Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Sep. 30, 2023 | Nov. 20, 2023 | Mar. 31, 2023 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Amendment Flag | false | ||
Document Period End Date | Sep. 30, 2023 | ||
Document Fiscal Year Focus | 2023 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | LESL | ||
Entity Registrant Name | LESLIE’S, INC. | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Central Index Key | 0001821806 | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Current Fiscal Year End Date | --09-30 | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 2 | ||
Entity Common Stock, Shares Outstanding | 184,333,670 | ||
Entity Shell Company | false | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Document Transition Report | false | ||
Entity File Number | 001-39667 | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 20-8397425 | ||
Entity Address, Address Line One | 2005 East Indian School Road | ||
Entity Address, City or Town | Phoenix | ||
Entity Address, State or Province | AZ | ||
Entity Address, Postal Zip Code | 85016 | ||
City Area Code | 602 | ||
Local Phone Number | 366-3999 | ||
Documents Incorporated by Reference | DOCUMENTS INCORPORATED BY REFERENCE The information required by Part III of this Report, to the extent not set forth herein, is incorporated herein by reference from the Registrant’s definitive proxy statement relating to the Annual Meeting of Shareholders to be held in 2024, which definitive proxy statement shall be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this Annual Report on Form 10-K relates. | ||
Title of 12(b) Security | Common Stock, par value $0.001 per share | ||
Security Exchange Name | NASDAQ | ||
Document Financial Statement Error Correction [Flag] | false | ||
Auditor Name | Ernst & Young LLP | ||
Auditor Location | Phoenix, Arizona | ||
Auditor Firm ID | 42 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2023 | Oct. 01, 2022 |
Current assets | ||
Cash and cash equivalents | $ 55,420 | $ 112,293 |
Accounts and other receivables, net | 29,396 | 45,295 |
Inventories | 311,837 | 361,686 |
Prepaid expenses and other current assets | 23,633 | 23,104 |
Total current assets | 420,286 | 542,378 |
Property and equipment, net | 90,285 | 78,087 |
Operating lease right-of-use assets | 251,460 | 236,477 |
Goodwill and other intangibles, net | 218,855 | 213,701 |
Deferred tax assets | 7,598 | 1,268 |
Other assets | 45,951 | 37,720 |
Total assets | 1,034,435 | 1,109,631 |
Current liabilities | ||
Accounts payable and accrued expenses | 149,154 | 266,972 |
Operating lease liabilities | 62,794 | 60,373 |
Income taxes payable | 5,782 | 12,511 |
Current portion of long-term debt | 8,100 | 8,100 |
Total current liabilities | 225,830 | 347,956 |
Operating lease liabilities, noncurrent | 193,222 | 179,835 |
Long-term debt, net | 773,276 | 779,726 |
Other long-term liabilities | 3,469 | 65 |
Total liabilities | 1,195,797 | 1,307,582 |
Commitments and contingencies | ||
Stockholders’ deficit | ||
Common stock, $0.001 par value, 1,000,000,000 shares authorized and 184,333,670 and 183,480,545 issued and outstanding as of September 30, 2023 and October 1, 2022, respectively. | 184 | 183 |
Additional paid in capital | 99,280 | 89,934 |
Retained deficit | (260,826) | (288,068) |
Total stockholders’ deficit | (161,362) | (197,951) |
Total liabilities and stockholders’ deficit | $ 1,034,435 | $ 1,109,631 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2023 | Oct. 01, 2022 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 184,333,670 | 183,480,545 |
Common stock, shares outstanding | 184,333,670 | 183,480,545 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Oct. 02, 2021 | |
Income Statement [Abstract] | |||
Sales | $ 1,451,209 | $ 1,562,120 | $ 1,342,917 |
Cost of merchandise and services sold | 902,986 | 888,379 | 747,757 |
Gross profit | 548,223 | 673,741 | 595,160 |
Selling, general and administrative expenses | 446,044 | 434,987 | 386,075 |
Operating income | 102,179 | 238,754 | 209,085 |
Other expense: | |||
Interest expense | 65,438 | 30,240 | 34,410 |
Loss on debt extinguishment | 0 | 0 | 9,169 |
Other expenses, net | 0 | 397 | 2,377 |
Total other expense | 65,438 | 30,637 | 45,956 |
Income before taxes | 36,741 | 208,117 | 163,129 |
Income tax expense | 9,499 | 49,088 | 36,495 |
Net income | $ 27,242 | $ 159,029 | $ 126,634 |
Earnings per share: | |||
Basic | $ 0.15 | $ 0.86 | $ 0.68 |
Diluted | $ 0.15 | $ 0.85 | $ 0.67 |
Weighted average shares outstanding: | |||
Basic | 183,839 | 184,347 | 185,412 |
Diluted | 184,716 | 186,148 | 190,009 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid in Capital (Deficit) | Retained Deficit |
Beginning Balance at Oct. 03, 2020 | $ (826,999) | $ 157 | $ (278,063) | $ (549,093) |
Beginning Balance, Shares at Oct. 03, 2020 | 156,500 | |||
Issuance of common stock upon initial public offering, net of offering costs | 458,587 | $ 30 | 458,557 | |
Issuance of common stock upon initial public offering, net of offering costs, Shares | 30,000 | |||
Issuance of common stock under the Plan, shares | 3,321 | |||
Issuance of common stock under the Plan | 3 | $ 3 | ||
Equity-based compensation | 24,217 | 24,217 | ||
Net Income (Loss) | 126,634 | 126,634 | ||
Ending Balance at Oct. 02, 2021 | (217,558) | $ 190 | 204,711 | (422,459) |
Ending Balance, Shares at Oct. 02, 2021 | 189,821 | |||
Issuance of common stock under the Plan, shares | 1,160 | |||
Issuance of common stock under the Plan | 1,378 | $ 1 | 1,377 | |
Equity-based compensation | 11,346 | 11,346 | ||
Repurchase and retirement of common stock, shares | (7,500) | |||
Repurchase and retirement of common stock | (152,146) | $ (8) | (127,500) | (24,638) |
Net Income (Loss) | 159,029 | 159,029 | ||
Ending Balance at Oct. 01, 2022 | (197,951) | $ 183 | 89,934 | (288,068) |
Ending Balance, Shares at Oct. 01, 2022 | 183,481 | |||
Issuance of common stock under the Plan, shares | 1,057 | |||
Issuance of common stock under the Plan | 1 | $ 1 | ||
Equity-based compensation | 11,703 | 11,703 | ||
Repurchase and retirement of common stock, shares | 0 | |||
Restricted stock units surrendered in lieu of withholding taxes, Shares | (204) | |||
Restricted Stock, Value, Shares Issued Net of Tax Withholdings | (2,357) | (2,357) | ||
Net Income (Loss) | 27,242 | 27,242 | ||
Ending Balance at Sep. 30, 2023 | $ (161,362) | $ 184 | $ 99,280 | $ (260,826) |
Ending Balance, Shares at Sep. 30, 2023 | 184,334 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Oct. 02, 2021 | |
Operating Activities | |||
Net income | $ 27,242 | $ 159,029 | $ 126,634 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 34,142 | 30,769 | 26,553 |
Equity-based compensation | 11,703 | 11,346 | 24,217 |
Amortization of deferred financing costs and debt discounts | 2,100 | 1,982 | 2,483 |
Provision for doubtful accounts | 193 | 1,186 | 2,105 |
Deferred income taxes | (6,330) | 2,466 | 2,848 |
Loss (gain) on asset dispositions | 6,396 | 466 | (1,606) |
Loss on debt extinguishment | 0 | 0 | 9,169 |
Changes in operating assets and liabilities: | |||
Accounts and other receivables | 16,101 | (7,621) | (9,484) |
Inventories | 54,331 | (143,147) | (47,787) |
Prepaid expenses and other current assets | (3,466) | (1,476) | 2,674 |
Other assets | (9,990) | (12,670) | (11,164) |
Accounts payable and accrued expenses | (120,048) | 23,841 | 35,756 |
Income taxes payable | (6,729) | 5,566 | 5,088 |
Operating lease assets and liabilities, net | 825 | (5,093) | 1,786 |
Net cash provided by operating activities | 6,470 | 66,644 | 169,272 |
Investing Activities | |||
Purchases of property and equipment | (38,577) | (31,726) | (28,931) |
Business acquisitions, net of cash acquired | (15,549) | (107,663) | (8,868) |
Proceeds from asset dispositions | 1,587 | 408 | 2,444 |
Net cash used in investing activities | (52,539) | (138,981) | (35,355) |
Financing Activities | |||
Borrowings on Revolving Credit Facility | 264,000 | 45,000 | 0 |
Payments on Revolving Credit Facility | (264,000) | (45,000) | 0 |
Repayment of long term debt | (8,100) | (8,100) | (396,135) |
Issuance of long term debt | 0 | 0 | 907 |
Payment of deferred financing costs | (347) | 0 | (9,579) |
Proceeds from options exercised | 0 | 1,378 | 0 |
Repurchase and retirement of common stock | 0 | (152,146) | 0 |
Proceeds from issuance of common stock upon initial public offering, net | 0 | 0 | 458,587 |
Payments of employee tax withholdings related to restricted stock vesting | (2,357) | 0 | 0 |
Net cash (used in) provided by financing activities | (10,804) | (158,868) | 53,780 |
Net (decrease) increase in cash and cash equivalents | (56,873) | (231,205) | 187,697 |
Cash and cash equivalents, beginning of year | 112,293 | 343,498 | 155,801 |
Cash and cash equivalents, end of year | 55,420 | 112,293 | 343,498 |
Supplemental Information: | |||
Interest | 63,059 | 32,617 | 36,408 |
Income taxes, net of refunds received | $ 22,559 | $ 41,149 | $ 28,559 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Oct. 02, 2021 | |
Pay vs Performance Disclosure | |||
Net Income (Loss) | $ 27,242 | $ 159,029 | $ 126,634 |
Insider Trading Arrangements
Insider Trading Arrangements | 12 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Business and Operations
Business and Operations | 12 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Business and Operations | Note 1—Business and Operations Leslie’s, Inc. (“Leslie’s,” “we,” “our,” “us,” “its,” or the “Company”) is the leading direct-to-consumer pool and spa care brand. We market and sell pool and spa supplies and related products and services, which primarily consist of maintenance items such as chemicals, equipment and parts, and cleaning accessories, as well as safety, recreational, and fitness-related products. We currently market our products through over 1,000 company-operated locations in 39 states and e-commerce websites. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2—Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation We prepared the accompanying consolidated financial statements following GAAP. The financial statements include all normal and recurring adjustments that are necessary for a fair presentation of our financial position and operating results. The consolidated financial statements include the accounts of Leslie’s, Inc. and our subsidiaries. All significant intercompany accounts and transactions have been eliminated. Fiscal Periods We operate on a fiscal calendar that results in a fiscal year consisting of a 52- or 53-week period ending on the Saturday closest to September 30th. In a 52-week fiscal year, each quarter contains 13 weeks of operations; in a 53-week fiscal year, each of the first, second and third quarters includes 13 weeks of operations and the fourth quarter includes 14 weeks of operations. References to fiscal 2023, 2022, and 2021 refer to the 52 weeks ended September 30, 2023, October 1, 2022, and October 2, 2021, respectively. Segment Reporting Our Chief Operating Decision Maker is our Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of allocating resources and assessing performance. We operate all of our locations in the United States and offer consumers similar products, services, and methods of distribution through our retail locations and e-commerce websites. As a result, we have a single reportable segment. Seasonality Our business is highly seasonal. Sales and earnings are highest during our third and fourth fiscal quarters, being April through September, which represent the peak months of swimming pool use. Sales are substantially lower during our first and second fiscal quarters. Use of Estimates Management is required to make certain estimates and assumptions during the preparation of the consolidated financial statements in accordance with GAAP. These estimates and assumptions impact the reported amount of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements. They also impact the reported amount of net income (loss) during any period. Actual results could differ from those estimates. Significant estimates underlying the accompanying consolidated financial statements include inventory reserves, lease assumptions, vendor rebate programs, our loyalty program, the determination of income taxes payable and deferred income taxes, sales returns reserve, self-insurance liabilities, the recoverability of intangible assets and goodwill, fair value of assets acquired in a business combination, and contingent consideration related to business combinations. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, demand deposits, money market funds and credit and debit card transactions. Our cash balance at financial institutions may exceed the FDIC insurance coverage limit. We consider all investments with an original maturity of three months or less and money market funds to be cash equivalents. All credit card and debit card transactions that process in less than seven days are classified as cash and cash equivalents. Fair Value Measurements We use fair value measurements to record the fair value of certain assets and to estimate the fair value of financial instruments not recorded at fair value but required to be disclosed at fair value. To determine the fair value, we maximize the use of observable inputs and minimize the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use to value an asset or liability and are developed based on market data obtained from independent sources. Unobservable inputs are inputs based on assumptions about the factors market participants would use to value an asset or liability. The fair value hierarchy is as follows, of which the first two are considered observable and the last unobservable: • Level 1—Quoted prices in active markets for identical assets or liabilities. • Level 2—Inputs other than Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data by correlation or other means. • Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Value is determined using pricing models, discounted cash flow methodologies, or similar techniques and also includes instruments for which the determination of fair value requires significant judgment or estimation. As of September 30, 2023 and October 1, 2022, we held no assets that were required to be measured at fair value on a recurring basis. There were no transfers between levels in the fair value hierarchy during fiscal 2023, 2022, and 2021, respectively. The fair value of our Amended and Restated Term Loan Credit Agreement (“Term Loan”) due in 2028 was determined to be $ 774.9 million and $ 760.0 million as of September 30, 2023 and October 1, 2022, respectively. These fair value estimates, determined to be Level 2, are subjective in nature and involve uncertainties and matters of judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect these estimates. The Company’s measurement of contingent consideration is categorized as Level 3 within the fair value hierarchy. Refer to “Business Combinations” herein Note 2—Summary of Significant Accounting Policies below for the fair value measurement of its contingent consideration. The carrying amounts of cash, cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value due to the short-term maturity of these instruments. Vendor Rebates Many of our vendor arrangements provide for us to receive specified amounts of consideration when we achieve various measures. These measures generally relate to the volume level of purchases. We calculate the amount earned based on actual purchases, recorded as a reduction of the prices of the vendor’s products and therefore a reduction of inventory at the end of each period based on a detailed analysis of inventory and of the facts and circumstances of various contractual agreements with vendors. We recognize rebates based on an estimated recognition pattern using historical data, and we record this as a reduction of cost of merchandise and services sold in our consolidated statements of operations. Accounts and other receivables include vendor rebate receiva bles of $ 4.7 million and $ 16.6 million as of September 30, 2023 and October 1, 2022, respectively. Allowance for Doubtful Accounts Allowance for doubtful accounts is calculated based on historical experience, counterparty credit risk, consumer credit risk and application of the specific identification method. Inventories Inventories are stated at the lower of cost or market or net realizable value. We value inventory using the weighted-average cost method. We evaluate inventory for excess and obsolescence and record necessary reserves. We provide provisions for losses related to inventories based on management’s judgment regarding historical purchase cost, selling price, margin, movements, and current business trends. If actual demand or market conditions are different than those projected by management, future margins may be unfavorably or favorably affected by adjustments to these estimates. When an inventory item is sold or disposed, the associated reserve is released at that time. Business Combinations We account for business combinations using the acquisition method of accounting. This method requires that the purchase price of the acquisition be allocated to the assets acquired and liabilities assumed using the fair values determined by management as of the acquisition date. The excess of the purchase price over the amounts allocated to assets acquired and liabilities assumed is recorded as goodwill. We use our best estimates and assumptions as part of the purchase price allocation process to accurately value assets acquired and liabilities assumed as of the acquisition date. Our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill to the extent we identify adjustments to the preliminary purchase price allocation. Upon the conclusion of the measurement period or final determination of the fair values of the assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded in our consolidated statements