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 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.

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 July 4, 2026 and June 28, 2025 refer to the 13 weeks ended July 4, 2026 and June 28, 2025. References to the nine months ended July 4, 2026 and June 28, 2025 refer to the 39 weeks ended July 4, 2026 and June 28, 2025.

Previous wording

Founded in 1963 by Phil Leslie Jr. in Southern California, the Company today known simply as “Leslie’s” has over six decades of disruptive retail innovation in the $15 billion U.S. pool and spa care industry. Today, we are the largest and most trusted direct-to-consumer brand in our segment, serving residential consumers and pool professionals, and many of the largest commercial property operators in the country. With approximately 950 retail locations, an integrated, digitally forward omnichannel strategy, and a horizontally integrated, nationwide ecosystem under the Leslie’s and In the Swim® brands, among others, we have built a market-leading share of residential aftermarket product spend, based on 2024 industry analyst reports, and a physical network larger than the sum of our 20 largest competitors. We offer an extensive assortment of professional-grade products, the majority of which are exclusive to Leslie’s, manufacturer certified installation and repair services, and in some markets, weekly pool maintenance services. Our dedicated, knowledgeable team of associates, pool and spa care experts, and experienced service technicians, are passionate about empowering every single Leslie’s customer with the knowledge, products, and solutions necessary to confidently maintain and thoroughly enjoy their pools and spas. The considerable scale of our integrated marketing and distribution ecosystem, which is powered by our direct-to-consumer network, uniquely enables us to efficiently reach and service nearly every pool and spa in the continental United States.

Current wording

Founded in 1963 by Phil Leslie Jr. in Southern California, the Company today known simply as “Leslie’s” has over six decades of disruptive retail innovation in the $15 billion U.S. pool and spa care industry. Today, we are the largest and most trusted direct-to-consumer brand in our segment, serving residential consumers and pool professionals, and many of the largest commercial property operators in the country. With over 900 retail locations, an integrated, digitally forward omnichannel strategy, and a horizontally integrated, nationwide ecosystem under the Leslie’s and In the Swim® brands, among others, we have built a market-leading share of residential aftermarket product spend, based on 2024 industry analyst reports, and a physical network larger than the sum of our 20 largest competitors. We offer an extensive assortment of professional-grade products, the majority of which are exclusive to Leslie’s, manufacturer certified installation and repair services, and in some markets, weekly pool maintenance services. Our dedicated, knowledgeable team of associates, pool and spa care experts, and experienced service technicians, are passionate about empowering every single Leslie’s customer with the knowledge, products, and solutions necessary to confidently maintain and thoroughly enjoy their pools and spas. The considerable scale of our integrated marketing and distribution ecosystem, which is powered by our direct-to-consumer network, uniquely enables us to efficiently reach and service nearly every pool and spa in the continental United States.

Previous wording

We operate primarily in the pool and spa aftermarket industry, a fundamentally attractive category in retail, given its scale, historical predictability, and growth outlook. More than 85% of our product assortment is comprised of non-discretionary products essential to the care of residential and commercial pools and spas. This includes chemicals, new and replacement parts, cleaning and maintenance equipment, safety, recreational, and fitness-related products. We also offer important essential services, such as equipment installation and repair for residential and commercial customers. We have relationships with professional pool operators from major hotel and apartment owners to municipal, county and state governments, all the way to sole proprietors. In addition to a strong consumer and commercial retail and service presence, we operate a wholesale specialty pool and spa parts distribution business, giving us unique access to hard-to-find specialty parts; an integrated manufacturing plant, giving us vertical scale and competitive cost on parts of our chemical assortment; and a regionally located, hub-and-spoke distribution system throughout the continental United States.

