Leslie's, Inc.

Previous wording

We operate on a fiscal calendar that results in a fiscal year consisting of a 52- or 53-week period ending on the Saturday closest to September 30th. In a 52-week fiscal year, each quarter contains 13 weeks of operations; in a 53-week fiscal year, each of the first, second and third quarters includes 13 weeks of operations and the fourth quarter includes 14 weeks of operations. References to the three months ended January 3, 2026 and December 28, 2024 refer to the 13 weeks ended January 3, 2026 and December 28, 2024.

Current wording

We operate on a fiscal calendar that results in a fiscal year consisting of a 52- or 53-week period ending on the Saturday closest to September 30th. In a 52-week fiscal year, each quarter contains 13 weeks of operations; in a 53-week fiscal year, each of the first, second and third quarters includes 13 weeks of operations and the fourth quarter includes 14 weeks of operations. References to the three months ended April 4, 2026 and March 29, 2025 refer to the 13 weeks ended April 4, 2026 and March 29, 2025. References to the six months ended April 4, 2026 and March 29, 2025 refer to the 26 weeks ended April 4, 2026 and March 29, 2025.

Previous wording

We consider a variety of financial and operating measures in assessing the performance of our business. The key measures we use under United States generally accepted accounting principles (“GAAP”) are sales, gross profit and gross margin, selling, general and administrative expenses (“SG&A”), and operating loss. The key non-GAAP measures and other operating measures we use are comparable sales, comparable sales growth, Adjusted EBITDA, Adjusted net loss, and Adjusted diluted loss per share.

Current wording

We consider a variety of financial and operating measures in assessing the performance of our business. The key measures we use under United States generally accepted accounting principles (“GAAP”) are sales, gross profit and gross margin, selling, general and administrative expenses (“SG&A”), impairment, and operating loss. The key non-GAAP measures and other operating measures we use are comparable sales, comparable sales growth, Adjusted EBITDA, Adjusted net loss, and Adjusted diluted loss per share.

Previous wording

Operating loss is gross profit less SG&A. Operating loss excludes interest expense and income tax expense (benefit). We use operating loss as an indicator of the productivity of our business and our ability to manage expenses.

Current wording

Operating loss is gross profit less SG&A and impairment. Operating loss excludes interest expense and income tax expense (benefit). We use operating loss as an indicator of the productivity of our business and our ability to manage expenses.

Previous wording

Adjusted EBITDA is not a recognized measure of financial performance under GAAP but is used by some investors to determine a company’s ability to service or incur indebtedness. Adjusted EBITDA is not calculated in the same manner by all companies, and accordingly, is not necessarily comparable to similarly titled measures of other companies and may not be an appropriate measure for performance relative to other companies. Adjusted EBITDA should not be construed as an indicator of a company’s operating performance in isolation from, or as a substitute for, net income (loss), cash flows from operations or cash flow data, all of which are prepared in accordance with GAAP. We have presented Adjusted EBITDA solely as supplemental disclosure because we believe it allows for a more complete analysis of results of operations. Adjusted EBITDA is not intended to represent, and should not be considered more meaningful than, or as an alternative to, measures of operating performance as determined in accordance with GAAP. In the future, we may incur expenses or charges such as those added back to calculate Adjusted EBITDA. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these items.

Current wording

Adjusted EBITDA is not a recognized measure of financial performance under GAAP but is used by some investors to determine a company’s ability to service or incur indebtedness. Adjusted EBITDA is not calculated in the same manner by all companies, and accordingly, is not necessarily comparable to similarly titled measures of other companies and may not be an appropriate measure for performance relative to other companies. Adjusted EBITDA should not be construed as an indicator of a company’s operating performance in isolation from, or as a substitute for, net loss, cash flows from operations or cash flow data, all of which are prepared in accordance with GAAP. We have presented Adjusted EBITDA solely as supplemental disclosure because we believe it allows for a more complete analysis of results of operations. Adjusted EBITDA is not intended to represent, and should not be considered more meaningful than, or as an alternative to, measures of operating performance as determined in accordance with GAAP. In the future, we may incur expenses or charges such as those added back to calculate Adjusted EBITDA. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these items.