of operations. Our consolidated financial statements include the results of operations from the date of acquisition for each business combination. The consideration for an acquisition may include future payments that are contingent upon the occurrence of a particular event. We record contingent consideration at fair value on the acquisition date. We estimate the fair values through valuation models that incorporate probability adjusted assumptions related to the achievement of the milestones and the likelihood of making related payments. The fair value is remeasured at each reporting date and changes in fair value are recorded within SG&A in our consolidated statements of operations. Determining the fair value of the contingent consideration requires management to make certain assumptions and judgments, primarily based on the achievement of certain performance metrics specified in the purchase agreements. We expense all acquisition-related costs as incurred within SG&A expenses in our consolidated statements of operations. Property and Equipment, Net Property and equipment are stated at cost, less accumulated depreciation and amortization. Costs of normal maintenance and repairs are charged to expense as incurred. Major replacements or improvements of property and equipment are capitalized. When items are sold or otherwise disposed of, the cost and related accumulated depreciation or amortization are removed from the accounts, and any resulting gain or loss is included in our consolidated statements of operations. Depreciation and amortization are computed using the straight-line method. These charges are based on the following range of useful lives: Building and improvements 5 - 39 years Vehicles, machinery and equipment 3 - 10 years Office furniture, computers and software 3 - 7 years Leasehold improvements 5 - 10 years , not to exceed the lease life We evaluate our long-lived assets for potential impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. The evaluation for long-lived assets (asset group) is performed at the lowest level of identifiable cash flows, which, for location assets, is the individual location level. The assets of a physical location with indicators of impairment are evaluated for recoverability by comparing its undiscounted future cash flows with its carrying value. If the carrying value is greater than the undiscounted future cash flows, we then measure the asset’s fair value to determine whether an impairment loss should be recognized. If the resulting fair value is less than the carrying value, an impairment loss is recognized for the difference between the carrying value and the estimated fair value. Impairment charges are recorded in SG&A in our consolidated statements of operations. There was no impairment charge in fiscal 2023, 2022, or 2021. Cloud Computing Arrangements From time-to-time, we enter into various agreements with unaffiliated third parties for assistance with technical development work related to our security-related software and systems and other ongoing projects. Expenditures for implementation, set-up, and other upfront costs incurred in a cloud computing arrangement that is hosted by the ven dor are capitalized generally in the same manner as internal use software and are recorded as other assets in our consolidated balance sheets. Such costs are amortized over the life of the related cloud computing arrangement. As of September 30, 2023 and October 1, 2022, approximately $ 5.9 million and $ 9.7 million associated with these agreements are included in prepaid expenses and other current assets in our consolidated balance sheets, respectively. Approximately $ 44.1 million a nd $ 35.7 million associated with these agreements are included in other assets in our consolidated balance sheets as of September 30, 2023 and October 1, 2022, respectively. In addition, for the year ended September 30, 2023, the Company recognized $ 6.3 million of expense in connection with the discontinued use of certain software subscriptions which is recorded in SG&A in our consolidated statements of operations and a corresponding $ 4.4 million liability for future obligations associated with these subscriptions. Goodwill and Other Intangibles, Net Goodwill and intangible assets are recorded at their estimated fair values at the date of acquisition. We review goodwill and indefinite-lived intangible assets for impairment annually (in the fourth quarter) or more frequently if impairment indicators arise. Goodwill can be evaluated for impairment, at our option, by first performing a qualitative assessment to determine whether a quantitative goodwill test is necessary. If it is determined, based on qualitative factors, the fair value of the reporting unit may be more likely than not less than the carrying amount, a quantitative goodwill impairment test would be required. Additionally, we can elect to forgo a qualitative assessment and perform a quantitative test. The quantitative test is to identify if a potential impairment exists by comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds the fair value, an impairment loss is recognized in an amount equal to that excess, not to exceed the carrying amount of goodwill. If a quantitative test is performed, we would estimate the value considering the use of various valuation techniques which may use significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy. We include assumptions about sales growth, operating margins, discount rates and valuations multiples which consider our budgets, business plans, economic projections and marketplace data, and are believed to reflect market participant views which would exist in an exit transaction. Some of the inherent estimates and assumptions used in this analysis are outside the control of management, including cost of capital, tax rates and market EBITDA comparables. Finite-lived intangible assets are amortized to reflect the pattern of economic benefits consumed. We evaluate amortizable intangible assets for potential impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. Intangible assets useful lives are reviewed annually. For our indefinite life intangible assets, a qualitative assessment can also be performed to determine whether the existence of events and circumstances indicates it is more likely than not the intangible asset is impaired. Similar to goodwill, we can also elect to forgo a qualitative test for indefinite life intangible assets and perform a quantitative test. Upon performing the quantitative test, if the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. We evaluate whether certain trade names continue to have an indefinite life annually. After we made our assessments, it was determined that there was no impairment related to goodwill or other intangible assets during fiscal 2023, 2022, and 2021. Leases We enter into contractual arrangements for the utilization of certain non-owned assets which are evaluated as finance or operating leases upon commencement and are accounted for accordingly. Specifically, a contract is or contains a lease when (1) the contract contains an explicitly or implicitly identified asset and (2) we obtain substantially all of the economic benefits from the use of that underlying asset and direct how and for what purpose the asset is used during the term of the contract in exchange for consideration. We assess whether an arrangement is or contains a lease at inception of the contract. We lease certain retail locations, warehouse and distribution space, office space, equipment, and vehicles. A substantial majority of our leases have an initial lease term of five years , typically with the option to extend the lease for at least one additional five-year term. Some of our leases may include the option to terminate in less than five years. The lease term used to calculate the right-of-use asset and lease liability at commencement includes the impacts of options to extend or terminate the lease when it is reasonably certain that we will exercise that option. When determining whether it is reasonably certain that we will exercise an option at commencement, we consider various existing economic factors, including market conditions, real estate strategies, the nature, length, and terms of the agreement, as well as the uncertainty of the condition of leased equipment at the end of the lease term. Based on these considerations, we generally conclude that the exercise of renewal options would not be reasonably certain in calculating our operating lease liability at commencement. The discount rate used to calculate the present value of lease payments is the rate implicit in the lease, when readily determinable. As the rate implicit in the lease is rarely readily determinable, we use a secured incremental borrowing rate, which is updated on a periodic basis as the discount rate for the present value of lease payments. Real estate taxes, insurance, maintenance, and operating expenses applicable to the leased property are generally our obligations under our lease agreements. In instances where these payments are fixed, they are included in the measurement of our lease liabilities, and when variable, are excluded and recognized in the period in which the obligation for those payments is incurred. For variable payments dependent upon an index or rate, we apply the active index or rate as of the lease commencement date. Variable lease payments not based on an index or rate are not included in the measurement of our operating lease liabilities as they cannot be reasonably estimated and are recognized in the period in which the obligation for those payments is incurred. Leases that have a term of 12 months or less upon commencement are considered short-term in nature and as such are not included in the measurement of our operating lease right-of-use assets and operating lease liabilities on the consolidated balance sheets and are expensed on a straight-line basis over the lease term. In addition, we separate lease and non-lease components (e.g., common area maintenance). Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Revenue Recognition Revenue is recognized when control of the promised goods or services is transferred to our customer, in an amount that reflects the consideration we expect to be entitled to in exchange for such goods or services. Revenue from merchandise sales at retail locations is recognized at the point of sale and revenue from services is recognized when the services are rendered. Revenue from e-commerce merchandise sales is recognized either at the time of pick-up at one of our locations or at the time of shipment, depending on the customer’s order designation. Revenue is recorded net of related discounts, loyalty point deferrals, and sales tax. Payment from retail customers is generally at the point of sale and payment terms for professional pool operators are based on our credit requirements and generally have terms of less than 60 days . When we receive payment from a consumer before the consumer has taken possession of the merchandise or the service has been performed, the amount received is recorded as deferred revenue or as a customer deposit until the sale or service is complete. Shipping and h andling are treated as costs to fulfill the contract and not a separate performance obligation. We estimate a liability for sales returns based on current sales levels and historical return trends. At each financial reporting date, we assess our estimates of expected returns, and a corresponding adjustment to cost of sales for our right to recover the goods returned by the customer, net of any expected recovery cost. Adjustments related to changes in return estimates were immaterial in all periods presented. Our loyalty program, Pool Perks ® , allows members to earn reward points based on their purchases. Once a loyalty member achieves a certain point level, the member earns an award that may be used on future purchases. Points and awards are valid for 12 months from issuance. We defer revenue related to earned points and awards that have not yet been redeemed. The amount of deferred revenue is based on the estimated standalone selling price of points and awards earned by members and reduced by the percentage of points and awards expected to be redeemed. Estimating future redemption rates requires judgment based on current trends and historical patterns. Revenue is recognized when the rewards are re deemed and expired. To the extent we have a change in our breakage estimates, the corresponding amount of change is recognized in revenue. As of September 30, 2023 and October 1, 2022, deferred revenue related to the loyalty program was $ 5.6 million and $ 4.6 million, respectively, and is included in accounts payable and accrued expenses in our consolidated balance sheets. Cost of Merchandise and Services Sold Cost of merchandise and services sold reflects the direct cost of purchased merchandise, costs to package certain chemical products, including direct materials and labor, costs to provide services, including labor and materials, as well as distribution and occupancy costs. Distribution costs include warehousing and transportation expenses, including costs associated with third-party fulfillment centers. Occupancy costs include the rent, common area maintenance, real estate taxes, and depreciation and amortization costs of all retail locations . Selling, General and Administrative Expenses Our SG&A includes selling and operating expenses at our retail locations and corporate level general and administrative expenses. Selling and operating expenses at retail locations include payroll, bonus and benefit costs for personnel, supplies, and credit and debit card processing costs. Corporate expenses include payroll, bonus, and benefit costs for our corporate and field support functions, equity-based compensation, marketing and advertising, insurance, utilities, occupancy costs related to our corporate office facilities, professional services, and depreciation and amortization for all assets, except those related to our retail locations and distribution operations, which are included in cost of merchandise and services sold. Advertising We expense advertising costs as incurred. Advertising costs for fiscal 2023, 2022, and 2021 were approxim ately $ 35.1 million, $ 38.0 million, and $ 25.4 million, respectively. Income Taxes We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts and tax bases of existing assets and liabilities. Deferred tax assets, including the benefit of net operating loss and tax credit carryforwards, are evaluated based on the guidelines for realization and are reduced by a valuation allowance if it is deemed more likely than not that such assets will not be realized. We consider several factors in evaluating the realizability of our deferred tax assets, including the nature, frequency and severity of recent losses, the remaining years available for carryforwards, changes in tax laws, the future profitability of the operations in the jurisdiction, and tax planning strategies. Our judgments and estimates concerning realizability of deferred tax assets could change if any of the evaluation factors change, resulting in an increase or decrease to income tax expense in any period. The ultimate realization of deferred tax assets can be dependent upon the generation of future taxable income during the periods in which the associated temporary differences become deductible. On a quarterly basis, we evaluate whether it is more likely than not that our deferred tax assets will be realized in the future and conclude whether a valuation allowance must be established. We record a liability for uncertain tax positions to the extent a tax position taken or expected to be taken in a tax return does not meet certain recognition or measurement criteria. Considerable management judgment is necessary to assess the inherent uncertainties related to the interpretations of complex tax laws, regulations and taxing authority rulings. Our judgments and estimates may change as a result of the evaluation of new information, such as the outcome of tax audits or changes to or further interpretations of tax laws and regulations, resulting in an increase or decrease to income tax expense in any period. Interest and penalties accrued, if any, relating to uncertain tax positions will be recognized as a component of the income tax provision. We determined there were no material uncertain tax positions as of September 30, 2023 and October 1, 2022. Equity-Based Compensation Stock-based compensation expense is measured at grant date, based on the fair value of the award, and is recognized on a straight-line basis over the requisite service period for awards expected to vest. See Note 17—Equity-Based Compensation for further discussion. Self-Insurance Reserves We are self-insured for losses relating to workers’ compensation, general liability, and employee medical. Stop-loss coverage has been purchased to limit exposure to any material level of claims. Liabilities for self-insurance reserves are estimated based on independent actuarial estimates, which are based on historical information and assumptions about future events. We utilize various techniques, including analysis of historical trends and actuarial valuation methods, to estimate the cost to settle reported claims and claims incurred but not yet reported as of the balance sheet date. The actuarial valuation methods consider loss development factors, which include the development time frame and expected claim reporting and settlement patterns, and expected loss costs, which include the expected frequency and severity of claim activity. Earnings per Share Basic earnings per share is calculated by dividing net income by the weighted average number of shares outstanding during the period. Dilutive earnings per share is computed giving effect to all potentially dilutive shares, unless their effect is antidilutive. We apply the treasury stock method for dilutive share-based awards. Performance-based share-based awards are included in diluted shares only if the related performance conditions have been considered satisfied as of the end of the reporting period. Recent Accounting Pronouncements In March 2020, January 2021 and December 2022, the FASB issued ASU No. 2020-04, 2021-01 and 2022-06, respectively, regarding Reference Rate Reform (collectively “Topic 848”). This collective guidance was in response to accounting concerns regarding contract modifications and hedge accounting because of rate reform associated with structural risks of interbank offered rates, and particularly, the risk of cessation of the London Inter-Bank Offer Rate (“LIBOR”) related to regulators in several jurisdictions around the world having undertaken reference rate reform initiatives to identify alternative reference rates. In addition, Topic 848 provided optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria were met. The guidance was effective upon issuance and may be applied through December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. The primary contracts for which LIBOR were used were our Revolving Credit Facility and Term Loan (as defined in Note 10—Long-Term Debt, Net). The Company transitioned from a LIBOR-based rate to a Term Secured Overnight Financing Rate (“Term SOFR”)-based rate for our Revolving Credit Facility and Term Loan and elected the optional expedients under the standard as of the first day of the second and third quarters, respectively. This adoption did not have a material impact to our condensed consolidated financial statements. |
