Exhibit 99.1

 

img57390227_0.jpg 

Leslie’s, Inc. Announces

Third Quarter Fiscal 2022 Financial Results;

Revises Full Year Outlook

 

•
Record third quarter sales of $673.6 million, an increase of 12.9% from the prior year period; Comparable sales growth of 7.4%
•
Net income increase of 3.5% from the prior year period to $123.0 million; Adjusted net income increase of 1.1% from the prior year period to $125.7 million
•
Diluted earnings per share of $0.67 compared to $0.61 in the prior year period and Adjusted diluted earnings per share of $0.68 compared to $0.64 in the prior year period
•
Adjusted EBITDA increase of 2.0% from the prior year period to $182.9 million
•
Revises Fiscal 2022 outlook for sales to increase 15% to 17%, Adjusted EBITDA to increase 6% to 10%, and Adjusted earnings per share to increase 6% to 13% compared to Fiscal 2021

 

PHOENIX, August 5, 2022 – Leslie's, Inc. (“Leslie's”, “we”, “our” or “its”; NASDAQ: LESL), the largest and most trusted direct-to-consumer brand in the U.S. pool and spa care industry, today announced its financial results for the third quarter of Fiscal 2022.

 

Mike Egeck, Chief Executive Officer, commented, “We delivered another quarter of record top and bottom line results, despite the adverse impacts of execution issues at our Northeastern distribution center, and to a lesser extent, product margin decreases associated with supply chain challenges and industry promotions. While we have addressed our distribution center issues and operations are now shipping to plan, we have revised our annual outlook to reflect our third quarter performance, as well as expectations for elevated distribution costs and product margin impacts for the remainder of the year. We remain focused on making progress against each of our strategic growth priorities, which continue to fuel our market share gains and better position us to grow profitably amid varying macro conditions.”

 

For the Thirteen-Weeks Ended July 2, 2022 Highlights

•
Sales increased $77.1 million, or 12.9%, to $673.6 million compared to $596.5 million in the prior year period. In the current year period comparable sales increased 7.4%. Comparable sales increased 19.4% in the prior year period, on a shifted basis, which uses a realigned period in 2020 for comparability given the 53rd week in Fiscal 2020.
•
Gross profit increased $19.9 million, or 7.0%, to $303.6 million compared to $283.7 million in the prior year period and gross margin was 45.1% compared to 47.6% in the prior year period. The decrease in gross margin rate was primarily due to shifts in business mix, decreased product margin and higher distribution expenses, partially offset by occupancy leverage.
•
Selling, general and administrative expenses (“SG&A”) increased $14.2 million, or 12.1%, to $131.5 million compared to $117.3 million in the prior year period, primarily driven by the sales increase,

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additional planned marketing spend, inflationary costs primarily associated with payroll and marketing spend, and expenses associated with acquisitions completed after the end of the third quarter of Fiscal 2021.
•
Operating income was $172.1 million compared to $166.4 million in the prior year period.
•
Net income was $123.0 million compared to $118.8 million in the prior year period.
•
Adjusted net income was $125.7 million compared to $124.4 million in the prior year period.
•
Diluted earnings per share of $0.67 compared to $0.61 in the prior year period. Adjusted diluted earnings per share of $0.68 compared to $0.64 in the prior year period.
•
Adjusted EBITDA was $182.9 million compared to $179.3 million in the prior year period.