Previous wording

Adjusted net loss is defined as net loss adjusted to exclude equity-based compensation expense, executive transition costs, severance, strategic project costs, merger and acquisition costs, change in valuation allowance for deferred taxes, and other non-recurring, non-cash, or discrete items. Adjusted diluted loss per share is defined as Adjusted net loss divided by the diluted weighted average number of common shares outstanding.

Current wording

Adjusted net loss is defined as net loss adjusted to exclude equity-based compensation expense, executive transition costs, severance, strategic project costs, merger and acquisition costs, and other non-recurring, non-cash, or discrete items. Adjusted diluted loss per share is defined as Adjusted net loss divided by the diluted weighted average number of common shares outstanding.

Previous wording

Our financial performance and condition may be impacted to varying extents from period to period by macroeconomic and geopolitical developments, including public health crises, escalating global conflicts, tariffs, supply chain disruptions, labor market constraints, high rates of inflation, high interest rates, general economic slowdown, and potential failures among financial institutions. New or increased tariffs and other barriers to trade, especially in light of comments and executive orders made by the U.S. presidential administration, could further impact or exacerbate these conditions. The United States has announced tariffs on imports from most countries, including significant tariffs on imports from Canada, Mexico and China. In response to tariffs, other countries have implemented retaliatory tariffs on U.S. goods. There is substantial uncertainty about the duration of existing tariffs and whether additional tariffs may be imposed, modified or suspended, and the impacts of such actions on the Company’s business. Significant disruption to our supply chain for products we sell, as a result of geopolitical conflict, tariffs or trade policies or otherwise, can also have a material impact on our sales and earnings and cause unpredictable changes in results. In addition, we believe adverse macroeconomic trends and uncertainties including inflation, tariffs, and varying interest rates also increase consumers’ sensitivity to price and result in cost-conscious behavior inclusive of high ticket items, which can result in corresponding declines in sales and/or gross profit.

Current wording

Our financial performance and condition may be impacted to varying extents from period to period by macroeconomic and geopolitical developments, including public health crises, escalating global conflicts (including the ongoing conflict in Ukraine, the conflicts in the Middle East, and the related impacts on commodity prices, including the price of oil), tariffs, supply chain disruptions, labor market constraints, high rates of inflation, high interest rates, general economic slowdown, and potential failures among financial institutions. New or increased tariffs and other barriers to trade, especially in light of comments and executive orders made by the U.S. presidential administration, could further impact or exacerbate these conditions. The United States has announced tariffs on imports from most countries, including significant tariffs on imports from Canada, Mexico and China. In response to tariffs, other countries have implemented retaliatory tariffs on U.S. goods. There is substantial uncertainty about the duration of existing tariffs and whether additional tariffs may be imposed, modified or suspended, and the impacts of such actions on the Company’s business. Significant disruption to our supply chain for products we sell or increased costs (including in the cost of oil), as a result of geopolitical conflict, tariffs or trade policies or otherwise, can also have a material impact on our sales and earnings and cause unpredictable changes in results. In addition, we believe adverse macroeconomic trends and uncertainties including inflation, tariffs, and varying interest rates also increase consumers’ sensitivity to price and result in cost-conscious behavior inclusive of high ticket items, which can result in corresponding declines in sales and/or gross profit.

Previous wording

On September 10, 2025, our shareholders approved a series of amendments to our Seventh Amended and Restated Certificate of Incorporation (the “Certificate of Amendment”). On September 26, 2025, we filed a Certificate of Amendment with the Secretary of State of the State of Delaware to effect a reverse stock split of our comment stock at a ratio of 1-for-20 (the “Reverse Stock Split”) and proportionately decrease the number of authorized shares of the Company’s common stock, which became effective upon filing (the “Effective Time”). The Company’s common stock began trading on a Reverse Stock Split-adjusted basis on Nasdaq as of the open of trading on September 29, 2025 under the existing ticker symbol “LESL”. The Company’s common stock is now represented by a new CUSIP number, 527064 208.

