and below the 200-day MA of 2.67, indicating a bearish trend. The MACD of -0.21 indicates Negative momentum. The RSI at 29.05 is Positive, neither overbought nor oversold. The STOCH value of 21.46 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LESL.
Leslie's Risk Analysis
Leslie's disclosed 46 risk factors in its most recent earnings report. Leslie's reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Leslie's Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $5.82B | 37.45 | 9.96% | 0.99% | 2.35% | 44.23% | |
74 Outperform | $11.02B | 832.06 | 1.20% | ― | 12.86% | -84.18% | |
65 Neutral | $3.08B | 26.62 | 8.68% | ― | 5.96% | 45.69% | |
63 Neutral | $12.25B | 28.84 | 33.41% | 1.44% | -4.16% | -15.44% | |
63 Neutral | $9.53B | 18.33 | 28.63% | 1.99% | -0.90% | -1.69% | |
59 Neutral | $12.76B | 11.27 | 1.14% | 3.69% | 1.25% | -20.97% | |
47 Neutral | $145.18M | ― | 12.90% | ― | -6.90% | -256.95% |
* Consumer Cyclical Sector Average
Performance Comparison
LESL
Leslie's
0.92
-5.53
-85.74%
POOL
Pool
325.63
-71.51
-18.01%
ZWS
Zurn Water Solutions
34.22
2.23
6.97%
AOS
A. O. Smith Corporation
66.73
-19.65
-22.75%
PEN
Penumbra
283.42
62.55
28.32%
HAYW
Hayward Holdings
14.40
-0.54
-3.61%
Leslie's Earnings Call Summary
Earnings Call Date: Feb 6, 2025 | % Change Since: -63.39% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted Leslie's strategic initiatives and improvements in inventory management and core chemical sales. However, financial losses and sales declines in certain segments present challenges. The sentiment is mixed with a cautious optimism for future improvements.Highlights
Pro Pool Sales Growth
Pro Pool sales grew 9% year-over-year, driven by better in-stock positions and a double-digit increase in pro partner contracts.
Inventory Reduction and Optimization
Lowered overall inventory by $63 million or 19% compared to the prior year, with significant improvements in in-stock levels across most categories.
Core Chemical Sales Increase
Core chemical sales were up approximately 4%, with positive unit volumes, driven by improved in-stock positions.
Introduction of Local Fulfillment Centers (LFCs)
Establishing 26 local fulfillment centers to improve inventory depth and availability, enhancing customer service efficiency.
Debt Reduction
Paid down $27 million of debt in the quarter, with a focus on reducing overall debt and minimizing leverage.
Lowlights
Adjusted EBITDA Loss
Adjusted EBITDA was at a loss of $29 million, due to inventory optimization decisions and additional professional fees supporting transformation.
Residential Pool and Hot Tub Sales Decline
Residential pool sales declined 1% and residential hot tub sales declined 5% year-over-year.
Gross Margin Decrease
Gross margin rate decreased by 180 basis points to 27.2%, impacted by inventory optimization and occupancy and distribution cost deleverages.
Adjusted Net Loss
Adjusted net loss was $41 million compared to a loss of $37 million in the same period last year, resulting in adjusted diluted loss per share of $0.22.
Company Guidance
During the Fiscal First Quarter 2025 earnings call for Leslie's, Inc., management provided guidance focusing on strategic initiatives aimed at transformation and improving performance. The company's revenue reached $175 million, marking a 0.7% increase compared to the same period in 2024, with Pro Pool sales up 9% while residential pool and hot tub sales declined by 1% and 5%, respectively. The adjusted EBITDA was reported at a loss of $29 million, affected by inventory optimization and professional fees. Key performance indicators showed a positive shift, with traffic improving to flat, conversion rates increasing by over 160 basis points, and in-stock levels on top items improving by over 300 basis points. Looking forward, Leslie's aims to enhance customer centricity, convenience, and asset utilization through initiatives such as establishing local fulfillment centers and expanding pro customer services across its store footprint. The company also provided guidance for the second quarter and full fiscal year 2025, projecting sales between $1.3 billion and $1.37 billion, with a focus on maximizing free cash flow and reducing debt.Leslie's Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Leslie’s Announces Key Leadership Changes for 2025
Neutral
Mar 17, 2025
Leslie’s, Inc. announced significant leadership changes effective March 14, 2025, as part of its transformation strategy. Tony Iskander was appointed as the Interim Chief Financial Officer and Treasurer, bringing nearly 30 years of experience in corporate finance and operational transformation. Naomi Cramer was promoted to Chief Retail Operations and Talent Officer, combining roles to enhance retail execution and drive long-term growth. These changes aim to strengthen Leslie’s strategic focus on customer centricity, convenience, and asset utilization, with an emphasis on debt reduction and operational efficiency. The departures of Scott Bowman, the former CFO, and Dave Caspers, Chief Stores Officer, were not due to disagreements with the company.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.