Current wording

We operate primarily in the pool and spa aftermarket industry, a fundamentally attractive category in retail, given its scale, historical predictability, and growth outlook. A majority of our product assortment is comprised of products essential to the care of residential and commercial pools and spas. This includes chemicals, new and replacement parts, cleaning and maintenance equipment, safety, recreational, and fitness-related products. We also offer important essential services, such as equipment installation and repair for residential and commercial customers. We have relationships with professional pool operators from major hotel and apartment owners to municipal, county and state governments, all the way to sole proprietors. In addition to a strong consumer and commercial retail and service presence, we operate a wholesale specialty pool and spa parts distribution business, giving us unique access to hard-to-find specialty parts; an integrated manufacturing plant, giving us vertical scale and competitive cost on parts of our chemical assortment; and a regionally located, hub-and-spoke distribution system throughout the continental United States.

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”), 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.

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 income (loss). The key non-GAAP measures and other operating measures we use are comparable sales, comparable sales growth, Adjusted EBITDA, Adjusted net income (loss), and Adjusted diluted earnings (loss) per share.

Previous wording

We offer a broad range of products that consists of regularly purchased, non-discretionary pool and spa maintenance items such as chemicals, equipment, cleaning accessories and parts, as well as installation and repair services for pool and spa equipment. Our offering of proprietary, owned, and third-party brands across diverse product categories drives sales growth by attracting new consumers and encouraging repeat visits from our existing consumers. Revenue from merchandise sales at retail locations is recognized at the point of sale, revenue from services is recognized when the services are rendered, and revenue from e-commerce merchandise sales is generally recognized upon shipment of the merchandise. Revenue is recorded net of related discounts and sales tax. Payment from retail customers is generally at the point of sale and payment terms for professional pool operator customers are based on our credit requirements and generally have terms of less than 60 days. When we receive payment from a consumer before the consumer has taken possession of the merchandise or the service has been performed, the amount received is recorded as deferred revenue or as a customer deposit until the sale or service is complete. Sales are impacted by weather, seasonality, product mix and availability, promotional and competitive activities, and the spending habits of our consumers, as well as inflation and interest rates. Growth of our sales is primarily driven by comparable sales growth and expansion of our locations in existing and new markets.

Current wording

We offer a broad range of products that consists of regularly purchased, essential pool and spa maintenance items such as chemicals, equipment, cleaning accessories and parts, as well as installation and repair services for pool and spa equipment. Our offering of proprietary, owned, and third-party brands across diverse product categories drives sales growth by attracting new consumers and encouraging repeat visits from our existing consumers. Revenue from merchandise sales at retail locations is recognized at the point of sale, revenue from services is recognized when the services are rendered, and revenue from e-commerce merchandise sales is generally recognized upon shipment of the merchandise. Revenue is recorded net of related discounts and sales tax. Payment from retail customers is generally at the point of sale and payment terms for professional pool operator customers are based on our credit requirements and generally have terms of less than 60 days. When we receive payment from a consumer before the consumer has taken possession of the merchandise or the service has been performed, the amount received is recorded as deferred revenue or as a customer deposit until the sale or service is complete. Sales are impacted by weather, seasonality, product mix and availability, promotional and competitive activities, and the spending habits of our consumers, as well as inflation and interest rates. Growth of our sales is primarily driven by comparable sales growth and expansion of our locations in existing and new markets.

Previous wording

As of April 4, 2026, we operated approximately 950 locations in 38 states across the United States. We owned 27 locations and leased the remainder of our locations. Our initial lease terms are typically five years with options to renew for multiple successive five-year periods. We evaluate new opportunities in new and existing markets based on the number of pools and spas in the market, competition, our existing locations, availability and cost of real estate, and distribution and operating costs of our locations. We review the performance of our locations on a regular basis and evaluate opportunities to strategically close locations to improve our profitability. Our limited investment costs in individual locations and our ability to transfer sales to our extensive network of remaining locations and e-commerce websites allows us to improve profitability as a result of any strategic closures.

