LESL - Earnings call transcript Q1 2022

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Operator

Good afternoon and welcome to the First Quarter of Fiscal 2022 conference call for Leslie's Inc. At this time all participants are in listen-only mode.

Following the prepared remarks management will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded and will be available for replay later today on the company's website. It's now my pleasure to turn the call over to Caitlin Churchill, Investor Relations. ahead. go please Caitlin,

Caitlin Churchill

and cause good made would statements, today significant current that subject and differ results everyone from materially which to that to management's could uncertainties and comments expectations. may earnings factors change. risks company's filings not the Please recent afternoon. you updated These cautionary actual like to I of press contained the in statements will speak and remind as risk are in review company's the future the Thank include release statements and SEC. the today be forward-looking if with circumstances

company's During measures. press furnished was the will A ir.lesliespool.com. management non-GAAP of release, refer SEC financial the to posted to at website today between section non the GAAP relations and GAAP be the the earnings call reconciliation Leslie's can investor financial which to today, measures and certain in found

call Steve to Chief Mike? Inc today call over is Mike On Financial Leslie's, I'll the Egeck, that, Chief With Weddell, Mike from turn the and Egeck. Officer; Executive Officer.

Michael Egeck

consumer our two-year pool for two-year company's quarter our XX% I'm Thanks, The comp to all record the a our increased generated million XX for everyone. our hot more QX. positively were represented results history, responded expanded $XX the record for $XXX our in increased from grew And quarter year first of our EBITDA and stack Steve residential report Sales the basis qX the performance the in tub quarter, for good and us. that for points. I'm results. profit was performance for quarter stack all XX%. by afternoon, to PRO first detail. grew positive offers. Comp for record pleased and Residential groups marketing XX%. adjusted result. our Thank guidance sales and the the of drivers margin continued quarter, time you our our streak as QX XX% to financial for pool and was product three key Gross you quarter. walk results Caitlin through will Then the comp highlighting going and acceleration million the and in start full quarter and comp grew XX% for and rate we fiscal joining

the traditionally been loss making seasonality first has Given quarter. our business, of quarter the a

a our in During earnings we $XXX share of announced call program. buyback our authorized Directors that December, Board had million

at $XX.XX put million. to and During shares for that average price the million total quarter, authorization of of a work we an back $XXX X.X bought

Moving the to is of lifestyle, the home schedules. quarter. to industry driving backdrop, see strong strong housing we healthy fueled investment demand desire and the consumer by Sunbelt, for a demand tub the safety backyard, pool benefit in from outdoor hot being and a in the continue market standardization to and and a industry hybrid migration heightened and sense home the work from This

evidence no macro of abating. seen have We trends these

ahead industry Another quarter, inflation demand. of slowdown nearly any was associated our inflation. was This the we in little price but retail continuing see XX%. the a see trend didn't expectations, we is In in

As inflation a expect the to we moderate saw XXXX, This year. inflation quarters. year, coming reminder increase throughout during the fiscal in we

by Connect the our And this physical asset. digital of from drove still could we Against For growth the continued initiative, Leslie's higher. we sales acceleration approximately of move derived full strong quarter. our execution backdrop competitive year, expect of system experienced advantages associates integrated the of X% demand, in it certainly our inflation a robust the and

initiatives. our of the we'll through walk six Now performance growth each of strategic

digital double-digit file sustained marketing file XXXX capabilities, growth. straight in was by compelling our to quarter. the file growth consumer continues ninth of show our QX, was our strong and Total quarter First, target growth, assortment. XX% driven

As budget Connect our marketing our These approximately on from Connect increased and XXXX orders marketing us last mentioned Buy store, online buy return whatever quarter. the store to effectively and XX%. to our by spend, our omni-channel choose, orders continue location in Leslie's they we than ship increase in capabilities. manner to in online have more ROI XX% consumer to to responding we our for Leslie's well high in ship inventory fulfill capabilities pickup call, retention. store. achieve allow network Consumers consumer store, digital of utilize to during are in and Leslie's enable also