Current wording

On September 10, 2025, our shareholders approved a series of amendments to our Seventh Amended and Restated Certificate of Incorporation (the “Certificate of Amendment”). On September 26, 2025, we filed a Certificate of Amendment with the Secretary of State of the State of Delaware to effect a reverse stock split of our common stock at a ratio of 1-for-20 (the “Reverse Stock Split”) and proportionately decrease the number of authorized shares of the Company’s common stock, which became effective upon filing (the “Effective Time”). The Company’s common stock began trading on a Reverse Stock Split-adjusted basis on Nasdaq as of the open of trading on September 29, 2025 under the existing ticker symbol “LESL”. The Company’s common stock is now represented by a new CUSIP number, 527064 208.

Previous wording

We derived our consolidated statements of operations for the three months ended January 3, 2026 and December 28, 2024 from our consolidated financial statements. Our historical results are not necessarily indicative of the results that may be expected in the future. The following table summarizes key components of our results of operations for the periods indicated, both in dollars and as a percentage of our sales (in thousands, except per share amounts and percentages):

Current wording

We derived our consolidated statements of operations for the three and six months ended April 4, 2026 and March 29, 2025 from our consolidated financial statements. Our historical results are not necessarily indicative of the results that may be expected in the future. The following table summarizes key components of our results of operations for the periods indicated, both in dollars and as a percentage of our sales (in thousands, except per share amounts and percentages):

Previous wording

The tables below provide a reconciliation from our net loss to Adjusted EBITDA and net loss to Adjusted net loss for the three months ended January 3, 2026 and December 28, 2024 (in thousands). Adjusted net loss reported for the three months ended December 28, 2024 reflects a correction of an immaterial error in the “tax effects of these adjustments” amount reported in the first quarter of 2025.

Current wording

The tables below provide a reconciliation from our net loss to Adjusted EBITDA and net loss to Adjusted net loss for the three and six months ended April 4, 2026 and March 29, 2025 (in thousands). Adjusted net loss reported for the three and six months ended March 29, 2025 reflects a correction of an immaterial error in the “tax effects of these adjustments” amounts reported in the first and second quarter of 2025. Additionally, the prior period comparative reconciliation has been updated to conform to the current period presentation.

Previous wording

Represents the tax effect of the total adjustments based on our combined U.S. federal and state statutory tax rates. Amounts are reported in income tax expense in our consolidated statements of operations. The prior period amount has been corrected for an immaterial error reported for the period ended December 28, 2024.

Current wording

Represents the tax effect of the total adjustments based on our combined U.S. federal and state statutory tax rates. Amounts are reported in income tax expense (benefit) in our consolidated statements of operations. The prior period amounts have been corrected for an immaterial error reported for the three and six months ended March 29, 2025.

Previous wording

Gross profit for the three months ended January 3, 2026 was $27.1 million compared to $47.7 million in the prior year period, representing a decrease of $20.6 million, or 43.3%. Gross margin decreased to 18.4% compared to 27.2% in the prior year period, a decrease of 880 basis points. A negative impact of approximately 430 basis points was due to an inventory impairment charge of $6.4 million relating to store and DC closures during the period. The remaining approximately 450 basis points decline was due to a decline in overall margins on our core chemicals, which had an outsized negative impact on our gross profit margin during the first quarter due to the low sales volume. These declines were partially offset by our cost reduction strategies implemented during the quarter.

Current wording

Gross profit for the six months ended April 4, 2026 was $80.4 million compared to $91.7 million in the prior year period, a decrease of $11.3 million, or 12.3%. Gross margin decreased to 24.2% compared to 26.0% in the prior year period, a decrease of approximately 180 basis points. A negative impact of approximately 165 basis points was due to an inventory impairment charge of $5.5 million relating to store and DC closures during the six month period. The remaining approximately 15 basis points decline was due to an approximately 70 basis point impact due to a decrease in volume of products sold and mix, partially offset by an approximately 55 basis point impact due to occupancy and distribution center costs savings.

Previous wording

SG&A for the three months ended January 3, 2026 was $85.7 million compared to $87.4 million in the prior year period, a decrease of $1.7 million, or 2.0%. The decrease in SG&A was primarily related to decreases of merchant fees in $1.4 million, $1.1 million of labor and fringe costs, $0.6 million in direct store expenses, and $0.3 million in other operating expenses. Partially offsetting the decrease is $0.9 million of marketing fees and $0.8 million in technology costs.

