LESL - Earnings call transcript Q3 2024

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Operator

Good afternoon, and welcome to the third quarter of fiscal 2024 conference call for Leslie's, Inc. [Operator Instructions] As a reminder, this conference call is being recorded and will be available for replay later today on the company's website. I will now turn the call over to Matt Skelly, Vice President of Investor Relations. Please go ahead, sir.

Matthew Skelly

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

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

We posted IR call. also during references our have presentation QX earnings to website, to XXXX our this make earnings and we'll it

On the Scott I and Officer. With call Officer; that, are today will turn Chief over Executive Chief call Financial Egeck, Bowman, the Mike Mike. to

Michael Egeck

thank all this you us and joining afternoon. for you, Thank Matt,

our quarter some performance. like to address our and we I'd third expected put current results, future around context Before

prior than consistent, mid-single-digit business with XX more was the Leslie's teens. For and in a years the predictable margins mid-to-high growth to sales pandemic, EBITDA

During installed pools industry the consumers and owners more invested as pool money experienced and time profitability pandemic, unprecedented their and more pools. growth the in pool

reaching the levels Leslie's industry this and in period of growth, As both share market profitability. participated of gaining outsized leader, record

sales our XXXX well. In of presentation, Over the of Leslie's we select and industry period XXXX traded the for year, of normalization, publicly companies. as gone pool compare into and course and through this has demand challenging pool part guided XXXX a has this industry actual been

representative trends is year, Leslie's. correction demand of companies to similarly. The the timing industry in varies all and by is sales have Although the over unique period, X-year the not and performed of

margin. deleverage a fixed industry of margin adjusted EBITDA the gross have discrete has expense declined as X combination through Over well impacted which items our negatively last correction, of as years

components inventory. margin costs distribution of occupancy we decreased reduced as time over delivered. also deleverage as this gross SG&A period, costs as expensing have capitalized of points basis and DC Fixed from During XXX well has of the

sales As well targets our continued on returning of progress long-term as leverage industry combination a normalizes, as margin efficiencies. demand to will entail cost

the X% X% does industry with Our operating the XX%, potential X% last are to our and is performance and of our we the our EBITDA performance not the margin targets, believe over demand XX%, in we which growth the performance of years is growth, our industry of meet by including of XX%, share SG&A our normalize, well diminish store current reflected of challenges does business long-term historical to of in and long-term of margin comps to not positioned view mid-single in company, digits inconsistent X and fundamentals gross price. When unprecedented adjusted sales location X% driven mid-teens. margin our

Now the our third quarter. for to moving results

for outlined release. performance in in pool of May April from X as the delayed of and revised days the quarter the dry the in and year seasonal and pool nonseasonal up to the third it June the cold quarter, expectations weather, was Versus improved with enough lost and season first markets. Sales start July of in days reduced but markets quarter. months number our press XX make not warm met pool prior Our in our wet weather the

detail our release. rates from press month's outlook provide large to the ticket of weighed call, more also interest inflation see high will effect on We and household in Scott full-year on the continued weakness categories as in cumulative spending. Later last

improved categories. we Total X% encouraged sales As first the to saw third weather down from by in we improved in in the June, quarter in certain the were down XX% improvement half.

X% X%. Chemical sales in in improved improved to and in sales quarter June June. up quarter, Within the down down the to X%

half. Hot improved first from improved in quarter the XX% second now volume mid-teens first X% total discretionary quarter. Traffic is sequential in quarter. in to in the X% improved to down sales in from positive down in down the in sales half down improvement the the to drove the X% to which from the quarter, sales chemical tub down down XX% products quarter, down year-to-date. PRO a Our X%

So while demand business. continues with we trends a unfavorable to industry the beginning are pool and challenging environment, in ongoing to the macro weather, encouraging post-pandemic deal normalization, see

not actions, from results This sales quarter Moving fiscal down quarter. Residential includes down and the down for hot pool was basis year-over-year. which an X%, point pool to X%. Total third year-over-year. XXXX was our down X%, Total price tub approximate transactions chemical X% $XXX million, headwind financial until were the of fully our end did were residential June X% XXX was the down anniversary PRO quarter.

