Leslie’s, Inc. (NASDAQ:LESL) Q3 2023 Earnings Conference Call August 2, 2023 4:30 PM ET

Company Participants

Caitlin Churchill - IR

Mike Egeck - CEO

Steve Weddell - CFO

Scott Bowman - CFO Designate

Conference Call Participants

Simeon Gutman - Morgan Stanley

Steven Forbes - Guggenheim Securities

Ryan Merkel - William Blair

Dana Telsey - Telsey Advisory Group

Elizabeth Suzuki - Bank of America

Garik Shmois - Loop Capital Markets

Jonathan Matuszewski - Jefferies

Andrew Carter - Stifel

Justin Kleber - Robert W. Baird

Operator

Good afternoon and welcome to the Third Quarter of Fiscal 2023 Conference Call for Leslie’s, Inc. At this time, all participants are in a listen-only mode. Following the prepared remarks, management will conduct a question-and-answer session. [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 Caitlin Churchill, Investor Relations. Please go ahead.

Caitlin Churchill

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. These statements speak as of today and will not be updated in the future if circumstances change. Please review the cautionary statements and risk factors contained in the company’s earnings press release and recent filings with the SEC.

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

On the call today from Leslie’s are Mike Egeck, Chief Executive Officer; and Steve Weddell, Chief Financial Officer; and Scott Bowman, Chief Financial Officer Designate.

With that, I will turn the call over to Mike. Mike?

Mike Egeck

Thanks Caitlin and good afternoon everyone. Thank you for joining us. Please note that we have posted a Q3 2023 earnings deck to the Leslie’s IR site and that we will be referring to certain pages in that deck during our call.

As we shared in our pre-release three weeks ago, it was a difficult quarter. Low double-digit traffic declines resulted in a 12% comparable sales decline and a 9% total sales decline.

In addition to fixed cost deleverage associated with these sales, we faced unexpected in season product cost increases and higher distribution expenses that significantly impacted gross margins for the quarter.