Next, to with we continue deepen our our consumers. relationship

of key in benefit Pool drove the per continue to personalized file Perks and rewards in free help our targeted with Pool consumer shipping. consumers as tactics revenue to Perks quarter, loyalty be marketing and X% drawn conjunction grow earn in X% Our average Leslie's quarter. the loyalty programs with growth program, the XX% rate

track. driving our of to five Third, XXXX on by results, and our pro plan operating pool new All to be are strong locations the in three are initiatives scheduled remains convert season. pro locations start the XX build

pro-business our and e-commerce converted pro partner to During in are X,XXX dedicated as call, and our XXXX that our week, we PRO last target of Plus say affiliate site and locations the targeted surpassed pro help affiliate more Leslie's that executed agreements, our pro total XXXX. that had that for quarter. have than grow the noted The I sales and XX% pro doubled last number affiliate program, quarter. had we in I'm expanding new encouraged

which we closed in Pools, Greater locations the M&A, on the B&L in to Moving Phoenix acquisition area. of the operates seven quarter

to and pool and In addition, retailer have we into entered we month. an an acquisition from LOI, expect this close that additional spa

XXXX. to in locations and in on our staffed regard integrate up industry. two wealth pool acquisition accelerate quarter new added at acquire to our We in the a see least and And opportunities continue XXXX. track ability spa we to residential in XX we With new businesses initiative, the of have locations remain whitespace open to to residential

delays pool season due this for to microchips, uncertain. of be to remains Home, AccuBlue number able and that exact produce the we'll required Finally devices

have At are limited customers. any this that do production release this enough not for we we planning have confirmed However, Version of pilot in with to significant initiative XXXX. number time, small devices we'll X.X a sales a still

We growth strategic XXXX. with to quarter. With team's This governance, meeting you're inaugural and we our look all them the initiatives to welcome And on be, very inaugural in regard XX, in. the proxy and corporate pleased will listen XX, March our virtual leading to performed our on are published January XXXX. forward shareholder meeting was

Steve results Steve? guidance. turn to I'll financial to Now share increase it fiscal detail and XXXX our QX over on more

Steven Weddell

we're results quarter record year I'll performance Today Mike review the outlook for XXXX. Thank full report for you, first pleased everyone. our and good quarter. fiscal fiscal Today, XXXX of to our of afternoon and

weeks XXXX. included quarter XXXX. reported first January results, sales Our first first and Total ended quarter increased to $XXX.X of quarter to X, compared our on XX.X% fiscal million, XX or

is consumers. growth sales This consumer residential strong represents increase stack top comparable growth with comparable strengths a on XX.X%. basis growth shifted increased pool our fiscal Our sales XXXX particular of in comparable quarter XX.X% and on and types across tub results pro of XX.X%. of generated hot two-year with sales first of the We

quarter from including equity-based increased mentioned inflation both in costs and and average equipment XX.X% these Retail IPO. recurring prior continue of In an year year, residential with pro contractual over of XXXX, related incurred strong primarily and chemical improvement strong primarily payments to of quarter, growth and price $XX.X with we've per increase remained by to million. equipment. on million core $X.X product connection categories in fiscal elevated last margin seen our our the a reported see also a the Trichlor rate tub were cost products SG&A Approximately our during pool improvements as and reported in We we sanitizer basis. profit pound Gross We result performance we occupancy quarter. and Also, and efforts mix, due into $XX pounds our to margin across and primarily to factored pricing XX.X% product gross retail as the one-time basis leverage. offset prior to and procure Trichlor hot these Gross consumers. business for of increases related businesses costs to non-cash fiscal points this compensation increased partially non- the in increased by XX.X% was X.X% the more certain of convert cost year. our margin XXXX. million totaling XX first

acquisitions items the fiscal primarily completed by of and associated non-recurring year-over-year growth in the first of quarter after of investments XXXX. XXXX, the expenses these in our first fiscal the end with was XXXX increase increase, to support SG&A quarter Excluding our driven fiscal sales

Adjusted elevated. of a continue a to quarter improved when of fiscal $X.X we the reminder, invest and positive through percentage loss the in to year does of flow in million year a the this from business as throughout $X.X by SG&A first in the sales million $X.X the XXXX. of first is half impact fiscal million As EBITDA

in the X% converted Adjusted strategic at During when annual year a the historically first and higher share the our the was We current quarter, increase EBITDA has of remained in prior key quarter approximately we gross priorities. positive net margin net compared $XX.X of relatively loss to and both flat of year. XXXX the per million loss at XXXX $XX.X in a $X.XX quarter the quarter first million in of the fiscal prior first fiscal quarter against invested a generated represented sales Adjusted negative year. loss in EBITDA.