Current wording

As of July 4, 2026, we operated 943 locations in 38 states across the United States. We owned 27 locations and leased the remainder of our locations. Our initial lease terms are typically five years with options to renew for multiple successive five-year periods. We evaluate new opportunities in new and existing markets based on the number of pools and spas in the market, competition, our existing locations, availability and cost of real estate, and distribution and operating costs of our locations. We review the performance of our locations on a regular basis and evaluate opportunities to strategically close locations to improve our profitability. Our limited investment costs in individual locations and our ability to transfer sales to our extensive network of remaining locations and e-commerce websites allows us to improve profitability as a result of any strategic closures.

Previous 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.

Current wording

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

Previous wording

Adjusted net loss and Adjusted diluted loss per share are additional key measures used by management and our board of directors to assess our financial performance. Adjusted net loss and Adjusted diluted loss per share are also frequently used by analysts, investors, and other interested parties to evaluate companies in our industry, when considered alongside other GAAP measures.

Current wording

Adjusted net income (loss) and Adjusted diluted earnings (loss) per share are additional key measures used by management and our board of directors to assess our financial performance. Adjusted net income (loss) and Adjusted diluted earnings (loss) per share are also frequently used by analysts, investors, and other interested parties to evaluate companies in our industry, when considered alongside other GAAP measures.

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, 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 income (loss) is defined as net income (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 earnings (loss) per share is defined as Adjusted net income (loss) divided by the diluted weighted average number of common shares outstanding.

Previous 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):

Current wording

We derived our consolidated statements of operations for the three and nine months ended July 4, 2026 and June 28, 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 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.

Current wording

The tables below provide a reconciliation from our net income (loss) to Adjusted EBITDA and net income (loss) to Adjusted net income (loss) for the three and nine months ended July 4, 2026 and June 28, 2025 (in thousands). Adjusted net income (loss) reported for the three and nine months ended June 28, 2025 reflects a correction of a calculation error in the “tax effects of these adjustments” amounts reported in the prior period. Additionally, the prior period comparative reconciliation has been updated to conform to the current period presentation.

Previous wording

Represents non-cash charges related asset write offs for certain underperforming stores and certain inventory related to the store and distribution center closings.

Current wording

Represents non-cash charges related to asset write offs for certain underperforming stores and certain inventory related to the store and distribution center closings.

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 (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.

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 a calculation error reported for the three and nine months ended June 28, 2025.

Previous wording

Sales were $184.7 million for the three months ended April 4, 2026 compared to $177.1 million in the prior year period, an increase of $7.6 million, or 4.3%. The increase was driven by a strength in our retail business and favorability driven by a week calendar shift in comparing to the prior year. These benefits were partially offset by the loss of sales from the closure of underperforming stores. Comparable sales for the three months ended on April 4, 2026 increased $11.5 million or 6.6% compared to the prior year period.

Current wording

Sales were $458.5 million for the three months ended July 4, 2026 compared to $500.3 million in the prior year period, a decrease of $41.9 million, or 8.4%. The decrease was driven by softness in our retail business due to a slower summer pool season as well as the loss of sales from the closure of underperforming stores. Comparable sales for the three months ended July 4, 2026 decreased $30.4 million or 6.2% compared to the prior year period.

Previous wording

Sales were $331.9 million for the six months ended April 4, 2026, compared to $352.4 million in the prior year period, a decrease of $20.5 million, or 5.8%. The decrease was primarily driven by lower sales as a result of the closure of underperforming stores during the period, headwinds in our first quarter as we anniversaried increased demand in the prior year period driven by an active hurricane season and demand driven by the liquidation of certain products. Comparable sales for the six months ended April 4, 2026 decreased $15.5 million or 4.5% compared to the prior year period.

Current wording

Sales were $790.4 million for the nine months ended July 4, 2026, compared to $852.7 million in the prior year period, a decrease of $62.3 million, or 7.3%. The decrease was primarily driven by lower traffic and transactions in our stores due to overall softness in the summer pool season and lower sales resulting from the closure of underperforming stores during the period. Additionally, first-quarter revenue faced headwinds as the Company cycled against elevated demand in the prior-year period, which had been driven by an active hurricane season and the liquidation of certain products. Comparable sales for the nine months ended July 4, 2026 decreased $45.9 million or 5.5% compared to the prior year period.

