Leslie's, Inc.

Good afternoon and welcome to the fiscal fourth quarter and full year 2024 earnings conference call for Lesley's. 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 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 Matt Skelly, Vice President of 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 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.lesleyspool.com. For this quarter, we have opted not to post an earnings presentation as we continue to refine our materials under our new chief executive officer. On the call today are Jason McDonald, Chief Executive Officer, and Scott Bowman, Chief Financial Officer. With that, I will turn the call over to Jason.

Thanks, Matt. And thank you all for joining us this afternoon. I'd like to take this opportunity to share how appreciative I am to serve Lesley's customers, team members, and shareholders as our new CEO. I'm not only a longtime admirer of the 60-year legacy of the Lesley's brand, but I'm also a longtime customer. And I'd like to thank the Lesley's frontline team, our corporate team members, and our board of directors for the warm welcome I've received. Also, to our shareholders, I want to make it clear that shareholder value creation is top of mind as I enter the role. I believe Lesley's has a strong set of near-term and long-term opportunities. And the team and I are very motivated to build on the legacy of Lesley's and ensure that we perform while we transform. Understanding the needs of our customers and our employees who serve them is critically important to me, and I plan on putting the customer at the center of everything we do. Since joining the Lesley's team in September, I've had the pleasure of visiting over 40 stores, multiple distribution centers, and regional commercial service centers across more than half a dozen states, including California, Texas, Florida, Arizona, Colorado, and North Carolina. While I'm less than 80 days in my role, I've captured a lot of learnings in that short period of time. And while spending time in the market, I've been really pleased to witness the pride and expertise with which our team members care for the customer. When I step back and put my customer hat on, one thing really resonates with me. We do a lot more than just sell pool supplies. At Lesley's, our purpose is to enable joy through customized pool care solutions. And when you're in our stores, you can see and feel the passion of our purpose with our frontline team members. They take pride in serving customers. And I've seen this exemplified with Clara in Texas, Dawn in Florida, and Scott in Arizona. I saw this firsthand when a customer came into our store. and called our general manager by their first name. That relationship mindset, whether it's assisting a residential or, as I call it, a DIY customer with our best-in-class AccuBlue water testing technology, helping our local pros with liquid chlorine so they can get on their way, or helping our retail customers with an equipment repair, our employees' commitment to serve is unwavering. Lesley's represents an empowered team that provides trusted care for DIY and pro customers with customized pool and spa care solutions. I have also had the opportunity to connect with many of our vendor partners, and each conversation has deepened my appreciation for this industry. The pool industry has experienced one of the most dynamic five-year periods in its history, which of course Leslie's has experienced as well. We believe our industry has been and will remain advantaged for the long term. The installed base of pools and spas at over 14 million bodies of water, with a total addressable market of approximately $15 billion, typically grows 1% to 2% every year. And those pools need to be maintained. As we turn the page to the next chapter of Lesley's history, one observation has been abundantly clear. Sharpen our focus on the fundamentals of retailing. Presents a compelling opportunity. And that's just what we plan to do. So what does that mean? It's about getting back to basics. Blocking and tackling. Retail 101. At Lesley's, we remain the only national large-scale omni-channel player in aftermarket pool and spa care that serves both DIY and pro customers. In addition, we are closest to the pools. In fact, our 1,000-plus store network is within 20 miles of 80% of the pools in the United States. In the Sun Belt, we're even closer, with almost 88% of our pools within 10 miles of a Leslie store. Our footprint remains a major competitive advantage that we plan to leverage to deliver more value to our DIY and pro customers through our omnichannel approach. In addition to our proximity advantage, Lesley's has a well-known pool expertise and capabilities that are key to personalized customer care. Our brand strength and MPS scores are strong, driven by our ability to serve the DIY and pro customer quickly and efficiently. So, we believe our industry and our company remains advantaged. The next logical question is, how do we leverage those advantages even better going forward? What you can expect from Lesley's is a clear focus on fundamentals and that we plan to leverage our competitive advantages to drive long-term profitable growth. It starts with three strategic themes, customer centricity, convenience, and asset utilization. Each theme has a set of related priorities and defined initiatives intended to deliver sustainable, profitable growth and fuel long-term shareholder value. I will speak to these three themes today and plan to expand on them each quarter in fiscal 2025. The first strategic theme is customer centricity. As I noted, we are putting the customer at the center of everything we do. Since 1963, the Lesley's brand has been synonymous with trust and expert care. While our marketing research still indicates these words are associated with our brand, I believe we can take these to the next level in the future. Continuing to elevate our customer care through pool expertise for the DIYer and the pro will make it even more rewarding to shop with us. As we look to the future, we can elevate this experience with a more personalized approach. The customers who choose to take care of their pool know the value of Leslie's. In fact, over eight out of 10 DIY customers are members of our loyalty program. That is extremely powerful. We know a lot about them and their pool, including