 

 

For the Thirty-Nine Weeks Ended July 2, 2022 Highlights

•
Sales increased $152.5 million, or 16.3%, to $1,086.5 million compared to $934.0 million in the prior year period. In the current year period comparable sales increased 10.7%. Comparable sales increased 23.4% in the prior year period, on a shifted basis, which uses a realigned period in 2020 for comparability given the 53rd week in Fiscal 2020.
•
Gross profit increased $49.5 million, or 12.1%, to $456.6 million compared to $407.1 million in the prior year period and gross margin was 42.0% compared to 43.6% in the prior year period.
•
SG&A increased $35.8 million, or 13.5%, to $300.9 million compared to $265.1 million in the prior year period, primarily driven by the sales increase, additional planned marketing spend, inflationary impacts primarily associated with payroll and marketing costs, investments to support our growth, and expenses associated with acquisitions completed after the end of the third quarter of Fiscal 2021. We also incurred lower non-cash equity-based compensation costs of $12.0 million and did not incur certain one-time payments of contractual amounts of $8.2 million, as compared to the prior year period. The elevated costs in Fiscal 2021 were primarily incurred in connection with our initial public offering (“IPO”).
•
Operating income increased $13.7 million to $155.7 million compared to $142.0 million in the prior year period.
•
Net income increased $19.0 million to $101.1 million compared to $82.1 million in the prior year period.
•
Adjusted net income was $112.0 million compared to $111.0 million in the prior year period.
•
Diluted earnings per share of $0.54 compared to $0.43 in the prior year period. Adjusted diluted earnings per share of $0.60 compared to $0.59 in the prior year period.
•
Adjusted EBITDA increased $4.1 million to $192.7 million compared to $188.6 million in the prior year period.

 

 

 

2

 

Balance Sheet and Cash Flow Highlights

•
Cash and cash equivalents totaled $193.1 million as of July 2, 2022 compared to $307.4 million as of July 3, 2021, a decrease of $114.3 million.
•
Inventories totaled $361.4 million as of July 2, 2022, compared to $224.5 million as of July 3, 2021, an increase of $136.9 million, or 61.0%, reflecting a continued investment to meet elevated consumer demand and to mitigate the impact of supply chain uncertainty. Inventories also include amounts associated with acquisitions completed since Fiscal 2021.
•
Funded debt totaled $800.0 million as of July 2, 2022, compared to $808.0 million as of July 3, 2021. There were no borrowings on the revolver as of July 2, 2022.
•
Net cash provided by operating activities totaled $72.7 million during the first nine months of Fiscal 2022 compared to $118.0 million during the first nine months of Fiscal 2021.
•
Capital expenditures totaled $25.9 million during the first nine months of Fiscal 2022 compared to $17.8 million during the first nine months of Fiscal 2021.
•
Net cash used for acquisition of businesses totaled $40.7 million during the first nine months of Fiscal 2022 compared to $6.8 million during the first nine months of Fiscal 2021.
•
We repurchased 7.5 million shares of common stock totaling $151.9 million, excluding offering costs, during the first nine months of Fiscal 2022. As of July 2, 2022, $148.1 million remained available under our existing share repurchase authorization.

 

Fiscal 2022 Outlook

The Company revised its outlook for the full year of Fiscal 2022:

 

 

Current Outlook

 

Prior Outlook

Sales

 

$1,550 to $1,570 million

 

$1,575 to $1,610 million

Gross profit

 

$655 to $670 million

 

$700 to $715 million

Net income

 

$150 to $160 million

 

$178 to $190 million

Adjusted net income

 

$168 to $178 million

 

$193 to $205 million

Adjusted EBITDA

 

$287 to $297 million

 

$315 to $330 million

Adjusted diluted earnings per share

 

$0.90 to $0.96

 

$1.02 to $1.10

Diluted weighted average shares outstanding

 

185 to 187 million

 

187 to 189 million

 

Conference Call Details

A conference call to discuss the Company’s financial results for the third quarter of Fiscal 2022 is scheduled for today, Friday, August 5, 2022, at 9:00 a.m. Eastern Time. Investors and analysts interested in participating in the call are invited to dial 877-407-0784 (international callers please dial 1-201-689-8560) approximately 10 minutes prior to the start of the call. A live audio webcast of the conference call will be available online at https://ir.lesliespool.com/.

