Leslies Inc (LESL) Reports Decline in Fiscal 2023 Earnings Amid Industry Headwinds
Leslies Inc (NASDAQ:LESL) announces a 7.1% decrease in annual sales and an 18.6% decrease in gross profit for Fiscal 2023.
Net income for the year fell to $27.2 million, a significant drop from the previous year's $159.0 million.
Adjusted EBITDA also saw a decrease, ending the year at $168.1 million compared to $292.3 million in the prior year.
On November 28, 2023, Leslies Inc (NASDAQ:LESL) released its 8-K filing, detailing the financial outcomes for the fourth quarter and the full fiscal year of 2023. The report highlighted a year of challenges for the pool and spa care industry leader, with a notable impact on its financial performance.
Fiscal 2023 Performance Overview
Leslies Inc (NASDAQ:LESL) reported a 7.1% decrease in sales, totaling $1,451.2 million for Fiscal 2023. The company's net income also experienced a downturn, settling at $27.2 million, a stark contrast to the $159.0 million reported in the previous fiscal year. Adjusted EBITDA followed suit, decreasing to $168.1 million from $292.3 million in Fiscal 2022. Diluted earnings per share (EPS) were $0.15, compared to $0.85 in the prior year, and adjusted diluted EPS were $0.28, down from $0.95.
Fourth Quarter Financial Highlights
The fourth quarter saw sales decrease by 9.1% to $432.4 million, with comparable sales down by 11.0%. Gross profit for the quarter fell 26.3% to $160.2 million, and gross margin dropped to 37.0% from 45.7% in the prior year period. Operating income was reported at $38.5 million, a decrease from $83.1 million in the same period last year. Net income for the quarter was $16.5 million, down from $57.9 million in the prior year period, and adjusted net income was $25.7 million compared to $64.4 million.
Balance Sheet and Cash Flow Insights
As of September 30, 2023, Leslies Inc (NASDAQ:LESL) had cash and cash equivalents of $55.4 million, a decrease from the previous year's $112.3 million. Inventory levels decreased by 13.8% to $311.8 million. The company's funded debt on its term loan was $789.8 million, slightly down from $797.9 million. Net cash provided by operating activities significantly decreased to $6.5 million in Fiscal 2023 from $66.6 million in Fiscal 2022.
Management Commentary
CEO Mike Egeck acknowledged the transitory headwinds faced by the industry and Leslies Inc (NASDAQ:LESL) in 2023, impacting financial results through the fiscal fourth quarter. Despite these challenges, the company maintained high levels of brand awareness, service, and customer loyalty.
In 2023, brand awareness, in stock service levels and corresponding net promoter scores were at all-time highs,"
Egeck stated, emphasizing the company's resilience and market share growth.
Looking Ahead
For Fiscal 2024, Leslies Inc (NASDAQ:LESL) projects sales between $1,410 to $1,470 million, gross profit in the range of $550 to $573 million, and net income anticipated to be between $32 to $46 million. Adjusted net income is expected to range from $46 to $60 million, with adjusted EBITDA forecasted between $170 to $190 million. The company also estimates adjusted diluted earnings per share to be $0.25 to $0.33.
Leslies Inc (NASDAQ:LESL) remains optimistic about its long-term growth opportunities and competitive advantages, despite the current industry conditions. The company's focus on strategic initiatives is aimed at driving financial performance and creating shareholder value as the market stabilizes.
Investors and analysts can find further details and participate in the discussion during the company's conference call, scheduled for today at 4:30 p.m. Eastern Time.
For a more detailed analysis of Leslies Inc (NASDAQ:LESL)'s financial results and future outlook, investors are encouraged to review the full 8-K filing.
Explore the complete 8-K earnings release (here) from Leslies Inc for further details.
This article first appeared on GuruFocus.