of quarter $XX XXXX quarter the of the Moving cash of fiscal did of either equivalents first compared the and sheet, fiscal a on the the borrowings end with $XXX first have XXXX. We million, not finished quarter. end balance any cash at revolver to million at to we of

in XXXX, We conditions chemicals remain particularly expect equipment. throughout and to inventory for fiscal the tight industry

inventory the $XXX first As compared fiscal quarter quarter. team, the at the of tireless the of million end of XX% ended efforts $XXX of a of to XXXX million, we our prior with result year up

opportunities the fiscal regard flow first consumer have inventory. with our We $XXX continues heightened to $XXX prior partners continue we pool inventory identify strategy million, at manage team in And end of quarter. invest end at proactively year to always-on was vendor demand the compared XXXX, funded to total to the Leslie's the of our of to With at to debt season. million procurement debt the strategically the and prepare meet for to of an work quarter

We're of high with for a share generation. and consistent and to million. This balanced we first capital in completed authorization. flow shares announced XX, consistent XXXX, disciplined the our our $XXX first company with a a program position, On is million fiscal $XXX action million repurchase of strong unique the growth cash December with of allocation. repurchase total share a X.X approach During quarter repurchase we

confidence and Our long-term in commitment our shareholder value to demonstrates prospects. driving our growth

remind I get the to to outlook, seasonality natural everyone want our Before business. our of of I

in through April spanned our season during In the selling occurs for the September. while all accounted third We and and represented third XX%. of substantially primary fourth which year represented full XX% profits fiscal half second of XX% approximately fourth Our quarter of of half our fiscal approximately fiscal the our year sales, our the XXXX, quarters first annual year. the quarter approximately generate

invest operating the beat our reflect driving our positioned capital in pool expenditures. fiscal with raising first outlook, the these reduce start the business year our capital XXXX. working our our uniquely our season year. our to full quarter selling fiscal fiscal flow on of year. half to We're focused are to we're drive our pleased throughout cash strong and for during in regard initiatives expenses, first preparing our to in including expectations. performance They We earnings investments With and during today, talent, year, XXXX firmly We're primary to season. outlook the All

of high representing We to December million, $X,XXX the growth rates year. the $X,XXX our to single-digits. increase million sales This of to compared an XX% expect to compared XX% growth increase outlook long-term algorithm in of compared is to to a prior our $XX and million mid

is December. compared profit to expect flat a million our to of $XX gross prior We positive in to our improvement line year. which of in points million compared $XXX gross implies small margin the And over growth basis algorithm outlook year $XXX to This per prior long-term year. with million, increase the to the in margin a improvement XX gross is

in to adjusted And is to XX% expect XX% of our to our the of outlook million to to long-term growth This EBITDA $XXX $XXX growth increase compared prior algorithm year. compared have representing rates We million $X low compared million a December. the double-digits. an increase

million $XXX to income $XXX net income million expect net $XXX We of to million. of $XXX and adjusted million

in $X.XX an represents expect our of our adjusted rates December, a per high-teens to of We and $X.XX mid increase growth. compared earnings to $X.XX, earnings This year. growth XX% to XX% diluted share the the to prior to increase to representing outlook compared compared long-term algorithm of growth

As a completed may shares. the diluted now does repurchases of XXX This additional first completed any of of share in a include we range our quarter, million impact count XXXX. be the during to share repurchase result XXX share million estimate fiscal not that

disciplined balanced and our priorities are have a to approach allocation. We capital as follows. And

first priority capital is Our structure.

second is through growth to M&A. expenditures priority and Our invest both in capital

return excess is priority final Our to cash shareholders.

team share conditions. $XXX And will we generated In the under have reported they our high in repurchase entire our drive record we're heightened of Mike. And I'll financial repurchase Thank from and contributions back to first growth you. investment shares continue our to initiatives. execute strong evaluate million see remaining growth over a at based authorization. for sales, grateful We hand consumer continue opportunities opportunities it the demand. all fiscal on positive this our to we environment during summary, of with quarter market and continue level And of to XXXX, as to position, EBITDA that, to results