Previous 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.

Current wording

Gross profit for the nine months ended July 4, 2026 was $247.5 million compared to $289.6 million in the prior year period, a decrease of $42.0 million, or 14.5%. Gross margin decreased to 31.3% compared to 34.0% in the prior year period, a decrease of approximately 265 basis points. A negative impact of approximately 70 basis points was due to an inventory impairment charge of $5.4 million relating to store and DC closures during the nine month period. The remaining approximately 195 basis points decline was due to an approximately 145 basis point impact due to a decrease in volume of high margin products sold and mix, and an approximately 50 basis point impact due to occupancy, distribution center, and manufacturing costs.

Previous 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.

Current wording

SG&A for the three months ended July 4, 2026 was $106.4 million compared to $129.6 million in the prior year period, a decrease of $23.2 million, or 17.9%. As a percentage of sales SG&A was 23.2% compared to 25.9%, down 270 basis points from the prior year period. The decrease in SG&A was primarily related to a one-time gain for a credit card interchange fee settlement of $17.5 million, net of legal fees. Additionally, SG&A decreased due to decreases of $3.4 million in direct store and other operating expenses, $2.1 million in merchant fees, $1.2 million in labor and fringe costs, and $0.4 million in marketing fees. Partially offsetting the decrease was an increase of $1.4 million in technology costs.

Previous wording

SG&A for the six months ended April 4, 2026 was $177.9 million compared to $179.7 million in the prior year period, a decrease of $1.9 million, or 1.0%. As a percentage of sales SG&A was 53.6% compared to 51.0%, an increase of 259 basis points from the prior year. The decrease in SG&A was primarily related to decreases of $2.7 million in labor and fringe costs, $1.9 million in direct store and other operating expenses, and $1.5 million in merchant fees. Partially offsetting the decrease were increases of $2.3 million in marketing fees and $1.9 million in technology costs.

Current wording

SG&A for the nine months ended July 4, 2026 was $284.2 million compared to $309.3 million in the prior year period, a decrease of $25.1 million, or 8.1%. As a percentage of sales SG&A was 36.0% compared to 36.3%, a decrease of 30 basis points from the prior year. The decrease in SG&A was primarily related to a one-time gain for a credit card interchange fee settlement of $17.5 million, net of legal fees. Additionally, SG&A decreased due to decreases of $5.2 million in direct store and other operating expenses, $3.9 million in labor and fringe costs, and $3.6 million in merchant fees. Partially offsetting the decrease were increases of $3.3 million in technology costs and $1.9 million in marketing fees.

Previous 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.

Current wording

Non-cash impairment for the three months ended July 4, 2026 was $(0.7) 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 nine months ended July 4, 2026 impairment was $8.3 million, which was comprised of $5.4 million of property and equipment impairment, $4.8 million right-of-use asset impairment, and $(1.9) 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 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.

Current wording

Interest expense for the three months ended July 4, 2026 was $14.1 million compared to $15.8 million in the prior year period, a decrease of $1.6 million. Interest expense for the nine months ended July 4, 2026 was $42.0 million compared to $47.4 million in the prior year period, a decrease of $5.4 million. The decrease in both periods was driven by lower interest rates on our Term Loan.

Previous 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.

Current wording

Income tax benefit was $0.5 million for the three months ended July 4, 2026 compared to an expense of $30.8 million in the prior year period, an increase of $31.3 million. Income tax expense was $0.7 million for the nine months ended July 4, 2026 compared to $7.0 million in the prior year period, a decrease of $6.3 million. The changes were primarily attributable to the change in valuation allowance and use of the discrete effective tax rate method in the prior year periods.

Previous 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.