Business Combinations
Business Combinations | 12 Months Ended |
Sep. 30, 2023 | |
Business Combinations [Abstract] | |
Business Combinations | Note 3—Business Combinations Our consolidated financial statements include the results of operations of these acquisitions from the date of acquisition. The total purchase consideration was allocated to the tangible and intangible assets acquired and the liabilities assumed at their estimated fair values as of each acquisition date, with the excess recorded to goodwill. The goodwill resulting from these acquisitions is expected to be deductible for income tax purposes. During the measurement periods, which will not exceed one year from each closing, we will continue to obtain information to assist us in finalizing the acquisition date fair values. Any qualifying changes to our preliminary estimates will be recorded as adjustments to the respective assets and liabilities, with any residual amounts allocated to goodwill. Fiscal 2023 Acquisitions In fiscal 2023, we acquired five businesses for an aggregate purchase price of $ 15.5 million, net of cash acquired. These acquisitions expanded our pool and spa footprint and added 12 new locations across Arizona, California, Florida, and Louisiana. The purchase accounting for these acquisitions has not yet been completed and therefore the purchase price allocations are preliminary. Total Total purchase consideration, net of cash acquired $ 15,549 Fair value of assets acquired and liabilities assumed: Inventories 4,518 Finite-lived intangible assets 2,700 Other assets and liabilities, net 152 Total assets acquired, net of liabilities assumed 7,370 Goodwill $ 8,179 Fiscal 2022 Acquisitions In fiscal 2022, we acquired six businesses for an aggregate purchase price of $ 107.7 million, inclusive of contingent considerations of up to $ 4.0 million if certain performance metrics are achieved within one to three years of the respective closing dates. Contingent considerations are remeasured to fair value at each reporting period until the contingency is resolved. As of September 30, 2023, the fair value of fiscal 2022 contingent consideration is $ 3.0 million and is included in accounts payable and accrued expenses in our consolidated balance sheets. These acquisitions expanded our pool and spa footprint and added 27 new locations as well as expanded our manufacturing capabilities. The following table sets forth the purchase price allocation of these acquisitions, net of immaterial measurement period adjustments, in the aggregate (in thousands). The purchase accounting for these acquisitions is complete. Total Total purchase consideration, net of cash acquired $ 107,663 Fair value of assets acquired and liabilities assumed: Inventories 20,050 Finite-lived intangible assets 15,200 Other assets and liabilities, net 3,086 Total assets acquired, net of liabilities assumed 38,336 Goodwill $ 69,327 |
Goodwill and Other Intangibles,
Goodwill and Other Intangibles, Net | 12 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangibles, Net | Note 4—Goodwill and Other Intangibles, Net Goodwill The following table details the changes in goodwill (in thousands): September 30, 2023 October 1, 2022 Balance at beginning of the year $ 173,513 $ 101,114 Acquisitions, net of measurement period adjustments 7,185 72,399 Balance at the end of the year $ 180,698 $ 173,513 Other Intangible Assets Other intangible assets consisted of the following as of September 30, 2023 (in thousands, except weighted average remaining useful life): Weighted Gross Accumulated Net Trade name and trademarks (finite life) 9.8 $ 26,740 $ ( 7,958 ) $ 18,782 Trade name and trademarks (indefinite life) Indefinite 9,350 — 9,350 Non-compete agreements 5.4 8,683 ( 7,585 ) 1,098 Consumer relationships 7.4 24,100 ( 15,317 ) 8,783 Other intangibles 5.1 6,620 ( 6,476 ) 144 Total $ 75,493 $ ( 37,336 ) $ 38,157 Other intangible assets consisted of the following as of October 1, 2022 (in thousands, except weighted average remaining useful life): Weighted Gross Accumulated Net Trade name and trademarks (finite life) 11.0 $ 24,440 $ ( 5,907 ) $ 18,533 Trade name and trademarks (indefinite life) Indefinite 9,350 — 9,350 Non-compete agreements 6.5 8,683 ( 7,379 ) 1,304 Consumer relationships 7.9 24,100 ( 13,339 ) 10,761 Other intangibles 6.2 6,620 ( 6,380 ) 240 Total $ 73,193 $ ( 33,005 ) $ 40,188 Other intangible assets consisted of the following as of October 2, 2021 (in thousands, except weighted average remaining useful life): Weighted Gross Accumulated Net Trade name and trademarks (finite life) 6.6 $ 5,940 $ ( 5,274 ) $ 666 Trade name and trademarks (indefinite life) Indefinite 17,750 — 17,750 Non-compete agreements 7.5 8,633 ( 7,123 ) 1,510 Consumer relationships 6.4 19,000 ( 11,688 ) 7,312 Other intangibles 7.0 6,620 ( 5,952 ) 668 Total $ 57,943 $ ( 30,037 ) $ 27,906 Amortization expense was $ 4.3 million, $ 3.0 million, and $ 2.2 million in fiscal 2023, 2022, and 2021, respectively. No impairment of goodwill or other intangible assets was recorded during fiscal 2023, 2022, and 2021. In fiscal 2022, an $ 8.4 million indefinite-lived trade name intangible asset was reclassified to a finite-lived intangible asset due to a change in the way the asset will be utilized in the future. Prior to reclassifying the trade name to a finite-lived intangible asset, the Company tested it for impairment and determined that the fair value of the asset exceeded the carrying value. This trade name was assigned a 10 -year estimated useful life and will be amortized over its useful life on a prospective basis. The following table summarizes the estimated future amortization expense related to finite-lived intangible assets on our consolidated balance sheet as of September 30, 2023 (in thousands): Amount 2024 $ 3,693 2025 3,596 2026 3,350 2027 3,226 2028 2,273 Thereafter 12,669 Total $ 28,807 |
Accounts and Other Receivables,
Accounts and Other Receivables, Net | 12 Months Ended |
Sep. 30, 2023 | |
Receivables [Abstract] | |
Accounts and Other Receivables, Net | Note 5—Accounts and Other Receivables, Net Accounts and other receivables, net consisted of the following (in thousands): September 30, 2023 October 1, 2022 Vendor and other rebates receivable $ 6,818 $ 24,546 Customer receivables 18,334 17,708 Other receivables 5,900 4,553 Allowance for doubtful accounts ( 1,656 ) ( 1,512 ) Total $ 29,396 $ 45,295 |
Inventories
Inventories | 12 Months Ended |
Sep. 30, 2023 | |
Inventory Disclosure [Abstract] | |
Inventories | Note 6—Inventories Inventories consisted of the following (in thousands): September 30, 2023 October 1, 2022 Raw materials $ 3,076 $ 9,065 Finished goods 308,761 352,621 Total $ 311,837 $ 361,686 Changes in inventory excess and obsolescence reserves were as follows (in thousands): Additions Deductions Balance at Beginning of Period Charged to Costs and Expenses Sale or Disposal of Inventories Balance at Fiscal 2023 $ 5,871 $ 4,387 $ ( 3,334 ) $ 6,924 Fiscal 2022 $ 5,856 $ 865 $ ( 850 ) $ 5,871 Fiscal 2021 $ 4,939 $ 1,993 $ ( 1,076 ) $ 5,856 |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 12 Months Ended |
Sep. 30, 2023 | |
Prepaid Expense and Other Assets, Current [Abstract] | |
Prepaid Expenses and Other Current Assets | Note 7—Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following (in thousands): September 30, 2023 October 1, 2022 Prepaid insurance $ 1,236 $ 1,110 Prepaid occupancy costs 1,967 1,840 Prepaid sales tax 4,060 2,874 Prepaid other 6,239 4,847 Other current assets 10,131 12,433 Total $ 23,633 $ 23,104 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 8—Property and Equipment Property and equipment consist of the following (in thousands): September 30, 2023 October 1, 2022 Land $ 5,401 $ 5,813 Buildings and improvements 10,063 10,135 Vehicles, machinery and equipment 42,663 42,394 Leasehold improvements 200,968 187,876 Office furniture, computers and software 178,733 168,988 Construction in process 12,389 5,741 $ 450,217 $ 420,947 Less: accumulated depreciation and amortization ( 359,932 ) ( 342,860 ) Total $ 90,285 $ 78,087 Depreciation and amortization expense on property and equipment was $ 29.8 million, $ 27.8 million, and $ 26.6 million in fiscal 2023, 2022, and 2021, respectively. Construction in process primarily consisted of leasehold improvements related to new or remodeled locations where construction had not been completed by the end of the period and internal use software as of September 30, 2023 and October 1, 2022, respectively. Capitalized software additions placed into service we re $ 5.2 million, $ 6.5 million, and $ 2.8 million in fiscal 2023, 2022, and 2021, respectively. C apitalized software accumulated amortization totaled approximately $ 22.0 million and $ 20.9 million as of September 30, 2023 and October 1, 2022, respectively. Capitalized software and development costs remaining to be amortized were approximately $ 11.6 million and $ 7.6 million as of September 30, 2023 and October 1, 2022, respectively. |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 12 Months Ended |
Sep. 30, 2023 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Expenses | Note 9—Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consisted of the following (in thousands): September 30, 2023 October 1, 2022 Accounts payable $ 58,556 $ 156,456 Accrued payroll and employee benefits 18,558 34,010 Customer deposits 7,356 13,250 Interest 581 342 Inventory related accruals 13,843 16,034 Loyalty and deferred revenue 6,785 5,541 Sales tax 9,146 9,130 Self-insurance reserves 9,138 9,280 Other accrued liabilities 25,191 22,929 Total $ 149,154 $ 266,972 As of September 20, 2023, October 1, 2022, and October 2, 2021, approx imately $ 1.5 million, $ 1.1 million, and $ 1.5 million of capital expenditures were included in other accrued liabilities, respectively. |
Long-Term Debt, Net
Long-Term Debt, Net | 12 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Long-Term Debt, Net | Note 10—Long-Term Debt, Net Our long-term debt, net consisted of the following (in thousands, except interest rates): Effective (1) September 30, 2023 October 1, 2022 Term Loan 8.20 % (2) $ 789,750 $ 797,850 Revolving Credit Facility — % (3) — — Total long-term debt 789,750 797,850 Less: current portion of long-term debt ( 8,100 ) ( 8,100 ) Less: unamortized discount ( 2,316 ) ( 2,805 ) Less: deferred financing charges ( 6,058 ) ( 7,219 ) Total long-term debt, net $ 773,276 $ 779,726 (1) Effective interest rates as of September 30, 2023. (2) Carries interest at a specified margin over Term SOFR between 2.50 % and 2.75 % with a minimum SOFR of 0.50 % plus a SOFR adjustment. (3) Carries interest at a specific margin between 0.25 % and 0.75 % with respect to Base Rate loans and between 1.25 % and 1.75 % with respect to Term SOFR loans, with a SOFR adjustment. Term Loan In June 2023, we entered into Amendment No. 1 (“Term Loan Amendment”) to our Term Loan. The Term Loan Amendment (i) replaced the existing LIBOR-based interest rate benchmark with a Term SOFR-based benchmark and (ii) amended certain other related terms and provisions, including the addition of a SOFR adjustment of (a) 0.11448 % per annum for one-month, (b) 0.26161 % per annum for three months, and (c) 0.42826 % per annum for six months. The other material terms of the Term Loan remained substantially unchanged. The Term Loan provides for an $ 810.0 million secured term loan facility with a maturity date of March 9, 2028 . Borrowings under the Term Loan have an initial applicable rate, at our option, of (i) 2.75 % for loans that are Term SOFR loans and (ii) 1.75 % for loans that are ABR loans (the “Applicable Rate”). The Applicable Rate of the Term Loan is based on our first lien leverage ratio as follows: (a) if the first lien leverage ratio is greater than 2.75 to 1.00 , the applicable rate will be 2.75 % for Term SOFR loans and 1.75 % for ABR loans and (b) if the first lien leverage ratio is less than or equal to 2.75 to 1.00 , the applicable rate will be 2.50 % for Term SOFR loans and 1.50 % for ABR loans. For Term SOFR loans, the loans will bear interest at the Term SOFR-based benchmark rate plus the Applicable Rate and the SOFR adjustment, as defined above. Revolving Credit Facility In March 2023, we entered into Amendment No. 6 to our $ 200.0 million credit facility (“Revolving Credit Facility”) maturing on August 13, 2025 (the “Amendment”). The Amendment (i) increased the revolving credit commitments under the Revolving Credit Facility in the amount of $ 50.0 million, such that the aggregate commitments are $ 250.0 million and (ii) replaced the existing LIBOR-based rate with a Term SOFR-based rate, as an interest rate benchmark. The Revolving Credit Facility has (i) an applicable margin on Base Rate loans with a range of 0.25 % to 0.75 %, (ii) an applicable margin on Term SOFR loans with a range of 1.25 % and 1.75 %, (iii) a SOFR Adjustment of 0.10 % for all borrowing periods, (iv) a floor of 0 % per annum, and (v) a commitment fee rate of 0.25 % per annum. The other material terms of the Revolving Credit Facility prior to the Amendment remained substantially unchanged. As of September 30, 2023 and October 1, 2022, no amounts were outstanding under the Revolving Credit Facility. Th e amount available under our Revolving Credit Facility was reduc ed by $ 11.4 million and $ 10.0 million of existing standby letters of credit as of September 30, 2023 and October 1, 2022, respectively. Representations and Covenants Substantially all of our assets are pledged as collateral to secure our indebtedness. The Term Loan does not require us to comply with any financial covenants. The Term Loan and the Revolving Credit Facility contain customary representations and warranties, covenants, and conditions to borrowing. No events of default occurred as of September 30, 2023 and October 1, 2022, respectively. Future Debt Maturities The following table summarizes the debt maturities and scheduled principal repayments of our indebtedness as of September 30, 2023 (in thousands): Amount 2024 $ 6,075 2025 10,125 2026 8,100 2027 8,100 2028 757,350 Thereafter — Total $ 789,750 |
Leases
Leases | 12 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Leases | Note 11—Leases Operating Leases We lease certain locations, office, distribution, and manufacturing facilities under operating leases that expire at various dates through December 2048 . We are obligated to make cash payments in connection with various lease obligations and purchase commitments. All of these obligations require cash payments to be made by us over varying periods of time. Certain leases are renewable at our option typically for periods of five or more years. Certain of these arrangements are cancelable on short notice and others require payments upon early termination. We do not have any finance leases. The following table summarizes the components of lease expense (in thousands): Year Ended September 30, 2023 October 1, 2022 October 2, 2021 Operating lease expense $ 79,741 $ 72,922 $ 68,130 Variable lease expense — — 1,129 Total net lease expense $ 79,741 $ 72,922 $ 69,259 As of September 30, 2023 and October 1, 2022, operating lease right-of-use assets obtained in exchange for operating lease liabilities totaled $ 11.1 million and $ 32.6 million, respectively. The follow ing table presents the weighted-average remaining lease term and discount rate for operating leases: September 30, 2023 October 1, 2022 Weighted-average remaining lease term 5.0 years 4.4 years Weighted-average discount rate 6.2 % 5.5 % The following table summarizes the future annual minimum lease payments as of September 30, 2023 (in thousands): Amount 2024 $ 76,361 2025 70,356 2026 61,616 2027 41,139 2028 22,036 Thereafter 34,773 Total $ 306,281 Less: amount of lease payments representing imputed interest 50,265 Present value of future minimum lease payments 256,016 Less: current operating lease liabilities 62,794 Operating lease liabilities, noncurrent $ 193,222 |
Income Taxes