 

A recorded replay of the conference call will be available within approximately three hours of the conclusion of the call and can be accessed, along with the associated slides, online at https://ir.lesliespool.com/ for 90 days.

 

About Leslie's

Founded in 1963, Leslie’s is the largest and most trusted direct-to-consumer brand in the U.S. pool and spa care industry. The Company serves the aftermarket needs of residential and professional consumers with an extensive and largely exclusive assortment of essential pool and spa care products. The Company operates an integrated ecosystem of over 975 physical locations, and a robust digital platform, enabling

3

 

consumers to engage with Leslie’s whenever, wherever, and however they prefer to shop. Its dedicated team of associates, pool and spa care experts, and experienced service technicians are passionate about empowering Leslie’s consumers with the knowledge, products, and solutions necessary to confidently maintain and enjoy their pools and spas.

 

Use of Non-GAAP Financial Measures and Other Operating Measures

In addition to reporting financial results in accordance with accounting principles generally accepted in the United States (“GAAP”), we use certain non-GAAP financial measures and other operating measures, including comparable sales growth and Adjusted EBITDA, Adjusted net income (loss), and Adjusted earnings per share, to evaluate the effectiveness of our business strategies, to make budgeting decisions, and to compare our performance against that of other peer companies using similar measures. These non-GAAP financial measures and other operating measures should not be considered in isolation or as substitutes for our results as reported under GAAP. In addition, these non-GAAP financial measures and other operating measures are not calculated in the same manner by all companies, and accordingly, are not necessarily comparable to similarly titled measures of other companies and may not be appropriate measures for performance relative to other companies.

 

Comparable Sales Growth

We measure comparable sales growth as the increase or decrease in sales recorded by the comparable base in any reporting period, compared to sales recorded by the comparable base in the prior reporting period. The comparable base includes sales through our locations and through our e-commerce websites and third-party marketplaces. Comparable sales growth is a key measure used by management and our board of directors to assess our financial performance.

 

Adjusted EBITDA

Adjusted EBITDA is defined as earnings before interest (including amortization of debt issuance costs), taxes, depreciation and amortization, management fees, equity-based compensation expense, loss on debt extinguishment, costs related to equity offerings, strategic project costs, executive transition costs, loss (gain) on disposition of assets, mark-to-market on interest rate cap, and other non-recurring, non-cash or discrete items. Adjusted EBITDA is a key measure used by management and our board of directors to assess our financial performance. Adjusted EBITDA is also frequently used by analysts, investors and other interested parties to evaluate companies in our industry, when considered alongside other GAAP measures. We use Adjusted EBITDA to supplement GAAP measures of performance to evaluate the effectiveness of our business strategies, to make budgeting decisions and to compare our performance against that of other companies using similar measures.

 

Adjusted EBITDA is not a recognized measure of financial performance under GAAP but is used by some investors to determine a company’s ability to service or incur indebtedness. Adjusted EBITDA is not calculated in the same manner by all companies, and accordingly, is not necessarily comparable to similarly entitled measures of other companies and may not be an appropriate measure for performance relative to other companies. Adjusted EBITDA should not be construed as an indicator of a company’s operating performance in isolation from, or as a substitute for, net income (loss), cash flows from operations or cash flow data, all of which are prepared in accordance with GAAP. We have presented Adjusted EBITDA solely as supplemental disclosure because we believe it allows for a more complete analysis of results of operations. Adjusted EBITDA is not intended to represent, and should not be considered more meaningful than, or as an alternative to, measures of operating performance as determined in accordance with GAAP. In the future, we may incur expenses or charges such as those added back to calculate Adjusted EBITDA.

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Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these items.

 

Adjusted Net Income (Loss) and Adjusted Earnings per Share

Adjusted net income (loss) and Adjusted earnings per share are additional key measures used by management and our board of directors to assess our financial performance. Adjusted net income (loss) and Adjusted earnings per share are also frequently used by analysts, investors, and other interested parties to evaluate companies in our industry, when considered alongside other GAAP measures.

