Leslie’s Reports Lower-than-Expected EPS Despite Beating Revenue Expectations
November 29, 2023
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Leslie’s ($NASDAQ:LESL), a publicly-traded company, recently reported lower-than-expected earnings per share (EPS) despite beating revenue expectations. The Non-GAAP EPS of $0.14 was $0.03 lower than expected, however, their revenue of $432.4M was $13.05M higher than anticipated. This result was a mixed bag for investors, as it showed that Leslie’s had strong top-line growth, but their bottom-line results fell short of expectations. The company attributed the lower-than-expected EPS to higher operating expenses due to investments in technology and initiatives related to customer service.
In addition, Leslie’s saw an increase in its research and development costs as well as higher costs associated with the opening of new stores. Despite these higher expenses, Leslie’s reported an improvement in its gross margins and an overall increase in profits. Overall, Leslie’s report showed that the company is continuing to invest in its growth and customer service initiatives, while also managing to maintain strong margins. As the company continues to invest in these areas, investors may be hopeful that in time their Non-GAAP EPS numbers will continue to improve and surpass expectations.
Earnings
In the latest earning report for the fiscal year 2023 third quarter, ending June 30 2021, LESLIE’S reported total revenue of 596.54 million USD and net income of 118.8 million USD. Compared to the previous year’s earning report, this marks a decrease of 11.4% in total revenue and a decrease of 3.4% in net income. This is in contrast to the steady increase in total revenue from 596.54 million USD to 610.89 million USD over the past three years. Despite beating total revenue expectations, the lower-than-expected earnings per share (EPS) has caused concern among investors.
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Leslie’s. More…
| Total Revenues | Net Income | Net Margin |
| 1.49k | 68.69 | 4.6% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Leslie’s. More…
| Operations | Investing | Financing |
| -80.83 | -113.7 | 20.82 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Leslie’s. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 1.14k | 1.32k | -0.98 |
Key Ratios Snapshot
Some of the financial key ratios for Leslie’s are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 13.2% | 2.2% | 9.8% |
| FCF Margin | ROE | ROA |
| -7.6% | -42.2% | 8.1% |
Share Price
On Tuesday, Leslie’s reported lower-than-expected earnings per share (EPS) despite beating revenue expectations. Despite the EPS miss, the stock opened the day at $5.7 and closed at $5.8, up 1.9% from its previous closing price of $5.7. The company’s results provided a boost to its share price and the overall market sentiment. Analysts attributed the EPS miss to higher-than-anticipated costs related to marketing and other expenses related to the company’s expansion initiatives.
The company also reported that gross margins improved by 8 basis points year-over-year. Overall, Leslie’s had a mixed quarter, but investors and analysts remain hopeful that the company will be able to continue to deliver strong results in the long term. If they are able to do so, Leslie’s stock may continue to perform well in the stock market. Live Quote…
Analysis
GoodWhale’s analysis of LESLIE’S financials has revealed a strong health score of 8/10. This is largely due to its cashflows and debt position, which is capable of funding future operations and paying off debt. In terms of profitability, growth and asset metrics, LESLIE’S was assessed as high, medium and weak respectively. Based on this, we classified LESLIE’S as a ‘rhino’ type company, one that has achieved moderate revenue or earnings growth. Given its overall financial health, LESLIE’S may be attractive to a variety of investors such as value investors, growth investors or those looking for dividend returns. Value investors may find the company appealing as it shows signs of stability and potential growth at a reasonable price. Similarly, growth investors could be enticed by the moderate revenue or earnings growth as these are a good indication of the potential development of this business. Lastly, those looking for a return on their investment through dividends could be interested in LESLIE’S strong profitability and ability to pay off debt. More…
Peers
Leslie’s is the world’s largest retailer of swimming pool supplies. Headquartered in Phoenix, Arizona, the company operates over 900 retail stores in the United States and Canada. Leslie’s also operates an e-commerce website and direct mail catalog business. The company was founded in 1963 by brothers John and Bill Leslie. Pool Corp is the world’s largest wholesale distributor of swimming pool supplies and equipment. Headquartered in Covington, Louisiana, the company operates over 360 distribution centers in North America, Europe, South America, and Australia. Pool Corp was founded in 1993. Tandem Group PLC is a leading designer, manufacturer, and distributor of swimming pool and spa products. Headquartered in the United Kingdom, the company operates in over 30 countries worldwide. Tandem Group PLC was founded in 1981. Real American Capital Corp is a leading provider of financing solutions for the swimming pool and spa industry. Headquartered in Boca Raton, Florida, the company operates in the United States, Canada, and Europe. Real American Capital Corp was founded in 2008.
– Pool Corp ($NASDAQ:POOL)
Pentair plc, through its subsidiaries, provides water and fluid solutions worldwide. The company operates in two segments, Industrial and Residential & Commercial. The Industrial segment offers a range of products and services that meet the needs of customers in the water and fluid solutions industry, including filtration, separation, fluid control, fluid movement, fluid management, and heat transfer. The Residential & Commercial segment provides products and services that meet the needs of customers in the residential and commercial water markets. Pentair plc was founded in 1966 and is headquartered in London, the United Kingdom.
– Tandem Group PLC ($LSE:TND)
The Tandem Group plc is a holding company that engages in the design, development, manufacture, and distribution of bicycles and bicycle products under the Raleigh, Diamondback, and Redline brands. The company operates through two segments, Bicycles and Accessories, and Pools. The Bicycles and Accessories segment offers bicycles, bicycle parts, and bicycle accessories. The Pools segment provides above-ground and in-ground swimming pools, related equipment, and chemicals. The company was founded in 1887 and is headquartered in Kent, the United Kingdom.
Summary
Leslie’s reported its financial results for the first quarter of 2021, which showed mixed results.
However, the company posted revenue of $432.4M, beating the analysts’ expectations by $13.05M. Leslie’s performance was driven primarily by increased demand for its retail and commercial products, as well as strong growth in its e-commerce channels. Looking ahead, the company expects to continue to capitalize on attractive market opportunities, and aims to improve its profitability over the coming quarters. Investors should watch for any updates from the company on how it plans to achieve this goal.
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