Leslie's (LESL) Q1 2025 earnings summary

Executive summary

• Sales increased 0.7% to $175.2 million for Q1 2025, marking the first positive comp since 4Q 2022, driven by higher transaction volume but offset by lower average order value.

• Net loss widened to $44.6 million from $39.6 million year-over-year, primarily due to lower gross profit, higher SG&A, and strategic transformation expenses.

• Adjusted EBITDA was $(29.3) million, at the lower end of guidance, impacted by inventory adjustments and professional fees.

• Comparable sales grew 0.2%, the first gain in two years.

• Strategic transformation initiatives focus on customer centricity, convenience, asset utilization, and digital enhancements under new CEO leadership.

Financial highlights

• Gross profit declined 5.4% to $47.7 million; gross margin fell to 27.2% from 29.0% year-over-year.

• SG&A expenses rose to $87.4 million, mainly due to higher consulting and professional fees, partially offset by lower equity-based compensation.

• Adjusted net loss was $41.3 million ($0.22 per share), up from $36.8 million ($0.20 per share) last year.

• Interest expense decreased to $15.8 million from $17.1 million due to lower rates and debt.

• Operating loss was $39.7 million, compared to $36.5 million in the prior year period.

Outlook and guidance

• Q2 2025 sales expected at $179–$189 million, gross profit $44–$48 million, adjusted EBITDA $(38)M–$(33)M.

• Full-year 2025 sales guidance is $1,304–$1,370 million, adjusted EBITDA $96–$116 million, and adjusted diluted EPS $(0.01)–$0.07.

• CapEx planned at $35–$40 million for the year; capital expenditures were $4.7 million in Q1.

• Management expects sufficient liquidity for working capital, capex, acquisitions, share repurchases, and debt service.

• Remediation of material weaknesses in internal controls is ongoing, with completion anticipated in fiscal 2025.