this competitive product availability, X% drove versus offset were year. Nondiscretionary was but Our traffic value year-over-year, quarters down a service, X% that customer in of customer focus fiscal to of in the the increases majority down compelling messaging sales the first X% in improved a June. pricing, down assortments, X with and product year X% on quarter. Average value ago, decline order consistent conversion

Page in the and see data growth card we outperformed sales year a that pool third of that shows June purchases reported of an analysis As better were point than X%, by in the environment. Discretionary XX by to XX% driven were quarter third-party was actions. Equipment believe you our down a total and that down down cautious QX. ago. On inclusive credit sales the headwind sales the noted chemical from macro this in basis industry improvement X% sales basis June. that XXX chemical Leslie's was deck, price XX%, our versus XXX product outperformed consumers specialty were our delaying down due earlier, of June of quarter. was from XXXX big-ticket We can retailers points

industry quarter. Additionally, e-commerce of indicates third-party traffic digital during share traffic pool our that we analysis grew the

presented pool highlights results points. XX X performance sales select for public guidance. a Moving The other XXXX to We believe comparison this Page the and companies of is XXXX important comparison of table to deck. industry Leslie's actual current

pool last X over Leslie's in with First, public companies. other line performance the is industry years

pool the industry the have performance some distributors, challenging demand of and with retailers spike impacted by associated for combination of Second, macro, industry unfavorable unwind been manufacturers, the a pandemic. weather, all sales and

the Third, of been impact relative retail in the a performance reflective and models the of similar their view, position to the over manufacturing, has is timing distribution, and the total the end chain operating differences all groups of X although consumer. supply in X-year

the quarter. DC EBITDA gross includes was actions, chemical year-over-year, Turning impact to sales, margin XX%, occupancy XXXX $XXX basis quarter, price capitalized expensing diluted points deleverage and million, June point and on a the costs. Adjusted profitability and for backdrop, XXX down basis which chains from of the for was lower XXX largely the in steady pro adjusted to is stable residential regard Chemical typical are are pricing Supply and is appropriate. markets promotional industry inventory well activity and $X.XX. With was share throughout per seasonally earnings season. prices operating relatively levels the the held the both

direct-to-consumer normalize demand post-pandemic, scale, the leading pool brand remains and capabilities, Leslie's and industry with continues retailer While to unmatched spa awareness.

We are efficiency. execute and share long-term growth leveraging expect to sustainable we to our and gains, our top-line which pursue on drive operational position further initiatives, growth unique strategic and profitability,

Turning to initiatives. those strategic

flat that believe to a customer ago, file growth. positioned First, are and we was customer year our deliver now we we file are encouraged versus

in was as customer decreases per average big-ticket and the by items above-ground driven Second, equipment X% down quarter, such primarily revenue pools. in

Our per revenue customers customer down X% loyalty X%. with pool average perks outperformed, up and transactions

in the and PRO for Partner ended of PRO we the This X,XXX down our growth to of and end to were long-term PRO confident regard down Partner opened M&A the quarter, component X XXX have and new initiative, of we sequential improvement store by PRO continue XXXX. fiscal our be locations additional driven new with sales and the quarter we first with locations. and our X,XXX program. Fourth, our X% expansion a opportunities. XX in quarter compares half, open to at stores XX contracts effectiveness the year. algorithm, in PRO fiscal Third, PRO expect from growth to meaningful third the contracts PRO last are long-term X% a Year-to-date, store stores

build we strengthening of the sheet. to pipeline capital balance remains opportunities, highest store While expansion our allocation priority continue our

and encouraged leave be million industry-leading our water XX positive adoption safe, spend clean, at more and without all to beautiful a and and than strongly instructions year. capabilities garnered the reviews, response our with to per $X,XXX consistently testing X-star smart to pool by them resonating customers to device home, and powered Home testing their it membership get by is having maintain tech Finally, tests. We more continue smart the member step-by-step associated a of from than as continue members rate we expertise water device. gives The to AccuBlue program

outlook it its Home excited in AccuBlue future Although still remain we hand our over results discuss in stages and production. I more Scott early and of will to adoption, its about continue detail. Scott? to to scale is now