Michael Egeck

as Thanks, and analogy strong key that, is offence, Steve. One, slowing. consumer pass in our season, we just defense investment like industry to four, continued are to and secular free benefiting that that strong costs of macro we driving cash like generation end able is consumers. Leslie's that consecutive and and has our NFL in strong trends I'd sales of assortment nine remind non-discretionary. to to of have showing playoff defensive has demand business, no we our attributes a you through the Three, long And history NFL of best which start offence, are of record enables analogy. EBITDA. signs high buyback. quarters defense. return in of XX% has durable with in Two, and flow a from four capital both operate Leslie's an is opportunistic are share business. to form Answer teams, our consistent I'll well football a also as shareholders powered resulted of of a with The the the

results in has tangible rapidly. pool the in meaningful Our Two, to up that set industry. are And M&A One, strong important growth capitalize and by driving don't have merchandising continue and have and components. initiatives stage we ourselves industry, execution continue pro strategic and is we still to development. is With Q&A. Three, the accelerating advantage to unique why it team a [indiscernible] we on believe has opportunities a robust six in their initiative a rely the have four, operator are great spa and four I'll see hand our multi-pronged put early we is favorable that just both. to for that advantage have us advantaged since back to we inventory uniquely a Leslie win. position We This on to authenticity in position.

Operator

from Securities. from question Guggenheim first is Our Steven Forbes coming Instructions] [Operator today

line Your is now live.

Steven Forbes

expectations, standpoint and margin relative through inflationary you're the just moving us on I year focus on performance, speak one margin a or performance you right basis? us just basis costs to flowing we can to cost the on the occupancy think maybe the are on seeing quarter reiteration a versus on hi industry as can to around an first and last. managing in for Steve. update if Good about are the the from pressures And of Steve, I quarterly this gross gross how this P&L tell running evening, full to what pressures where input wanted competitive year quarter behaviors, maybe

Steven Weddell

to that. take Sure, thanks, happy Steven,

per the well perspective, new pick higher. locations, some M&A locations year quarter the So open not with this but an to going - about new bit, of occupancy stores, shy some little may of materially $XX of as of as addition running a up million just from we're that new

as it's So great ability a point. have And costs. business. I pass perspective, do look that we've on then lot addresses that We a to think the about talked in inflation question, from an our occupancy

advanced We the the connection typically price are obviously in to vendor costs We're able if notifications it package come business well. with plays we in the typically our we increases rising pricing from to consumers, prices form average of have get way the partners. of they increased as in notice, resale So advance as that we're as out those have in through.

well. And can to opportunity so protect basis. maintain on we times, as have we margin And minimum, at the rates dollars many an a profit an overall actually

So We couple remainder when through I And leverage We've again, which quarter to in to then we of over XXXX. that consistent of mix, we in we're back well. the businesses. and each first have year. see done And think occupancy right. business we've with to QX, again, and talk continually about our years years improve you got gross expectations fairly get our to offset the the we've last to respect go it's ability do margins well, do for of margin, seen to certainly some as that expect couple continue going last as talked the

of So the we growth residential tub, growth hot saw first of And larger pro XX% in those year. in half of - XX% the of tremendous in typically the those are the pool, growth that are consumers business in consumers. both those of business percentage a with areas both

how in So when the you again, out with the we've of to it out seen about an but impact, relative QX, the outsized past. playing mix full year, play in think little consistently

Steven Forbes

and yourself expenses, quick And follow-up advertising Super, then through helpful Steven. on XX%. up thanks mentioned or Mike you a to again

spent? it as relates terms thoughts, year, to were of any cadence the planning for sort or up that of of which In comments

Michael Egeck

four, out expecting do We're of Yes, sync of percent the increase out or quarters business our where of in first not be the Steven to volume the focused half. the anything will ordinary is. and XX% in three we'll, with -

Steven Forbes

best you, Thank luck. of

Michael Egeck

Thanks.