Current wording

The effective income tax rate was (1.0)% and (0.8)% for the three and nine months ended July 4, 2026, and included net income tax expenses attributable to state taxes and the change in valuation allowance. The effective income tax rate was 58.7% and (10.4)% for the three and nine months ended June 28, 2025, and included net income tax expenses attributable to equity-based compensation awards and the change in valuation allowance.

Previous wording

Net loss for the three months ended April 4, 2026 was $52.5 million compared to $51.3 million in the prior year period, a decrease of $1.2 million. The change was primarily due to a tax benefit in the prior year period that was not repeated in the current year period due to the valuation allowance. This decline was partially offset by the increase in gross profit. Net loss for the six months ended April 4, 2026 was $135.5 million compared to $95.9 million in the prior year period, an increase of $39.6 million. The change was 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 period due to the valuation allowance.

Current wording

Net income for the three months ended July 4, 2026 was $47.8 million compared to $21.7 million in the prior year period, an increase of $26.1 million. The change was primarily due to the change in valuation allowance in the prior year period as well as savings in SG&A in the current year period. This increase was partially offset by decreases in gross profit due to lower sales. Net loss for the nine months ended July 4, 2026 was $(87.7) million compared to $(74.2) million in the prior year period, an increase of $13.5 million. The change was primarily due to decreases in gross profit due to lower sales and impairment charges in the current year period. Partially offsetting the decrease was savings in SG&A during the current year period.

Previous wording

Diluted loss per share was $5.63 for the three months ended April 4, 2026 compared to $5.54 in the prior year period. Diluted loss per share was $14.55 for the six months ended April 4, 2026 compared to $10.36 in the prior year period.

Current wording

Diluted earnings per share was $5.01 for the three months ended July 4, 2026 compared to $2.34 in the prior year period. Diluted loss per share was $(9.40) for the nine months ended July 4, 2026 compared to $(8.01) in the prior year period.

Previous wording

Adjusted diluted loss per share was $5.36 for the three months ended April 4, 2026 compared to $5.21 in the prior year period. Adjusted diluted loss per share was $12.62 for the six months ended April 4, 2026 compared to $9.86 in the prior year period.

Current wording

Adjusted diluted earnings per share was $3.96 for the three months ended July 4, 2026 compared to $2.72 in the prior year period. Adjusted diluted loss per share was $(8.55) for the nine months ended July 4, 2026 compared to $(7.13) in the prior year period.

Previous 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.

Current wording

Adjusted EBITDA for the three months ended July 4, 2026 was $55.7 million compared to $81.6 million in the prior year period, a decrease of $25.9 million. Adjusted EBITDA for the nine months ended July 4, 2026 was $(11.4) million compared to $16.2 million in the prior year period, a decrease of $27.6 million. The decreases in Adjusted EBITDA during the three months ended July 4, 2026 and nine months ended July 4, 2026 were primarily due to decreases in gross profit due to lower sales partially offset by savings in SG&A.

Previous wording

The principal external factor affecting our business is weather. Hot weather can increase purchases of chemicals and other non-discretionary products as well as purchases of discretionary products and can drive increased purchases of installation and repair services. Unseasonably cool weather or significant amounts of rainfall during the peak pool sales season can reduce chemical consumption in pools and spas and decrease consumer purchases of our products and services. In addition, unseasonably early or late warming trends can increase or decrease the length of the pool season and impact timing around pool openings and closings and, therefore, our total sales and timing of our sales. Further, we generally close locations after our peak selling season ends.

Current wording

The principal external factor affecting our business is weather. Hot weather can increase purchases of chemicals and other essential products as well as purchases of discretionary products and can drive increased purchases of installation and repair services. Unseasonably cool weather or significant amounts of rainfall during the peak pool sales season can reduce chemical consumption in pools and spas and decrease consumer purchases of our products and services. In addition, unseasonably early or late warming trends can increase or decrease the length of the pool season and impact timing around pool openings and closings and, therefore, our total sales and timing of our sales. Further, we generally close locations after our peak selling season ends.

