Leslie's, Inc.

Good afternoon and welcome to the first quarter 2021 conference call for Lesley's Incorporated. At this time, all participants are in a listen-only mode. Following the prepared remarks, management will conduct a question and answer session. If you should require any operator assistance during the conference call, please press star zero on your telephone keypad. 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.

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 will 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 Lesley Zink is Mike Ejack, Chief Executive Officer, and Steve Waddell, Chief Financial Officer. With that, I will turn the call over to Mike.

Thanks, Caitlin, and good afternoon, everyone. Thank you all for joining us. So today happens to be my one-year anniversary with Lesley's. Even though I don't spend a lot of time looking backwards, I have to say it's been quite a year. Pandemic, IPO, record 2020 results, And now, thanks to our team continuing to perform at a high level executing against our growth initiatives, we are pleased to report a record start to our 2021 fiscal year. Our performance in Q1 exceeded our internal expectations and produced exceptional results for the quarter, including sales of 145 million, comp sales increased of 25.7% on a calendar basis, and adjusted EBITDA growth of 8.8 million. I would also like to highlight that the Q4 gross margin pressure associated with our decision to clear inventory and to accelerate the launch of new proprietary product was, as we had discussed in our December call, an isolated event. In Q1, we delivered 225 basis points of gross margin expansion. Our record sales and profit were driven by the three pillars that make our business so compelling. we operate in one of the most advantaged and attractive consumer products industries, an industry that benefits from predictable, recurring, and non-discretionary demand. In Q1, we benefited from a strong industry backdrop as the acceleration in key macro trends continued unabated. We saw consumers continue to focus time and investment on their homes, pursue healthy outdoor lifestyles, migrate to the suburbs and exurbs, and have an elevated attention to safety and sanitization. We believe these trends are secular in nature and will create enduring tailwinds for our business. As evidence of this, we continue to see pool usage, interest in pool ownership, new pool permits, and pool construction backlogs all remain at elevated levels. Second, our integrated ecosystem of physical and digital assets and our total solution-based approach to pool care that it enables is an unmatched competitive advantage. We believe this advantage will only get stronger with the launch of our omni-channel capabilities later this year. Third, despite being the largest direct-to-consumer brand in our industry, we have tremendous growth opportunities available to us. We have $10 billion of white space in our markets, and we have developed a specific multi-pronged growth strategy along with tangible supporting initiatives, to address the opportunity. Key drivers of our growth strategy include consumer file growth. We continue to see good results from our work to acquire and reactivate consumers in an optimized marketing strategy. The ongoing shift of our media spend from direct mail to digital and social is a key driver of this success, and we can attribute the majority of our Q1 sales increase directly to consumer file growth. We are generating high levels of ROI with our marketing spin, and we will continue to invest in our targeted marketing tactics to capture share. Driving growth in our loyalty program is another attractive opportunity for Leslie's. In Q1, we grew new loyalty members by more than 50% year over year. We generated this growth by leveraging the reach and scale of our physical and digital assets and focusing our physical and digital teams on new member sign-ups. Our new loyalty program 2.0 with enhanced features and benefits is on track to launch by the end of May, and we feel very good about our ability to continue our loyalty file growth in the second half of the year. The pro market. We are pleased to share that part one of our pro strategy, our new qualified access website for the pro consumer, is now in beta test with a select number of pro partners. Part two of our pro strategy the launch of our affiliate program also remains on track. And as a start to the third part of our pro strategy, we have identified 10 residential locations that we will convert to pro locations, as well as three brand new pro locations. All 13 are slated to open for pool season 2021. While on the topic of additional locations, we continue to have very attractive residential white space opportunities in the 700 underserved markets we have identified. We now have a total of 936 locations and are on track to open at least seven new residential locations this fiscal year. In addition, our Omni fulfillment capabilities are on track for rollout prior to pool season with Boris now active and Bopas shipped to store and shipped from store coming online in the next 60 days. Also, and importantly, AccuBlue Home, our connected pool technology solution and subscription service, has successfully completed beta testing with our consumer panel and remains on track for a limited launch of version 1.0 around Memorial Day. On the M&A front, we continue to see abundance of acquisition opportunities across the highly fragmented pool and hot tub industry, and we are managing an active pipeline of candidates. We have a long history of programmatic M&A with smaller bolt-on businesses as our targets. In line with our recent M&A history, we have executed an LOI for one such target, and we'll have more to share once the agreement is definitive. With regard to corporate governance, I'd like to note that we ceased to be a controlled company in November 2020 following our IPO. Also, our board recently reconstituted our nominating and governance committees to be majority independent in line with our compensation committee. And our audit committee continues to be fully independent. Finally, I'd like to comment on chlorine supply and retail pricing. Despite widespread industry shortages, we are confident in our ability to both serve our existing consumers as well as the significant number of new consumers we are acquiring with our growth strategies. We have a 30-year relationship and a history of superior performance with our primary supplier. And we have a contract in place that secures both volume and cost through 2025. We also have well-developed relationships with a global network of additional partners that give us supply flexibility. So with regard to supply and cost, we're in good shape. With regard to retail pricing, it is a fact that we are seeing increases across the industry. The question is whether this level of retail pricing will be maintained. In our planning and guidance, we are taking a conservative approach for three reasons. First, the October through December quarter is the smallest of the year for Leslie's and the industry. It is not necessarily a reliable indicator of peak pool season trends. Second, everyone in the industry, including us, are investing in alternative sanitizers. And third, it is unclear what the mass home or club strategies will be. Your takeaway regarding chlorine should be that we feel very good about our supply and cost situation and that we are being prudently cautious about the durability of current retail pricing. To wrap up my remarks, it is gratifying to see such a strong start to the year. but our entire organization remains firmly focused on gearing up for success in the 2021 pool season. Balancing overperformance in our seasonally smallest quarter, with confidence in our team executing our growth initiatives, a favorable industry backdrop, and overall business momentum, we have, as you have seen in the press release, revised our guidance for the year upward. With that, I will hand it over to Steve, to discuss the quarter and outlook in more detail. Steve?