Operator

you. Thank

Morgan question next today is coming Our Simeon Gutman from from Stanley.

live. is Your line now

Simeon Gutman

on gross want margin everyone. from follow-up Hi, the to question I first question. my

right, was the where or to the and helpful, should depends think Obviously, And implied in, Besides it feels you the the et maybe occupancy XX example. gross to Steve, better. the for know, just year. I rest run leverage product gave of a bps It for general mix XX occupancy on upside? like a come gross the risk seems year much like in to I the but cetera. full up little you flattish was like be sales think rate it is

So any we're there where pricing. offsets, it seems a where like like, pretty the know, Are you of it getting because still guided, you've big other buckets running business is big delta. feels there's versus

Steven Weddell

Yes, kind about at is to of you up talked positive back look in originally XX XX. so guidance points. XX when being we guidance, The today to basis the of kind December, flat

through it gross $XX when range. again, a rate look up did profit it is margin flowing at increase So pick $XX gross the on flow million in increase XX%, in XX% overall million the a you sales at XX% in when through

saw the for for We've think Trichlor. full the areas talked products. about that year, on some of from So some is, certainly certainly perspective When you improvement. focused cost we're about

flow we an the through consistency. an to of our consumers procure and the on first quarter that's expect out relative of this year. have and QX, would it we Certainly, opportunity a to ability talked come share, think remainder go in gain the we protect a headwind some year. in more product year, potentially higher get price. at profit overall, margin we've through to serve fact that Again But In would market seen that more about last to unique dollar ability

Simeon Gutman

of stability don't very there's it leave any was how that you know but inform can talk a talk much curious you year and that as you about if and rest can - that about helps And I lot talk about Okay, talk seeing granted, there then I the retail, left. it's know I'll a think next measure you'll small. caveat the also yes, the about, at January. don't but, follow-up, with you you've continued quarter, QX you'll that. you volatility

inform the could QX the year? of how rest just, So

Michael Egeck

this from long Look the and Mike. is Yes QX a of is it's Simeon, small the heart pool ways season.

feel supply getting get a we weekend. So to we closer last May We that good will our industry. situation a and really, where situation in said the us for be Day pricing to for the Memorial talked both and from year, about

said, the just encouraged consumers. at I And we've actions QX us suspect, but to So any slowdown in no as time. for it's early. demand, it's we're mean awfully to is might important. awfully And And the the we've have pricing comment we're on you this with comment. we going by QX early certainly not stuck taken, start in seen like

Simeon Gutman

thank Good you. luck. Okay,

Michael Egeck

Thanks.

Operator

you. Thank

Jonathan today question next Our is coming from Matuszewski from Jefferies.

now Your live. is line

Jonathan Matuszewski

to Great, thanks the question. year for fiscal guys. taking my start Nice

one could relatedly their builders, maybe First I hearing that's how on pool guess things of has performed and on like - rising some during is you the Thanks. periods costs, pro from or negatively And historically, question? first financing impacting your share been business pipeline that, perspective anything interest - for recently my customers builds if rates? regarding higher pool have you

Michael Egeck

thanks Jonathan. business. the myself Good curious question being Yes, newer was about to I that and

that And grown But funds periods we we've the in So And since where at not year. plus the back range. the XXXX, news has there's grown in we XXXX. look founded and new XX% every team rate that. it's been were nine had federal go

period environment, was growth those interest low every but of rising And single-digit. grew growth we So periods. year, during our double-digit rates high we average

it rate us builds. So, lot rates very a With on has performed pool a well. historically high that company to of interest in interest the gave regard comfort environment,

very backlog there's any maybe to heard But slowdown backlog people And getting a to a potentially builds think haven't rising a better. little constraints rates. associated But and, those with very know, we seem built. you still in as waiting that, bit have there's slow, consumers healthy from or of about be anything healthy pools been some it typical pool I a labor situation, may could down. slow still on builders

Jonathan Matuszewski

guidance, can full help fiscal And obviously, That's have get business big on the to really you pricing the chlorine about chlorine looking could then, but a be potential maybe season XXXX more your a picture, pricing But pronounced Not XXXX view reversion. the playing levels, one for scenarios think outlook? numerical from question, of likelihood minor on reversion maybe through. downward XXXX? suppose different could I another impact be still wanted of us just and second helpful. in in

You know, industry in for maybe XXXX? pre-pandemic levels but are toward of could a has different number as out now? thinking of how been about ramps, the play that chlorine tailwind capacity scenarios kind you years Obviously, awhile way out, a