Current wording

SG&A for the three months ended April 4, 2026 was $92.2 million compared to $92.3 million in the prior year period, a decrease of $0.1 million, or 0.1%. As a percentage of sales SG&A was 49.9% compared to 52.1%, down 220 basis points from the prior year. The decrease in SG&A was primarily related to decreases of $1.6 million in labor and fringe costs, $0.8 million in direct store and other operating expenses, and $0.2 million in merchant fees. Partially offsetting the decrease were increases of $1.4 million in marketing fees and $1.1 million in technology costs.

Previous wording

Non-cash impairment for the three months ended January 3, 2026 was $10.1 million, comprised of $5.4 million of property and equipment impairment and $4.8 million right-of-use asset impairment relating to the store and distribution center closures. There was no impairment in the prior year period.

Current wording

Non-cash impairment for the three months ended April 4, 2026 was $(1.2) million, which was comprised of non-cash lease gains due to lease terminations on stores that were closed and impaired during the first quarter of 2026. For the six months ended April 4, 2026 impairment was $9.0 million, which was comprised of $5.4 million of property and equipment impairment, $4.8 million right-of-use asset impairment, and $(1.2) million non-cash lease gains all relating to the store and distribution center closures that occurred during the first quarter of 2026. There was no impairment during either period in the prior year.

Previous wording

Interest expense for the three months ended January 3, 2026 was $13.5 million compared to $15.8 million in the prior year period, a decrease of $2.3 million. The decrease was driven by lower interest rates on our Term Loan.

Current wording

Interest expense for the three months ended April 4, 2026 was $14.4 million compared to $15.9 million in the prior year period, a decrease of $1.5 million. Interest expense for the six months ended April 4, 2026 was $27.9 million compared to $31.7 million in the prior year period, a decrease of $3.8 million. The decrease in both periods was driven by lower interest rates on our Term Loan.

Previous wording

Income tax expense increased to $0.7 million for the three months ended January 3, 2026 compared to a benefit of $10.9 million in the prior year period, an increase of $11.6 million. The increases were primarily attributable to the change in valuation allowance and use of the discrete effective tax rate method in the prior year period.

Current wording

Income tax expense increased to $0.4 million for the three months ended April 4, 2026 compared to a benefit of $13.0 million in the prior year period, an increase of $13.4 million. Income tax expense increased to $1.1 million for the six months ended April 4, 2026 compared to a benefit of $23.9 million in the prior year period, an increase of $25.0 million. The increases were primarily attributable to the change in valuation allowance and use of the discrete effective tax rate method in the prior year period.

Previous wording

The effective income tax rate was (0.8)% for the three months ended January 3, 2026, and included net income tax expenses attributable to state taxes and the change in valuation allowance. The effective income tax rate was 19.7% for the three months ended December 28, 2024, and included net income tax expenses attributable to equity-based compensation awards and the change in valuation allowance related to our interest expense limitation.

Current wording

The effective income tax rate was (0.9)% and (0.8)% for the three and six months ended April 4, 2026, respectively, and included net income tax expenses attributable to state taxes and the change in valuation allowance. The effective income tax rate was 20.2% and 19.9% for the three and six months ended March 29, 2025, respectively, and included net income tax expenses attributable to equity-based compensation awards and the change in valuation allowance related to our interest expense limitation.

Previous wording

Net loss for the three months ended January 3, 2026 was $83.0 million compared to $44.6 million in the prior year period, a decrease of $38.4 million. The changes in net loss during the three months ended January 3, 2026, were primarily due to decreases in gross profit due to lower sales, impairment charges in the current year, and a tax benefit in the prior year that was not repeated in the current year due to the valuation allowance.

Current wording

Adjusted EBITDA for the three months ended April 4, 2026 was $(26.8) million compared to $(36.1) million in the prior year period, an increase of $9.2 million. Adjusted EBITDA for the six months ended April 4, 2026 was $(67.1) million compared to $(65.4) million in the prior year period, a decrease of $1.7 million. The changes in Adjusted EBITDA during the three months ended April 4, 2026 were primarily due to increases in gross profit. The changes in Adjusted EBITDA during the six months ended April 4, 2026 were primarily due to decreases in gross profit due to lower sales and the impairment charges in the current year.