Scott Bowman

my otherwise indicated. afternoon, comments unless you, remind I'd Thank performance like basis to good on that quarterly our on are Mike, everyone. and a everyone year-over-year

As Mike our and mentioned, led factors an by July which outlook. been to XX unusual several our performance revised has this been has year, affected

don't For performance. this provide more EBITDA that include additional in we our earnings normally reason, our on presentation add adjusted to we detail bridges

bridges, has environment, combination challenges the was by due traffic can of you As volume a weather, industry to demand. our see and in of ongoing macro challenge normalization the the been This related.

pool X%, million for tub X%, in in quarter. There declined factors the sales X%, strong sales sales at are continued a third quarter PRO in were pool hot the discretionary and total weather sales trends the weakness by of primarily by in fiscal million encouraged when our For quarter, quarter. pool the sales sales. Comparable sales to unfavorable sequential sales With note driven residential contributed the year. and to declined declined consumer $XXX tub noncomparable versus residential improvement and decrease residential for reported PRO decreased $X.X looking prior by hot group, We we of and X%, respect the X%. X product

core was X as of March this selling basis the result, discussed points our pool last the X volume gained versus June previously on XXX year as negative season July of call, early quarter lost approximately million, shift third $X X impact year, The days at the resulting volume sales ended during high and quarter First, days in we selling or April. a fiscal XX lower the and quarter. in end and the second

mainly year, XX.X%. Second, point and headwind actions headwind to in due Gross headwind quarter. basis same million period XXXX to XXX was were gross was points up decline capitalized on basis basis quarter occupancy compares and of adjustments XXX basis declined margin deleverage lower the inventory actions the and to previously our improvements to costs. basis of XXX in reduction expensing DC the higher in last XXXX and in sequential million the was a points from decline decline fiscal the quarter approximate chemical percentage due of chemical mix deleverage price basis June shipments XX occupancy The to from inventory. costs. This point new $XXX price favorability from to second This of rate partially compared to favorable was costs, improvement point points mainly basis cost XXXX. The due XX points DC year-over-year by a the XX costs June on ramp profit second of an in due $XXX chemical in a adjustments, sales, a of inventory lower offset and XXX of

As quarter, continue to more inventory. new we to favorable comparisons the look lower we as expect we fourth cost ship

a or million million, last outstanding million adjusted XX.X% were as to presentation compared effective lapped $XX we $X.XX expense period was in progress that impacted million, last million initiatives. Adjusted and to the compared adjustments quarter, same make $XX our EBITDA our per was of detail. Interest approximately weighted same bridge EBITDA quarter fourth we on fully the distribution last in compared chemical adjusted period same income year. year's Diluted as to the share million XX.X% price management costs, last period period have $XXX last was in diluted and X% year. Adjusted Page in higher the XXX and $XXX tax the net earnings was average to million. rate flat our reduction profitability. SG&A now $XX actions, the in to compared June same $XXX cost last year. and in illustrates earnings continue $X million X We year, $X.XX QX year, more inventory of XXXX our cycle was to the period shares the same was solid

our revolving effective with ago million and to on secured and amounts lower This Moving of $XX the term quarter interest quarter our on a compares quarter. Cash prior our compared revolver decrease and term compared was and rate X% the year the $XXX loan quarter our our year same ended were $XXX in-stock Overall, balance year no our prior million the quarter $XX on the promoter debt ratio term sheet, or in on quarter. X.Xx. The and a leverage last the period as very on at for facility. at were $XX loan to the million than million million, of levels million our $XXX cash prior loan in million to outstanding outstanding we our ended credit position, quarter equivalents remained the service compared $XXX X.X% metrics, compared million XX% net for year. Inventory strong. to was the end even the scores year to $XX

on outlook today's the in from release outlook Our XX. we provided revised earnings remains unchanged July

outlook Tropical quarter down Storm our assumes of Our year gross extension revised margin sales midpoint fourth and approximately outlook, the XX% at disruptions inclusive the quarter, of as our and trends Hurricane QX such an of the prior supportive quarter with is X% sales fourth at to period. midpoint Beryl Debby. The through XX% compared weather performance to in of date

and expect cycling price gross inventory cycling last We fourth year-over-year the the adjustments year chemical of quarter the fiscal XXXX and cost due the margin in higher June of action. improvement DC to

year-over-year Regarding cost in fourth SG&A, expect improvement the make our in we as quarter continued we improvements structure.

