UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO |
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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The |
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of April 28, 2023, the Registrant had
Table of Contents
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PART I |
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Item 1. |
2 |
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2 |
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3 |
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4 |
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5 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
6 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
15 |
Item 3. |
24 |
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Item 4. |
24 |
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PART II |
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Item 1. |
26 |
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Item 1A. |
26 |
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Item 2. |
26 |
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Item 3. |
26 |
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Item 4. |
26 |
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Item 5. |
26 |
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Item 6. |
27 |
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28 |
i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q 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 Quarterly Report on Form 10-Q, 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:
You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q 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 in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended October 1, 2022. 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 Quarterly Report on Form 10-Q. 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 Quarterly Report on Form 10-Q, 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 Quarterly Report on Form 10-Q 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 Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q 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.
1
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
LESLIE’S, INC.
CONDENSED Consolidated Balance Sheets
(Amounts in Thousands, Except Share and Per Share Amounts)
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April 1, 2023 |
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October 1, 2022 |
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April 2, 2022 |
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(Unaudited) |
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(Audited) |
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(Unaudited) |
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Assets |
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Current assets |
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Cash and cash equivalents |
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$ |
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$ |
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$ |
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Accounts and other receivables, net |
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Inventories |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Goodwill and other intangibles, net |
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Deferred tax assets |
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Other assets |
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Total assets |
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$ |
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$ |
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$ |
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Liabilities and stockholders’ deficit |
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Current liabilities |
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Accounts payable and accrued expenses |
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$ |
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$ |
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$ |
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Operating lease liabilities |
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Income taxes payable |
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Current portion of long-term debt |
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Total current liabilities |
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Deferred tax liabilities |
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Operating lease liabilities, noncurrent |
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Revolving Credit Facility |
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Long-term debt, net |
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Other long-term liabilities |
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Total liabilities |
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Stockholders’ deficit |
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Common stock, $ |
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Additional paid in capital |
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Retained deficit |
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( |
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( |
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( |
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Total stockholders’ deficit |
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( | ) |
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( | ) |
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( | ) |
Total liabilities and stockholders’ deficit |
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$ |
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$ |
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$ |
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See accompanying notes which are an integral part of these condensed consolidated financial statements.
2
LESLIE’S, INC.
CONDENSED Consolidated Statements of Operations
(Amounts in Thousands, Except Per Share Amounts)
(Unaudited)
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Three Months Ended |
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Six Months Ended |
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April 1, 2023 |
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April 2, 2022 |
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April 1, 2023 |
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April 2, 2022 |
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Sales |
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$ |
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$ |
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$ |
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$ |
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Cost of merchandise and services sold |
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Gross profit |
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Selling, general and administrative expenses |
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Operating loss |
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( |
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( |
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( |
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( |
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Other expense: |
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Interest expense |
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Other expenses, net |
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Total other expense |
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Loss before taxes |
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( |
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( |
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( |
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( |
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Income tax benefit |
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( |
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( |
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( |
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( |
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Net loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
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Earnings per share: |
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Basic |
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$ |
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$ |
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$ |
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$ |
( |
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Diluted |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
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Weighted average shares outstanding: |
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Basic |
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Diluted |
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See accompanying notes which are an integral part of these condensed consolidated financial statements.
3
LESLIE’S, INC.
CONDENSED Consolidated Statements of Stockholders’ Deficit
(Amounts in Thousands)
(Unaudited)
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Common Stock |
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Additional |
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Total |
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Shares |
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Amount |
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Paid in Capital |
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Retained Deficit |
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Stockholders’ Deficit |
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Balance, January 1, 2022 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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Issuance of common stock under the Plan |
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— |
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Equity-based compensation |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
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( |
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Balance, April 2, 2022 |
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$ |
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$ |
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$ |
( |
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$ |
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Balance, December 31, 2022 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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Issuance of common stock under the Plan |
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— |
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— |
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— |
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— |
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Equity-based compensation |
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— |
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— |
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— |
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Restricted stock units surrendered in lieu of withholding taxes |
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( |
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— |
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( |
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— |
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( |
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Net loss |
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— |
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— |
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— |
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( |
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( |
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Balance, April 1, 2023 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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Common Stock |
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Additional |
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Total |
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Shares |
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Amount |
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Paid in Capital |
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Retained Deficit |
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Stockholders’ Deficit |
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Balance, October 2, 2021 |
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$ |
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$ |
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$ |
( |
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Issuance of common stock under the Plan |
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— |
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Equity-based compensation |
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— |
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— |
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— |
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Repurchase and retirement of common stock |
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( |
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( |
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( |
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( |
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( |
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Net loss |
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— |
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— |
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— |
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( |
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( |
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Balance, April 2, 2022 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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Balance, October 1, 2022 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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Issuance of common stock under the Plan |
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— |
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— |
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Equity-based compensation |
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— |
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— |
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— |
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Restricted stock units surrendered in lieu of withholding taxes |
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( | ) |
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— |
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( |
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— |
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( |
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Net loss |
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— |
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— |
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— |
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( |
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( |
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Balance, April 1, 2023 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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See accompanying notes which are an integral part of these condensed consolidated financial statements.
4
LESLIE’S, INC.
CONDENSED Consolidated Statements of Cash Flows
(Amounts in Thousands)
(Unaudited)
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Six Months Ended |
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April 1, 2023 |
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April 2, 2022 |
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Operating Activities |
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Net loss |
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$ |
( |
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$ |
( |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
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Equity-based compensation |
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Amortization of deferred financing costs and debt discounts |
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Provision for doubtful accounts |
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Deferred income taxes |
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Loss on asset dispositions |
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Changes in operating assets and liabilities: |
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Accounts and other receivables |
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Inventories |
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( |
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( |
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Prepaid expenses and other current assets |
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( |
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( |
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Other assets |
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( |
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( |
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Accounts payable and accrued expenses |
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( |
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Income taxes payable |
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( |
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( |
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Operating lease assets and liabilities, net |
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( |
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( |
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Net cash used in operating activities |
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( |
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( |
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Investing Activities |
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Purchases of property and equipment |
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( |
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( |
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Business acquisitions, net of cash acquired |
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( |
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( |
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Proceeds from asset dispositions |
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Net cash used in investing activities |
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( |
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( |
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Financing Activities |
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Borrowings on Revolving Credit Facility |
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Payments on Revolving Credit Facility |
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( |
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Repayment of long-term debt |
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( |
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( |
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Payment of deferred financing costs |
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( |
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Proceeds from options exercised |
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Repurchase and retirement of common stock |
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( |
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Payments of employee tax withholdings related to restricted stock vesting |
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( |
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Net cash provided by (used in) financing activities |
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( |
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Net decrease in cash and cash equivalents |
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( |
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( |
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Cash and cash equivalents, beginning of period |
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Cash and cash equivalents, end of period |
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$ |
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$ |
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Supplemental Information: |
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Interest |
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$ |
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$ |
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Income taxes, net of refunds received |
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See accompanying notes which are an integral part of these condensed consolidated financial statements.
5
LESLIE’S, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1—Business and Operations
Leslie’s, Inc. (“Leslie’s,” “we,” “our,” “us,” “its,” or the “Company”) is the leading direct-to-consumer pool and spa care brand. We market and sell pool and spa supplies and related products and services, which primarily consist of maintenance items such as chemicals, equipment and parts, and