Michael Egeck

very the I this the that won't domestic was we come volume that Yes, think up own decreased importantly, the the I'll imports. that comes what volume out than most know, the on will at But is happen keep has But the December. lower prices replace XXXX talk and guidance should, what the a in to import make be The because that a at will price chlorine by demand factory back in taken is industry that will macro, come had it all. of about hurricane our plant current not online. down gap. It you until will have seen

higher levels. likely kind think but reversion reduction stabilized to might There's we're see I pre-XXXX these new price is industry of chlorine at in most the not the for that So pricing. a prices, environment a we any expecting potential scenario on some

Jonathan Matuszewski

you. thank helpful, Very

Operator

you. Thank

coming from Merkel Ryan William Our today's next Blair. question from

is now line Your live.

Ryan Merkel

want I price more. bit quarter. great a unpack little to guys, Hey,

for but still quarter, do think the in XX% going you year. up the So X% you're to

XQ So could is and that anywhere? upside timing the is there just be

Michael Egeck

thought. in the by run quarters. inflation, expected back around first was QX inflation little last of in half increase that did hotter that that Ryan, said less of the the And three It QX one. the balance pricing the an we how the we last at if QX were the is we in year. than - Look, look reported you Yes yes, a bigger take for year, bit than circled I'll a inflation we we quarter. than and surprised little year, But

correlation ran for for quarter. If you - XX We quarters. did about do the the first maybe five X% over last for that it ran year, QX. I three last thought we nine And said and

So upside or we were know by, surprised points. basis by one you XXX the

Ryan Merkel

the up the then XQ, the rest Got slightly to but we're year-over-year so nice increase? Steve, of just way. the sort again, margin guess of XQ margins way. so XQ of it, what okay, want XX% gross I expecting its XQ, go would versus normalizes of And is the back to smaller XQ, that maybe COGS? in changes My that rest is drive product flat

Steven Weddell

that's season. selling no think primary And I right. exactly again, Yes,

three of level as of and we in for Trichlor, Funny, is from well. So business a third as product of four. perspective get will we most think out that and I product get and into that'll going expect part kind to some quarter fourth in sold again, be it the of to mix

helped. looking expect three in sales XX% won't certainly four to guide QX at Occupancy most incremental the sales a at in our margin. So I be from and of we'll drive increase three four for based large have that overall on and the again, would opportunity as perspective

Ryan Merkel

all thanks it right it, on. Got pass

Operator

you. Thank

coming today Our question Benedict from Baird. from next Peter is

is line live. now Your

Peter Benedict

thanks Hey question. guys, for taking the

a loyalty, talk that's customers? question? just nature that year, your little bit X% any the more about the in first spend progress feel you larger you that the just of and do my seeing First the about what's maybe I loyalty on the for some growth engaging with of expectation just said growth you're growth think up How

Michael Egeck

there. a I'm in say low to by Peter. question, growth only to X% was double-digits disappointed the for loyalty. I thanks going Yes, running little teens We've been

by was spend a in on timing. The to growth to XX%. the that I'm Looking quarter, flip small it very the through data, up was side But up customer customer going new down new growth. of chalk pulled actually

second both from smallest So I not - year the average was seen the of XX% us. at with healthy, very XX. for those file, to smallest consumer, per it's quarters. up which line been which was again, quarter But of are quarter revenue too by the up I'm year prior seeing in to of the growth trying many conclusions drive we've the and in what liked More yes, have encouraged total would and XX%,

Peter Benedict

either while mean, I as the prices mean for maybe about in makes trade business have the are but trying the continues, market? pockets any or there that next response sense in to move the across where your consumers you of I the of sense. unit - these question, of not guess business inflation talked seen Okay, units not - you've products, to to just get demand the And haven't most then maybe really just response I they demand have aggregate, started you down, any to - have different changed, a course, higher as

Michael Egeck

drop we Yes, really in seen haven't any demand.

fact, two the and sanitizers equipment inflation categories, showed growth. strongest higher basic of the In

by quite we're couple couple file testing. the on very up only we're being encouraged dynamics, demand, bit, durable units - ASP are a water by is things I in a There's percent. seeing the our would say. continuing So, what that's AccuBlue the up interesting per transaction going driven believe

little to And is going people, a time. buy pound Cenobite a inflation But with a going or actually say, we're XX, some prices. their need season. at in be put running it trading a we same have over the XX seen sanitizers down would into that So some purchase tub, one of could to XX They XX. they're for potentially be smaller any evidence

Peter Benedict

Thanks lot much. makes now a that Excellent, sense. so of

Michael Egeck

Yes.