have efforts reduction year every fiscal quarter our into will XXXX. We and reduced expenses continue this

$X.XX. to quarter share range fourth adjusted $X.XX to adjusted be the be EBITDA the to in diluted $XX earnings expect range of of $XX We and million in million per to

seen Regarding our positive some longer-term have outlook, recent signs. we

as fourth the quarter. we back now equipment start volumes is XXXX unit to First,

volumes were seen business. product quarter hot specifically are have positive third, third the chemical positive sequential we our sales, improvement and in Second, in discretionary year-to-date. And in tub's

XXXX. From to to we prior $XX compared range in expect the are and year in a equivalents year $XX these million for early, sheet of Although balance encouraging million end perspective, the with the as the plan signs cash we period. XX cash million of

liquidity continue debt We in future order to efforts down enhance to in initiatives the our several goal. this identified to have achieve and improve prioritize cash to position pay and

tools First, future. reductions management improved to in to supply opportunity of we see have in significantly incremental reduced our the through and continue inventory make chain

Second, will a profitability in as environment. we in our which made grow we structure our improvements believe normalized cost enhance we more have significant sales

Third, the options needs cash to finally, we have growth evaluate our of our approximately manage CapEx, $XX especially million. And annual maintenance maintaining our continue capital over our we to additional expenditures, while ability priorities. to other and above strategic generate

allocation. capital to Moving

priority of goal expect first or be the in range reaching leverage XXXX the continues down of pay Our a to with ratio outlook, fiscal Xx. current of to our debt to Based Xx a of longer-term a X.Xx ratio end we on leverage with less.

business plans. We also the to support our to invest in continue store opening strategic

additional have opened the we plan stores, new stores of the by end open XX year-to-date two locations year. Regarding and to

not over remainder hand are XXXX. I We activity any for closing remarks. the it planning will now for to M&A of fiscal Mike

Michael Egeck

been capabilities, advantaged correction drive the and in our secular we that We that longer pool spike quarters, brand that leader pool said, Leslie's revision. That pandemic with length guidance pool of magnitude It and the but industry tailwinds been XX-plus the long-term clear intact, resulted the year has dynamics anything weather demand a is have current sum supply July years retail the fiscal from only fiscal are consumer, XX and normal correction taking strengthened. is made demand scale, in Scott. notwithstanding, the which industry industry believe past for awareness through the fundamentals anticipated. industry. in has it than unfavorable the To we and up X cautious Thanks, and the underestimated together the in

retail optimization yet, including what positions, competitive pool teams is our through service. all-time strong XX%. Improving on is superior seeing of highs. Continuing the SG&A. year-to-date. Managing and we signs. In to scores industry down are strategic are X% across adjustments to improving pricing, are at costs up compelling XXXX assortments, we are by lapping channels focused inventory costing actions. remain control, expect chemical and remain and can and all Inventory while price margin down year-to-date, not our in-stock controlling positive we meantime, our water We and testing. Providing and initiatives price AccuBlue conversion. driven XX%, down there June normalize, the product NPS the SG&A inventory. reducing gross our Conversion execute customer

margin together, to capture questions. of share open Taken an drive patterns improved significant market the back these operating with and to value. I are that the anticipate operator and yield to turn we line growing long-term a confident it remain for demand demand prepared industry service expansion actions that to shareholder normalize, will now we profitability. I increased when well

Operator

Kleber, first Our from question Justin Instructions] comes Baird. [Operator

Justin Kleber

looking First, by by versus there? understand, your I'd product guidance, customer in backwards, type better prior just XQ whether is like you us Can the category. bridge just that gap the shortfall to help or

Michael Egeck

question. we this our Thanks is ] question. Yes, It's covered a Justin, for [ good It's Mike. something the not deck. in

