Leslie's, Inc.

Good afternoon and welcome to the second quarter of fiscal 2021 conference call for Lesley's Inc. At this time all participants are in listen only mode. Following the prepared remarks management will conduct a question and answer session. To join the question queue you may press star then one on your telephone keypad. Should you require any operator assistance during the conference call please press star and 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. Please go ahead.

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 statement 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 Lesley's website at ir.lesliespool.com. On the call today from Lesley's Inc. is Mike Ejec, Chief Executive Officer, and Steve Waddell, Chief Financial Officer. With that, I will turn the call over to Mike.

Thanks, Kaitlin, and good afternoon, everyone. Thank you all for joining us today. I'm pleased to report that our performance in Q2 exceeded our internal expectations and produced record results for the quarter. Those results include sales of 192.4 million, a comp sales increase of 51.3% on a reported basis and 35.5% on a calendar adjusted basis. Comps accelerated each month of the quarter year over year and on a two year stack. This quarter represents our eighth straight quarter of sequential improvement in positive comps. Gross margin rate for the quarter expanded by 576 basis points and adjusted EBITDA grew by 17.6 million. Our record sales and profit for the quarter continue to be driven by the three pillars that make our business so compelling. First, the predictable, recurring, and non-discretionary nature of demand in our industry. The industry was further advantaged in the second quarter by the continuation of several key macro trends. 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. The continuation of these macro trends resulted in elevated levels of pool usage, interest in pool ownership and pool ownership, new pool permits, and pool construction backlogs. Second, the competitive advantage derived from our integrated system of physical and digital assets. In the quarter, we successfully completed our rollout of omnichannel capabilities, Volpus, Ship from Store, Ship to Store, and Boris. These new capabilities significantly strengthen our ecosystem and enable our consumers to shop Leslie's whenever, wherever, and however they choose. In the first six weeks since GoLive, 30% of our Leslie's e-commerce transactions have been enabled by our new omnichannel capabilities. Third, the significant and tangible growth opportunities available to us as the market leader. We continue to make great progress on the key drivers of our growth strategy, including consumer file growth. We continue to grow our consumer file driven by new consumer acquisition. Total target file growth was 12% in the quarter, New consumers grew 35%. During the quarter, we shifted marketing spend away from our lower-margin sites and increased spend to our targeted higher-margin sites and higher-value consumers. We continue to generate high levels of ROI with our marketing spend, and we'll continue to invest in our targeted marketing tactics to capture share. Driving growth in our loyalty program. In Q2, we grew our total loyalty members by 10% year-over-year driven by a strong increase in new members. The number of new members added in Q2 of this year increased 44% versus the number of new members added in Q2 of last year. Our new loyalty program 2.0, which we have named Pool Perks, is in final testing, and we look forward to launching this exciting and important initiative this pool season. We believe our consumers will love the new program benefits and experience, And we look forward to accelerating the growth and value of our member file with its launch. The pro market. We have completed the conversion of our first 10 residential locations to pro locations. And in the first eight weeks post-conversion, they are outperforming our pro format expectations. In addition, three new Biddle Pro stores remain on track to open in the third quarter. We also have launched our pro affiliate program and have already signed up affiliate partners in several hundred of our locations. These new affiliates are spending 80% more with Lesley's after signing up for the program and we are continuing to add new affiliates across our locations. The last component of our pro initiative, our pro e-commerce site, is still in beta testing. During testing, we received some very valuable feedback from our pro testers and are fine-tuning the site for mobile optimization and search. We are still on track for the full launch this season and feel we have materially improved the product with this process. With regard to our residential white space opportunity, we have opened three new stores year to date and plan to open up to seven additional stores this fiscal year. Also, and importantly, AccuBlue Home, our connected pool technology solution and subscription service, remains on track for a limited launch of version 1.0 during the third quarter. On the M&A front, we closed on the acquisition of International Hot Tub in the quarter. IHT operates four retail locations in the greater Denver, Colorado area, and we welcome them as the newest member of our hot tub business. With the acquisition, we now have a total of 943 physical locations and have Colorado as our 38th state of operations. We continue to see an abundance of acquisition opportunities across the highly fragmented pool and hot tub industry, and we are managing an active pipeline of targets. Accordingly, we have entered into an LOI with an additional tuck-in opportunity, which we expect to close in the third quarter. With regard to corporate governance, I'd like to note that in the quarter, Brad Gassaway, our chief legal officer, took on the executive leadership of our ESG initiatives. Also in the quarter, we hired a director of ESG and formed a sustainability working group comprised of internal resources and external advisors. This group will work at the direction of the board and management to assess material ESG factors and develop our novel ESG disclosure framework and report. We will keep you updated on our progress on this important initiative in future calls. Finally, I'd like to comment on two extraordinary industry dynamics in the quarter. First, chlorine supply remains constrained for the industry and is driving higher average retail pricing. Current residential chlorine pricing is approximately 40% higher than a year ago. As we discussed last call, we remain confident in our supply chain and in our ability to serve both our existing consumers as well as the new consumers we are acquiring with our growth initiatives. With regard to supply and cost, we remain in good shape. With regard to retail pricing, we are continuing to see increases across the industry. In the second quarter, chlorine retail inflation accounted for approximately 300 basis points of our reported sales growth. We continue to monitor chlorine product pricing across online physical competitors and modify our prices as appropriate. Although it remains to be seen what prices will do as we get further into the pool season, we now expect chlorine supply to continue to be constrained and chlorine price inflation to be more durable than we had anticipated on our last call. The second extraordinary event in the quarter was the deep freeze weather conditions in Texas and the south central U.S. This was an unprecedented event, and unlike anything even our most tenured associates have experienced. The event significantly increased our service volume and equipment sales in the region and drove total equipment sales up approximately 85% in the period. For the quarter, we estimate that the freeze accounted for approximately $10 million of incremental sales, and it's clear that we will continue to have opportunities to help consumers with damaged equipment and water sanitation needs into the third quarter. To wrap up, We are very pleased with our record results for the quarter. But more importantly, we are both gaining traction in our growth initiatives and feel we are very well prepared for what we see as a strong 2021 pool season in the back half of our year. With confidence in our team continuing to execute at a high level, our detailed preparations for the season, and the continuation of a favorable industry backdrop, we have, as you have seen in the press release, revised our guidance for the year upward. With that, I'll hand it over to Steve to discuss the quarter and outlook in more detail. Steve?