Operator

you. Thank

from is coming Suzuki today America. Bank Our Liz next of from question

is Your line live. now

Elizabeth Suzuki

network I the pro? thanks rates thank on average, details within by pool, your hot you. and categories Could for equipment any mentioned highlighting? the retail you and just between any sanitizers, but all the growth worth variation outperforming Yes, that's know underperforming about and talk underperforming also you channels? region basic those tub and Great,

Michael Egeck

of kind quarter results bit the things geography wasn't headwind it No, of all encouraging actually for standard performance. the of as I were And balanced the most it quarter. a was in let's that's and probably whether growth, All it the weather one would up characterize a driven, category very so, the most about terms of were the for nicely say, among deviation they categories, regions up.

Elizabeth Suzuki

actually spring how winter markets the the of could in markets impact of mean thinking is spring much on breaking pool round? itself your how then closed profits late year particularly? just where exposed seasonal that business for pools early third is impact and the I again open Right to question. open and are that weather the in quarter your versus and Just the pools in - where that about or are

Michael Egeck

that Liz, background Yes head, know don't off do. you Steve, know top if to my it don't exact I I'm I say going the

Steven Weddell

folks first to from season, water. trying to to to well, quarter solar uptake you indicator is that as - earlier earlier open that start trying good of season, a Liz about Your or though close a heat October in probably pumps, later, things April other it the of are see tail years, maybe the the think impact couple the margins, like right we've the season. right, can towards through the so extend to warm I little around - trying end seen thinking September, and way, an get covers, of typically What kind last heaters,

have great open don't have ask. material the So certainly you them to to for open the transitory earlier pool a doesn't question of pool have a but year, can overall usually keep on the use of that a extend performance I specifics longer. trend impact beneficial either, the the so it's but get or use it's pools earlier and and

Elizabeth Suzuki

thank Right, you.

Operator

you. Thank

is Capital. Garik from question from today coming next Shmois Loop Our

line Your now is live.

Garik Shmois

impact just thanks. that about an that integrate help margin you're in slowly make environment staffing acquisitions thinking Hi curious with recognize the know any some you to for as sounds It and these should like investing of picking be effort? we how M&A up you you, there's

Michael Egeck

continue of there amounts a we increase bit you done, March look staff XX. Yes, said, couple were from a that of pace, staff since four gone we've and XXXX, we on It done But big pace. kind to equivalent add to work depends with We've start buying. we're and M&A. staffing, said know, LOI wasn't as with, to to got like an we what Garik what another. add five, we've to on acquisitions, full more we've the to March We'll probably little two a we've going the about times

a put do first a profitable. with at their lower the up is hot margin, we of in but very, gross very purchase discussion, margin, things may businesses businesses, margins of purchase on the though, them As Steve slightly rest margin in get the them tub chain. the pool mentioned, contracts And are little right the lower our we and run one the

Garik Shmois

you Got I consistent fiscal in it. fairly of to there the curious the performance still then any of if last trends the growth? consistent what bit just wondering And or you're kind pro-business, think kind change so, healthy pretty year that's you steady, seeing XX% in on over expand could just delivered in a growth if little

Michael Egeck

very, we're growth. stopped We seeing, it's X,XXX we're go to They're Yes, optimize quarter. pro we're said market, the pro points targets look it agreements at growth, get roll. about XXXX. very the And quarter, mean, encouraged. to it's total setting basis had I've when and really an team. wanted the of got we the in that good out steady - a on over the team X,XXX. just they'll in pro was I And the to the for I'm initiative aggressive the And XXX pro very for confident But seeing - we consistent first contribution opportunity. you

Garik Shmois

thank Great, you.