Our we QX guide for was came flat in at down and X%. sales,

Conversion consumer think cautious so not need as much and pool So which not all bridging. the that's hit flat driven plus talking we're total was difference in our interest of about May June with discretionary equipment minus value came came at all June our as the X%. so transaction products. traffic the challenges is, do X%. April miss. for guide and at to miss for traffic like ongoing high-ticket June of I'd guide, April, improved are up positive decreases basis dealing that's nicely lower transactions traffic positive X,XXX value The year-over-traffic average seeing X% Actual we're miss be points. and basis to to the be were to and industry X the our of And bridging in order weather, guide minus overall. difference sales weather, quarter. assumption and believe of the we clear, We a down was some from foot most by weather, and was points. X-point entirely rates, are traffic striking. May, traffic transactions driven X% we in we're the X%, X%, minus by and was June To miss XXX high traffic. It Underneath combination X%, be average miss. normalization. And but X% a that looking at is that to order of improved in point again, inflation Actual

During changes changes in no going on, staffing, the promotions, no pricing, was competition. significant in all quarter we assortment, this had when or

So and we warm was cold the only wet very real May. that a change a and saw April June dry after a

So digital not over traffic losing we that that's similar losing question, we the add follow-up with how you're card about believe comparing one share, X-year BMA traffic and we want bridging pool industry other I comment, to discussions we're the our reporting, are credit share? the guidance. I'll with period we when be web clear, do the vendors. do basing other companies thinking public typically you our get we're And on about because think missed data, talk growth a is, and

answer, it's fulsome it's think kind important an needed a of but sorry, So long a question, it and response. I

Justin Kleber

on And margin. then a question gross

below XX% around through were you were pre-COVID, your XX% I guess XX% long-term mentioned targets. walking where when You -- XX%. of you kind

a revenue is So percentage occupancy I assume XXXX. below still of as

to opposed So just from time to to prevent XX% versus the the over I'm understand returning as that headwinds business trying would XX%. 'XX

Michael Egeck

to they're contributors And [ that. our well. mix business an ] The residential as strong basis, can PRO structurally tub margin with a our margin to with business comes answer hot true at residential digital businesses on though lesser and add you business. businesses, a lower our with And than Scott, growing, underneath start I'll that slightly our EBITDA down on gross our Same operates business, business. Yes, a is very are degree on.

really the to between difference do in change since So has XX% XXXX. business the with and XX% mix

Scott Bowman

add I'll on Yes, Justin. just to that,

improvement. it set we've As some margin of to already kind higher seen sights some we targets, of our

improvements made big So inventory for some example, DC adjustments and in costs.

little a incremental will that year. bit get so even improvement And next

what have And we future. some better us thing inventory helped lower cost think had. helped in right And handling which cost. have processes the better future. DC those pay That'll us have will It's leads changes some a which lower otherwise. We've just made than that's the DC, through. little the help I now with We would other and inventory than dividends new to lower also the tools the is in margin flowing inventory we we scrap, in really improved there some tools, good

-- the we line lot have bigger the So I mentioned, just structure standpoint, things the our that well, relationships favor do of have our things although is scale that different with of a a in business the business as we from suppliers.

those, where of we go of improvement some from so kind And we definitely through are as see today. each we

Operator

Matuszewski next Our Jonathan question from comes Jefferies. with

Jonathan Matuszewski

loyalty this customers outperformed transactions active like revenue Looks as average the not your Perks customer as per quarter, up Pool file. much down and

the to seeing to just your penetration with the you wanted where used nonmembers could today I you're just little first That's higher. maybe and spending spread that ago? a zoom consistent So think Is move to on it double. loyalty my update out bit. question. members years be with playbook around And us versus is them loyalty

Michael Egeck

a it, demand. grow but to standpoint, ], little Pool and thanks customers That down the not about it's from brought since similar as of twice had the program. file settled in about the But little bit we're Yes, we PRO at to a Pool when on yes, our question, the from Typically, PRO that outperform doing the And they're members. the both look business come just the non-Pool members total. outperformed Perks our Perks members Perks like returns focused transaction continuing Partner have in and Pool volume. and industry a we Perks, Partners overall, [ get during very loyalty we given add of yes, PRO in transaction members customers are new more the XX you the -- introduced bit in, that The Jonathan. consistently for range. And spike very a on, kind