Previous wording

Cash and cash equivalents consist primarily of cash on deposit with banks. Cash and cash equivalents totaled $3.6 million as of January 3, 2026 and $11.6 million as of December 28, 2024. Outstanding borrowings on our Revolving Credit Facility were $25.0 million as of January 3, 2026 and $40.0 million as of December 28, 2024. We had no amounts outstanding on our Revolving Credit Facility as of October 4, 2025.

Current wording

Cash and cash equivalents consist primarily of cash on deposit with banks. Cash and cash equivalents totaled $16.9 million as of April 4, 2026, $64.3 million as of October 4, 2025, and $17.3 million as of March 29, 2025. Outstanding borrowings on our Revolving Credit Facility were $99.0 million as of April 4, 2026 and $101.5 million as of March 29, 2025. We had no amounts outstanding on our Revolving Credit Facility as of October 4, 2025.

Previous wording

As of January 3, 2026, outstanding standby letters of credit totaled $11.1 million, and after considering borrowing base restrictions, we had $128.3 million of available borrowing capacity under the terms of the Revolving Credit Facility. As of January 3, 2026, we were in compliance with the covenants under the Revolving Credit Facility and our Term Loan.

Current wording

As of April 4, 2026, outstanding standby letters of credit totaled $11.1 million, and after considering borrowing base restrictions, we had $97.1 million of available borrowing capacity under the terms of the Revolving Credit Facility. As of April 4, 2026, we were in compliance with the covenants under the Revolving Credit Facility and our Term Loan.

Previous wording

Net cash used in operating activities was $81.1 million for the three months ended January 3, 2026 compared to $105.1 million in the prior year period, a decrease of $24.0 million. The decrease was primarily driven by a strategic decrease in inventory of $28.4 million.

Current wording

Net cash used in operating activities was $136.6 million for the six months ended April 4, 2026 compared to $154.3 million in the prior year period, a decrease of $17.8 million. The decrease was primarily driven by a strategic decrease in inventory of $40.9 million and $25.0 million due to deferred income taxes. Partially offsetting this decrease was a higher net loss in the current year.

Previous wording

Net cash used in investing activities was $4.3 million for the three months ended January 3, 2026 compared to $4.6 million in the prior year period, a decrease of $0.3 million. This decrease was driven by lower investments in purchases of property and equipment.

Current wording

Net cash used in investing activities was $9.5 million for the six months ended April 4, 2026 compared to $11.1 million in the prior year period, a decrease of $1.6 million. This decrease was driven by lower investments in purchases of property and equipment.

Previous wording

Net cash provided by financing activities for the three months ended January 3, 2026 was $24.7 million compared to $12.8 million in the prior year period, an increase of $11.9 million. This increase was due to a $27.0 million principal payment made during the three months ended December 28, 2024, partially offset by $15.0 million of decreased borrowings on the revolving credit facility in the current period.

Current wording

Net cash provided by financing activities for the six months ended April 4, 2026 was $98.6 million compared to $74.2 million in the prior year period, an increase of $24.5 million. This increase was due to a $27.0 million principal payment made during the prior year period, partially offset by $2.5 million of decreased borrowings on the Revolving Credit Facility in the current year period.

Previous wording

There have been no material changes to our contractual obligations and other commitments during the three months ended January 3, 2026 from those disclosed in our Annual Report on Form 10-K for the fiscal year ended October 4, 2025.

Current wording

There have been no material changes to our contractual obligations and other commitments during the six months ended April 4, 2026 from those disclosed in our Annual Report on Form 10-K for the fiscal year ended October 4, 2025 except as disclosed in Note 10—Leases and Note 12—Commitments & Contingencies in this Quarterly Report on Form 10-Q.

Previous wording

There have been no material changes to our critical accounting estimates during the three months ended January 3, 2026 from those disclosed in our Annual Report on Form 10-K for the fiscal year ended October 4, 2025.

Current wording

There have been no material changes to our critical accounting estimates during the six months ended April 4, 2026 from those disclosed in our Annual Report on Form 10-K for the fiscal year ended October 4, 2025.