 

Adjusted net income (loss) is defined as net income (loss) adjusted to exclude management fees, equity-based compensation expense, loss on debt extinguishment, costs related to equity offerings, strategic project costs, executive transition costs, loss (gain) on disposition of assets, mark-to-market on interest rate cap, and other non-recurring, non-cash or discrete items. Adjusted diluted earnings per share is defined as Adjusted net income (loss) divided by the diluted weighted average number of common shares outstanding.

 

Forward Looking Statements

This press release contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical fact contained in this press release, including statements regarding our future results of operations or financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions. Our actual results or outcomes could differ materially from those indicated in these forward-looking statements for a variety of reasons, including, among others:

 

•
our ability to execute on our growth strategies;
•
supply disruptions;
•
our ability to maintain favorable relationships with suppliers and manufacturers;
•
competition from mass merchants and specialty retailers;
•
impacts on our business from the sensitivity of our business to weather conditions, changes in the economy, and the housing market;
•
our ability to implement technology initiatives that deliver the anticipated benefits, without disrupting our operations;
•
our ability to attract and retain senior management and other qualified personnel;
•
regulatory changes and development affecting our current and future products;
•
our ability to obtain additional capital to finance operations;
•
commodity price inflation and deflation;
•
impacts on our business from the COVID-19 pandemic;
•
impacts on our business from cyber incidents and other security threats or disruptions; and
•
other risks and uncertainties, including those listed in the section titled “Risk Factors” in our filings with the United States Securities and Exchange Commission.

 

 

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You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this press release primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described above and our filings with the Securities and Exchange Commission. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this press release. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results or outcomes could differ materially from those described in the forward-looking statements.

 

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this press release, and, while we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

 

The forward-looking statements made in this press release are based on events or circumstances as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments.

Contact

Investors

Farah Soi/Caitlin Churchill

ICR

investorrelations@lesl.com

 

 

6

 

Condensed Consolidated Statements of Operations

(amounts in thousands, except per share amounts)

(unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

July 2, 2022

 

 

July 3, 2021

 

 

July 2, 2022

 

 

July 3, 2021

 

Sales

 

$

673,633

 

 

$

596,543

 

 

$

1,086,529

 

 

$

933,991

 

Cost of merchandise and services sold

 

 

370,026

 

 

 

312,845

 

 

 

629,977

 

 

 

526,895

 

Gross profit

 

 

303,607

 

 

 

283,698

 

 

 

456,552

 

 

 

407,096

 

Selling, general and administrative expenses

 

 

131,469

 

 

 

117,264

 

 

 

300,872

 

 

 

265,127

 

Operating income

 

 

172,138

 

 

 

166,434

 

 

 

155,680

 

 

 

141,969

 

Other expense:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

6,847

 

 

 

7,399

 

 

 

20,659

 

 

 

27,041

 

Loss on debt extinguishment

 

 

—

 

 

 

—

 

 

 

—

 

 

 

9,169

 

Other (income) expenses, net

 

 

(143

)

 

 

861

 

 

 

407

 

 

 

1,917

 

Total other expense

 

 

6,704

 

 

 

8,260

 

 

 

21,066

 

 

 

38,127

 

Income before taxes

 

 

165,434

 

 

 

158,174

 

 

 

134,614

 

 

 

103,842

 

Income tax expense

 

 

42,448

 

 

 

39,372

 

 

 

33,519

 

 

 

21,749

 

Net income

 

$

122,986

 

 

$

118,802

 

 

$

101,095

 

 

$

82,093

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.67

 

 

$

0.63

 

 

$

0.55

 

 

$

0.45

 

Diluted

 

$

0.67

 

 

$

0.61

 

 

$

0.54

 

 

$

0.43

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

182,937

 

 

 

188,264

 

 

 

184,707

 

 

 

184,021

 

