Leslie's, Inc.

Good afternoon and welcome to the fiscal first quarter 2026 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 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 Lesley's website at ir.lesleyspool.com. On the call today is Jason McDonald, Chief Executive Officer, and Jeff White, Chief Financial Officer. With that, I will turn the call over to Jason.

Good afternoon, and thank you for joining us today to discuss our first quarter fiscal 2026 results. As we begin 2026, our unwavering commitment to become America's one-stop shop for pool care drives every action we're taking to position Lesley's for a return to sustainable, profitable growth. We see a clear opportunity as we execute our comprehensive transformation plan. We are working diligently to turn around and transform this business with focus on our customer value proposition and right-sizing our operations through cost optimization and better asset utilization. Before I dive in, I wanted to point to our earnings press release in which we reaffirmed our full year guidance for net sales at $1.1 billion to $1.25 billion and adjusted EBITDA in a range of $55 million to $75 million. To start quarter two, we are seeing encouraging momentum with positive comparable store sales in January. This momentum, coupled with the progress we're making on our transformation initiatives, gives us confidence in our team's ability to execute and deliver on our commitments in the upcoming pool season. As we move into the 2026 pool season, we are implementing a pricing transformation initiative that is a strategic decision to improve pricing for our customers on key items. We have identified that our pricing was often out of step in the market, contributing to our net loss of 160,000 residential customers this past fiscal year. We have been conducting price testing during the off-season period, measuring lift performance across various segments, and the results have given us confidence to move directly to national implementation. The renewed strategy will be supported by our new low prices, same great quality integrated marketing campaign launching this pool season. Our pricing strategy is designed to drive traffic, increase conversion rates, and build customer loyalty. Our field organization will capitalize on this opportunity by focusing on basket size growth. with the improved pricing on key value items through the integration with our proprietary 10-point water testing system and our in-store consultative approach. In partnership with our vendors, we've made significant investments in associate training and development programs to enhance their customer engagement capabilities, which are essential for successful basket building and sustained customer relationships. Our new low prices, same great quality campaign will also be powered by an integrated marketing plan that combines digital media with other precision targeted outreach. We will deliver personalized messages about our new pricing offer to both active and lapsed customers by mining of our existing Pool Perks loyalty database that has captured customer information from over 85% of our transactions. We have conducted extensive testing to inform this targeted approach and will continue leveraging marketing mix modeling to optimize campaign effectiveness and return on investment. Let me go a little deeper on our customer transition and retention efforts. As I mentioned, we had a net loss of 160,000 customers in 2025. Double-clicking on this net loss, the most significant driver was customer churn. Through a combination of our renewed price strategy, a revitalized targeted marketing approach, and our store-level pool expertise, we are planning to grow our active customer file in 2026 and beyond. Although we see a clear opportunity to garner new-to-file customers, reengaging lapsed customers remains our greatest opportunity for growth over the near term. by optimizing our marketing spend to mid and lower funnel with a targeted approach. Now, an update on our store optimization initiative, which we announced last quarter. A comprehensive review of our entire asset base led to the decision to close 80 underperforming locations. Our team completed approximately 80% of these closures in less than seven days after we made our announcement last quarter. This accelerated timeline was made possible through meticulous planning, strong cross-functional coordination, and the dedication of our field teams who manage this complex process while maintaining service to our customers. The speed of execution not only minimized business disruption, but also allowed us to capture cost savings more quickly than projected, providing immediate benefit to our financial performance. As we discussed on our Q4 call, despite an expected annual sales impact of approximately $25 million to $35 million, the financial benefits of our store optimization strategy are expected to yield an annualized net EBITDA improvement of $4 million to $10 million once fully completed by the end of Q2 2026. We have implemented a comprehensive customer transition strategy to retain relationships despite physical store closures. Utilizing our Pool Perks loyalty program, we deployed targeted marketing to reach affected customers. We are providing personalized offers