Jonathan Matuszewski

a follow-up And question. just then

EPA season And seller was some think year, not third chlorine on those didn't around approvals. buy to you were into encouraging leading talk have that there think pool marketplaces. imports consumers I I last party

updates Just consumers increasingly in of Any towards that'd are cheaper gravitating be far. get seeing season XXXX pool in wanted your terms you're there alternatives indications those terms that of to what helpful. so

Michael Egeck

Yes.

going in keep been that say good and seeing, the prior partner and years going in something they removed. Amazon's helping so less saw Another but that bit a and to we chlorine we're an eye to up these marketplace pretty them I'm say, then up clean on good question. I'm unregistered little pop the whack-a-mole, of impact certainly from Amazon a we we out honestly. They to to tend them get point providers,

process, in significant an see any but don't we it's So pool season. it as this ongoing headwind

Operator

Our next McShane Sachs. Kate Goldman comes question with from

Katharine McShane

Our and segments? first the performance discretionary Why the difference there different versus between hot by the and PRO if equipment, the just residential of was chemicals, there? mix question any on was really tub And in pool. difference product

Michael Egeck

seeing hot Look, Thank Yes, really -- Kate. great on progress We we're you. encouraged question, tubs. we're the by

a off in tubs could you that it all be, seeing and us improving I were know, business. it's in unseasonably a demand the think not And flow year. hurt business adding installed, is kind one position weather, that get And And in tubs. where backyards also want demand the we and not actually Wet a able install tubs that we're ways. weather of so decks we the June, order had book, in up in out cool weren't that we business the that is a for dried things of hot and in in hot to We're incoming order the much much particular. But much, to really but we position things seeing we're when book nice headwind working As tubs. to temperatures, we're we lift X low to May But were where of lift while still last nicely. was in And really saw better. -- challenged built is.

encouraged challenges, what's macro So by despite with some we're on of going tubs. the hot

those in predominantly weekly impacted PRO to that whether outside the out not the think a hot that PRO PRO for they or on consumers using by raining or particular. it's going it's cleaning whether business I'm for business, the they pools For in their customer, it's as whether are going weather not. monthly. basis. pay you or the is cold pay pool And professionals And When Sunbelt pool about say or are

a of And and built-in if correlated to to would on chemicals hand, So really absolute When addition And residential buffer, burning highly weather, you there's using pools. with little their not it's is that, most they not bit aren't weather. the pools. weather. The the their would, cool they're raining, business, using other dry people weather. warm in to they're

how weather a categories. each don't DIFM. part of nuances see little -- the impact we shift DIY just So that that's those of from in of any may It's to We think been bit steady. pretty

Katharine McShane

And PRO by with the in equipment any and chemicals between and like residential? difference customer trend

Michael Egeck

No, the chemicals...

Katharine McShane

Or just overall. Go ahead.

Sorry.

Michael Egeck

Yes.

June. plus in in I right? we're They -- The of the there. Sorry, really look, X% chemicals, encouraged went jumped by month

where seeing is equipment. conserve in flat is and equipment across and we're And offset that mean, said, -- tough. real We're very I pleased positive indicative The Equipment challenged manifesting volume down sales, to to point. in itself the that. Very, of we that's for Our sales part residential see on to XX% for where services, And of like that trying down the macro. that money down quarter. PRO. chemical consider year. is a be they're which the continued We down see year. think has We're a for XX%. ran I We inflection and is about now really XX% equipment are actively quarter. people our the

with it it the to equipment has it growing are spike So see that good for pretty encouraging back short-term if we it which like a clear to saw before kind to the as of, base consider Scott in bit and pump. XXXX again. way and situation. industry And They're of supply we replace means the a worked that's, us, people consider upgrade have or can looks they said, first very through solid problem their looking the they And a fix levels, moment. the we chains that a at sales 'XX to like start have at unit big are 'XX its from it

Operator

comes Guggenheim Forbes Securities. next Steven Our from question with

Steven Forbes

June are the to as the I the stable gains sort price sort you just look you the it's sort share a -- where wanted given out XX around June? as industry your Can it over share right, or as on wanted you pricing saw about XX maybe whether backdrop on think us to commentary. thinking of the behind in of gauge return next or the pertains in breadth to to as And expand of we I category-wise, your comments then customer improvement, just here forward, months. you're adjustments confidence pricing, of to whole, that follow-up