Previous 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.

Current wording

Our primary sources of liquidity are net cash provided by operating activities and borrowing availability under our Revolving Credit Facility. Cash and cash equivalents consist primarily of cash on deposit with banks. Cash and cash equivalents totaled $45.9 million as of July 4, 2026, $64.3 million as of October 4, 2025, and $42.7 million as of June 28, 2025. Outstanding borrowings on our Revolving Credit Facility were $30.0 million as of July 4, 2026, and $20.0 million as of June 28, 2025. We had no amounts outstanding on our Revolving Credit Facility as of October 4, 2025.

Previous 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.

Current wording

As of July 4, 2026, outstanding standby letters of credit totaled $11.1 million. After considering borrowing base restrictions, we had $207.1 million of availability from cash on hand and available borrowing capacity under the terms of the Revolving Credit Facility. As of July 4, 2026, we were in compliance with the covenants under the Revolving Credit Facility and our Term Loan.

Previous wording

During the quarter ended January 3, 2026, the Company received downgraded credit rating from Standard and Poor’s (“S&P”) Global Ratings (CCC from CCC+).

Current wording

During the quarter ended January 3, 2026, the Company received downgraded credit rating from Standard and Poor’s (“S&P”) Global Ratings (CCC from CCC+). A lower credit rating could increase the cost of, and reduce our access to, any future financing, including any refinancing of our Term Loan prior to its maturity on March 9, 2028, and could adversely affect our ability to access the capital markets.

Previous wording

Our capital expenditures are primarily related to infrastructure-related investments, including investments related to upgrading and maintaining our information technology systems, ongoing location improvements, expenditures related to our distribution centers, and new location openings. We expect to fund capital expenditures from net cash provided by operating activities.

Current wording

Our capital expenditures are primarily related to infrastructure-related investments, including investments related to upgrading and maintaining our information technology systems, ongoing location improvements, expenditures related to our distribution centers, and new location openings.

Previous wording

Our primary sources of liquidity are net cash provided by operating activities and borrowing availability under our Revolving Credit Facility. Historically, we have funded working capital requirements, capital expenditures, payments related to acquisitions, and debt service requirements with internally generated cash on hand and through our Revolving Credit Facility.

Current wording

Historically, we have funded working capital requirements, capital expenditures, payments related to acquisitions, and debt service requirements with internally generated cash on hand and through our Revolving Credit Facility. Macroeconomic softness, persistent inflationary pressures on the consumer – including the growing bifurcation of household income and wealth – combined with the uncertainty around our ability to continue to drive customer traffic, has negatively impacted our business and liquidity. Although we continue to pursue our strategic initiatives, including ongoing cost optimization efforts, the timing and realization of our strategy cannot guarantee sufficient cash flow will be generated to meet the Company’s debt obligations and operating costs. These conditions and events raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans to address our more immediate challenges may include the following:

Previous 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.

Current wording

Net cash used in operating activities was $37.6 million for the nine months ended July 4, 2026, compared to $39.4 million in the prior year period, a decrease of $1.8 million. The decrease was driven by changes in working capital primarily relating to inventory and accounts payable.

Previous 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.

Current wording

Net cash used in investing activities was $10.4 million for the nine months ended July 4, 2026, compared to $18.9 million in the prior year period, a decrease of $8.5 million. This decrease was driven by lower investments in purchases of property and equipment.

Previous 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.

Current wording

Net cash provided by financing activities for the nine months ended July 4, 2026, was $29.6 million compared to net cash used in financing activities of $7.5 million in the prior year period, an increase of $37.1 million. This increase was due to a $27.0 million principal payment made during the prior year period as well as $10.0 million in additional borrowing 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 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.

Current wording

There have been no material changes to our contractual obligations and other commitments during the nine months ended July 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 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.

Current wording

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