to visit nearby Lesley's locations, as well as reminding customers to access our full portfolio of products and services through our online platform and mobile app. Building on this foundation, we are expanding our localized marketing efforts through digital channels, direct mail, and phone calls to remind customers that other nearby stores can help them with their pool care needs. We will continue to engage customers from closed stores on how leslies can meet their needs throughout the upcoming pool season. Complementing our store optimization efforts, we've simultaneously streamlined our distribution footprint to create a more efficient and cost-effective supply chain network. In Q3 last year, we successfully closed our Denver warehouse and seamlessly shifted volume to other distribution centers, reducing annual costs by approximately $500,000 while maintaining service levels. As we transition to a more efficient five distribution center network in 2026, we are on track with the planned closure of our Illinois facility, which will drive an additional $500,000 to a million dollars in annual savings and further reduce our system-wide inventory levels while maintaining strong and improved in-stock levels. The Illinois location was primarily focused on e-commerce fulfillment. Our optimized network will enable us to fulfill e-commerce orders closer to our customers in regional DCs and supporting BOPUS capabilities at store level, thereby lowering shipping costs and significantly improving delivery speed across our digital platforms. In addition, we are continuing our focus on customer convenience with the further expansion of our Uber partnership. We have completed the rollout in Arizona and California, and we'll be rolling out our Uber delivery platform across the United States ahead of the pool season. Uber same-day delivery is Leslie's next step on delivering added convenience for our customer. Aligned with our asset utilization and operational efficiency priorities, our SKU optimization initiative remains on track. As we outlined in our Q4 call, We will have successfully reduced our SKU count by more than 2,000 SKUs entering the 2026 pool season, primarily eliminating long-tail items from our e-commerce and marketplace offerings fulfilled through our distribution centers. The reduction allows us to focus our assortment on our highest value inventory items that drive the majority of our sales. We believe the strategic skew rationalization will enable us to simplify our go-to-market solutions and streamline operations while delivering the targeted $4 million to $5 million in annualized EBITDA improvement we projected. And finally, as we discussed on our Q4 call, we successfully implemented a significant restructuring of our field organization. We moved away from the siloed approach that historically separated our stores, service, commercial, and trade operations, and implemented a market leadership model that integrates all these functions under unified local management. This structure gives managers clear ownership of specific markets and zip codes, enabling deeper customer relationships across all touchpoints. stores, services, and digital channels. We're implementing zip code ownership with incentives for managers who build their business and customer relationships in their territories. These programs are designed to drive transaction growth and higher order values while maintaining our consultative selling approach. The restructuring also accelerates our customer-centric strategy by combining our customer data with local market leadership, giving managers the tools and authority to capture growth opportunities amongst thousands of pool owners. In summary, we have made meaningful progress on our transformation plan during Q1. We continue executing fundamental changes to how we operate and serve our customers, focused on delivering improved value while maintaining our competitive advantages as the industry leader. Our strategic initiatives are advancing with urgency and discipline. We're excited about our pricing investments and targeted marketing efforts, while our cost optimization and asset utilization actions are proceeding on schedule. We remain committed to transparent communication as we work to restore Leslie's to sustainable, profitable growth and rebuild stakeholder confidence through disciplined execution. Now for a brief update on our Q1 results, which were largely in line with our internal top line and adjusted EBITDA expectations. We saw top line net sales of $147 million. When reviewing this result, it is important to keep in mind last year's one-time impacts resulting from the hurricane benefit. the meaningful impact from the shift in comparing a 52-week year to last year's 53-week year, and the closure of 80 stores. When it comes to profitability, we surpassed our internal plan with disciplined cost control and efficient implementation of our initiatives. As I mentioned in my opening comments, we are reaffirming our full-year outlook for both net sales and adjusted EBITDA, anchored on our confidence in our strategic direction and the continued progress across our key transformation initiatives. With that, I will turn it to Jeff for a more detailed review of our first quarter results.

Jeff? Thank you, Jason.