Michael Egeck

I'll pricing. on Yes, that of good question. start the with second part

up, to seen seen consider We first more the typical the movement of for some of quarters, of what not stable for There's and PRO chemicals say rational out be would always of X and have plenty the the industry. matter, in which in seen equipment, Right? I movement and we And we've across any price, product. general, pre-pandemic. But industry we've Typical tends lack there's that's there's pricing But hold would market. of that inventory is relatively in the pricing. in market.

have of looks settled That there pandemic, all lot price. in movements a was down. During the to

confident. pretty at a we below, not feel as returning our but or traditional at, in believe on and shop to said, right share specialty. And terms significant basis. That price. beyond encouraged we've talked go-forward websites, And price make we then we're concessions actions saying slightly we We week looking which price being competitors above we're share, every so having monitor we're any if to will continue in the of gains. sit its about, position, mass, And

As were we talked we wasn't or partners our were what data the opinion other about the always with aligning of hearing vendor stores. that from quarters, the we

was business, down. the seems it's traffic So more as underlying I'm down. was were what in be sure industry data now Foot use was the return we not of so was to down. a feeling reflective which the that Pool -- the

credit think think company we're right? a as coming data as didn't share's any peers, the the the little market. it's use in not the top-line sign what public that challenging foot this that's with that that quarter, experiencing, But it's then challenge. pool of traffic where similar though that down. from, we of lined a look share. And at was sales, Bank good losing bit a we we same up underlies has industry And well as Our America web we of data feel like share, that's drivers our did the were -- we losing were card data. And whole industry AOB in I certainly terms the

share as last might up share, But now due price and pick a we took in our more terms if pools in heightened getting the incremental of little line, capture. you to actions we Ours year. that's the would, we chemical kind be their we're are of and traffic, people think have using normal, weather

Steven Forbes

It talked might about July equipment. caught follow-up. when quick we maybe in around programs, this just be buy up on the a just know early. we early Mike, especially And I

as said, yourself do this And as want just third expand -- it? on you right, if the hear do really you you to partners it's you just expect what the do backdrop you side? equipment the Or in the ending about quarter, price be want increases all you to then sort that, of decreases, from as? next to today, sort year the think right, where what for in you inventory on or performance sort of talk do as given year? vendor don't stands, see positioning year you or this it about of what can the maybe Given Like, stable,

Michael Egeck

I think year our pleased the -- with our feel of I management about year. good inventory we're quite we're and going think to end the Well, really where

there. no So concerns

a be we're of business. right? early there's we the of with on with incremental creation destroying terms all manufacturers. considering anything would too buy that can't would working But of -- equipment, vendor seen In are haven't those. Typically, we're go on not I to yet, the of think all any say this There that the but high I make each speak look, some with all same to And is demand need hurting very in there heard there to pressures not from pricing. us are different other programs equipment, aren't partners be cost things, aware parts our the sure season up or heightened out do demand. year, I so equipment sense prices of like

Operator

Our next with Bank question of America. comes from Shaun Calnan

Shaun Calnan

down digit. in fourth quarter, mid-single Just first, it's on growth I sales the the implied about think

you're and chemical in seeing were to cuts you this of what of seeing talk lapping the some and that can you about quarter-to-date you're then compares price just trends kind how June quarter. So the

kind So negative that driving just of what's outlook?

Michael Egeck

would X%. But June consumer. is much Very for we've be things of a then those We've that. the to end what some size month also the there. still, got some down Yes, saw. some going since a better aware QX. want hurricanes trends very At pandemic had to We of is trends still unwinding And what seen say, I there's Still which us. And And saw. June for anomalies. it's we thankfully. out of exited continuation encouraged QX QX improved, though demand, than X continue. of cautious year. the outlook we was encouraging X very midpoint, we of weather, it's hard We've is on of the by very the

of change that seen the we fairly QX haven't us some need to need guidance So out of -- the date in saw shortness to about anything unknowns the of guide at all. trend and we we given to June. with thinking way the tell that our we're coming we would some quarter range gave wide But our anything do performance we is of a the