Income Taxes | 12 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 12—Income Taxes The provision for income taxes consists of the following (in thousands): Year Ended September 30, 2023 October 1, 2022 October 2, 2021 Current: Federal $ 13,425 $ 37,886 $ 25,914 State 2,404 8,736 7,733 Total Current 15,829 46,622 33,647 Deferred: Federal ( 5,608 ) 2,556 2,633 State ( 722 ) ( 90 ) 215 Total Deferred ( 6,330 ) 2,466 2,848 Total income tax provision $ 9,499 $ 49,088 $ 36,495 A reconciliation of the provision for income taxes to the amount computed at the federal statutory rate is as follows (in thousands): Year Ended September 30, 2023 October 1, 2022 October 2, 2021 Federal income tax at statutory rate $ 7,716 $ 43,705 $ 34,257 Equity-based compensation 129 ( 1,025 ) ( 2,360 ) Section 162(m) limitation 520 805 2,826 Permanent differences 82 96 564 Change in valuation allowance — — ( 5,425 ) State taxes, net of federal benefit 1,109 6,734 7,072 Other ( 57 ) ( 1,227 ) ( 439 ) Total income tax provision $ 9,499 $ 49,088 $ 36,495 Our effecti ve income tax rate for fiscal 2023 was 25.9 % as compared to 23.6 % in fiscal 2022. The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities are summarized below (in thousands): September 30, 2023 October 1, 2022 Deferred tax assets: Compensation accruals $ 1,878 $ 4,067 Inventories 1,237 3,496 Lease liabilities 64,619 58,710 Equity-based compensation 2,503 2,151 Reserves and other accruals 2,696 1,059 Interest limitation 7,615 — Capitalized research expenditures 2,017 — Total deferred tax assets 82,565 69,483 Deferred tax liabilities: Property, plant, and equipment ( 4,387 ) ( 4,066 ) Intangibles ( 6,109 ) ( 4,302 ) Lease assets ( 61,835 ) ( 57,798 ) Deferred financing cost ( 253 ) ( 310 ) Other ( 2,383 ) ( 1,739 ) Total deferred tax liabilities ( 74,967 ) ( 68,215 ) Deferred tax assets (liabilities), net $ 7,598 $ 1,268 Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets. The interest expense limitation passed in the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) created a deferred tax asset for the fiscal year ended October 3, 2020 that we did not anticipate realizing in the immediate future; as a result, a valuation allowance was recorded. The $ 5.4 million valuation allowance was removed during the first quarter of fiscal 2021 as the realization of the CARES Act deferred tax asset was deemed probable due to the Company's paydown of debt with proceeds from the IPO, which decreased interest expense. We are subject to United States federal and state taxes in the normal course of business and our income tax returns are subject to examination by the relevant tax authorities. We are no longer subject to United States federal examinations by taxing authorities for calendar years before 2019 and no longer subject to state examinations for calendar years before 2018. We have not identified any material uncertain tax positions. In August 2022, the Inflation Reduction Act of 2022 was signed into law and contains provisions effective January 1, 2023 which were not material to the Company’s income tax provision. |
Commitments & Contingencies
Commitments & Contingencies | 12 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments & Contingencies | Note 13—Commitments & Contingencies Contingencies On September 8, 2023, a class action complaint for violation of federal securities laws was filed by West Palm Beach Police Pension Fund in the U.S. District Court for the District of Arizona against us, our Chief Executive Officer and our former Chief Financial Officer. The complaint alleges that we violated federal securities laws by issuing materially false and misleading statements that failed to disclose adverse facts about our financial guidance, business operations and prospects, and seeks class certification, damages, interest, attorneys’ fees, and other relief. Due to the early stage of this proceeding, we cannot reasonably estimate the potential range of loss, if any. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter. We are also defendants in lawsuits or potential claims encountered in the normal course of business. When the potential liability from a matter can be estimated and the loss is considered probable, we record the estimated loss. Due to uncertainties related to the resolution of lawsuits, investigations and claims, the ultimate outcome may differ from the estimates. We do not expect that the resolutions of any of these matters will have a material effect to our consolidated financial position or results of operations. We did not record any material loss contingencies as of September 30, 2023, October 1, 2022, and October 2, 2021, respectively. Our workers’ compensation insurance program, general liability insurance program, and employee group medical plan have self-insurance retention features of up to $ 0.4 million per event as o f September 30, 2023 and October 1, 2022. We had standby letters of credit outstanding in the amo unt of $ 11.4 million and $ 10.0 million as of September 30, 2023 and October 1, 2022, respectively, for the purpose of securing such obligations under our workers’ compensation self-insurance programs. Purchase Commitments In addition to our lease obligations, we maintain future purchase commitments related to inventory and operational requirements. The following table summarizes the future minimum purchase commitments as of September 30, 2023 (in thousands): Amount 2024 $ 79,941 2025 78,327 2026 7,838 2027 5,705 2028 2,207 Thereafter — Total $ 174,018 |
401(K) Plan
401(K) Plan | 12 Months Ended |
Sep. 30, 2023 | |
Retirement Benefits [Abstract] | |
401(K) Plan | Note 14—401(K) Plan We provide for the benefit of our employees a voluntary defined contribution retirement plan under Section 401(k) of the Internal Revenue Code. The plan covers all eligible employees and provides for a matching contribution by us of 50 % of each participant’s contribution of up to 4 % of the individual’s compensation as defined. The expenses related to this plan wer e $ 1.5 million, $ 1.4 million, and $ 0.8 million in fiscal 2023, 2022, and 2021, respectively. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Sep. 30, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 15—Related Party Transactions On December 14, 2021, the Company entered into a share repurchase agreement with Bubbles Investor Aggregator, L.P. and Explorer Investment Pte. Ltd. (together, the “Selling Stockholders”), each a greater than 5 % beneficial owner of the Company’s common stock at the time of the transaction, providing for the repurchase by the Company from the Selling Stockholders of an aggregate of 7.5 million shares of common stock, conditioned on the closing of a contemporaneous secondary public offering (the “Offering”). The price per share of repurchased common stock paid by the Company was $ 20.25 , which represents the per share price at which shares of common stock were sold to the public in the Offering less the underwriting discount. The repurchase transaction closed on December 16, 2021. See Note 16—Share Repurchase Program for detailed information regarding our share repurchase program. |
Share Repurchase Program
Share Repurchase Program | 12 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
Share Repurchase Program | Note 16—Share Repurchase Program On December 3, 2021, the board of directors authorized a share repurchase program for up to an aggregate of $ 300 million of the Company’s outstanding shares of common stock over a period of three years , expiring December 31, 2024 . The amount, price, manner, and timing of repurchases are determined by the Company in its discretion and depends on a number of factors, including legal requirements, price, economic and market conditions, the Company’s financial condition, capital requirements, cash flows, results of operations, future business prospects, and other factors our management may deem relevant. The share repurchase program may be amended, suspended, or discontinued at any time. Shares may be repurchased from time-to-time using a variety of methods, including on the open market and/or in privately negotiated transactions, including under plans complying with Rule 10b5-1 under the Exchange Act, as part of accelerated share repurchases, and other methods. On December 16, 2021, the Company repurchased and retired 7.5 million shares of common stock at a price per share of $ 20.25 under the program. The Company paid $ 151.9 million ($ 152.1 million including offering costs) to fund the share repurchase using existing cash on hand. The Company accounted for the share repurchase and retirement of shares under the cost method by deducting its par value from common stock, reducing additional paid-in-capital by $ 127.5 million (using the share price when the shares were originally issued), and increasing retained deficit by the remaining excess cost of $ 24.4 million. As of September 30, 2023, approximately $ 147.7 million remained available for future purchases under our share repurchase program. The following table presents information about our repurchases of common stock under our share repurchase program (in thousands): Year Ended September 30, 2023 October 1, 2022 Total number of shares repurchased — 7,500 Total amount paid for shares repurchased $ — $ 151,875 |
Equity-Based Compensation
Equity-Based Compensation | 12 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Equity-Based Compensation | Note 17—Equity-Based Compensation Equity-Based Compensation 2020 Omnibus Incentive Plan In October 2020, we adopted the Leslie’s, Inc. 2020 Omnibus Incentive Plan (the “Plan”). The Plan provides for various types of awards, including non-qualified stock options to purchase Leslie’s common stock (each, a “Stock Option”), restricted stock units (“RSUs”) and performance stock units (“PSUs”) which may settle in Leslie’s, Inc. common stock to our directors, executives, and eligible employees of the Company. As of September 30, 2023, we had approximately 7.7 million shares of common stock available for future grants under the Plan. As of September 30, 2023, the aggregate unamortized value of all outstanding equity-based compensation awards was approximately $ 22.6 million, which is expected to be recognized over a weighted average period of approximately 2.4 years. Stock Options Stock Options granted under the Plan generally expire ten years from the date of grant and consist of Stock Options that vest upon satisfaction of time-based requirements. The following tables summarize our Stock Option activity under the Plan (in thousands, except per share amounts): Year Ended September 30, 2023 October 1, 2022 Number of Options Weighted Average Number of Options Weighted Average Outstanding, Beginning 3,780 $ 18.24 4,877 $ 18.22 Granted — — — — Exercised — — ( 81 ) 17.00 Forfeited/Expired ( 472 ) 19.25 ( 1,016 ) 18.22 Balance, Ending 3,308 $ 18.10 3,780 $ 18.24 Vested and exercisable as of September 30, 2023 1,980 $ 18.18 1,349 $ 18.28 September 30, 2023 Aggregate intrinsic value of Stock Options outstanding $ — Unamortized value of unvested Stock Options $ 4,072 Weighted average years that expense is expected to be recognized 1.1 Weighted average remaining contractual years outstanding 7.5 Restricted Stock Units and Performance Units RSUs represent grants that vest ratably upon the satisfaction of time-based requirements. PSUs represent grants potentially issuable in the future based upon the Company’s achievement of certain performance conditions. The fair value of our RSUs and PSUs are calculated based on the Company’s stock price on the date of the grant. The following table summarizes our RSU and PSU activity under the Plan (in thousands, except per share amounts): Year Ended September 30, 2023 October 1, 2022 Number of RSUs/PSUs Weighted Average Number of RSUs/PSUs Weighted Average Outstanding, Beginning 2,297 $ 10.04 3,135 $ 6.90 Granted (1) 1,487 11.19 631 18.57 Vested ( 1,057 ) 7.00 ( 1,079 ) 5.99 Forfeited ( 643 ) 11.58 ( 390 ) 9.82 Balance, Ending 2,084 $ 11.92 2,297 $ 10.04 (1) Includes 0.3 million PSUs granted in December 2022 subject to the Company achieving certain adjusted net income and sales performance targets on a cumulative basis during each of fiscal years 2023, 2024, and 2025. The criteria are based on a range of these performance targets in which participants may earn between 0 % to 200 % of the base number of awards granted. The weighted average grant date fair value of the PSUs was $ 12.04 . The Company assesses the attainment of target payout rates each reporting period. Equity-based compensation expense is recognized for awards deemed probable of vesting. September 30, 2023 Unamortized value of unvested RSUs/PSUs $ 18,527 Weighted average period (years) expense is expected to be recognized 2.7 During the fiscal year ended September 30, 2023, equity-based compensation expens e was $ 11.7 million. During the fiscal year ended October 1, 2022, equity-based compensation expense was $ 11.3 million. Equity-based compensation expense is reported in SG&A in our consolidated statements of operations. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 18—Earnings Per Share The following is a reconciliation of basic weighted average common shares outstanding to diluted weighted average common shares outstanding (in thousands, except per share amounts): Year Ended September 30, 2023 October 1, 2022 October 2, 2021 Numerator: Net income $ 27,242 $ 159,029 $ 126,634 Denominator: Weighted average shares outstanding - basic 183,839 184,347 185,412 Effect of dilutive securities: Stock Options — — 567 RSUs 877 1,801 4,030 Weighted average shares outstanding - diluted 184,716 186,148 190,009 Basic earnings per share $ 0.15 $ 0.86 $ 0.68 Diluted earnings per share $ 0.15 $ 0.85 $ 0.67 The following number of weighted-average potentially dilutive shares were excluded from the calculation of diluted earnings per share because the effect of including such shares would have been antidilutive (in thousands): Year Ended September 30, 2023 October 1, 2022 October 2, 2021 Stock Options 3,539 4,020 321 RSUs 2,154 601 2 Total 5,693 4,621 323 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation We prepared the accompanying consolidated financial statements following GAAP. The financial statements include all normal and recurring adjustments that are necessary for a fair presentation of our financial position and operating results. The consolidated financial statements include the accounts of Leslie’s, Inc. and our subsidiaries. All significant intercompany accounts and transactions have been eliminated. |
Fiscal Periods | Fiscal Periods We operate on a fiscal calendar that results in a fiscal year consisting of a 52- or 53-week period ending on the Saturday closest to September 30th. In a 52-week fiscal year, each quarter contains 13 weeks of operations; in a 53-week fiscal year, each of the first, second and third quarters includes 13 weeks of operations and the fourth quarter includes 14 weeks of operations. References to fiscal 2023, 2022, and 2021 refer to the 52 weeks ended September 30, 2023, October 1, 2022, and October 2, 2021, respectively. |
Segment Reporting | Segment Reporting Our Chief Operating Decision Maker is our Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of allocating resources and assessing performance. We operate all of our locations in the United States and offer consumers similar products, services, and methods of distribution through our retail locations and e-commerce websites. As a result, we have a single reportable segment. |
Seasonality | Seasonality Our business is highly seasonal. Sales and earnings are highest during our third and fourth fiscal quarters, being April through September, which represent the peak months of swimming pool use. Sales are substantially lower during our first and second fiscal quarters. |
Use of Estimates | Use of Estimates Management is required to make certain estimates and assumptions during the preparation of the consolidated financial statements in accordance with GAAP. These estimates and assumptions impact the reported amount of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements. They also impact the reported amount of net income (loss) during any period. Actual results could differ from those estimates. Significant estimates underlying the accompanying consolidated financial statements include inventory reserves, lease assumptions, vendor rebate programs, our loyalty program, the determination of income taxes payable and deferred income taxes, sales returns reserve, self-insurance liabilities, the recoverability of intangible assets and goodwill, fair value of assets acquired in a business combination, and contingent consideration related to business combinations. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include cash on hand, demand deposits, money market funds and credit and debit card transactions. Our cash balance at financial institutions may exceed the FDIC insurance coverage limit. We consider all investments with an original maturity of three months or less and money market funds to be cash equivalents. All credit card and debit card transactions that process in less than seven days are classified as cash and cash equivalents. |