Diluted

 

 

184,721

 

 

 

194,200

 

 

 

186,695

 

 

 

189,603

 

 

Other Financial Data (1)

(amounts in thousands, except per share amounts)

(unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

July 2, 2022

 

 

July 3, 2021

 

 

July 2, 2022

 

 

July 3, 2021

 

Adjusted EBITDA

 

$

182,942

 

 

$

179,346

 

 

$

192,734

 

 

$

188,631

 

Adjusted net income

 

$

125,685

 

 

$

124,364

 

 

$

112,031

 

 

$

110,964

 

Adjusted diluted earnings per share

 

$

0.68

 

 

$

0.64

 

 

$

0.60

 

 

$

0.59

 
(1)
See section titled “GAAP to Non-GAAP Reconciliation”.

 

 

 

 

7

 

Condensed Consolidated Balance Sheets

(amounts in thousands, except share and per share amounts)

 

 

 

July 2, 2022

 

 

October 2, 2021

 

 

July 3, 2021

 

Assets

 

(Unaudited)

 

 

(Audited)

 

 

(Unaudited)

 

Current assets

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

193,130

 

 

$

343,498

 

 

$

307,395

 

Accounts and other receivables, net

 

 

47,266

 

 

 

38,860

 

 

 

47,848

 

Inventories

 

 

361,391

 

 

 

198,789

 

 

 

224,526

 

Prepaid expenses and other current assets

 

 

30,542

 

 

 

20,564

 

 

 

28,615

 

Total current assets

 

 

632,329

 

 

 

601,711

 

 

 

608,384

 

Property and equipment, net

 

 

71,653

 

 

 

70,335

 

 

 

66,363

 

Operating lease right-of-use assets

 

 

221,694

 

 

 

212,284

 

 

 

169,001

 

Goodwill and other intangibles, net

 

 

155,663

 

 

 

129,020

 

 

 

127,740

 

Deferred tax assets

 

 

1,230

 

 

 

3,734

 

 

 

6,386

 

Other assets

 

 

34,422

 

 

 

25,148

 

 

 

18,238

 

Total assets

 

$

1,116,991

 

 

$

1,042,232

 

 

$

996,112

 

Liabilities and stockholders’ deficit

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

330,881

 

 

$

233,597

 

 

$

271,731

 

Operating lease liabilities

 

 

63,303

 

 

 

61,071

 

 

 

53,700

 

Income taxes payable

 

 

30,611

 

 

 

6,945

 

 

 

18,906

 

Current portion of long-term debt

 

 

8,100

 

 

 

8,100

 

 

 

8,100

 

Total current liabilities

 

 

432,895

 

 

 

309,713

 

 

 

352,437

 

Operating lease liabilities, noncurrent

 

 

161,473

 

 

 

160,037

 

 

 

118,941

 

Long-term debt, net

 

 

781,322

 

 

 

786,125

 

 

 

787,731

 

Other long-term liabilities

 

 

70

 

 

 

3,915

 

 

 

2,729

 

Total liabilities

 

 

1,375,760

 

 

 

1,259,790

 

 

 

1,261,838

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

Stockholders’ deficit

 

 

 

 

 

 

 

 

 

Common stock, $0.001 par value, 1,000,000,000 shares authorized and 183,027,684, 189,821,011, and 189,284,566 issued and outstanding as of July 2, 2022, October 2, 2021, and July 3, 2021, respectively.