Shaun Calnan

think you guidance, I the growth, to assuming location aggressive. said X% long-term seems And then pretty X% you're which on

capital So downgrade? you on the store using paying about how think versus recent especially do the debt, openings down near-term considering

Scott Bowman

can I one. that cover Yes,

the moderate more will paying to pace. down a still Our that business at to to going want new We we're doing continue first debt. be in be stores, but grow priority

can get continue we're as we that to until to debt So that the pay leverage our make using cash sure [ ratio closer extra first priority. we'll flow ] X, down capital that to the prioritization

Operator

from Simon with Gutman is ] Morgan [ question Stanley. next Our

Simeon Gutman

Simeon. It's

I is up you In I know chemicals, Can for terms talk don't chemical of the I don't where a broadly chemical ask entire if guess, it's broadly know from chemicals up year-to-date. could now? quarter. but I And think is where it, about chemicals, should the is prices know it where a is? about where pricing prices from here. think and meaning pricing be mentioned it's volume say you -- I but if we curious year bulk means Mike, beyond we of be, if

Michael Egeck

June. with as through quarter, for Yes, traffic was good strongly question, June, May sequentially been up Simeon. The in weather. and And April trended better the did chemical has volume up improved through

challenging So we up share if are actions. the with we is being data are consider good chemicals did we And but putting we -- into is about price into chemical than year this feel volumes top-line despite Share also and sold how point share. we would. a inflecting, data where endpoint as a despite much we last dollars, more you market. And chemicals chemicals chemical the have nice year,

commodity really year. preparation inputs. in chemicals. The now place pretty chemical urea, and So stable we suppliers all for of with in standpoint, a seen, be discussions think vendors we've terms next a with about good From start in we're chloralkali,

any will year, deflation but don't So situation we be chemicals. also next price on think counting [ price that incremental we're not any in with ] price any taking

Simeon Gutman

I times then know to quarter. normalizing, guess you this don't had you QX season you be the isn't be the bottom quarter a but early, But third this answer business the of tried little and it's issues pricing the hesitant going given if sounds gotten call I this how been that the should this to in like softer we've because normalization? certainly And seen, forward? would if again, it want given bottom volume, normalizing I know we've shocked may for be this the peak few a And

Michael Egeck

And product like I'm say discretionary unit indicators improvement. might there Simeon, are bottom. a of kind to And be reluctant we of about. the still up that 'XX, came They done cohorts. lot during we some, there. had down pre-pandemic we that ended volumes business Improving right. much think, then -- 'XX to and file quarter, the a particularly positive talked our flat is. And one part that Yes, where that the and we 'XX, customer in file. itself XXXX, a we to that We about indicator. they back We're We and when solid The file. look customers we volume, have there calling a for Chemical the actually call equipment been of worked we're sales, you're other levels. from files. not retailers. has the little a the base typically better bought at nice sales available may but sequential will I cohort through chemicals XX% with feel stable nice consider feel

triggered back discretionary lot a from took be response, for new to for retailers on just chemical 'XX, of to all weren't product price to chemical consumers. we sales, industry on seeing a of increases. pass input as the those volumes and customers, file, unit our indicators, customers, band. challenged ourselves cost pricing, that So could to of go base and the our chemical right, and chemical unit equipment our our volumes, your We industry. And question. actions. were including loyalty very seeing And outside demand getting we're were what's value That's we the In

in see see would retail able that in why say in lost the That's included we next margin increased the for I see ourselves on a price costs. I industry be it if we deflation some So don't some and being focused will even chemicals. I we of would pass the costing to actual we 'XX believe when where on improved year chemicals, recapturing situation weren't

Operator

to now We I to turn have for reached Egeck and over questions the comments. Mike closing like answers. would for of allotted end time floor back the our

Michael Egeck

Thanks. Maria. to interest in you, on forward quarter We our to And everyone look their Leslie's. talking Thank you earnings I'd thank like fourth again call. for to

Operator

This concludes today's teleconference.

your may disconnect you this participation. your for You lines time. at Thank

Leslie's (LESL) 7 Aug 242024 Q3 Earnings call transcript