Fair Value Measurements | Fair Value Measurements We use fair value measurements to record the fair value of certain assets and to estimate the fair value of financial instruments not recorded at fair value but required to be disclosed at fair value. To determine the fair value, we maximize the use of observable inputs and minimize the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use to value an asset or liability and are developed based on market data obtained from independent sources. Unobservable inputs are inputs based on assumptions about the factors market participants would use to value an asset or liability. The fair value hierarchy is as follows, of which the first two are considered observable and the last unobservable: • Level 1—Quoted prices in active markets for identical assets or liabilities. • Level 2—Inputs other than Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data by correlation or other means. • Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Value is determined using pricing models, discounted cash flow methodologies, or similar techniques and also includes instruments for which the determination of fair value requires significant judgment or estimation. As of September 30, 2023 and October 1, 2022, we held no assets that were required to be measured at fair value on a recurring basis. There were no transfers between levels in the fair value hierarchy during fiscal 2023, 2022, and 2021, respectively. The fair value of our Amended and Restated Term Loan Credit Agreement (“Term Loan”) due in 2028 was determined to be $ 774.9 million and $ 760.0 million as of September 30, 2023 and October 1, 2022, respectively. These fair value estimates, determined to be Level 2, are subjective in nature and involve uncertainties and matters of judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect these estimates. The Company’s measurement of contingent consideration is categorized as Level 3 within the fair value hierarchy. Refer to “Business Combinations” herein Note 2—Summary of Significant Accounting Policies below for the fair value measurement of its contingent consideration. The carrying amounts of cash, cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value due to the short-term maturity of these instruments. |
Vendor Rebates | Vendor Rebates Many of our vendor arrangements provide for us to receive specified amounts of consideration when we achieve various measures. These measures generally relate to the volume level of purchases. We calculate the amount earned based on actual purchases, recorded as a reduction of the prices of the vendor’s products and therefore a reduction of inventory at the end of each period based on a detailed analysis of inventory and of the facts and circumstances of various contractual agreements with vendors. We recognize rebates based on an estimated recognition pattern using historical data, and we record this as a reduction of cost of merchandise and services sold in our consolidated statements of operations. Accounts and other receivables include vendor rebate receiva bles of $ 4.7 million and $ 16.6 million as of September 30, 2023 and October 1, 2022, respectively. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts Allowance for doubtful accounts is calculated based on historical experience, counterparty credit risk, consumer credit risk and application of the specific identification method. |
Inventories | Inventories Inventories are stated at the lower of cost or market or net realizable value. We value inventory using the weighted-average cost method. We evaluate inventory for excess and obsolescence and record necessary reserves. We provide provisions for losses related to inventories based on management’s judgment regarding historical purchase cost, selling price, margin, movements, and current business trends. If actual demand or market conditions are different than those projected by management, future margins may be unfavorably or favorably affected by adjustments to these estimates. When an inventory item is sold or disposed, the associated reserve is released at that time. |
Business Combinations | Business Combinations We account for business combinations using the acquisition method of accounting. This method requires that the purchase price of the acquisition be allocated to the assets acquired and liabilities assumed using the fair values determined by management as of the acquisition date. The excess of the purchase price over the amounts allocated to assets acquired and liabilities assumed is recorded as goodwill. We use our best estimates and assumptions as part of the purchase price allocation process to accurately value assets acquired and liabilities assumed as of the acquisition date. Our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill to the extent we identify adjustments to the preliminary purchase price allocation. Upon the conclusion of the measurement period or final determination of the fair values of the assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded in our consolidated statements of operations. Our consolidated financial statements include the results of operations from the date of acquisition for each business combination. The consideration for an acquisition may include future payments that are contingent upon the occurrence of a particular event. We record contingent consideration at fair value on the acquisition date. We estimate the fair values through valuation models that incorporate probability adjusted assumptions related to the achievement of the milestones and the likelihood of making related payments. The fair value is remeasured at each reporting date and changes in fair value are recorded within SG&A in our consolidated statements of operations. Determining the fair value of the contingent consideration requires management to make certain assumptions and judgments, primarily based on the achievement of certain performance metrics specified in the purchase agreements. We expense all acquisition-related costs as incurred within SG&A expenses in our consolidated statements of operations. |
Property and Equipment, Net | Property and Equipment, Net Property and equipment are stated at cost, less accumulated depreciation and amortization. Costs of normal maintenance and repairs are charged to expense as incurred. Major replacements or improvements of property and equipment are capitalized. When items are sold or otherwise disposed of, the cost and related accumulated depreciation or amortization are removed from the accounts, and any resulting gain or loss is included in our consolidated statements of operations. Depreciation and amortization are computed using the straight-line method. These charges are based on the following range of useful lives: Building and improvements 5 - 39 years Vehicles, machinery and equipment 3 - 10 years Office furniture, computers and software 3 - 7 years Leasehold improvements 5 - 10 years , not to exceed the lease life We evaluate our long-lived assets for potential impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. The evaluation for long-lived assets (asset group) is performed at the lowest level of identifiable cash flows, which, for location assets, is the individual location level. The assets of a physical location with indicators of impairment are evaluated for recoverability by comparing its undiscounted future cash flows with its carrying value. If the carrying value is greater than the undiscounted future cash flows, we then measure the asset’s fair value to determine whether an impairment loss should be recognized. If the resulting fair value is less than the carrying value, an impairment loss is recognized for the difference between the carrying value and the estimated fair value. Impairment charges are recorded in SG&A in our consolidated statements of operations. There was no impairment charge in fiscal 2023, 2022, or 2021. |
Cloud Computing Arrangements | Cloud Computing Arrangements From time-to-time, we enter into various agreements with unaffiliated third parties for assistance with technical development work related to our security-related software and systems and other ongoing projects. Expenditures for implementation, set-up, and other upfront costs incurred in a cloud computing arrangement that is hosted by the ven dor are capitalized generally in the same manner as internal use software and are recorded as other assets in our consolidated balance sheets. Such costs are amortized over the life of the related cloud computing arrangement. As of September 30, 2023 and October 1, 2022, approximately $ 5.9 million and $ 9.7 million associated with these agreements are included in prepaid expenses and other current assets in our consolidated balance sheets, respectively. Approximately $ 44.1 million a nd $ 35.7 million associated with these agreements are included in other assets in our consolidated balance sheets as of September 30, 2023 and October 1, 2022, respectively. In addition, for the year ended September 30, 2023, the Company recognized $ 6.3 million of expense in connection with the discontinued use of certain software subscriptions which is recorded in SG&A in our consolidated statements of operations and a corresponding $ 4.4 million liability for future obligations associated with these subscriptions. |
Goodwill and Other Intangibles, Net | Goodwill and Other Intangibles, Net Goodwill and intangible assets are recorded at their estimated fair values at the date of acquisition. We review goodwill and indefinite-lived intangible assets for impairment annually (in the fourth quarter) or more frequently if impairment indicators arise. Goodwill can be evaluated for impairment, at our option, by first performing a qualitative assessment to determine whether a quantitative goodwill test is necessary. If it is determined, based on qualitative factors, the fair value of the reporting unit may be more likely than not less than the carrying amount, a quantitative goodwill impairment test would be required. Additionally, we can elect to forgo a qualitative assessment and perform a quantitative test. The quantitative test is to identify if a potential impairment exists by comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds the fair value, an impairment loss is recognized in an amount equal to that excess, not to exceed the carrying amount of goodwill. If a quantitative test is performed, we would estimate the value considering the use of various valuation techniques which may use significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy. We include assumptions about sales growth, operating margins, discount rates and valuations multiples which consider our budgets, business plans, economic projections and marketplace data, and are believed to reflect market participant views which would exist in an exit transaction. Some of the inherent estimates and assumptions used in this analysis are outside the control of management, including cost of capital, tax rates and market EBITDA comparables. Finite-lived intangible assets are amortized to reflect the pattern of economic benefits consumed. We evaluate amortizable intangible assets for potential impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. Intangible assets useful lives are reviewed annually. For our indefinite life intangible assets, a qualitative assessment can also be performed to determine whether the existence of events and circumstances indicates it is more likely than not the intangible asset is impaired. Similar to goodwill, we can also elect to forgo a qualitative test for indefinite life intangible assets and perform a quantitative test. Upon performing the quantitative test, if the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. We evaluate whether certain trade names continue to have an indefinite life annually. After we made our assessments, it was determined that there was no impairment related to goodwill or other intangible assets during fiscal 2023, 2022, and 2021. |
Leases | Leases We enter into contractual arrangements for the utilization of certain non-owned assets which are evaluated as finance or operating leases upon commencement and are accounted for accordingly. Specifically, a contract is or contains a lease when (1) the contract contains an explicitly or implicitly identified asset and (2) we obtain substantially all of the economic benefits from the use of that underlying asset and direct how and for what purpose the asset is used during the term of the contract in exchange for consideration. We assess whether an arrangement is or contains a lease at inception of the contract. We lease certain retail locations, warehouse and distribution space, office space, equipment, and vehicles. A substantial majority of our leases have an initial lease term of five years , typically with the option to extend the lease for at least one additional five-year term. Some of our leases may include the option to terminate in less than five years. The lease term used to calculate the right-of-use asset and lease liability at commencement includes the impacts of options to extend or terminate the lease when it is reasonably certain that we will exercise that option. When determining whether it is reasonably certain that we will exercise an option at commencement, we consider various existing economic factors, including market conditions, real estate strategies, the nature, length, and terms of the agreement, as well as the uncertainty of the condition of leased equipment at the end of the lease term. Based on these considerations, we generally conclude that the exercise of renewal options would not be reasonably certain in calculating our operating lease liability at commencement. The discount rate used to calculate the present value of lease payments is the rate implicit in the lease, when readily determinable. As the rate implicit in the lease is rarely readily determinable, we use a secured incremental borrowing rate, which is updated on a periodic basis as the discount rate for the present value of lease payments. Real estate taxes, insurance, maintenance, and operating expenses applicable to the leased property are generally our obligations under our lease agreements. In instances where these payments are fixed, they are included in the measurement of our lease liabilities, and when variable, are excluded and recognized in the period in which the obligation for those payments is incurred. For variable payments dependent upon an index or rate, we apply the active index or rate as of the lease commencement date. Variable lease payments not based on an index or rate are not included in the measurement of our operating lease liabilities as they cannot be reasonably estimated and are recognized in the period in which the obligation for those payments is incurred. Leases that have a term of 12 months or less upon commencement are considered short-term in nature and as such are not included in the measurement of our operating lease right-of-use assets and operating lease liabilities on the consolidated balance sheets and are expensed on a straight-line basis over the lease term. In addition, we separate lease and non-lease components (e.g., common area maintenance). Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. |
Revenue Recognition | Revenue Recognition Revenue is recognized when control of the promised goods or services is transferred to our customer, in an amount that reflects the consideration we expect to be entitled to in exchange for such goods or services. Revenue from merchandise sales at retail locations is recognized at the point of sale and revenue from services is recognized when the services are rendered. Revenue from e-commerce merchandise sales is recognized either at the time of pick-up at one of our locations or at the time of shipment, depending on the customer’s order designation. Revenue is recorded net of related discounts, loyalty point deferrals, and sales tax. Payment from retail customers is generally at the point of sale and payment terms for professional pool operators are based on our credit requirements and generally have terms of less than 60 days . When we receive payment from a consumer before the consumer has taken possession of the merchandise or the service has been performed, the amount received is recorded as deferred revenue or as a customer deposit until the sale or service is complete. Shipping and h andling are treated as costs to fulfill the contract and not a separate performance obligation. We estimate a liability for sales returns based on current sales levels and historical return trends. At each financial reporting date, we assess our estimates of expected returns, and a corresponding adjustment to cost of sales for our right to recover the goods returned by the customer, net of any expected recovery cost. Adjustments related to changes in return estimates were immaterial in all periods presented. Our loyalty program, Pool Perks ® , allows members to earn reward points based on their purchases. Once a loyalty member achieves a certain point level, the member earns an award that may be used on future purchases. Points and awards are valid for 12 months from issuance. We defer revenue related to earned points and awards that have not yet been redeemed. The amount of deferred revenue is based on the estimated standalone selling price of points and awards earned by members and reduced by the percentage of points and awards expected to be redeemed. Estimating future redemption rates requires judgment based on current trends and historical patterns. Revenue is recognized when the rewards are re deemed and expired. To the extent we have a change in our breakage estimates, the corresponding amount of change is recognized in revenue. As of September 30, 2023 and October 1, 2022, deferred revenue related to the loyalty program was $ 5.6 million and $ 4.6 million, respectively, and is included in accounts payable and accrued expenses in our consolidated balance sheets. |
Cost of Merchandise and Services Sold | Cost of Merchandise and Services Sold Cost of merchandise and services sold reflects the direct cost of purchased merchandise, costs to package certain chemical products, including direct materials and labor, costs to provide services, including labor and materials, as well as distribution and occupancy costs. Distribution costs include warehousing and transportation expenses, including costs associated with third-party fulfillment centers. Occupancy costs include the rent, common area maintenance, real estate taxes, and depreciation and amortization costs of all retail locations . |