location, size of their pool, whether it is a salt or chlorine pool, equipment preferences, the health of their pool following a water test, and even their last purchase of an inflatable for their family. This wealth of information allows us to know our customer more deeply, offer more personalized solutions, and inform us on what winning in service can be. Having had experience in loyalty programs, I believe that we have an ability to elevate our loyalty program even further for both the retail customer and the pro. Our primary goals will be to increase the awareness of the program to attract new loyalty members and enhance its value proposition to the loyalty member and for Leslie's. Lastly, in this customer centricity theme, I believe we can build traffic by increasing awareness around our best in class water testing, our differentiated expertise localized for the customer's neighborhood, our product availability, and by customized services leveraging our omnichannel approach. Our second strategic theme is convenience. We believe this theme is core to us winning within the DIY and pro customer. Being closest to the pools with a best-in-class footprint is a key competitive advantage to helping customers with their pool needs. Whether it's a part a pro needs to make their customer's equipment work, specialty chemicals for a DIYer to balance their pool to be clean, safe, and beautiful, or that special pool toy to brighten a child's day. We want to be able to satisfy any pool need quickly. Convenience is such an important aspect of being a trusted total solution provider. Time to solve a customer's problem often determines who wins the sale and who is key to delivering on our customers' expectations. a major element of enabling this through inventory and store assortment. With a solution orientation, we're reframing availability with a customer-centric and convenience approach in terms of minutes, hours, and days. In our portfolio, some products have customer availability expectation of minutes. They have a need, and time is of the essence. Included as part of that thinking is our new inventory segmentation I like to call Never Outs. For these items, we measure in minutes, and we have to have the best in-stock performance, and we can never be out. To complement to this line of thinking, we are evolving Leslie's focus towards localized assortment. There are regional and local differences in the pool market, and we need to have the right inventory in the right place at the right time. It's about being able to get to the place of precision inventory in our local markets. This precision inventory approach will better leverage our existing advantage footprint. It can also speed up reverse logistics, lower inventory adjustment expense, and reduce shrink. To reiterate, This is about convenience as a competitive advantage, and we expect improving inventory management will help accelerate our time to serve. Our third and final strategic theme is asset utilization. The areas of focus in improving asset utilization include our physical assets, our technology and data assets, and our human capital. First, on improving our physical asset utilization, I've already discussed our best in class footprint, including our 1,000 plus stores. But our physical assets also include our strategic network of distribution centers and commercial service centers. In fiscal 2025, we expect to add approximately three stores to our footprint. That said, the majority of our attention will be getting more out of our combination of assets to drive higher organic sales. Expanding average sales per store will drive comp growth, feeling positive leverage through the P&L. Internally, the company has made significant investments over the past couple of years to enhance our technical capabilities, such as adding the Blue Yonder tool. And I believe we can do more to maximize the value that these strategic investments can bring to our processes and our operations. We will plan to also prioritize incremental investments that enhance our ability to serve the customer as we pursue our strategic objectives for the coming year. Finally, in the area of human capital, we believe we can use our national scale and local community presence to make a stronger, positive impact in the communities we serve. As the industry's market leader, Lesley's workforce is dedicated to making human capital a positive differentiator through the expertise we provide our pool and spa customers and the care they entrust in us to keep their pool clean, safe, and beautiful. These three strategic themes, customer centricity, convenience, and asset utilization will be supported by empowering our teams to drive a continuous improvement culture. At Leslie's, we will focus on the customer and the fundamentals and prioritize what helps achieve our objectives and deprioritize what does not. Turning to our results for the fourth quarter and for fiscal 2024, sales for the fiscal fourth quarter were $398 million, down 8%, which was in line with our revised guidance from July. Sales for fiscal 2024 were $1.33 billion, down 8%, also in line with our expectations. Adjusted earnings per share were two cents for the fourth quarter and a loss of one cent for the year. Adjusted EBITDA in the fourth quarter was 43 million and was 109 million for the full year. Consistent with our primary capital allocation priority of reducing debt, we expect to pay down approximately 25 million of our debt balance during the current quarter. Scott will detail further our financial performance for the fourth quarter and full year during his prepared remarks. During the first seven weeks of the fiscal year, trends were in line with our expectations. We had some positive demand activity from post-storm cleanup in Florida and throughout the southeast. However, as I mentioned earlier, the macro environment continues to be dynamic. And we're in the process of orienting our business around our three key strategic themes and related initiatives. Given these factors, at this time, we're only providing financial guidance for the first quarter of 2025, which includes top line sales expected in a range of down 3% to up 1% year over year. We continue to form our thoughts on the year ahead and expect to update the market with some of that thinking on our next earnings call. I'll now turn it over to Scott to give his remarks.