Operator

Thank you.

is question coming Next from Andrew from Carter today Stifel.

live. now line Your is

Andrew Carter

- Hey, contribution for I openings. about you thank that is total store I What between wanted much. a M&A your that expectation said you Thanks. ask during to think, guidance? December, $XX million in very new

Michael Egeck

you XXX all guided we XXX M&A, basis to range to be initiatives know the we at did Yes, as point year. the within probably

Andrew Carter

XX have the I XX of you ask points, margin would pricing can to question XX. guess year the worst second kind Okay, on inflation. I of you you're the quarter, in the of, still headwind, year-over-year, mean win you're gross I mean, question that's going net probably XXX I over balance did is and and to going course, the basis to that to expect on wanted mix had I

some to going to be Thanks. Our there ask if that could you're wanted inflation - about some just costs even, pretty extra significant investment? upside, make or

Steven Weddell

the certainly that's goal. Yes

started leverage we for opportunities what side. that as do expand And on and off flat. we to But roughly we think the algorithm. being get on the is in December, is back both talked every look gross margins about every day, we I conversation our period SG&A again, well guidance as

to mentioned as when a I becomes closely we're of bigger. earlier, aggressively, a we're vendor pricing kind occupancy going our an some in I leverage think as from we're it. think portion going occupancy I moderation to And sales of dynamic see of dollars percentage with to environment So and very But perspective smaller get manage continue partners. as a sales, work

with as into I think said, like the get we're I left, this and more first lot year the of through think we'll it, guidance. at think we're So updated provide the point we - pleased start, quarter, I season, I

Andrew Carter

it I'll pass Thanks, on.

Operator

Thank you.

is question Piper next Peter Sandler. Our from coming from Keith

is line now live. Your

Peter Keith

afternoon, want into pro affiliate Good dig I a program. Thanks. more the the to Mike specifically and around bit

grow at Does still could total you're Are X,XXX ran to ramping will year. that in the it time full number? you're the Do pick talk you So the much with continue some that quarter stopping? - a on I and look to think affiliates. if takes spend us ramp about you've pretty up? you and you're similarly, Maybe you to not back assume seen already

Michael Egeck

will that continue comfortable that pretty grow number. to we're Yes, total

in Our doubling. running doubled been they've pro the XX% partners, quarter, to to comps

convenience. to So or really one the trend which it's two which our the - target we've we really in an of trucks just The is or sole past continue are very operators we encouraging. from to it's operator perhaps say as on can our think that well, value pro predominantly said proposition, I customers, response have

are at the Our stores work pools and the pool. are where they

something's up in, quickly. pro they the front, need in on pull website, and when They to something app, get very in the go quick. So go out store, can their available see what

price, slowing to You know, I'm value And that, standpoint, as compared that lot proposition. of say pricing that referral convenience but competitive. that it's been competitive then and that's on is to been it we're we're the food price. programs. fast response down. don't very There's not gratifying the in And we've to it going to yes, see with and we a a see competing from we've We're

Peter Keith

that verify to just effectively dollars? think comp I your were affiliate saying pro you XX% Okay, up partners that's

Michael Egeck

Yes, that's pre-affiliate pros comp joined for posts program. affiliate - program, were the have affiliate program, pre and that the

Peter Keith

of to it's then - and spending I guess kind Yes, understand, exciting. like it's ramp, the because just

XX% quarters? is from going this affiliates that been new is You're season into an now that acceleration X,XXX with prior

Michael Egeck

been them. consistently. we pretty, affiliates. agreements in quickly have by XXX% We've very been running purchase well seem those And received ramp pretty in about and The the signed, up those some to pretty the amounts have XX% to

Peter Keith

Thanks so and good right. all the Okay for feedback much luck.

Michael Egeck

Yes, thanks.

Operator

like of comments. floor Thank management I'd you. to over back end question-and-answer for our session. the We reach the to further closing turn

Michael Egeck

the Thank operator call us and everybody you, thank joining you today. for for

pool in end say look Just visit. forward stay look come if nice pretty, Arizona season importantly, there safe. will saying And like hope in you to not, most storm forward look All by you to it's here doesn't these to want and we Landon out I XXXX. the but you. it's Thank

Operator

webcast. Thank teleconference you. and That does conclude today's

line your disconnect you day. a We today. have time at thank this for participation and your You may wonderful

Leslie's (LESL) 4 Feb 222022 Q1 Earnings call transcript