Selling, General and Administrative Expenses | Selling, General and Administrative Expenses Our SG&A includes selling and operating expenses at our retail locations and corporate level general and administrative expenses. Selling and operating expenses at retail locations include payroll, bonus and benefit costs for personnel, supplies, and credit and debit card processing costs. Corporate expenses include payroll, bonus, and benefit costs for our corporate and field support functions, equity-based compensation, marketing and advertising, insurance, utilities, occupancy costs related to our corporate office facilities, professional services, and depreciation and amortization for all assets, except those related to our retail locations and distribution operations, which are included in cost of merchandise and services sold. |
Advertising | Advertising We expense advertising costs as incurred. Advertising costs for fiscal 2023, 2022, and 2021 were approxim ately $ 35.1 million, $ 38.0 million, and $ 25.4 million, respectively. |
Income Taxes | Income Taxes We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts and tax bases of existing assets and liabilities. Deferred tax assets, including the benefit of net operating loss and tax credit carryforwards, are evaluated based on the guidelines for realization and are reduced by a valuation allowance if it is deemed more likely than not that such assets will not be realized. We consider several factors in evaluating the realizability of our deferred tax assets, including the nature, frequency and severity of recent losses, the remaining years available for carryforwards, changes in tax laws, the future profitability of the operations in the jurisdiction, and tax planning strategies. Our judgments and estimates concerning realizability of deferred tax assets could change if any of the evaluation factors change, resulting in an increase or decrease to income tax expense in any period. The ultimate realization of deferred tax assets can be dependent upon the generation of future taxable income during the periods in which the associated temporary differences become deductible. On a quarterly basis, we evaluate whether it is more likely than not that our deferred tax assets will be realized in the future and conclude whether a valuation allowance must be established. We record a liability for uncertain tax positions to the extent a tax position taken or expected to be taken in a tax return does not meet certain recognition or measurement criteria. Considerable management judgment is necessary to assess the inherent uncertainties related to the interpretations of complex tax laws, regulations and taxing authority rulings. Our judgments and estimates may change as a result of the evaluation of new information, such as the outcome of tax audits or changes to or further interpretations of tax laws and regulations, resulting in an increase or decrease to income tax expense in any period. Interest and penalties accrued, if any, relating to uncertain tax positions will be recognized as a component of the income tax provision. We determined there were no material uncertain tax positions as of September 30, 2023 and October 1, 2022. |
Equity-Based Compensation | Equity-Based Compensation Stock-based compensation expense is measured at grant date, based on the fair value of the award, and is recognized on a straight-line basis over the requisite service period for awards expected to vest. See Note 17—Equity-Based Compensation for further discussion. |
Self-Insurance Reserves | Self-Insurance Reserves We are self-insured for losses relating to workers’ compensation, general liability, and employee medical. Stop-loss coverage has been purchased to limit exposure to any material level of claims. Liabilities for self-insurance reserves are estimated based on independent actuarial estimates, which are based on historical information and assumptions about future events. We utilize various techniques, including analysis of historical trends and actuarial valuation methods, to estimate the cost to settle reported claims and claims incurred but not yet reported as of the balance sheet date. The actuarial valuation methods consider loss development factors, which include the development time frame and expected claim reporting and settlement patterns, and expected loss costs, which include the expected frequency and severity of claim activity. |
Earnings per Share | Earnings per Share Basic earnings per share is calculated by dividing net income by the weighted average number of shares outstanding during the period. Dilutive earnings per share is computed giving effect to all potentially dilutive shares, unless their effect is antidilutive. We apply the treasury stock method for dilutive share-based awards. Performance-based share-based awards are included in diluted shares only if the related performance conditions have been considered satisfied as of the end of the reporting period. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In March 2020, January 2021 and December 2022, the FASB issued ASU No. 2020-04, 2021-01 and 2022-06, respectively, regarding Reference Rate Reform (collectively “Topic 848”). This collective guidance was in response to accounting concerns regarding contract modifications and hedge accounting because of rate reform associated with structural risks of interbank offered rates, and particularly, the risk of cessation of the London Inter-Bank Offer Rate (“LIBOR”) related to regulators in several jurisdictions around the world having undertaken reference rate reform initiatives to identify alternative reference rates. In addition, Topic 848 provided optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria were met. The guidance was effective upon issuance and may be applied through December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. The primary contracts for which LIBOR were used were our Revolving Credit Facility and Term Loan (as defined in Note 10—Long-Term Debt, Net). The Company transitioned from a LIBOR-based rate to a Term Secured Overnight Financing Rate (“Term SOFR”)-based rate for our Revolving Credit Facility and Term Loan and elected the optional expedients under the standard as of the first day of the second and third quarters, respectively. This adoption did not have a material impact to our condensed consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Useful Lives | Depreciation and amortization are computed using the straight-line method. These charges are based on the following range of useful lives: Building and improvements 5 - 39 years Vehicles, machinery and equipment 3 - 10 years Office furniture, computers and software 3 - 7 years Leasehold improvements 5 - 10 years , not to exceed the lease life |
Business Combinations (Tables)
Business Combinations (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
2022 Acquisitions | |
Business Acquisition [Line Items] | |
Schedule of Preliminary Allocation of Acquisitions, Net of Immaterial Measurement Period Adjustments in Aggregate | Total Total purchase consideration, net of cash acquired $ 107,663 Fair value of assets acquired and liabilities assumed: Inventories 20,050 Finite-lived intangible assets 15,200 Other assets and liabilities, net 3,086 Total assets acquired, net of liabilities assumed 38,336 Goodwill $ 69,327 |
2023 Acquisitions | |
Business Acquisition [Line Items] | |
Schedule of Preliminary Allocation of Acquisitions, Net of Immaterial Measurement Period Adjustments in Aggregate | Total Total purchase consideration, net of cash acquired $ 15,549 Fair value of assets acquired and liabilities assumed: Inventories 4,518 Finite-lived intangible assets 2,700 Other assets and liabilities, net 152 Total assets acquired, net of liabilities assumed 7,370 Goodwill $ 8,179 |
Goodwill and Other Intangible_2
Goodwill and Other Intangibles, Net (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Goodwill | The following table details the changes in goodwill (in thousands): September 30, 2023 October 1, 2022 Balance at beginning of the year $ 173,513 $ 101,114 Acquisitions, net of measurement period adjustments 7,185 72,399 Balance at the end of the year $ 180,698 $ 173,513 |
Summary of Other Intangible Assets | Other intangible assets consisted of the following as of September 30, 2023 (in thousands, except weighted average remaining useful life): Weighted Gross Accumulated Net Trade name and trademarks (finite life) 9.8 $ 26,740 $ ( 7,958 ) $ 18,782 Trade name and trademarks (indefinite life) Indefinite 9,350 — 9,350 Non-compete agreements 5.4 8,683 ( 7,585 ) 1,098 Consumer relationships 7.4 24,100 ( 15,317 ) 8,783 Other intangibles 5.1 6,620 ( 6,476 ) 144 Total $ 75,493 $ ( 37,336 ) $ 38,157 Other intangible assets consisted of the following as of October 1, 2022 (in thousands, except weighted average remaining useful life): Weighted Gross Accumulated Net Trade name and trademarks (finite life) 11.0 $ 24,440 $ ( 5,907 ) $ 18,533 Trade name and trademarks (indefinite life) Indefinite 9,350 — 9,350 Non-compete agreements 6.5 8,683 ( 7,379 ) 1,304 Consumer relationships 7.9 24,100 ( 13,339 ) 10,761 Other intangibles 6.2 6,620 ( 6,380 ) 240 Total $ 73,193 $ ( 33,005 ) $ 40,188 Other intangible assets consisted of the following as of October 2, 2021 (in thousands, except weighted average remaining useful life): Weighted Gross Accumulated Net Trade name and trademarks (finite life) 6.6 $ 5,940 $ ( 5,274 ) $ 666 Trade name and trademarks (indefinite life) Indefinite 17,750 — 17,750 Non-compete agreements 7.5 8,633 ( 7,123 ) 1,510 Consumer relationships 6.4 19,000 ( 11,688 ) 7,312 Other intangibles 7.0 6,620 ( 5,952 ) 668 Total $ 57,943 $ ( 30,037 ) $ 27,906 |
Summary of Estimated Future Amortization Expense Related to Finite-Lived Intangible Assets | The following table summarizes the estimated future amortization expense related to finite-lived intangible assets on our consolidated balance sheet as of September 30, 2023 (in thousands): Amount 2024 $ 3,693 2025 3,596 2026 3,350 2027 3,226 2028 2,273 Thereafter 12,669 Total $ 28,807 |
Accounts and Other Receivable_2
Accounts and Other Receivables, Net (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Receivables [Abstract] | |
Schedule of Accounts and Other Receivables, Net | Accounts and other receivables, net consisted of the following (in thousands): September 30, 2023 October 1, 2022 Vendor and other rebates receivable $ 6,818 $ 24,546 Customer receivables 18,334 17,708 Other receivables 5,900 4,553 Allowance for doubtful accounts ( 1,656 ) ( 1,512 ) Total $ 29,396 $ 45,295 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories consisted of the following (in thousands): September 30, 2023 October 1, 2022 Raw materials $ 3,076 $ 9,065 Finished goods 308,761 352,621 Total $ 311,837 $ 361,686 |
Schedule of Changes in Inventory Excess and Obsolescence Reserves | Changes in inventory excess and obsolescence reserves were as follows (in thousands): Additions Deductions Balance at Beginning of Period Charged to Costs and Expenses Sale or Disposal of Inventories Balance at Fiscal 2023 $ 5,871 $ 4,387 $ ( 3,334 ) $ 6,924 Fiscal 2022 $ 5,856 $ 865 $ ( 850 ) $ 5,871 Fiscal 2021 $ 4,939 $ 1,993 $ ( 1,076 ) $ 5,856 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Prepaid Expense and Other Assets, Current [Abstract] | |
Schedule of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consisted of the following (in thousands): September 30, 2023 October 1, 2022 Prepaid insurance $ 1,236 $ 1,110 Prepaid occupancy costs 1,967 1,840 Prepaid sales tax 4,060 2,874 Prepaid other 6,239 4,847 Other current assets 10,131 12,433 Total $ 23,633 $ 23,104 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Summary of Components of Property and Equipment | Property and equipment consist of the following (in thousands): September 30, 2023 October 1, 2022 Land $ 5,401 $ 5,813 Buildings and improvements 10,063 10,135 Vehicles, machinery and equipment 42,663 42,394 Leasehold improvements 200,968 187,876 Office furniture, computers and software 178,733 168,988 Construction in process 12,389 5,741 $ 450,217 $ 420,947 Less: accumulated depreciation and amortization ( 359,932 ) ( 342,860 ) Total $ 90,285 $ 78,087 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Expenses (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Text Block [Abstract] | |
Schedule of Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses consisted of the following (in thousands): September 30, 2023 October 1, 2022 Accounts payable $ 58,556 $ 156,456 Accrued payroll and employee benefits 18,558 34,010 Customer deposits 7,356 13,250 Interest 581 342 Inventory related accruals 13,843 16,034 Loyalty and deferred revenue 6,785 5,541 Sales tax 9,146 9,130 Self-insurance reserves 9,138 9,280 Other accrued liabilities 25,191 22,929 Total $ 149,154 $ 266,972 |
Long-Term Debt, Net (Tables)
Long-Term Debt, Net (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Summary of Long-Term Debt, Net | Our long-term debt, net consisted of the following (in thousands, except interest rates): Effective (1) September 30, 2023 October 1, 2022 Term Loan 8.20 % (2) $ 789,750 $ 797,850 Revolving Credit Facility — % (3) — — Total long-term debt 789,750 797,850 Less: current portion of long-term debt ( 8,100 ) ( 8,100 ) Less: unamortized discount ( 2,316 ) ( 2,805 ) Less: deferred financing charges ( 6,058 ) ( 7,219 ) Total long-term debt, net $ 773,276 $ 779,726 (1) Effective interest rates as of September 30, 2023. (2) Carries interest at a specified margin over Term SOFR between 2.50 % and 2.75 % with a minimum SOFR of 0.50 % plus a SOFR adjustment. (3) Carries interest at a specific margin between 0.25 % and 0.75 % with respect to Base Rate loans and between 1.25 % and 1.75 % with respect to Term SOFR loans, with a SOFR adjustment. |
Schedule of Debt Maturities and Principal Repayments of Indebtedness | The following table summarizes the debt maturities and scheduled principal repayments of our indebtedness as of September 30, 2023 (in thousands): Amount 2024 $ 6,075 2025 10,125 2026 8,100 2027 8,100 2028 757,350 Thereafter — Total $ 789,750 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Summary of Components of Lease Expense | The following table summarizes the components of lease expense (in thousands): Year Ended September 30, 2023 October 1, 2022 October 2, 2021 Operating lease expense $ 79,741 $ 72,922 $ 68,130 Variable lease expense — — 1,129 Total net lease expense $ 79,741 $ 72,922 $ 69,259 |
Schedule of Weighted-Average Remaining Lease Term and Discount Rate for Operating Leases | The follow ing table presents the weighted-average remaining lease term and discount rate for operating leases: September 30, 2023 October 1, 2022 Weighted-average remaining lease term 5.0 years 4.4 years Weighted-average discount rate 6.2 % 5.5 % |
Schedule of Future Annual Minimum Lease Payments | The following table summarizes the future annual minimum lease payments as of September 30, 2023 (in thousands): Amount 2024 $ 76,361 2025 70,356 2026 61,616 2027 41,139 2028 22,036 Thereafter 34,773 Total $ 306,281 Less: amount of lease payments representing imputed interest 50,265 Present value of future minimum lease payments 256,016 Less: current operating lease liabilities 62,794 Operating lease liabilities, noncurrent $ 193,222 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Summary of Provision for Income Taxes | The provision for income taxes consists of the following (in thousands): Year Ended September 30, 2023 October 1, 2022 October 2, 2021 Current: Federal $ 13,425 $ 37,886 $ 25,914 State 2,404 8,736 7,733 Total Current 15,829 46,622 33,647 Deferred: Federal ( 5,608 ) 2,556 2,633 State ( 722 ) ( 90 ) 215 Total Deferred ( 6,330 ) 2,466 2,848 Total income tax provision $ 9,499 $ 49,088 $ 36,495 |
Summary of Provision for Income Taxes to Amount Computed at Federal Statutory Rate | A reconciliation of the provision for income taxes to the amount computed at the federal statutory rate is as follows (in thousands): Year Ended September 30, 2023 October 1, 2022 October 2, 2021 Federal income tax at statutory rate $ 7,716 $ 43,705 $ 34,257 Equity-based compensation 129 ( 1,025 ) ( 2,360 ) Section 162(m) limitation 520 805 2,826 Permanent differences 82 96 564 Change in valuation allowance — — ( 5,425 ) State taxes, net of federal benefit 1,109 6,734 7,072 Other ( 57 ) ( 1,227 ) ( 439 ) Total income tax provision $ 9,499 $ 49,088 $ 36,495 |
Summary of Deferred Tax Assets and Liabilities | The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities are summarized below (in thousands): September 30, 2023 October 1, 2022 Deferred tax assets: Compensation accruals $ 1,878 $ 4,067 Inventories 1,237 3,496 Lease liabilities 64,619 58,710 Equity-based compensation 2,503 2,151 Reserves and other accruals 2,696 1,059 Interest limitation 7,615 — Capitalized research expenditures 2,017 — Total deferred tax assets 82,565 69,483 Deferred tax liabilities: Property, plant, and equipment ( 4,387 ) ( 4,066 ) Intangibles ( 6,109 ) ( 4,302 ) Lease assets ( 61,835 ) ( 57,798 ) Deferred financing cost ( 253 ) ( 310 ) Other ( 2,383 ) ( 1,739 ) Total deferred tax liabilities ( 74,967 ) ( 68,215 ) Deferred tax assets (liabilities), net $ 7,598 $ 1,268 |
Commitments & Contingencies (Ta
Commitments & Contingencies (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Summary of Future Minimum Purchase Commitments | The following table summarizes the future minimum purchase commitments as of September 30, 2023 (in thousands): Amount 2024 $ 79,941 2025 78,327 2026 7,838 2027 5,705 2028 2,207 Thereafter — Total $ 174,018 |
Share Repurchase Program (Table
Share Repurchase Program (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