 

 

183

 

 

 

190

 

 

 

189

 

Additional paid in capital

 

 

87,050

 

 

 

204,711

 

 

 

201,085

 

Retained deficit

 

 

(346,002

)

 

 

(422,459

)

 

 

(467,000

)

Total stockholders’ deficit

 

 

(258,769

)

 

 

(217,558

)

 

 

(265,726

)

Total liabilities and stockholders’ deficit

 

$

1,116,991

 

 

$

1,042,232

 

 

$

996,112

 

 

 

 

8

 

Condensed Consolidated Statements of Cash Flows

(amounts in thousands)

(unaudited)

 

 

 

Nine Months Ended

 

 

 

July 2, 2022

 

 

July 3, 2021

 

Operating Activities

 

 

 

 

 

 

Net income

 

$

101,095

 

 

$

82,093

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

22,880

 

 

 

19,205

 

Equity-based compensation

 

 

8,462

 

 

 

20,591

 

Amortization of deferred financing costs and debt discounts

 

 

1,483

 

 

 

1,551

 

Provision for doubtful accounts

 

 

723

 

 

 

134

 

Deferred income taxes

 

 

2,504

 

 

 

197

 

Loss (gain) on disposition of assets

 

 

271

 

 

 

(1,668

)

Loss on debt extinguishment

 

 

—

 

 

 

9,169

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts and other receivables

 

 

(9,129

)

 

 

(16,501

)

Inventories

 

 

(146,196

)

 

 

(74,401

)

Prepaid expenses and other current assets

 

 

(9,075

)

 

 

6,289

 

Other assets

 

 

(9,429

)

 

 

(15,696

)

Accounts payable and accrued expenses

 

 

91,145

 

 

 

73,350

 

Income taxes payable

 

 

23,666

 

 

 

17,049

 

Operating lease assets and liabilities, net

 

 

(5,742

)

 

 

(3,397

)

Net cash provided by operating activities

 

 

72,658

 

 

 

117,965

 

Investing Activities

 

 

 

 

 

 

Purchases of property and equipment

 

 

(25,927

)

 

 

(17,799

)

Business acquisitions, net of cash acquired

 

 

(40,670

)

 

 

(6,806

)

Proceeds from disposition of fixed assets

 

 

414

 

 

 

2,429

 

Net cash used in investing activities

 

 

(66,183

)

 

 

(22,176

)

Financing Activities

 

 

 

 

 

 

Borrowings on revolving credit facility

 

 

45,000

 

 

 

—

 

Payments on revolving credit facility

 

 

(45,000

)

 

 

—

 

Repayment of long-term debt

 

 

(6,075

)

 

 

(394,110

)

Issuance of long-term debt

 

 

—

 

 

 

907

 

Payment of deferred financing costs

 

 

—

 

 

 

(9,579

)

Proceeds from options exercised

 

 

1,378

 

 

 

—

 

Repurchase and retirement of common stock

 

 

(152,146

)

 

 

—

 

Proceeds from issuance of common stock upon initial public offering, net

 

 

—

 

 

 

458,587

 

Net cash (used in) provided by financing activities

 

 

(156,843

)

 

 

55,805

 

Net (decrease) increase in cash and cash equivalents

 

 

(150,368

)

 

 

151,594

 

Cash and cash equivalents, beginning of period

 

 

343,498

 

 

 

155,801

 

Cash and cash equivalents, end of period

 

$

193,130

 

 

$

307,395

 

Supplemental Information:

 

 

 

 

 

 

Interest

 

$

19,409

 

 

$

29,549

 

Income taxes, net of refunds received

 

 

7,442

 

 

 

4,503

 

 

 

9

 

GAAP to Non-GAAP Reconciliation

(amounts in thousands except per share amounts)

(unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

July 2, 2022

 

 

July 3, 2021

 

 

July 2, 2022

 

 

July 3, 2021

 

Net income

 

$

122,986

 

 

$

118,802

 

 

$

101,095

 

 

$

82,093

 

Interest expense

 

 

6,847

 

 

 

7,399

 

 

 

20,659

 

 

 

27,041

 

Income tax expense

 

 

42,448

 

 

 

39,372

 

 

 

33,519

 

 

 

21,749

 

Depreciation and amortization expense(1)

 

 

7,063

 

 

 

6,347

 

 

 

22,880

 

 

 

19,205

 