Schedule of Repurchases of Common Stock | The following table presents information about our repurchases of common stock under our share repurchase program (in thousands): Year Ended September 30, 2023 October 1, 2022 Total number of shares repurchased — 7,500 Total amount paid for shares repurchased $ — $ 151,875 |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Summary of Stock Options Activity | The following tables summarize our Stock Option activity under the Plan (in thousands, except per share amounts): Year Ended September 30, 2023 October 1, 2022 Number of Options Weighted Average Number of Options Weighted Average Outstanding, Beginning 3,780 $ 18.24 4,877 $ 18.22 Granted — — — — Exercised — — ( 81 ) 17.00 Forfeited/Expired ( 472 ) 19.25 ( 1,016 ) 18.22 Balance, Ending 3,308 $ 18.10 3,780 $ 18.24 Vested and exercisable as of September 30, 2023 1,980 $ 18.18 1,349 $ 18.28 September 30, 2023 Aggregate intrinsic value of Stock Options outstanding $ — Unamortized value of unvested Stock Options $ 4,072 Weighted average years that expense is expected to be recognized 1.1 Weighted average remaining contractual years outstanding 7.5 |
Summary of RSU and PSU Activity under Plan | The following table summarizes our RSU and PSU activity under the Plan (in thousands, except per share amounts): Year Ended September 30, 2023 October 1, 2022 Number of RSUs/PSUs Weighted Average Number of RSUs/PSUs Weighted Average Outstanding, Beginning 2,297 $ 10.04 3,135 $ 6.90 Granted (1) 1,487 11.19 631 18.57 Vested ( 1,057 ) 7.00 ( 1,079 ) 5.99 Forfeited ( 643 ) 11.58 ( 390 ) 9.82 Balance, Ending 2,084 $ 11.92 2,297 $ 10.04 (1) Includes 0.3 million PSUs granted in December 2022 subject to the Company achieving certain adjusted net income and sales performance targets on a cumulative basis during each of fiscal years 2023, 2024, and 2025. The criteria are based on a range of these performance targets in which participants may earn between 0 % to 200 % of the base number of awards granted. The weighted average grant date fair value of the PSUs was $ 12.04 . The Company assesses the attainment of target payout rates each reporting period. Equity-based compensation expense is recognized for awards deemed probable of vesting. September 30, 2023 Unamortized value of unvested RSUs/PSUs $ 18,527 Weighted average period (years) expense is expected to be recognized 2.7 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Summary of Reconciliation of Basic Weighted Average Common Shares Outstanding to Diluted Weighted Average Common Shares Outstanding | The following is a reconciliation of basic weighted average common shares outstanding to diluted weighted average common shares outstanding (in thousands, except per share amounts): Year Ended September 30, 2023 October 1, 2022 October 2, 2021 Numerator: Net income $ 27,242 $ 159,029 $ 126,634 Denominator: Weighted average shares outstanding - basic 183,839 184,347 185,412 Effect of dilutive securities: Stock Options — — 567 RSUs 877 1,801 4,030 Weighted average shares outstanding - diluted 184,716 186,148 190,009 Basic earnings per share $ 0.15 $ 0.86 $ 0.68 Diluted earnings per share $ 0.15 $ 0.85 $ 0.67 |
Schedule of Antidilutive Securities Excluded from Calculation of Diluted Earnings Per Share | The following number of weighted-average potentially dilutive shares were excluded from the calculation of diluted earnings per share because the effect of including such shares would have been antidilutive (in thousands): Year Ended September 30, 2023 October 1, 2022 October 2, 2021 Stock Options 3,539 4,020 321 RSUs 2,154 601 2 Total 5,693 4,621 323 |
Business and Operations - Addit
Business and Operations - Additional Information (Details) | 12 Months Ended |
Sep. 30, 2023 State Location | |
Subsidiary, Sale of Stock [Line Items] | |
Number of company-operated locations | Location | 1,000 |
Number of states in which entity operates | State | 39 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Details) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2023 USD ($) Segment | Oct. 01, 2022 USD ($) | Oct. 02, 2021 USD ($) | |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Number of reportable segment | Segment | 1 | ||
Vendor Rebate Receivables | $ 4,700 | $ 16,600 | |
Impairment charges related to goodwill or other indefinite lived intangible assets | 0 | 0 | $ 0 |
Impairment of long-lived assets | $ 0 | 0 | 0 |
Leases initial term | 5 years | ||
Fair value transfer amount | $ 0 | 0 | 0 |
Advertising Expense | 35,100 | 38,000 | $ 25,400 |
Liability on software subscriptions | 4,400 | ||
Termination expense on software subscriptions | $ 6,300 | ||
Lease existence of option to extend [true false] | true | ||
Lease existence of option to terminate [true false] | true | ||
Lease option to extend | one additional five-year | ||
Leases option to terminate | Some of our leases may include the option to terminate in less than five years. | ||
Credit payment terms for commercial customers | 60 days | ||
Deferred revenue related to loyalty program | $ 5,600 | 4,600 | |
Cloud Computing Arrangements | Prepaid Expenses and Other Current Assets | |||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Capitalized expenditures on cloud computing arrangement | 5,900 | 9,700 | |
Cloud Computing Arrangements | Other Assets | |||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Capitalized expenditures on cloud computing arrangement | 44,100 | 35,700 | |
Level 2 | Term Loan due in 2028 | |||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Fair value of term loan | $ 774,900 | $ 760,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Useful Lives (Details) | Sep. 30, 2023 |
Building and Improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful lives | 39 years |
Building and Improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful lives | 5 years |
Vehicles, Machinery and Equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful lives | 10 years |
Vehicles, Machinery and Equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful lives | 3 years |
Office Furniture, Computers and Software | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful lives | 7 years |
Office Furniture, Computers and Software | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful lives | 3 years |
Leasehold Improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful lives | 10 years |
Leasehold Improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful lives | 5 years |
Business Combinations - Additio
Business Combinations - Additional Information (Details) $ in Thousands | 12 Months Ended | |||
Oct. 01, 2022 USD ($) | Sep. 30, 2023 USD ($) Number Location | Oct. 01, 2022 USD ($) Number | Oct. 02, 2021 USD ($) | |
Business Acquisition [Line Items] | ||||
Total purchase consideration, net of cash acquired | $ 15,549 | $ 107,663 | $ 8,868 | |
2022 Acquisitions | ||||
Business Acquisition [Line Items] | ||||
Number of business acquired | Number | 6 | |||
Total purchase consideration, net of cash acquired | $ 107,663 | $ 107,700 | ||
Fair value contigent consideration | $ 3,000 | |||
Number of locations in which assets acquired | Location | 27 | |||
2022 Acquisitions | Contingent Consideration Two | ||||
Business Acquisition [Line Items] | ||||
Contingent consideration | $ 4,000 | $ 4,000 | ||
2023 Acquisitions | ||||
Business Acquisition [Line Items] | ||||
Number of business acquired | Number | 5 | |||
Total purchase consideration, net of cash acquired | $ 15,549 | |||
Number of locations in which assets acquired | Location | 12 |
Business Combinations - Schedul
Business Combinations - Schedule of Preliminary Allocation of Acquisitions, Net of Immaterial Measurement Period Adjustments (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | Oct. 02, 2021 | |
Asset Acquisition [Line Items] | ||||
Total purchase consideration, net of cash acquired | $ 15,549 | $ 107,663 | $ 8,868 | |
Fair value of assets acquired and liabilities assumed: | ||||
Goodwill | 7,185 | 72,399 | ||
2022 Acquisitions | ||||
Asset Acquisition [Line Items] | ||||
Total purchase consideration, net of cash acquired | $ 107,663 | 107,700 | ||
Fair value of assets acquired and liabilities assumed: | ||||
Inventories | 20,050 | 20,050 | ||
Finite-lived intangible assets | 15,200 | 15,200 | ||
Other assets and liabilities, net | 3,086 | 3,086 | ||
Total assets acquired, net of liabilities assumed | 38,336 | $ 38,336 | ||
Goodwill | $ 69,327 | |||
2023 Acquisitions | ||||
Asset Acquisition [Line Items] | ||||
Total purchase consideration, net of cash acquired | 15,549 | |||
Fair value of assets acquired and liabilities assumed: | ||||
Inventories | 4,518 | |||
Finite-lived intangible assets | 2,700 | |||
Other assets and liabilities, net | 152 | |||
Total assets acquired, net of liabilities assumed | 7,370 | |||
Goodwill | $ 8,179 |
Goodwill and Other Intangible_3
Goodwill and Other Intangibles, Net - Summary of Goodwill (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2023 | Oct. 01, 2022 | |
Goodwill [Roll Forward] | ||
Beginning Balance | $ 173,513 | $ 101,114 |
Acquisitions, net of measurement period adjustments | 7,185 | 72,399 |
Ending Balance | $ 180,698 | $ 173,513 |
Goodwill and Other Intangible_4
Goodwill and Other Intangibles, Net - Summary of Other Intangible Assets (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Oct. 02, 2021 | |
Finite and Indefinite Lived Intangible Assets [Line Items] | |||
Total | $ 28,807 | ||
Gross Carrying Value | 75,493 | $ 73,193 | $ 57,943 |
Accumulated Amortization | (37,336) | (33,005) | (30,037) |
Net Carrying Amount | $ 38,157 | $ 40,188 | $ 27,906 |
Trade Name and Trademarks | |||
Finite and Indefinite Lived Intangible Assets [Line Items] | |||
Weighted Average Remaining Useful Life, Finite Life | 9 years 9 months 18 days | 11 years | 6 years 7 months 6 days |
Gross Carrying Value, Finite Life | $ 26,740 | $ 24,440 | $ 5,940 |
Accumulated Amortization, Finite Life | (7,958) | (5,907) | (5,274) |
Total | $ 18,782 | $ 18,533 | $ 666 |
Non-compete Agreements | |||
Finite and Indefinite Lived Intangible Assets [Line Items] | |||
Weighted Average Remaining Useful Life, Finite Life | 5 years 4 months 24 days | 6 years 6 months | 7 years 6 months |
Gross Carrying Value, Finite Life | $ 8,683 | $ 8,683 | $ 8,633 |
Accumulated Amortization, Finite Life | (7,585) | (7,379) | (7,123) |
Total | $ 1,098 | $ 1,304 | $ 1,510 |
Consumer Relationships | |||
Finite and Indefinite Lived Intangible Assets [Line Items] | |||
Weighted Average Remaining Useful Life, Finite Life | 7 years 4 months 24 days | 7 years 10 months 24 days | 6 years 4 months 24 days |
Gross Carrying Value, Finite Life | $ 24,100 | $ 24,100 | $ 19,000 |
Accumulated Amortization, Finite Life | (15,317) | (13,339) | (11,688) |
Total | $ 8,783 | $ 10,761 | $ 7,312 |
Other Intangibles | |||
Finite and Indefinite Lived Intangible Assets [Line Items] | |||
Weighted Average Remaining Useful Life, Finite Life | 5 years 1 month 6 days | 6 years 2 months 12 days | 7 years |
Gross Carrying Value, Finite Life | $ 6,620 | $ 6,620 | $ 6,620 |
Accumulated Amortization, Finite Life | (6,476) | (6,380) | (5,952) |
Total | $ 144 | $ 240 | $ 668 |
Trade Name and Trademarks | |||
Finite and Indefinite Lived Intangible Assets [Line Items] | |||
Weighted Average Remaining Useful Life, Indefinite Life | Indefinite | Indefinite | Indefinite |
Net Carrying Amount, Indefinite Life | $ 9,350 | $ 9,350 | $ 17,750 |
Gross Carrying Value | $ 9,350 | $ 9,350 | $ 17,750 |
Goodwill and Other Intangible_5
Goodwill and Other Intangibles, Net - Additional Information (Detail) - USD ($) | 12 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Oct. 02, 2021 | |
Indefinite-Lived Intangible Assets [Line Items] | |||
Amortization expense | $ 4,300,000 | $ 3,000,000 | $ 2,200,000 |
Impairment of goodwill or other intangible assets | $ 0 | 0 | $ 0 |
Change in estimated useful life | $ 8,400,000 | ||
Trade Names [Member] | |||
Indefinite-Lived Intangible Assets [Line Items] | |||
Weighted Average Remaining Useful Life, Finite Life | 10 years |
Goodwill and Other Intangible_6
Goodwill and Other Intangibles, Net - Summary of Estimated Future Amortization Expense Related to Finite-Lived Intangible Assets (Detail) $ in Thousands | Sep. 30, 2023 USD ($) |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
2024 | $ 3,693 |
2025 | 3,596 |
2026 | 3,350 |
2027 | 3,226 |
2028 | 2,273 |
Thereafter | 12,669 |
Total | $ 28,807 |
Accounts and Other Receivable_3
Accounts and Other Receivables, Net - Schedule of Accounts and Other Receivables, Net - (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Oct. 01, 2022 |
Receivables [Abstract] | ||
Vendor and other rebates receivable | $ 6,818 | $ 24,546 |
Customer receivables | 18,334 | 17,708 |
Other receivables | 5,900 | 4,553 |
Allowance for doubtful accounts | (1,656) | (1,512) |
Total | $ 29,396 | $ 45,295 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventories (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Oct. 01, 2022 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 3,076 | $ 9,065 |
Finished goods | 308,761 | 352,621 |
Total | $ 311,837 | $ 361,686 |
Inventories - Changes in Invent
Inventories - Changes in Inventory Excess and Obsolescence Reserves (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Oct. 02, 2021 | |
Inventory Adjustments [Abstract] | |||
Balance at Beginning of Period | $ 5,871 | $ 5,856 | $ 4,939 |
Charged to Costs and Expenses | 4,387 | 865 | 1,993 |
Sale or Disposal of Inventories | (3,334) | (850) | (1,076) |
Balance at End of Period | $ 6,924 | $ 5,871 | $ 5,856 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Oct. 01, 2022 |
Prepaid Expense and Other Assets, Current [Abstract] | ||
Prepaid insurance | $ 1,236 | $ 1,110 |
Prepaid occupancy costs | 1,967 | 1,840 |
Prepaid sales tax | 4,060 | 2,874 |
Prepaid other | 6,239 | 4,847 |
Other current assets | 10,131 | 12,433 |
Total | $ 23,633 | $ 23,104 |
Property and Equipment - Summar
Property and Equipment - Summary of Components of Property and Equipment (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Oct. 01, 2022 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 450,217 | $ 420,947 |
Less: accumulated depreciation and amortization | (359,932) | (342,860) |
Total | 90,285 | 78,087 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 5,401 | 5,813 |
Buildings and Improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 10,063 | 10,135 |
Vehicles, Machinery and Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 42,663 | 42,394 |
Leasehold Improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 200,968 | 187,876 |
Office Furniture, Computers and Software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 178,733 | 168,988 |
Construction in Process | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 12,389 | $ 5,741 |
Property and Equipment - Additi
Property and Equipment - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Oct. 02, 2021 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation and amortization expense | $ 29.8 | $ 27.8 | $ 26.6 |
Capitalized software additions | 5.2 | 6.5 | $ 2.8 |
Capitalized software accumulated amortization | 22 | 20.9 | |
Capitalized software and development costs remaining to be amortized | $ 11.6 | $ 7.6 |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Expenses - Schedule of Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Oct. 01, 2022 |
Payables and Accruals [Abstract] | ||
Accounts payable | $ 58,556 | $ 156,456 |
Accrued payroll and employee benefits | 18,558 | 34,010 |
Customer deposits | 7,356 | 13,250 |
Interest | 581 | 342 |
Inventory related accruals | 13,843 | 16,034 |
Loyalty and deferred revenue | 6,785 | 5,541 |
Sales tax | 9,146 | 9,130 |
Self-insurance reserves | 9,138 | 9,280 |
Other accrued liabilities | 25,191 | 22,929 |
Total | $ 149,154 | $ 266,972 |
Accounts Payable and Accrued _4
Accounts Payable and Accrued Expenses (Additional Information) (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Oct. 01, 2022 | Oct. 02, 2021 |
Payables and Accruals [Abstract] | |||
Capital expenditures included in other accrued liabilities | $ 1.5 | $ 1.1 | $ 1.5 |
Long-Term Debt, Net - Summary o
Long-Term Debt, Net - Summary of Long-Term Debt, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Jun. 30, 2023 | Oct. 01, 2022 | |
Debt Instrument [Line Items] | ||||
Total long-term debt | $ 789,750 | $ 797,850 | ||
Less: current portion of long-term debt | (8,100) | (8,100) | ||
Less: unamortized discount | (2,316) | (2,805) | ||
Less: deferred financing charges | (6,058) | (7,219) | ||
Total long-term debt, net | $ 773,276 | 779,726 | ||
Term Loan Due on March 9, 2028 | ||||
Debt Instrument [Line Items] | ||||
Effective Interest Rate | [1],[2] | 8.20% | ||
Term Loan | ||||
Debt Instrument [Line Items] | ||||
Total long-term debt | $ 789,750 | $ 810,000 | 797,850 | |
Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Effective Interest Rate | [2],[3] | 0% | ||
Total long-term debt | $ 0 | $ 0 | ||
[1] Carries interest at a specified margin over Term SOFR between 2.50 % and 2.75 % with a minimum SOFR of 0.50 % plus a SOFR adjustment. Effective interest rates as of September 30, 2023. Carries interest at a specific margin between 0.25 % and 0.75 % with respect to Base Rate loans and between 1.25 % and 1.75 % with respect to Term SOFR loans, with a SOFR adjustment. |
Long-Term Debt, Net - Summary_2
Long-Term Debt, Net - Summary of Long-Term Debt, Net (Parenthetical) (Details) | 12 Months Ended |
Sep. 30, 2023 | |
SOFR | Term Loan | Maximum | |
Debt Instrument [Line Items] | |
Interest rate range | 2.75% |
SOFR | Term Loan | Minimum | |
Debt Instrument [Line Items] | |
Interest rate range | 2.50% |
Interest rate | 0.50% |
ABL Credit Facility | Base Rate | Maximum | |
Debt Instrument [Line Items] | |
Interest rate | 0.75% |
ABL Credit Facility | Base Rate | Minimum | |
Debt Instrument [Line Items] | |
Interest rate | 0.25% |
ABL Credit Facility | SOFR | Maximum | |
Debt Instrument [Line Items] | |
Interest rate | 1.75% |
ABL Credit Facility | SOFR | Minimum | |
Debt Instrument [Line Items] | |
Interest rate | 1.25% |
Long-Term Debt, Net - Term Loan