Management fees(2)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

382

 

Equity-based compensation expense(3)

 

 

3,113

 

 

 

6,480

 

 

 

8,825

 

 

 

20,591

 

Loss on debt extinguishment(4)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

9,169

 

Costs related to equity offerings(5)

 

 

—

 

 

 

778

 

 

 

550

 

 

 

9,986

 

Strategic project costs(6)

 

 

641

 

 

 

—

 

 

 

4,428

 

 

 

—

 

Executive transition costs and other(7)

 

 

(156

)

 

 

168

 

 

 

778

 

 

 

(1,585

)

Adjusted EBITDA

 

$

182,942

 

 

$

179,346

 

 

$

192,734

 

 

$

188,631

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

July 2, 2022

 

 

July 3, 2021

 

 

July 2, 2022

 

 

July 3, 2021

 

Net income

 

$

122,986

 

 

$

118,802

 

 

$

101,095

 

 

$

82,093

 

Management fees(2)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

382

 

Equity-based compensation expense(3)

 

 

3,113

 

 

 

6,480

 

 

 

8,825

 

 

 

20,591

 

Loss on debt extinguishment(4)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

9,169

 

Costs related to equity offerings(5)

 

 

—

 

 

 

778

 

 

 

550

 

 

 

9,986

 

Strategic project costs(6)

 

 

641

 

 

 

—

 

 

 

4,428

 

 

 

—

 

Executive transition costs and other(7)

 

 

(156

)

 

 

168

 

 

 

778

 

 

 

(1,585

)

Tax effects of these adjustments(8)

 

 

(899

)

 

 

(1,864

)

 

 

(3,645

)

 

 

(9,672

)

Adjusted net income

 

$

125,685

 

 

$

124,364

 

 

$

112,031

 

 

$

110,964

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

0.67

 

 

$

0.61

 

 

$

0.54

 

 

$

0.43

 

Adjusted diluted earnings per share

 

$

0.68

 

 

$

0.64

 

 

$

0.60

 

 

$

0.59

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

182,937

 

 

 

188,264

 

 

 

184,707

 

 

 

184,021

 

Diluted

 

 

184,721

 

 

 

194,200

 

 

 

186,695

 

 

 

189,603

 

 

(1)
Includes depreciation related to our distribution centers and locations, which is reported in cost of merchandise and services sold in our condensed consolidated statements of operations.
(2)
Represents amounts paid or accrued in connection with our management services agreement, which was terminated upon the completion of our IPO in November 2020 and are reported in SG&A in our condensed consolidated statements of operations.
(3)
Represents charges related to equity-based compensation and the related Company payroll tax expense which are reported in SG&A in our condensed consolidated statements of operations.
(4)
Represents non-cash expense due to the write-off of deferred financing costs related to the term loan modification and the repayment of our senior unsecured notes during the nine months ended July 3, 2021 which are reported in loss on debt extinguishment in our condensed consolidated statements of operations.
(5)
Includes one-time payments of contractual amounts incurred in connection with our IPO that was completed in November 2020 which are reported in SG&A, and costs incurred for follow-on equity offerings which are reported in other (income) expenses, net in our condensed consolidated statements of operations.
(6)
Represents non-recurring costs, such as third-party consulting costs that are not part of our ongoing operations and are incurred to execute differentiated, strategic projects, and are reported in SG&A in our condensed consolidated statements of operations.
(7)
Includes executive transition costs, losses (gains) on disposition of fixed assets, and other non-recurring, non-cash or discrete items as determined by management. Amounts are reported in SG&A and other (income) expenses, net in our condensed consolidated statements of operations.
(8)
Represents the tax effect of the total adjustments based on our actual statutory tax rate. Amounts are reported in income tax expense in our condensed consolidated statements of operations.

 

Note: A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty of expenses that may be incurred in the future, although it is important to note that these factors could be material to our results computed in accordance with GAAP.

10