Long-Term Debt, Net - Term Loan - Additional Information (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2023 | Sep. 30, 2023 | Sep. 30, 2023 | Sep. 30, 2023 | Oct. 01, 2022 | |
Debt Instrument [Line Items] | |||||
Secured term loan facility | $ 789,750 | $ 789,750 | $ 789,750 | $ 797,850 | |
SOFR | One-month | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 0.11448% | ||||
SOFR | Three-months | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 0.26161% | ||||
SOFR | Six-months | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 0.42826% | ||||
Term Loan | |||||
Debt Instrument [Line Items] | |||||
Secured term loan facility | $ 810,000 | $ 789,750 | $ 789,750 | $ 789,750 | $ 797,850 |
Debt instrument, maturity date | Mar. 09, 2028 | ||||
Term Loan | Minimum | First Lien Leverage Ratio Greater Than 2.75 to 100 | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 1% | ||||
Term Loan | Minimum | First Lien Leverage Ratio Less Than or Equal to 2.75 to 1.00 | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 1% | ||||
Term Loan | Maximum | First Lien Leverage Ratio Greater Than 2.75 to 100 | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 2.75% | ||||
Term Loan | Maximum | First Lien Leverage Ratio Less Than or Equal to 2.75 to 1.00 | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 2.75% | ||||
Term Loan | SOFR | Applicable Rate | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 2.75% | ||||
Term Loan | SOFR | First Lien Leverage Ratio Greater Than 2.75 to 100 | Applicable Rate | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 2.75% | ||||
Term Loan | SOFR | First Lien Leverage Ratio Less Than or Equal to 2.75 to 1.00 | Applicable Rate | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 2.50% | ||||
Term Loan | SOFR | Minimum | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 0.50% | ||||
Term Loan | ABR | Applicable Rate | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 1.75% | ||||
Term Loan | ABR | First Lien Leverage Ratio Greater Than 2.75 to 100 | Applicable Rate | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 1.75% | ||||
Term Loan | ABR | First Lien Leverage Ratio Less Than or Equal to 2.75 to 1.00 | Applicable Rate | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 1.50% |
Long-Term Debt, Net - Revolving
Long-Term Debt, Net - Revolving Credit Facility - Additional Information (Details) - Revolving Credit Facility - USD ($) | 1 Months Ended | ||
Mar. 31, 2023 | Sep. 30, 2023 | Oct. 01, 2022 | |
Debt Instrument [Line Items] | |||
Debt instrument, maturity date | Aug. 13, 2025 | ||
Credit facility, current borrowing capacity | $ 0 | $ 0 | |
Credit facility, maximum borrowing capacity | $ 200,000,000 | ||
Increased revolving credit commitments | 50,000,000 | ||
Aggregate commitments | $ 250,000,000 | ||
Credit facility, commitment fee percentage | 0.25% | ||
Standby Letter of Credit | |||
Debt Instrument [Line Items] | |||
Amount of Letters of credit on credit facility | $ 11,400,000 | $ 10,000,000 | |
Base Rate | Minimum | |||
Debt Instrument [Line Items] | |||
Interest rate | 0.25% | ||
Base Rate | Maximum | |||
Debt Instrument [Line Items] | |||
Interest rate | 0.75% | ||
SOFR | |||
Debt Instrument [Line Items] | |||
Interest rate | 0.10% | ||
SOFR | Minimum | |||
Debt Instrument [Line Items] | |||
Interest rate | 1.25% | ||
SOFR | Maximum | |||
Debt Instrument [Line Items] | |||
Interest rate | 1.75% | ||
Floor | |||
Debt Instrument [Line Items] | |||
Interest rate | 0% |
Long-Term Debt, Net - Schedule
Long-Term Debt, Net - Schedule of Debt Maturities and Principal Repayments of Indebtedness (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Oct. 01, 2022 |
Long-Term Debt, Fiscal Year Maturity [Abstract] | ||
2024 | $ 6,075 | |
2025 | 10,125 | |
2026 | 8,100 | |
2027 | 8,100 | |
2028 | 757,350 | |
Thereafter | 0 | |
Total long-term debt | $ 789,750 | $ 797,850 |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | |
Sep. 30, 2023 | Oct. 01, 2022 | |
Lessee Lease Description [Line Items] | ||
Lease expiration date | 2048-12 | |
Operating lease right-of-use assets obtained in exchange for operating lease liabilities | $ 11.1 | $ 32.6 |
Minimum | ||
Lessee Lease Description [Line Items] | ||
Operating lease renewal period | 5 years |
Leases - Summary of Components
Leases - Summary of Components of Lease Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Oct. 02, 2021 | |
Leases [Abstract] | |||
Operating lease expense | $ 79,741 | $ 72,922 | $ 68,130 |
Variable lease expense | 0 | 0 | 1,129 |
Total net lease expense | $ 79,741 | $ 72,922 | $ 69,259 |
Leases - Schedule of Weighted-A
Leases - Schedule of Weighted-Average Remaining Lease Term and Discount Rate for Operating Leases (Details) | Sep. 30, 2023 | Oct. 01, 2022 |
Leases [Abstract] | ||
Weighted-average remaining lease term | 5 years | 4 years 4 months 24 days |
Weighted-average discount rate | 6.20% | 5.50% |
Leases - Schedule of Future Ann
Leases - Schedule of Future Annual Minimum Lease Payments (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Oct. 01, 2022 |
Lessee, Operating Lease, Liability, to be Paid, Fiscal Year Maturity [Abstract] | ||
2024 | $ 76,361 | |
2025 | 70,356 | |
2026 | 61,616 | |
2027 | 41,139 | |
2028 | 22,036 | |
Thereafter | 34,773 | |
Total | 306,281 | |
Less: amount of lease payments representing imputed interest | 50,265 | |
Present value of future minimum lease payments | 256,016 | |
Less: current operating lease liabilities | 62,794 | $ 60,373 |
Operating lease liabilities, noncurrent | $ 193,222 | $ 179,835 |
Income Taxes - Summary of Provi
Income Taxes - Summary of Provision for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Oct. 02, 2021 | |
Current: | |||
Federal | $ 13,425 | $ 37,886 | $ 25,914 |
State | 2,404 | 8,736 | 7,733 |
Total Current | 15,829 | 46,622 | 33,647 |
Deferred: | |||
Federal | (5,608) | 2,556 | 2,633 |
State | (722) | (90) | 215 |
Total Deferred | (6,330) | 2,466 | 2,848 |
Total income tax provision | $ 9,499 | $ 49,088 | $ 36,495 |
Income Taxes - Summary of Pro_2
Income Taxes - Summary of Provision for Income Taxes to Amount Computed at Federal Statutory Rate (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Oct. 02, 2021 | |
Income Tax Disclosure [Abstract] | |||
Federal income tax at statutory rate | $ 7,716 | $ 43,705 | $ 34,257 |
Equity-based compensation | 129 | (1,025) | (2,360) |
Section 162(m) limitation | 520 | 805 | 2,826 |
Permanent differences | 82 | 96 | 564 |
Change in valuation allowance | 0 | 0 | (5,425) |
State taxes, net of federal benefit | 1,109 | 6,734 | 7,072 |
Other | (57) | (1,227) | (439) |
Total income tax provision | $ 9,499 | $ 49,088 | $ 36,495 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Jan. 02, 2021 | |
Income Tax Disclosure [Abstract] | |||
Effective income tax rate | 25.90% | 23.60% | |
Valuation allowance | $ 5.4 |
Income Taxes - Summary of Defer
Income Taxes - Summary of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Oct. 01, 2022 |
Deferred tax assets: | ||
Compensation accruals | $ 1,878 | $ 4,067 |
Inventories | 1,237 | 3,496 |
Lease liabilities | 64,619 | 58,710 |
Equity-based compensation | 2,503 | 2,151 |
Reserves and other accruals | 2,696 | 1,059 |
Interest limitation | 7,615 | 0 |
Capitalized research expenditures | 2,017 | 0 |
Total deferred tax assets | 82,565 | 69,483 |
Deferred tax liabilities: | ||
Property, plant, and equipment | (4,387) | (4,066) |
Intangibles | (6,109) | (4,302) |
Lease assets | (61,835) | (57,798) |
Deferred financing cost | (253) | (310) |
Other | (2,383) | (1,739) |
Total deferred tax liabilities | (74,967) | (68,215) |
Deferred tax assets (liabilities), net | $ 7,598 | $ 1,268 |
Commitments & Contingencies - A
Commitments & Contingencies - Additional Information (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Oct. 01, 2022 |
Workers' Compensation Insurance Program | Standby Letter of Credit | ||
Loss Contingencies [Line Items] | ||
Credit facility, remaining borrowing capacity | $ 11.4 | $ 10 |
General Liability Insurance Program | Maximum | ||
Loss Contingencies [Line Items] | ||
Self insurance retention amount | $ 0.4 | $ 0.4 |
Commitments & Contingencies - S
Commitments & Contingencies - Summary of Future Minimum Purchase Commitments (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Purchase Obligation, Fiscal Year Maturity [Abstract] | |
2024 | $ 79,941 |
2025 | 78,327 |
2026 | 7,838 |
2027 | 5,705 |
2028 | 2,207 |
Thereafter | 0 |
Total | $ 174,018 |
401(K) Plan - Additional Inform
401(K) Plan - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Oct. 02, 2021 | |
Defined Contribution Plan Disclosure [Line Items] | |||
Defined Contribution Plan, Tax Status [Extensible Enumeration] | us-gaap:QualifiedPlanMember | ||
Defined compensation plan matching contribution by employer | 50% | ||
Defined compensation plan by employee | 4% | ||
Defined contribution retirement plan expenses | $ 1.5 | $ 1.4 | $ 0.8 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Details) - $ / shares shares in Thousands | 1 Months Ended | 12 Months Ended | ||
Dec. 14, 2021 | Dec. 16, 2021 | Sep. 30, 2023 | Oct. 01, 2022 | |
Common Stock | ||||
Related Party Transaction [Line Items] | ||||
Common stock, shares repurchased | 7,500 | 0 | 7,500 | |
Common stock repurchased, price per share | $ 20.25 | |||
Bubbles Investor Aggregator, L.P. | Minimum | ||||
Related Party Transaction [Line Items] | ||||
Beneficial ownership interest in common stock | 5% | |||
Explorer Investment Pte. Ltd. | Minimum | ||||
Related Party Transaction [Line Items] | ||||
Beneficial ownership interest in common stock | 5% | |||
Bubbles Investor Aggregator, L.P. and Explorer Investment Pte. Ltd. | Common Stock | ||||
Related Party Transaction [Line Items] | ||||
Common stock, shares repurchased | 7,500 | |||
Common stock repurchased, price per share | $ 20.25 |
Share Repurchase Program - Addi
Share Repurchase Program - Additional Information (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Dec. 03, 2021 | Dec. 16, 2021 | Sep. 30, 2023 | Oct. 01, 2022 | Oct. 02, 2021 | |
Equity, Class of Treasury Stock [Line Items] | |||||
Repurchase and retirement of common stock including offering costs | $ 0 | $ 152,146 | $ 0 | ||
Common Stock | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Authorized amount under share repurchase program | $ 300,000 | ||||
Period during which shares can be repurchased under share repurchase program | 3 years | ||||
Expiration date of share repurchase program | Dec. 31, 2024 | ||||
Common stock, shares repurchased | 7,500 | 0 | 7,500 | ||
Common stock repurchased, price per share | $ 20.25 | ||||
Repurchase of common stock | $ 151,900 | $ 0 | $ 151,875 | ||
Repurchase and retirement of common stock including offering costs | 152,100 | ||||
Additional Paid in Capital | 127,500 | ||||
Increase in retained earnings | $ 24,400 | ||||
Remained available amount under share repurchase program | $ 147,700 |
Share Repurchase Program - Sche
Share Repurchase Program - Schedule of Repurchases of Common Stock (Details) - Common Stock [Member] - USD ($) shares in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | |
Dec. 16, 2021 | Sep. 30, 2023 | Oct. 01, 2022 | |
Equity, Class of Treasury Stock [Line Items] | |||
Total number of shares repurchased | 7,500 | 0 | 7,500 |
Total amount paid for shares repurchased | $ 151,900 | $ 0 | $ 151,875 |
Equity-Based Compensation - Add
Equity-Based Compensation - Additional Information (Details) - USD ($) $ in Thousands, shares in Millions | 12 Months Ended | |
Sep. 30, 2023 | Oct. 01, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Aggregate unamortized value of outstanding equity-based compensation awards | $ 22,600 | |
Unamortized equity-based compensation costs, expected to be recognized, weighted average period | 2 years 4 months 24 days | |
Selling, General and Administrative Expenses | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Equity-based compensation expense | $ 11,700 | $ 11,300 |
Common Stock | 2020 Omnibus Incentive Plan | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Shares available for grant | 7.7 | |
Employee Stock Option | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Option expiration period | 10 years | |
Aggregate unamortized value of outstanding equity-based compensation awards | $ 4,072 | |
Unamortized equity-based compensation costs, expected to be recognized, weighted average period | 1 year 1 month 6 days |
Equity-Based Compensation - Sum
Equity-Based Compensation - Summary of Stock Options Activity (Details) - Employee Stock Option - $ / shares | 12 Months Ended | |
Sep. 30, 2023 | Oct. 01, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Number of Options, Beginning Balance | 3,780,000 | 4,877,000 |
Number of Options, Granted | 0 | 0 |
Number of Options, Exercised | 0 | (81,000) |
Number of Options, Forfeited/Expired | (472,000) | (1,016,000) |
Number of Options, Ending Balance | 3,308,000 | 3,780,000 |
Number of Options, Vested | 1,980,000 | 1,349,000 |
Weighted Average Exercise Price, Balance, Beginning | $ 18.24 | $ 18.22 |
Weighted Average Exercise Price, Granted | 0 | 0 |
Weighted Average Exercise Price, Exercised | 0 | 17 |
Weighted Average Exercise Price, Forfeited/Expired | 19.25 | 18.22 |
Weighted Average Exercise Price, Balance, Ending | $ 18.1 | $ 18.24 |
Weighted Average Exercise Price, Vested and exercisable | 18.18 | 18.28 |
Equity-Based Compensation - S_2
Equity-Based Compensation - Summary of Stock Options Activity Additional Information (Details) $ in Thousands | 12 Months Ended |
Sep. 30, 2023 USD ($) | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Unamortized value of unvested Stock Options | $ 22,600 |
Weighted average period (years) that expense is expected to be recognized | 2 years 4 months 24 days |
Employee Stock Option | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Aggregate intrinsic value of Stock Options outstanding | $ 0 |
Unamortized value of unvested Stock Options | $ 4,072 |
Weighted average period (years) that expense is expected to be recognized | 1 year 1 month 6 days |
Weighted average remaining contractual life (years) for options outstanding | 7 years 6 months |
Equity-Based Compensation - S_3
Equity-Based Compensation - Summary of RSU and PSU Activity under Plan (Details) - Restricted Stock Units And Performance Units - $ / shares shares in Thousands | 12 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Outstanding, Beginning Balance | 2,297 | 3,135 | |
Granted | [1] | 1,487 | 631 |
Vested | (1,057) | (1,079) | |
Forfeited | (643) | (390) | |
Outstanding, Ending Balance | 2,084 | 2,297 | |
Weighted Average Grant Date Fair Value, Outstanding, Beginning Balance | $ 10.04 | $ 6.9 | |
Weighted Average Grant Date Fair Value, Granted | [1] | 11.19 | 18.57 |
Weighted Average Grant Date Fair Value, Vested | 7 | 5.99 | |
Weighted Average Grant Date Fair Value, Forfeited | 11.58 | 9.82 | |
Weighted Average Grant Date Fair Value, Outstanding, Ending Balance | $ 11.92 | $ 10.04 | |
[1] Includes 0.3 million PSUs granted in December 2022 subject to the Company achieving certain adjusted net income and sales performance targets on a cumulative basis during each of fiscal years 2023, 2024, and 2025. The criteria are based on a range of these performance targets in which participants may earn between 0 % to 200 % of the base number of awards granted. The weighted average grant date fair value of the PSUs was $ 12.04 . The Company assesses the attainment of target payout rates each reporting period. Equity-based compensation expense is recognized for awards deemed probable of vesting. |
Equity-Based Compensation - S_4
Equity-Based Compensation - Summary of RSU and PSU Activity under Plan (Parenthetical) (Details) - Performance Units shares in Millions | 12 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Granted | shares | 0.3 |
Weighted Average Grant Date Fair Value, Granted | $ / shares | $ 12.04 |
Maximum | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Percentage of shares granted | 200% |
Minimum | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Percentage of shares granted | 0% |
Equity-Based Compensation - S_5
Equity-Based Compensation - Summary of RSU and PSU Activity under Plan Additional Information (Details) $ in Thousands | 12 Months Ended |
Sep. 30, 2023 USD ($) | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Weighted average period (years) that expense is expected to be recognized | 2 years 4 months 24 days |
Restricted Stock Units And Performance Units | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Unamortized value of unvested RSUs/PSUs | $ 18,527 |
Weighted average period (years) that expense is expected to be recognized | 2 years 8 months 12 days |
Earnings Per Share - Summary of
Earnings Per Share - Summary of Reconciliation of Basic Weighted Average Common Shares Outstanding to Diluted Weighted Average Common Shares Outstanding (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Oct. 02, 2021 | |
Numerator: | |||
Net Income (Loss) | $ 27,242 | $ 159,029 | $ 126,634 |
Denominator: | |||
Basic | 183,839 | 184,347 | 185,412 |
Effect of dilutive securities: | |||
Stock Options | 0 | 0 | 567 |
RSUs | 877 | 1,801 | 4,030 |
Weighted average shares outstanding - diluted | 184,716 | 186,148 | 190,009 |
Basic earnings per share | $ 0.15 | $ 0.86 | $ 0.68 |
Diluted earnings per share | $ 0.15 | $ 0.85 | $ 0.67 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Antidilutive Securities Excluded from Calculation of Diluted Earnings Per Share (Details) - shares shares in Thousands | 12 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Oct. 02, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from calculation of diluted net income per share | 5,693 | 4,621 | 323 |
Employee Stock Option | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from calculation of diluted net income per share | 3,539 | 4,020 | 321 |
RSUs | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from calculation of diluted net income per share | 2,154 | 601 | 2 |